United States District Court, S.D. New York
KEYBANK NATIONAL ASSOCIATION, Plaintiff-Counterclaim-Defendant,
ELEMENT TRANSPORTATION LLC, f/k/a ELEMENT FINANCIAL CORP. (DELAWARE) and ELEMENT FLEET MANAGEMENT CORP., f/k/a ELEMENT FINANCIAL CORP. (ONTARIO), Defendants-Counterclaim-Plaintiffs.
MEMORANDUM OPINON & ORDER
F. KEENAN, United States District Judge:
KeyBank National Association moves the Court to seal a
portion of one exhibit appended to its complaint filed on
November 17, 2016 (ECF No. 1), because it contains highly
proprietary nonparty financial information irrelevant to its
claims. KeyBank also requests that the Court authorize the
Southern District of New York Clerk of Court's Electronic
Case Filing division to deem that exhibit and another
unredacted exhibit as annexed to and part of KeyBank's
complaint. The Court grants the motion to seal, directs
KeyBank to file the exhibit with the redactions proposed at
ECF No. 12-1, and authorizes the Clerk of Court to annex the
exhibits to KeyBank's complaint.
following facts are provided for background purposes and do
not constitute findings of fact by the Court.
seeks a declaratory judgment and to recover for a breach of
contract against Defendants-Counterclaim-Plaintiffs Element
Transportation LLC and Element Fleet Management Corp. The
parties' unincorporated subdivisions or predecessors in
interest entered into a set of contracts that sold
and assigned certain truck leases to KeyBank. In order to
timely close the deal, Element Transportation agreed to pay
any obligations owed to KeyBank under the assigned leases
until (i) KeyBank reviewed agreements between Element
Transportation and the lease servicer, nonparty Celadon
Group, Inc., to satisfy itself that Celadon would be
responsible for payments under the assigned leases, (ii)
performed due diligence and received internal credit
authorization on Celadon, and (iii) confirmed in writing to
Element Transportation that it had performed these duties.
This agreement is known as the Perfect Pay provision. Element
Fleet, the corporate parent of Element Transportation,
guarantied Element Transportation's Perfect Pay
obligation under a separate Parent Guaranty. If, after sixty
days, KeyBank did not perform its duties, Element
Transportation could, at its discretion, repurchase the
assigned leases. Either Element Transportation's
repurchase or KeyBank's confirmation in writing that it
performed its duties automatically terminated Element
Transportation's Perfect Pay obligations and Element
Fleet's Parent Guaranty.
alleges that it could not confirm in writing to Element
Transportation that it performed its duties, because Celadon
is not creditworthy. When a November 12, 2016 payment for
$450, 755.58 came due under the assigned leases, Element
Transportation paid only $255, 580.30, leaving a $195, 175.28
shortfall. Because Element Transportation did not repurchase
the assigned leases and KeyBank did not confirm in writing
that it performed its duties, KeyBank contends that Element
Transportation and Element Fleet are responsible for paying
the $195, 175.28 shortfall to KeyBank. KeyBank alleges that
Element Transportation and Element Fleet breached the
contract by failing to pay.
KeyBank seeks a declaratory judgment that the Parent Guaranty
is in full effect and that Element Fleet, who did not sign
the contract, is the party that the Parent Guaranty may be
enforced against because it is the successor in interest to
Element Transportation and Element Fleet answered and
counterclaimed against KeyBank for breach of contract,
alleging that KeyBank performed its duties but did not
confirm its completion in writing as it was obligated to do.
Alternatively, they argue that KeyBank breached the implied
covenant of good faith and fair dealing.
filed its complaint on November 17, 2016, and intended to
append two exhibits: Exhibit 1, the Master Sale and
Assignment Agreement (unredacted), and Exhibit 2,
Specification of Assigned Assets No. 1 (redacted). Due to a
technical glitch, KeyBank failed to attach either exhibit
when it filed on ECF. Both exhibits were served on Element
Transportation and Element Fleet. (See Answer &
Counterclaim ¶¶ 1, 4.)
seeks to seal a portion of Assignment Schedule No. 1, which
is appended to the Specification of Assigned Assets No. 1.
This portion of Assignment Schedule No. 1 contains highly
proprietary nonparty financial information including vehicle
identification numbers, borrower's credit scores,
guarantor's names, asset location, and the value of
payments remaining on the leases. Element Transportation and
Element Fleet consent to KeyBank's proposed redactions.
(See Letter Mot. in Support of Request to File
Sealed Documents 4 (Dec. 12, 2016), ECF No. 12.)
Rule of Civil Procedure 26(c) permits a court, on a showing
of good cause, to issue an order “to protect a party or
person from annoyance, embarrassment, oppression, or undue
burden or expense.” Fed.R.Civ.P. 26(c)(1). The public
has a right to access judicial documents that is rooted in
both the common law and the First Amendment. Lugosch v.
Pyramid Co. of Onondaga, 435 F.3d 110, 119-120 (2d Cir.
2006). Thus, if the party seeks to protect judicial
documents, its showing of good cause must be sufficient to
overcome the public's presumed right of access. Judicial
documents are those documents “relevant to the
performance of the judicial function and useful in the
judicial process.” Id. at 119 (quoting
United States v. Amodeo (Amodeo I), 44 F.3d
141, 145 (2d Cir. 1995)). If the court concludes that the
documents at issue are judicial documents, a presumption of
access attaches, and the court must determine the weight to
be given to the presumption based on a consideration of the
role the documents play in the court's exercise of
Article III power. Id. A court's determination
generally falls “somewhere on a continuum from matters
that directly affect an adjudication to matters that come
within a court's purview solely to insure their
irrelevance.” Id. (quoting United States
v. Amodeo (Amodeo II), 71 F.3d 1044, 1048 (2d
Cir. 1995)). Once it has determined the weight of the
presumption of access, the court must balance countervailing
considerations including the privacy interests of the party
seeking closure. Id. at 120.
the First Amendment protects the public's access to
certain documents may be determined in two ways. First, under
the so-called “experience and logic” approach,
the court asks “whether the documents ‘have
historically been open to the press and general public'
and whether ‘public access plays a significant positive
role in the functioning of the particular process in
question.'” Id. (quoting Hartford
Courant Co. v. Pellegrino, 380 F.3d 83, 91 (2d Cir.
2004)). A determination that the documents are judicial
documents generally supports a finding that they were
historically open to the public. Id. Second, the
court may consider the degree that the documents
“derived from or [are] a necessary corollary of the
capacity to attend the relevant proceedings.”
Id. (alteration in original) (quoting Hartford
Courant Co., 380 F.3d at 93)). Even where the First
Amendment protects public access, ...