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Free Speech

Can't Seal Case to Prevent Damage to Business Reputation, Even If Case Settled Quickly


From FTL Displays, LLC v. Blackout Inc., decided May 27 by the Nevada Court of Appeals (Chief Judge Michael Gibbons, joined by Judges Jerome Tao and Judge Bonnie Bulla):

… Blackout Inc. filed a complaint against FTL, alleging breach of contract. The parties quickly settled the matter and Blackout filed a voluntary dismissal with prejudice.

FTL then filed a motion to seal, seeking to seal the case, prohibiting public access to the documents filed in the case and the names of the parties. In its motion, FTL asserted that sealing the entire case was warranted pursuant to the Rules Governing Sealing and Redacting Court Records (SRCR) 3(4)(h) because the parties quickly resolved the case; FTL's reputation could be damaged if potential clients discovered the case, despite the fact that it was a mere misunderstanding between the parties; FTL was involved in other litigation and believed the opposing parties in that case may attempt to contact Blackout to "harass and/or coerce them;" and because FTL had partnerships with politically driven companies and wanted to prevent any inquiries into this matter….

On appeal, FTL challenges the district court's order denying its motion …. "All court records in civil actions are available to the public, except as otherwise provided in [the SRCR] or by statute." And pursuant to SRCR 3(4), the district court may seal records in a civil action if it finds compelling circumstances demonstrating that privacy or safety interests outweigh the public's interest in access to the court record.

Here, the district court considered FTL's stated reasons for requesting to seal the case but concluded that they were insufficient to demonstrate compelling circumstances warranting the same. And based on our review of the record, we cannot conclude that the district court abused its discretion in making this determination.

Moreover, regardless of whether FTL's stated reasons for seeking sealing were sufficient to demonstrate compelling circumstances under SRCR 3(4), its motion was otherwise deficient, such that the district court did not abuse its discretion in denying it, as the motion impermissibly sought to seal the entire case. SRCR 3(5)(c) (providing that "[u]nder no circumstances shall the court seal an entire court file" and that, at a minimum, the names of the parties and certain other information must be available for public viewing).

For a similar decision rejecting the sealing of the Complaint in a quickly settled case, see Bernstein v. Bernstein Litowitz Berger & Grossmann LLP (2d Cir. 2016).