Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 UNITED STATES OF AMERICA, Case No. 23-cv-00313-BAS-KSC 12 Plaintiff, ORDER DENYING DEFENDANTS’ 13 v. MOTION TO SEAL 14 STRATICS NETWORKS INC., et. al, (ECF No. 264) 15 Defendants. 16 17 Presently before the Court is Defendants’ Atlas Marketing Partners, Inc., Atlas 18 Investment, LLC, Tek Ventures, LLC, Todd DiRoberto, and Eric Petersen (“Atlas 19 Defendants”) renewed motion to seal (ECF No. 264). For the reasons below, the Court 20 DENIES Atlas Defendants’ motion (id). 21 I. BACKGROUND 22 On February 16, 2023, Plaintiff initiated this action against Defendants ACE 23 Business Solutions LLC, Atlas Investment Ventures LLC, Atlas Marketing Partners, Inc., 24 Sandra Barnes, Todd DiRoberto, Kurt Hannigan, Netlatitude, Inc., Eric Petersen, Tek 25 Ventures, LLC (collectively, “Defendants”), Kenan Azzeh, Kasm, and Stratics Networks 26 Inc. (“Stratics”). (ECF No. 1.) On February 23, 2023, Plaintiff and Defendants Kasm and 27 Kenan Azzeh entered into a joint stipulated order terminating the case against Defendants 28 Kasm and Kenan Azzeh. (ECF No. 4.) On March 6, 2024, the Court granted (ECF No. 1 71) Stratics’ motion to dismiss (ECF No. 50) with prejudice, but denied Defendants Atlas 2 Investment Ventures LLC’s and Atlas Marketing Partners, Inc.’s motion to dismiss (ECF 3 No. 45) and Defendant Ace’s motion to dismiss (ECF No. 42). Eventually, in September 4 and October of 2025, Plaintiff (ECF No. 204) and the majority of remaining Defendants 5 filed motions for summary judgment—including Defendants ACE Business Solutions, 6 LLC and Sandra Barnes (ECF No. 197), Defendant Atlas Marketing Partners, Inc. (ECF 7 No. 199), Defendant Tek Ventures, LLC (ECF No. 200), Defendant Atlas Investment 8 Ventures, LLC (ECF No. 201), and Defendants Todd DiRoberto and Eric Petersen (ECF 9 No. 209). 10 Various motions to seal accompanied these motions for summary judgment. (ECF 11 Nos. 202, 205, 233, 264). Relevant to deciding ECF No. 264, the Court previously granted 12 in part and denied in part Atlas Defendants’ motion to seal Exhibit 150 (ECF No. 233)— 13 granting sealing the numerical values, and denying sealing expository tax advice (ECF No. 14 254). 15 II. LEGAL STANDARD 16 “[T]he courts of this country recognize a general right to inspect and copy public 17 records and documents, including judicial records and documents.” Nixon v. Warner 18 Commc’ns, Inc., 435 U.S. 589, 597 (1978). “Unless a particular court record is one 19 ‘traditionally kept secret,’ a ‘strong presumption in favor of access’ is the starting point.” 20 Kamakana v. City & Cnty. of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006) (citing Foltz 21 v. State Farm Mut. Auto Ins. Co., 331 F.3d 1122, 1135 (9th Cir. 2003)). “The presumption 22 of access is ‘based on the need for federal courts, although independent—indeed, 23 particularly because they are independent—to have a measure of accountability and for the 24 public to have confidence in the administration of justice.’” Ctr. for Auto Safety v. Chrysler 25 Grp., LLC, 809 F.3d 1092, 1096 (9th Cir. 2016) (quoting United States v. Amodeo, 71 F.3d 26 1044, 1048 (2d Cir. 1995)). 27 A party seeking to seal a judicial record bears the burden of overcoming the strong 28 presumption of access. Foltz, 331 F.3d at 1135. The showing required to meet this burden 1 depends upon whether the documents to be sealed relate to a motion that is “more than 2 tangentially related to the merits of the case.” Ctr. for Auto Safety, 809 F.3d at 1101. When 3 the underlying motion is more than tangentially related to the merits, the “compelling 4 reasons” standard applies. Id. at 1096–98. When the underlying motion does not surpass 5 the tangential relevance threshold, the “good cause” standard applies. Id. 6 “In general, ‘compelling reasons’ sufficient to outweigh the public’s interest in 7 disclosure and justify sealing court records exist when such ‘court files might have become 8 a vehicle for improper purposes,’ such as the use of records to gratify private spite, promote 9 public scandal, circulate libelous statements, or release trade secrets.” Kamakana, 447 10 F.3d at 1179 (quoting Nixon, 435 U.S. at 598). 11 Courts within this Circuit have commonly held that “personally identifiable 12 information” or “PII” should be sealed to protect individual person’s privacy and to 13 safeguard individuals against risk of improper use upon disclosure. See Morton v. Cnty. 14 of San Diego, No. 21-CV-1428-MMA-DDL, 2024 WL 3205395, at *1 (S.D. Cal. June 26, 15 2024); see also Am. Automobile Ass'n of N. Cal., Nev., & Utah, 2019 WL 1206748, at *2 16 (N.D. Cal. Mar. 14, 2019) (finding compelling reasons to seal personally identifiable 17 information, “including names, addresses, phone numbers, and email addresses”); Benedict 18 v. Hewlett-Packard Co., 2014 WL 233827, at *3 (N.D. Cal. Jan. 21, 2014) (granting motion 19 to seal personal information, including a home address, phone number, and email address). 20 Courts within this Circuit have also regularly sealed “‘information such as IRS 21 filings and tax returns of particular individuals’ . . . even under the higher compelling 22 reasons standard,” if the information is not relevant to the claims at issue. Wang v. Kahn, 23 2022 WL 14814116, at *1 (N.D. Cal. Oct. 25, 2022) (quoting Hall v. Cultural Care USA, 24 2022 WL 2905353, at *10 (N.D. Cal. July 2022)); see also Delashaw v. Seattle Times Co., 25 2020 WL 6818720, at * (W.D. Wash. May 28, 2020) (denying application to seal tax 26 returns relevant to the plaintiff's claims but granting application to seal irrelevant tax 27 returns pursuant to public policy of encouraging taxpayers to file accurate returns); Lindsey 28 v. Elsevier Inc., 2017 WL 4518483, at *6 (S.D. Cal. Oct. 10, 2017) (“[A] public policy 1 against unnecessary public disclosure arises from the need, if the tax laws are to function 2 properly, to encourage taxpayers to file complete and accurate returns.”) (quoting Premium 3 Serv. Corp. v. Sperry & Hutchinson Co., 511 F.2d 225, 229 (9th Cir. 1975)). 4 Importantly, under the “compelling reasons” standard, “[t]he proponent of sealing 5 bears the burden with respect to sealing. . . [a] failure to meet that burden means that the 6 default posture of public access prevails.” Kamakana v. City & County of Honolulu, 447 7 F.3d 1172, 1182 (9th Cir. 2006). “Simply mentioning a general category of privilege, 8 without any further elaboration or any specific linkage with the documents, [also] does not 9 satisfy the [sealing] burden.” Kamakana, 447 F.3d at 1184. Likewise, “an unsupported 10 assertion of unfair advantage to competitors without explaining how a competitor would 11 use the information to obtain an unfair advantage is insufficient.” Cyprus Semiconductor 12 Corp., 2020 WL 11567020, at *2 (quoting Hodges v. Apple, Inc., 2013 WL 6070408, at *2 13 (N.D. Cal. Nov. 18, 2013)) (internal quotation marks and alterations omitted). The decision 14 to seal documents is “one best left to the sound discretion of the trial court” upon 15 consideration of the “relevant facts and circumstances of the particular case.” Nixon, 435 16 U.S. at 599. 17 III. ANALYSIS 18 A. Related Documents More Than Tangentially Related to Merits 19 Atlas Defendants’ proposed document to seal, Exhibit 150 (ECF No. 264), is 20 discussed in Plaintiff’s memorandum in support of Plaintiff’s opposition to Atlas 21 Defendants’ motions for summary judgment (ECF No. 234). Thus, Exhibit 150 is relevant 22 for determining the merits of this case. See Pac. Marine Propellers, Inc. v. Wartsila Def., 23 Inc., No. 17-CV-555-L-NLS, 2018 WL 11457880, at *1 (S.D. Cal. Nov. 5, 2018) (“The 24 compelling reasons standard applies to all motions except those that are only ‘tangentially 25 related to the merits of a case.’. . . Defendants’ summary judgment motion is more than 26 tangentially related to the merits”) (citing Kamakana, 447 F.3d at 1179). As such, the 27 Court finds Plaintiff’s motion to seal (ECF No. 233) is subject to the “compelling reasons” 28 standard in Kamakana, 447 F.3d at 1179. 1 B. Analysis of ‘Compelling Reasons” 2 Here, Atlas Defendants argue that Exhibit 150 should be sealed since it is an email 3 containing “shareholders contributions, retirement account information, and education 4 saving account information” of Defendants DiRoberto and Petersen, and constitutes 5 confidential personalized tax advice that is not typically shared with the public. (ECF No. 6 264 at 5:16-26.) The Court previously denied sealing Exhibit 150 in its entirety because 7 it found that Exhibit 150 is relevant for determining the merits of the case and thus, tax 8 information should not be sealed under 26 U.S.C. § 6103(h)(4)(A)-(B). (ECF No. 154 at 9 8:18-24.) Atlas Defendants now assert that § 6103 is inapplicable since the information in 10 Exhibit 150 is not derived from a tax return; and contends the Court should instead apply 11 § 7525 to find that Exhibit 150 is subject to privilege akin to attorney-client privilege. (ECF 12 No. 264 at 3:14-25.) 13 The Court agrees that personalized tax advice may be sealable under 26 U.S.C. § 14 7525(a)(3)(B) under privilege comparable to attorney-client privilege for taxpayer 15 communications with tax practitioners. See Baldwin v. United States, No. 16 817MC00027CJCKESX, 2018 WL 4372560, at *7 (C.D. Cal. June 14, 2018), report and 17 recommendation rejected on other grounds, No. 817MC00027CJCKESX, 2018 WL 18 4372553 (C.D. Cal. Aug. 1, 2018) (finding “disclosure of the E&Y Memos is inappropriate 19 unless (1) a waiver exists, or (2) the crime-fraud exception applies” because personalized 20 tax advice is privileged under § 7525). 21 However, the tax practitioner privilege in § 7525 does not apply to “communications 22 regarding the preparation of tax returns.” United States v. McEligot, No. 14-cv-05383- 23 JST, 2015 WL 1535695, at *6 (N.D. Cal. Apr. 6, 2015); see also United States v. Burga, 24 No. 18CV01633BLFSVK, 2019 WL 3859157, at *5 (N.D. Cal. Aug. 16, 2019). Here, it 25 appears that Exhibit 150 is an email from Altas Defendants’ tax advisor to Atlas 26 Defendants analyzing shareholder loan information in tax returns from at least 2020 to 27 2022 in preparation for correctly filing tax returns based on loan information in 2023. (See 28 1 || ECF No. 234-1.) Thus, the Court DENIES Atlas Defendants’ request for Exhibit 150 in 2 entirety. (ECF No. 264.) 3 CONCLUSION 4 For the reasons above, the Court DENIES Atlas Defendants’ request for Exhibit 150 5 |}in its entirety. (ECF No. 264.) 6 If Atlas Defendants wish to file a renewed motion to seal regarding their denied 7 || requests in ECF No. 264, they may do so no later than April 1, 2026, after the issuance of 8 || this order. 9 Otherwise, Atlas Defendants are instructed to file the versions of the aforementioned 10 || documents in ECF No. 264 as directed by the Court in this Order and in ECF No. 254 on 11 public docket no later than April 1, 2026.' Parties shall publicly file on CM/ECF as a 12 ||“Notice Regarding Exhibit Attachment” revised versions of these documents with only 13 ||those redactions that the Court has approved. When filing the documents on the public 14 || docket, Parties must strictly adhere to the relevant Federal Rules of Civil Procedure, this 15 || district’s Civil Local Rules, this Court’s Standing Order for Civil Cases, and this district’s 16 || Electronic Case Filing Administrative Policies & Procedures Manual. Non-compliance 17 || with this order or any relevant rules may result in sanctions pursuant to Civil Local Rule 18 19 IT IS SO ORDERED. 20 21 DATED: March 19, 2025 (yi. (Doha 9 H n. Cynthia Bashant, Chief Judge United States District Court 23 24 25 26 27 || ——_—— | The Court maintains its prior ruling to seal numerical values in Exhibit 150. (See ECF No. 254 at 8:4-12.) _f£.