Court Refuses to Seal Settlement Agreement

On April 21, 2022, Justice Masley of the New York County Commercial Division issued a decision in DT Net Lease I REIT v. Coughlan, 2022 NY Slip Op. 31326(U), refusing to seal a settlement agreement, explaining:

Section 216.1 (a) of the Uniform Rules for Trial Courts empowers courts to seal documents upon a written finding of good cause. It provides:
(a) [e]xcept 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.

A party’s designation of a document as confidential or restricted, without further explanation or supporting case law, is insufficient to support a finding of good cause to seal court records in whole or in part.

Defendants rely on paragraph 3 of the settlement agreement and on Gliklad v Deripaska, 185 AD3d 512 (1st Dept 2020), in support of sealing the agreement. As an initial matter, the parties’ designation of a court document as confidential, alone, does
not constitute good cause.

Second, defendants’ reliance on Gliklad v Deripaska is misplaced. In Gliklad, nonparty Buzzfeed, Inc. requested to unseal certain documents, including a confidentiality settlement agreement, arguing that all judicial proceedings are presumptively open to the public. The trial court agreed with Buzzfeed and unsealed the requested documents. However, on appeal, the First Department held that the complete unsealing of a settlement agreement was inappropriate despite the strong public policy in favor of open court records. The appellate court found that settlement agreement was the subject of a prior sealing order where the trial court found good cause to seal the documents in the first place. That is not the case here. Here, the parties have not shown good cause at all. The only similarity between this motion and Gliklad is the presence of a confidentiality agreement. The holding in Gliklad does not support defendants’ motion to seal a document as the holding permitted Buzzfeed to access the previously sealed document subject to redactions subject to redactions despite the public’s interest in the matter leading to the appellate court’s decision. Thus, the outcome in Gliklad provides little support for the moving defendants. Moreover, this is the first application to seal NYSCEF 67, the parties’ settlement agreement, and thus there has been no prior finding of good cause to permit the sealing of the settlement agreement.

In sum, defendants have failed to show why the settlement agreement should be completely sealed and not redacted in order to protect any confidential or proprietary information in the agreements-factors that weigh in favor of finding good cause to redact or seal court documents.

(Internal quotations and citations omitted).

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