Anthony-Thomas Candy Company v. Nestle USA, Inc.

IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF OHIO

EASTERN DIVISION

ANTHONY-THOMAS CANDY CO.,

Plaintiff,

v. Civil Action 2:24-cv-3938

Judge Edmund A. Sargus, Jr.

Magistrate Judge Kimberly A. Jolson

NESTLE USA, INC.,

Defendant.

OPINION AND ORDER

Before the Court is Defendant’s Renewed Motion to File Exhibit Under Seal. (Doc. 12). For

the following reasons, the Motion is GRANTED in part. Defendant is ORDERED to file Exhibit A

under seal and a redacted version of Exhibit A consistent with this order to the public docket within

seven (7) days.

I. BACKGROUND

This action is a contract dispute between Plaintiff Anthony-Thomas Candy Co. (“Anthony-

Thomas”) and Defendant Nestlé USA, Inc. (“Nestlé”). (See Docs. 3 (Plaintiff’s complaint alleging

breach of contract, fraudulent inducement, and unjust enrichment), 4-1 (Defendant’s counterclaims

alleging breaches of contract, violation of Ohio’s Uniform Trade Secrets Act, and unjust enrichment)).

Relevant here, the Complaint alleges the parties entered into a “Contract Manufacturing and Packaging

Agreement” that “contemplated Anthony-Thomas producing and packaging certain Nestlé food

products for Nestlé, a copy of which is attached hereto as Exhibit A.” (Doc. 3 at ¶ 4). This case was

originally filed in the Franklin County Court of Common Pleas before Defendant removed it to federal

court. (See generally Doc. 1).

Exhibit A to the Complaint, the Contract Manufacturing and Packaging Agreement, is the

subject of the motion at bar. When Plaintiff filed this action in the Franklin County Court of Common

Pleas, it attached Exhibit A to the Complaint. (See Doc. 1 at 46). So, the document was visible to the

public. This act was seemingly the basis for two of Defendant’s counterclaims (Doc. 4-1 at 7–9

(alleging a breach of contract and violation of the Ohio’s Uniform Trade Secrets Act based on Plaintiff

filing Exhibit A as an exhibit to the Complaint without seeking leave to file it under seal and without

Defendant’s written consent)). Defendant’s counterclaim in turned spurred Plaintiff to file a motion to

place the exhibit under seal in the Franklin County Court of Common Pleas, which that court granted.

(Doc. 1 at 46–48).

Now, Defendant seeks to file Exhibit A under seal in this Court. (Doc. 12). It represents that

Plaintiff does not oppose the motion. (Id. at 1). And it provided the Court a copy of Exhibit A for in

camera review. This matter is ripe for review.

II. STANDARD

Courts distinguish between limiting public disclosure of information during discovery versus

the adjudicative stage of a case. See Shane Grp., Inc. v. Blue Cross Blue Shield of Mich., 825 F.3d 299,

305 (6th Cir. 2016). “The line between these two stages, discovery and adjudicative, is crossed when

the parties place material in the court record.” Id. (citing Baxter Int’l, Inc. v. Abbott Labs., 297 F.3d

544, 545 (7th Cir. 2002)). “Unlike information merely exchanged between the parties, ‘[t]he public

has a strong interest in obtaining the information contained in the court record.’” Id. (quoting Brown

& Williamson Tobacco Corp. v. F.T.C., 710 F.2d 1165, 1180 (6th Cir. 1983)). For this reason, the

moving party has a “heavy” burden of overcoming a “‘strong presumption in favor of openness’ as to

court records.” Id. (quoting Brown & Williamson, 710 F.2d at 1179); see also id. (“Only the most

compelling reasons can justify non-disclosure of judicial records.” (quotation omitted)).

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“[I]n civil litigation, only trade secrets, information covered by a recognized privilege (such as

the attorney-client privilege), and information required by statute to be maintained in confidence (such

as the name of a minor victim of a sexual assault), is typically enough to overcome the presumption of

access.” Id. at 308 (citation and quotations omitted). “[T]he seal itself must be narrowly tailored to

serve” the reason for sealing, which requires the moving party to “analyze in detail, document by

document, the propriety of secrecy, providing reasons and legal citations.” Id. at 305–06 (quotation

omitted). Ultimately, the movant must show that “disclosure will work a clearly defined and serious

injury . . . And in delineating the injury to be prevented, specificity is essential.” Id. at 307–08 (internal

citations and quotations omitted). If there is a compelling reason, “the party must then show why those

reasons outweigh the public interest in access to those records.” Kondash v. Kia Motors Am., Inc., 767

F. App’x 635, 637 (6th Cir. 2019) (citing Shane Grp., Inc., 825 F.3d at 305). The court “that chooses

to seal court records must set forth specific findings and conclusions ‘which justify nondisclosure to

the public.’” Shane Grp., Inc., 825 F.3d at 306 (citing Brown & Williamson, 710 F.2d at 1176).

In sum, to overcome “the strong presumption in favor of openness,” parties who move to seal

documents must demonstrate: “(1) a compelling interest in sealing the records; (2) that the interest in

sealing outweighs the public’s interest in accessing the records; and (3) that the request is narrowly

tailored.” Kondash, 767 F. App’x at 637.

III. DISCUSSION

Defendant contends there is a compelling interest in sealing Exhibit A because it contains the

parties’ confidential and sensitive business information that is not otherwise known to the public. (Doc.

12 at 3). It argues that Exhibit A, if left unsealed, would “would benefit future business partners in

their negotiations with Nestlé and benefit competitors. (Id.). Defendant also argues that equitable

considerations weigh in favor of sealing Exhibit A as it “took reasonable steps to protect its trade

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secrets. They may be disclosed to the public solely because Plaintiff instituted this action against it.”

(Id.). In reviewing the document in camera, the Court agrees that a compelling interest exists to seal

at least some information contained in Exhibit A.

Exhibit A represents whole of the terms and conditions the parties agreed to pursuant to their

desire that Plaintiff manufacture, produce, and package for Defendant certain food products. Defendant

says the whole of Exhibit A is a trade secret. (Doc. 12 at 3–4). Trade secrets are a “recognized

exception to the right of public access to judicial records,” Brown & Williamson Tobacco Corp., 710

F.2d at 1180, and the existence of a trade secret generally satisfies the first “compelling interest”

element in Shane Group. See Kondash, 767 F. App’x at 638. A trade secret in Ohio is “information”

that “derives independent economic value . . . from not being generally known to . . . other persons who

can obtain economic value from its disclosure or use” and that a party expends reasonable efforts to

keep secret. Handels Enters., Inc. v. Schulenberg, 765 F. App’x 117, 122 (6th Cir. 2019) (quoting Ohio

Rev. Code § 1333.61(D)). In Ohio, six non-dispositive factors are used to determine the existence of a

trade secret:

(1) The extent to which the information is known outside the business; (2) the extent to

which it is known to those inside the business . . .; (3) the precautions taken by the holder

of the trade secret to guard the secrecy of the information; (4) the savings effected and

the value to the holder in having the information as against competitors; (5) the amount

of effort or money expended in obtaining and developing the information; and (6) the

amount of time and expense it would take for others to acquire and duplicate the

information.

Kondash, 767 F. App’x at 638–39 (quoting Heartland Home Fin., Inc. v. Allied Home Mortg. Capital

Corp., 258 F. App’x 860, 861–62 (6th Cir. 2008) (internal quotation omitted)).

As to the first and the third factors, though not dispositive to the question of sealing, Exhibit A

contains a confidentiality clause. This implies that Exhibit A is not generally known outside of the

parties, and the parties have made efforts to guard the information contained in it. Defendant also

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broadly gestures at the fourth factor, the savings effected and value to the holder in having the

information as against competitors. Particularly, it says “[p]otential business partners would have

insight into terms Nestlé was willing to accept. Competitors would also have insight into Nestlé’s

negotiations and structure of its agreements, putting them at an advantage if vying for the same

opportunities.” (Doc. 12 at 3). But this last argument lacks specificity as to the savings effected and

the value of this information to Defendant as against those competitors. See Ewalt v. GateHouse Media

Ohio Holding II, Inc., No. 2:19-CV-4262, 2022 WL 1080772 (S.D. Ohio Apr. 11, 2022) (finding a

defendant did not meet its burden to show a compelling reason existed to seal information when it did

not describe how it derived independent economic value from the alleged trade secret). Nor does

Defendant address the other Kondash factors. Simply put, Defendant has not met its burden to allow

the Court to conclude that it is attempting to protect a trade secret.

Still, even if Exhibit A is not wholly a trade secret, Defendant can establish a compelling reason

that its confidential business information should be protected. Protecting business information that

Defendant’s competitors could use to its disadvantage is a compelling reason to seal or redact

information from the public docket. See, e.g., Proctor & Gamble Co. v. Ranir, LLC, No. 1:17-CV-185,

2017 WL 3537195, at *3 (S.D. Ohio Aug. 17, 2017) (finding that market share data, sales trends and

analysis, customer preferences, confidential agreements, pricing strategy, and marketing strategy

should be redacted as public disclosure would allow competitors to have an inside look into the

plaintiff’s business strategies); Ethicon Endo-Surgery, Inc. v. Covidien, Inc., No. 1:11-CV-871, 2017

WL 4168290, at *2 (S.D. Ohio Sept. 20, 2017) (“[P]rotecting confidential information that would

otherwise allow competitors an inside look at a company’s business strategies is a compelling reason

to restrict public access to filings.”); Olymbec USA, LLC v. Closed Loop Ref. & Recovery, Inc., No.

2:19-CV-1041, 2021 WL 640452, at *2 (S.D. Ohio Feb. 11, 2021) (allowing a defendant to seal a

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master service agreement in part because it contained business terms and strategy information). This

is not an easy standard to meet; the moving party must show that disclosure would “seriously harm its

competitive standing.” United States ex rel. Scott v. Humana Inc., No. 3:18-CV-00061-GNS-CHL,

2021 WL 4449277, at *4 (W.D. Ky. Sept. 28, 2021) (“Humana has a compelling interest in concealing

business information that can be used to seriously harm its competitive standing.”). The Court finds

Defendant has done enough to the extent it seeks to redact information which could give its competitors

insight into the negotiated terms of this agreement.

Yet in this case, any compelling interest goes hand and hand with the third Shane Group

consideration―whether the request is narrowly tailored. Defendant advocates for wholesale sealing of

Exhibit A because “the entirety of Exhibit A [constitutes] its trade secrets because it reflects Nestlé’s

business terms and contracting strategy.” (Doc. 12 at 4–5). But in the event the Court does not agree,

Defendant requests leave to redact certain sections that “were the product of negotiations between the

parties.” (Id.).

As support for wholesale sealing, Defendant argues, the very “existence of Nestlé’s business

relationship with Plaintiff was confidential” as demonstrated by the confidentiality clause in the

agreement. (Id. at 5). However, in other circumstances, courts have said confidentiality provisions or

agreements do not justify sealing documents in litigation. See, e.g., Alpha Insulation & Water Proofing,

Inc. v. Hamilton, No. 2:20-CV-5938, 2020 WL 11885827, at *1 (S.D. Ohio Nov. 25, 2020) (holding a

confidentiality provision in a severance agreement does not constitute a compelling reason to file under

seal); Schnatter v. 247 Grp., LLC, No. 3:20-CV-00003-BJB-CHL, 2024 WL 3165317, at *2 (W.D. Ky.

June 25, 2024) (collecting cases for the notion that “[c]onfidentiality agreements entered in connection

with arbitration proceedings do not automatically justify sealing documents in litigation”);

Schmalenberg v. Dysphagia Mgmt. Sys., LLC, No. 1:18-CV-99, 2019 WL 978472, at *2 (S.D. Ohio

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Feb. 28, 2019) (collecting cases for the notion that an FLSA settlement agreement’s confidentiality

clause does not “overcome the presumption of public access to judicial records” (internal quotation

marks and citation omitted)); but see Proctor & Gamble Co., 2017 WL 3537195, *3 (allowing the

redaction of a brief’s citations to “confidential agreements” but providing no details about what those

agreements were).

More to the point, while Exhibit A contains provisions specifically negotiated by the parties

(see Doc. 12 at 4 (listing sections that “were the product of negotiations between the parties”), it also

contains provisions likely standard to a contract of this nature (see, e.g., Part 9. Compliance (containing

various provisions about the parties’ duties to comply with federal and state laws)). And Defendant

ultimately does not provide much specificity about why the latter type of provisions reflect its “business

terms and contracting strategy.” (Doc. 12 at 4). So, on Defendant’s Motion, wholesale sealing is not

narrowly tailored. See Schnatter v. 247 Grp., LLC, No. 3:20-CV-3-JRW-CHL, 2020 WL 3066622, at

*2 (W.D. Ky. June 9, 2020) (“[T]he Court finds a compelling reason to seal only the parts of these

documents that contain sensitive commercial information regarding pricing, strategy, and competitors

which would cause significant competitive harm to Defendants in the marketplace if disclosed.”). The

better route is to seal those provisions “of particular concern” identified by Defendant that “were the

product of negotiations between parties.” (Doc. 12 at 4).

Even if a compelling interest exists, the public’s interest in access to court records may outweigh

it still. See Shane Grp., 825 F.3d at 307. “The presumption in favor of public access is strong when

public safety is implicated.” Kondash, 767 F. App’x at 637. “This is particularly true in class actions,

where, because of the interest of a broader public outside of the named parties, the standards for

overcoming the presumption of openness ‘should be applied [...] with particular strictness.’” Id.

(quoting Shane Group, 825 F.3d at 305). This case involves a private contract dispute between two

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parties that does not implicate either of these concerns. Additionally, as Defendant does not seek to

seal anything but Exhibit A, the public should be able to glean the information necessary to understand

this case from the pleadings and other future filings. In short, the Court agrees with Defendant that the

public’s interest in particular sections of Exhibit A does not overcome the compelling interest in

keeping them sealed.

Accordingly, the Court finds redacting the following sections of Exhibit A is justified: §1.12.3

and 5.6.1 (allocation of risk), §2.1 (product procurement), §3.2.1 and 3.2.2 (schedules); §3.5 and 3.6

(purchase procedures), §3.7 (production procedures), §5.3 (fees), §14.1 (the term of the agreement),

§14.4 (termination procedures), §16.1, 16.1.1, and 16.1.2 (insurance requirements), the table on Ex. I

on page 26 (identification of the product), and Ex. IV, I.A.1.a on page 30 (costs provisions). The Court

GRANTS in part Defendant’s Motion and grants it leave to file Exhibit A under seal within seven (7)

days. However also within seven (7) days, Defendant is ORDERED to file a redacted version of

Exhibit A consistent with this Order to the public docket.

IV. CONCLUSION

For the foregoing reasons, Defendant’s Renewed Motion to File Exhibit Under Seal is

GRANTED in part. (Doc. 12). Defendant is ORDERED to file Exhibit A under seal and a redacted

version of Exhibit A consistent with this order to the public docket within seven (7) days.

IT IS SO ORDERED.

Date: October 10, 2024 /s/ Kimberly A. Jolson

KIMBERLY A. JOLSON

UNITED STATES MAGISTRATE JUDGE

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