United States Of America v. Stratics Networks Inc. et al

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA
UNITED STATES OF AMERICA,
Plaintiff,
v.
STRATICS NETWORKS INC., et. al,
Defendants.
Case No. 23-cv-00313-BAS-KSC
ORDER DENYING DEFENDANTS’
MOTION TO SEAL
(ECF No. 264)
Presently before the Court is Defendants’ Atlas Marketing Partners, Inc., Atlas
Investment, LLC, Tek Ventures, LLC, Todd DiRoberto, and Eric Petersen (“Atlas
Defendants”) renewed motion to seal (ECF No. 264). 	For the reasons below, the Court
DENIES Atlas Defendants’ motion (id).
I. 	BACKGROUND
On February 16, 2023, Plaintiff initiated this action against Defendants ACE
Business Solutions LLC, Atlas Investment Ventures LLC, Atlas Marketing Partners, Inc.,
Sandra Barnes, Todd DiRoberto, Kurt Hannigan, Netlatitude, Inc., Eric Petersen, Tek
Ventures, LLC (collectively, “Defendants”), Kenan Azzeh, Kasm, and Stratics Networks
Inc. (“Stratics”). (ECF No. 1.) 	On February 23, 2023, Plaintiff and Defendants Kasm and
Kenan Azzeh entered into a joint stipulated order terminating the case against Defendants
Kasm and Kenan Azzeh. (ECF No. 4.) On March 6, 2024, the Court granted (ECF No.
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71) Stratics’ motion to dismiss (ECF No. 50) with prejudice, but denied Defendants Atlas
Investment Ventures LLC’s and Atlas Marketing Partners, Inc.’s motion to dismiss (ECF
No. 45) and Defendant Ace’s motion to dismiss (ECF No. 42). Eventually, in September
and October of 2025, Plaintiff (ECF No. 204) and the majority of remaining Defendants
filed motions for summary judgment—including Defendants ACE Business Solutions,
LLC and Sandra Barnes (ECF No. 197), Defendant Atlas Marketing Partners, Inc. (ECF
No. 199), Defendant Tek Ventures, LLC (ECF No. 200), Defendant Atlas Investment
Ventures, LLC (ECF No. 201), and Defendants Todd DiRoberto and Eric Petersen (ECF
No. 209).
Various motions to seal accompanied these motions for summary judgment. (ECF
Nos. 202, 205, 233, 264). Relevant to deciding ECF No. 264, the Court previously granted
in part and denied in part Atlas Defendants’ motion to seal Exhibit 150 (ECF No. 233)—
granting sealing the numerical values, and denying sealing expository tax advice (ECF No.
254).
II. 	LEGAL STANDARD
“[T]he courts of this country recognize a general right to inspect and copy public
records and documents, including judicial records and documents.” 	Nixon v. Warner
Commc’ns, Inc., 435 U.S. 589, 597 (1978). 	“Unless a particular court record is one
‘traditionally kept secret,’ a ‘strong presumption in favor of access’ is the starting point.”
Kamakana v. City & Cnty. of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006) (citing Foltz
v. State Farm Mut. Auto Ins. Co., 331 F.3d 1122, 1135 (9th Cir. 2003)). “The presumption
of access is ‘based on the need for federal courts, although independent—indeed,
particularly because they are independent—to have a measure of accountability and for the
public to have confidence in the administration of justice.’” Ctr. for Auto Safety v. Chrysler
Grp., LLC, 809 F.3d 1092, 1096 (9th Cir. 2016) (quoting United States v. Amodeo, 71 F.3d
1044, 1048 (2d Cir. 1995)).
A party seeking to seal a judicial record bears the burden of overcoming the strong
presumption of access. Foltz, 331 F.3d at 1135. The showing required to meet this burden
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depends upon whether the documents to be sealed relate to a motion that is “more than
tangentially related to the merits of the case.” Ctr. for Auto Safety, 809 F.3d at 1101. When
the underlying motion is more than tangentially related to the merits, the “compelling
reasons” standard applies. Id. at 1096–98. When the underlying motion does not surpass
the tangential relevance threshold, the “good cause” standard applies. Id.
“In general, ‘compelling reasons’ sufficient to outweigh the public’s interest in
disclosure and justify sealing court records exist when such ‘court files might have become
a vehicle for improper purposes,’ such as the use of records to gratify private spite, promote
public scandal, circulate libelous statements, or release trade secrets.” 	Kamakana, 447
F.3d at 1179 (quoting Nixon, 435 U.S. at 598).
Courts 	within 	this Circuit 	have commonly 	held 	that 	“personally 	identifiable
information” or “PII” should be sealed to protect individual person’s privacy and to
safeguard individuals against risk of improper use upon disclosure. 	See Morton v. Cnty.
of San Diego, No. 21-CV-1428-MMA-DDL, 2024 WL 3205395, at *1 (S.D. Cal. June 26,
2024); see also Am. Automobile Ass'n of N. Cal., Nev., & Utah, 2019 WL 1206748, at *2
(N.D. Cal. Mar. 14, 2019) (finding compelling reasons to seal personally identifiable
information, “including names, addresses, phone numbers, and email addresses”); Benedict
v. Hewlett-Packard Co., 2014 WL 233827, at *3 (N.D. Cal. Jan. 21, 2014) (granting motion
to seal personal information, including a home address, phone number, and email address).
Courts within this Circuit have also regularly sealed “‘information such as IRS
filings and tax returns of particular individuals’ . . . even under the higher compelling
reasons standard,” if the information is not relevant to the claims at issue. Wang v. Kahn,
2022 WL 14814116, at *1 (N.D. Cal. Oct. 25, 2022) (quoting Hall v. Cultural Care USA,
2022 WL 2905353, at *10 (N.D. Cal. July 2022)); see also Delashaw v. Seattle Times Co.,
2020 WL 6818720, at * (W.D. Wash. May 28, 2020) (denying application to seal tax
returns relevant to the plaintiff's claims but granting application to seal irrelevant tax
returns pursuant to public policy of encouraging taxpayers to file accurate returns); Lindsey
v. Elsevier Inc., 2017 WL 4518483, at *6 (S.D. Cal. Oct. 10, 2017) (“[A] public policy
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against unnecessary public disclosure arises from the need, if the tax laws are to function
properly, to encourage taxpayers to file complete and accurate returns.”) (quoting Premium
Serv. Corp. v. Sperry & Hutchinson Co., 511 F.2d 225, 229 (9th Cir. 1975)).
Importantly, under the “compelling reasons” standard, “[t]he proponent of sealing
bears the burden with respect to sealing. . . [a] failure to meet that burden means that the
default posture of public access prevails.” 	Kamakana v. City & County of Honolulu, 447
F.3d 1172, 1182 (9th Cir. 2006). 	“Simply mentioning a general category of privilege,
without any further elaboration or any specific linkage with the documents, [also] does not
satisfy the [sealing] burden.” 	Kamakana, 447 F.3d at 1184. 	Likewise, “an unsupported
assertion of unfair advantage to competitors without explaining how a competitor would
use the information to obtain an unfair advantage is insufficient.” 	Cyprus Semiconductor
Corp., 2020 WL 11567020, at *2 (quoting Hodges v. Apple, Inc., 2013 WL 6070408, at *2
(N.D. Cal. Nov. 18, 2013)) (internal quotation marks and alterations omitted). The decision
to seal documents is “one best left to the sound discretion of the trial court” upon
consideration of the “relevant facts and circumstances of the particular case.” Nixon, 435
U.S. at 599.
III. 	ANALYSIS
A. 	Related Documents More Than Tangentially Related to Merits
Atlas Defendants’ proposed document to seal, Exhibit 150 (ECF No. 264), is
discussed 	in 	Plaintiff’s 	memorandum 	in 	support 	of 	Plaintiff’s 	opposition 	to 	Atlas
Defendants’ motions for summary judgment (ECF No. 234). Thus, Exhibit 150 is relevant
for determining the merits of this case. See Pac. Marine Propellers, Inc. v. Wartsila Def.,
Inc., No. 17-CV-555-L-NLS, 2018 WL 11457880, at *1 (S.D. Cal. Nov. 5, 2018) (“The
compelling reasons standard applies to all motions except those that are only ‘tangentially
related to the merits of a case.’. . . Defendants’ summary judgment motion is more than
tangentially related to the merits”) (citing Kamakana, 447 F.3d at 1179). 	As such, the
Court finds Plaintiff’s motion to seal (ECF No. 233) is subject to the “compelling reasons”
standard in Kamakana, 447 F.3d at 1179.
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B. 	Analysis of ‘Compelling Reasons”
Here, Atlas Defendants argue that Exhibit 150 should be sealed since it is an email
containing “shareholders contributions, retirement account information, and education
saving account information” of Defendants DiRoberto and Petersen, and constitutes
confidential personalized tax advice that is not typically shared with the public. (ECF No.
264 at 5:16-26.) 	The Court previously denied sealing Exhibit 150 in its entirety because
it found that Exhibit 150 is relevant for determining the merits of the case and thus, tax
information should not be sealed under 26 U.S.C. § 6103(h)(4)(A)-(B). (ECF No. 154 at
8:18-24.) Atlas Defendants now assert that § 6103 is inapplicable since the information in
Exhibit 150 is not derived from a tax return; and contends the Court should instead apply
§ 7525 to find that Exhibit 150 is subject to privilege akin to attorney-client privilege. (ECF
No. 264 at 3:14-25.)
The Court agrees that personalized tax advice may be sealable under 26 U.S.C. §
7525(a)(3)(B) 	under 	privilege 	comparable 	to 	attorney-client 	privilege 	for 	taxpayer
communications 	with 	tax 	practitioners. 	See 	Baldwin 	v. 	United 	States, 	No.
817MC00027CJCKESX, 2018 WL 4372560, at *7 (C.D. Cal. June 14, 2018), report and
recommendation rejected on other grounds, No. 817MC00027CJCKESX, 2018 WL
4372553 (C.D. Cal. Aug. 1, 2018) (finding “disclosure of the E&Y Memos is inappropriate
unless (1) a waiver exists, or (2) the crime-fraud exception applies” because personalized
tax advice is privileged under § 7525).
However, the tax practitioner privilege in § 7525 does not apply to “communications
regarding the preparation of tax returns.” 	United States v. McEligot, No. 14-cv-05383-
JST, 2015 WL 1535695, at *6 (N.D. Cal. Apr. 6, 2015); see also United States v. Burga,
No. 18CV01633BLFSVK, 2019 WL 3859157, at *5 (N.D. Cal. Aug. 16, 2019). Here, it
appears that Exhibit 150 is an email from Altas Defendants’ tax advisor to Atlas
Defendants analyzing shareholder loan information in tax returns from at least 2020 to
2022 in preparation for correctly filing tax returns based on loan information in 2023. (See
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ECF No. 234-1.) Thus, the Court DENIES Atlas Defendants’ request for Exhibit 150 in
its entirety. (ECF No. 264.)
IV. 	CONCLUSION
For the reasons above, the Court DENIES Atlas Defendants’ request for Exhibit 150
in its entirety. (ECF No. 264.)
If Atlas Defendants wish to file a renewed motion to seal regarding their denied
requests in ECF No. 264, they may do so no later than April 1, 2026, after the issuance of
this order.
Otherwise, Atlas Defendants are instructed to file the versions of the aforementioned
documents in ECF No. 264 as directed by the Court in this Order and in ECF No. 254 on
the public docket no later than April 1, 2026.1 Parties shall publicly file on CM/ECF as a
“Notice Regarding Exhibit Attachment” revised versions of these documents with only
those redactions that the Court has approved. 	When filing the documents on the public
docket, Parties must strictly adhere to the relevant Federal Rules of Civil Procedure, this
district’s Civil Local Rules, this Court’s Standing Order for Civil Cases, and this district’s
Electronic Case Filing Administrative Policies & Procedures Manual. 	Non-compliance
with this order or any relevant rules may result in sanctions pursuant to Civil Local Rule
83.1.
IT IS SO ORDERED.
DATED: March 19, 2025
1 The Court maintains its prior ruling to seal numerical values in Exhibit 150. (See ECF No. 254
at 8:4-12.)
Hon. Cynthia Bashant, Chief Judge
United States District Court
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