Joint motion to seal
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Case Name: Michael Spatz v. Charles Liang, et al. Case No.: 24CV452241 (consolidated with Case Nos. 24CV454416 and 24CV454689)
This is a shareholder derivative action on behalf of Super Micro Computer, Inc. (“Supermicro”) and it arises from pervasive breaches of fiduciary duty by Supermicro’s officers and directors involving accounting manipulation, false and misleading statements to shareholders and a materially deficient corporate governance and internal controls regime.
Before the Court is nominal defendant Super Micro’s, individual defendants’ Robert Blair, Shiu Leung (Fred) Chan, Daniel W. Fairfax, Susan M. Giordano, Charles Liang, Yih- Shyan (Wally) Liaw, Judy Lin, Sara Liu, Tally Liu, Sherman Tuan, and David E. Weigand (collectively, “Individual Defendants”), and plaintiffs’ John Clark, Myron Carter, Gary Reynolds, Bernice Reynolds, and Michael Spatz (collectively, “Plaintiffs”) joint motion to seal.
As discussed below, the Court GRANTS the parties’ motion.
X. MOTION TO SEAL
The parties move to seal portions of Plaintiffs’ amended consolidated shareholder Complaint (“FAC”).
A. Legal Standard
“The court may order that a record be filed under seal only if it expressly finds facts that establish: (1) There exists an overriding interest that overcomes the right of public access to the record; (2) The overriding interest supports sealing the record; (3) A substantial probability exists that the overriding interest will be prejudiced if the record is not sealed; (4) The proposed sealing is narrowly tailored; and (5) No less restrictive means exist to achieve the overriding interest.” (Cal. Rules of Court, rule 2.550(d).) Pleadings, in particular, should be open to public inspection “as a general rule,” although they may be filed under seal in appropriate circumstances. (Mercury Interactive Corp. v. Klein (2007) 158 Cal.App.4th 60, 104, fn. 35.)
“Courts have found that, under appropriate circumstances, various statutory privileges, trade secrets, and privacy interests, when properly asserted and not waived, may constitute overriding interests.” (
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Rule 2.550 does not directly apply to “discovery motions and records filed or lodged in connection with discovery motions or proceedings.” (See Cal. Rules of Court, rule 2.550(a)(3); H.B. Fuller Co. v. Doe (2007) 151 Cal.App.4th 879, 892-893 (Fuller) [the discovery process would be impeded if a presumptive right of public access to records disclosed under protective orders and filed in connection with routine discovery motions were
imposed].) Nonetheless, even in discovery proceedings, a party moving for leave to file records under seal must identify the specific information claimed to be entitled to confidentiality and the nature of the harm threatened by disclosure. (See Fuller, supra, 151 Cal.App.4th at p. 894.)
Where some material within a document warrants sealing, but other material does not, the document should be edited or redacted if possible, to accommodate both the moving party’s overriding interest and the strong presumption in favor of public access. (Cal. Rules of Court, rule 2.550(d)(4), (5).) In such a case, the moving party should take a line-by-line approach to the information in the document, rather than framing the issue to the court on an all-or-nothing basis. (Providian, supra, 96 Cal.App.4th at p. 309.)
B.
Discussion
The parties move to seal portions of the FAC that contain information derived from Supermicro’s non-public corporate books and records. (Motion, p. 2:8-9.) On May 6, 2025, Plaintiffs and Supermicro executed a non-disclosure and confidentiality agreement (the “Confidentiality Agreement”) which governs Plaintiffs’ use and disclosure of the materials Supermicro produced pursuant to Section 220 of the Delaware General Corporation Law. (Motion, p. 3:15-24.)
Supermicro has a legitimate interest in maintaining confidentiality of the redacted portions of the FAC, which reference competitively sensitive business and financial information including: financial and accounting information; strategic planning regarding financial and business operations; and board deliberations, processes, and personnel decisions. (Motion, pp. 4:23-5:5.) Supermicro’s interest in confidentiality supports sealing because the disclosure of the information could cause significant harm. (Motion, p. 5:21-28.)
There is a substantial risk that Supermicro’s business interest will be prejudiced if the information is made public. (Motion, p. 6:6-7.) The proposed redactions are narrowly tailored and there is no restrictive means to protect the overriding interest. (Motion, pp. 6:15-6:6.) Based on the foregoing, the Court finds that the parties’ sufficiently establish Supermicro’s overriding interest that justifies sealing this information and that the other factors set forth in rule 2.550 are satisfied. (See Universal, supra, 110 Cal.App.4th 1273 at p.1286 [confidential information relating to a party’s business operations can be sealed].)
Accordingly, the parties’ joint motion to seal is GRANTED.
XI. CONCLUSION
The parties’ motion to seal is GRANTED.
The Court will prepare the final order.
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