Federal Trade Commission v. Lending Club Corporation
3:18-cv-02454
N.D. Cal.Apr 14, 2020Background
- FTC filed motions for summary judgment and related Daubert and Rule 12(c) motions; both parties submitted administrative motions to file exhibits under seal in support of those motions.
- Ninth Circuit precedent requires a "compelling reasons" standard to seal documents filed with dispositive motions or materials "more than tangentially related" to the merits.
- LendingClub argued the less demanding "good cause" standard should apply to exhibits the Court did not rely on and sought provisional acceptance of its confidentiality designations.
- FTC argued most of LendingClub’s designations fail the "compelling reasons" test and sought unsealing except for consumer-sensitive personal information.
- The Court held the Ninth Circuit’s "compelling reasons" standard governs all documents submitted with the underlying dispositive and related motions, rejected LendingClub’s provisional-acceptance proposal, and found LendingClub’s initial declarations largely boilerplate and inadequate.
- The Court ordered LendingClub to submit supplemental, narrowly tailored declarations applying the "compelling reasons" standard by April 21, 2020 and to refile matching redacted and unredacted briefing if designations change.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicable sealing standard for exhibits to dispositive and related motions | FTC: "Compelling reasons" governs; public access presumption applies | LendingClub: apply "good cause" to documents Court does not rely on; Civil Standing Order references good cause | Court: "Compelling reasons" applies to all materials submitted with dispositive or "more than tangentially related" motions per Ninth Circuit authority |
| Adequacy of LendingClub's sealing declarations | FTC: LendingClub’s declarations are boilerplate and fail to show specific competitive harm | LendingClub: declarations generally show need to protect competitively sensitive info; asks to cure deficiencies and provisionally accept designations | Court: initial declarations insufficiently detailed; declines provisional acceptance; orders supplemental, narrowly tailored declarations |
| Procedural consequences and remedy | FTC: materials should be unsealed except limited redactions for consumer data | LendingClub: needs opportunity to justify designations and submit revised redactions | Court: ordered LendingClub to submit supplemental declarations and, if redactions change, submit corresponding unredacted/redacted briefs within 7 days per Local Rule 79-5(f) |
Key Cases Cited
- Kamakana v. City and Cty. of Honolulu, 447 F.3d 1172 (9th Cir. 2006) ("compelling reasons" standard governs sealing of judicial records attached to dispositive motions)
- Ctr. for Auto Safety v. Chrysler Grp., LLC, 809 F.3d 1092 (9th Cir. 2016) ("compelling reasons" applies to records "more than tangentially related" to the merits)
- In re Midland Nat. Life Ins. Co. Annuity Sales Practices Litig., 686 F.3d 1115 (9th Cir. 2012) (discussing sealing standard for motions related to merits, including Daubert filings)
- Foltz v. State Farm Mut. Auto. Ins. Co., 331 F.3d 1122 (9th Cir. 2003) (public disclosure insufficiently justified by embarrassment or exposure to litigation)
- Nixon v. Warner Commc'ns, Inc., 435 U.S. 589 (1978) (court may seal records to protect trade secrets and other competitively sensitive information)