On April 10, 2024, Justice Reed of the New York County Commercial Division issued a decision in Matter of Arad 2 LLC v. Ben-Hamo, 2024 NY Slip Op. 31478(U), sealing a complaint to prevent allegations of fraud and criminal conduct from becoming public, explaining:
Under New York law, there is a presumption that the public is entitled to access to judicial proceedings and court records. The public’s right to access, however, is not absolute, and a court is empowered to seal or redact court records pursuant to section 216.1 (a) of the Uniform Rules for Trial Courts upon a showing of good cause.
Section 216.l(a) of the Uniform Rules for Trial Courts empowers courts to seal documents upon a written finding of good cause. It provides:
(a) except where otherwise provided by statute or rule, a court shall not enter an order in any action or proceeding sealing the court records, whether in whole or in part, except upon a written finding of good cause, which shall specify the grounds thereof. In determining whether good cause has been shown, the court shall consider the interests of the public as well as the parties. Where it appears necessary or desirable, the court may prescribe appropriate notice and an opportunity to be heard.
Thus, sealing has been found to be appropriate to preserve the confidentiality of materials which involve internal finances of a party which are of minimal public interest. In the business context, courts permit records to be sealed when trade secrets are involved or when disclosure of information contained in documents could threaten a business’s competitive advantage. Moreover, sealing has been allowed in the absence of any legitimate public concern, as opposed to mere curiosity, to counterbalance the interest of a business’s partners and clients in keeping their financial arrangement private.
Since confidentiality is the exception, the movant must demonstrate that public access to the documents at issue will likely result in harm to a compelling interest of the movant. There is no indication on this record that the public or press would have an interest in this matter. It is this court’s view that there is no legitimate public interest in this matter, which involves a family dispute and is fueled, seemingly, by high emotions. Absent an order from this court, the pleadings containing prejudicial and irrelevant allegations would remain unrestricted to the public.
Arad’s subjective labeling of Ben Hamo and his attorney’s conduct in the Bronx litigation is irrelevant to whether Arad can establish that Ben Ramo committed fraud and breached his fiduciary duties with respect to the operation of 4053 BX LLC in this action. This court noted in its Decision and Order, dated May 12, 2022, that it is unnecessary, for the sufficiency of the pleading, to characterize the conduct of the parties involved in the Bronx litigation as criminal, fraudulent, and unethical. To allow those allegations to remain in the pleadings would cause undue prejudice to defendants.
In consideration of this court’s previous order to strike the pleading, defendants’ motion to seal the pleading is granted.
(Internal quotations and citations omitted).