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., A
CORPORATION, et al.,
Defendants.
Case No. 23-cv-00313-BAS-KSC
ORDER:
(1) VACATING AS MOOT
PLAINTIFF’S MOTION FOR
SUMMARY JUDGMENT (ECF
No. 204);
(2) GRANTING IN PART AND
DENYING IN PART
PLAINTIFF’S MOTION TO
SEAL (ECF No. 233); AND
(3) GRANTING 	JOINT 	MOTION
FOR 	EXTENSION 	OF 	TIME
TO FILE JOINT STATEMENT
OF UNDISPUTED MATERIAL
FACTS (ECF No. 253)
For the reasons discussed by below, the Court: (1) VACATES AS MOOT Plaintiff
United States of America’s motion for summary judgment (ECF No. 204); (2) GRANTS
IN PART and DENIES IN PART Plaintiff’s motion to seal (ECF No. 233); and (3)
GRANTS Parties’ joint motion for extension of time to file joint statement of undisputed
material facts (ECF No. 253).
I. 	MOTION FOR SUMMARY JUDGMENT (ECF No. 204)
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On October 10, 2025, the Court granted Parties’ joint motion to replace Plaintiff’s
motion for summary judgment filing. 	(ECF No. 212.) 	Plaintiff subsequently filed a
corrected motion for summary judgment. 	(ECF No. 213.) 	Accordingly, the Court
VACATES AS MOOT Plaintiff’s prior motion for summary judgment. (ECF No. 204.)
II. 	MOTION TO SEAL (ECF No. 233)
A. 	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
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
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F.3d at 1179 (quoting Nixon, 435 U.S. at 598). As to this last category, courts have been
willing to seal court filings containing confidential business material, “such as marketing
strategies, product development plans, licensing agreements, and profit, cost, and margin
data,” where the parties have been able to point to concrete factual information to justify
sealing. See, e.g., Cohen v. Trump, No. 13-cv-2519-GPC-WVG, 2016 WL 3036302, at *5
(S.D. Cal. May 27, 2016). However, “[t]he mere fact that the production of records may
lead to a litigant’s embarrassment, incrimination, or exposure to further litigation will not,
without more, compel the court to seal its records.” 	Kamakana, 447 F.3d at 1179.
Similarly, it is not enough to “mention[] a general category of privilege, without any further
elaboration or any specific linkage with the documents.” Id. at 1184. A blanket protective
order is not itself sufficient to show “good cause,” let alone compelling reasons, for sealing
particular documents. 	See Foltz, 331 F.3d at 1133; San Jose Mercury News, Inc. v. U.S.
Dist. Ct., N. Dist., 187 F.3d 1096, 1103 (9th Cir. 1999). 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.
In addition, parties moving to seal documents must comply with the procedures set
forth in this Court’s Standing Order for filing documents under seal. 	See Standing Order
of the Hon. Cynthia Bashant for Civil Cases § 5. These procedures limit sealing to “only
those documents, or portions thereof, necessary to protect such sensitive information.” Id.
Thus, although sometimes it may be appropriate to seal a document in its entirety,
whenever possible, a party must redact. 	See Kamakana, 447 F.3d at 1183 (noting a
preference for redactions so long as they “have the virtue of being limited and clear”);
Murphy v. Kavo Am. Corp., No. 11-cv-00410-YGR, 2012 WL 1497489, at *2–3 (N.D. Cal.
Apr. 27, 2012) (denying motion to seal exhibits but directing parties to redact confidential
information).
B. 	Compelling Reasons
1. 	Related Documents More Than Tangentially Related to Merits
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Plaintiff’s proposed document to seal, Exhibit 150 (see ECF No. 233), 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.
2. 	“Compelling Reasons” Legal Standard
Preventing the release of trade secrets generally constitutes a compelling reason to
seal such documents. 	Kamakana, 447 F.3d at 1179; see also Nixon, 435 U.S. at 598
(observing that the “common-law right of inspection has bowed before the power of a court
to insure that its records” are not used as “sources of business information that might harm
a litigant's competitive standing”); Apple Inc. v. Samsung Elecs. Co., 727 F.3d 1214, 1226–
28 	(Fed.Cir.2013) 	(holding 	that 	under Ninth 	Circuit 	law, 	detailed 	product-specific
information and internal reports are appropriate to seal under the “compelling reasons”
standard where that information could be used to the company's competitive disadvantage).
A “trade secret may consist of any formula, pattern, device or compilation of information
which is used in [the party]'s business, and which gives [the party] an opportunity to obtain
an advantage over competitors who do not know or use it.” 	In re Elec. Arts, Inc., 298 F.
App'x 568, 569–70 (9th Cir. 2008) (citing Restatement of Torts § 757, cmt. B); see also
Clark v. Bunker, 453 F.2d 1006, 1009 (9th Cir.1972) (adopting the Restatement definition
and finding that “a detailed plan for the creation, promotion, financing, and sale of
contracts” constitutes a trade secret); Whyte v. Schlage Lock Co., 101 Cal.App.4th 1443,
1455-56, 125 Cal.Rptr.2d 277 (2002).
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Even if proposed material for sealing does not constitute a trade secret, it may still
be sealable as confidential business information. See In re Elec. Arts, Inc., 298 F. App'x at
569 (finding sealable “business information that might harm a litigant's competitive
standing”); see also Ctr. for Auto Safety, 809 F.3d at 1097 (citing Nixon, 435 U.S. at 598–
599) (“sources of business information that might harm a litigant's competitive standing”
are subject to sealing); see also In re Qualcomm Litig., No. 3:17-cv-0108-GPC-MDD, 2017
WL 5176922, at *2 (S.D. Cal. Nov. 8, 2017) (sealing is warranted to prevent competitors
from “gaining insight into the parties' business model and strategy”); see also Garrity
Power Servs. LLC v. Samsung Elecs. Co., No. 21-MC-80159-JSC, 2021 WL 3473937, at
*1 (N.D. Cal. July 29, 2021) (“confidential business information in the form of ‘license
agreements, financial terms, details of confidential licensing negotiations, and business
strategies’ is sealable”).
In addition, 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
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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 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).
3. 	“Narrowly Tailored” Legal Standard
“Only those documents, or portions thereof, necessary to protect such sensitive
information” may be sealed. Standing Order § 5.A. As such, whenever possible, the
proponent of sealing must redact only what is necessary. See Kamakana, 447 F.3d at 1183;
Murphy, 2012 WL 1497489, at *2–3. Redactions must be narrowly tailored such that only
information that meets the compelling reasons standard is redacted. 	See Kamakana, 447
F.3d at 1183 (highlighting the “limited and clear” nature and specificity of the redactions);
ImprimisRx, LLC v. OSRX, Inc., No. 21-cv-01305-BAS-DL, 2023 WL 7029210, at *4
(S.D. Cal. Oct. 24, 2023) (rejecting redactions that were insufficiently tailored).
4. 	Analysis of Compelling Reasons
Plaintiff filed a motion to seal certain exhibits (ECF No. 233); and Defendants Atlas
Marketing Partners, Inc., Atlas Investment, LLC, Tek Ventures, LLC, dba Provident
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Solutions, Todd DiRoberto, and Eric Petersen (collectively “Atlas Defendants”) responded
in support of Plaintiff’s motion to seal. (ECF No. 238.)
In the motion to seal (ECF No. 233), Plaintiff requests the Court to evaluate whether:
(1) Exhibit 150 of the Declaration of Daniel J. Petrokas (ECF No. 234-1) should be filed
under seal in its entirety, and (2) Plaintiff’s memorandum of points and authorities in
opposition to Atlas Defendants’ motions for summary judgment (ECF No. 234) should be
redacted where it mentions Exhibit 150. 	Atlas Defendants move in support of sealing
Exhibit 150 and redacting relevant portions of Plaintiff’s memorandum. (ECF No. 238.)
i. 	Exhibit 150
Courts have sealed individuals’ PII in favor of individuals’ privacy interests. 	See
e.g., Benedict, 2014 WL 233827, at *3 (granting motion to seal personal information,
including a home address, phone number, and email address). 	Courts have granted sealing
individuals’ financial information as similarly important for preserving their privacy
interests. See F.D.I.C. v. Tarkanian, No. 10CV980-WQH-BGS, 2012 WL 1327856, at *2
(S.D. Cal. Apr. 17, 2012) (finding compelling reasons for sealing “personal financial
information” because it might “become a vehicle for improper purposes in the hands of
business competitors or private citizens”); see also Canchola v. Allstate Ins. Co., No. 8:23-
CV-00734-FWS-ADS, 2024 WL 5275024, at *6 (C.D. Cal. Oct. 8, 2024) (same). 	In
addition, courts have regularly sealed individuals’ tax information when not relevant to the
merits of the case. See e.g., Wang, 2022 WL 14814116, at *1.
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.
238 at 6:18-24.) Plaintiff states it “does not see any good cause or compelling reasons to
seal [Exhibit 150] and [relevant] portions of Plaintiff’s Memorandum sufficient to
overcome the presumptive right of public access, but reserves the right to file a reply to
Defendants’ responses.” 	(ECF No. 233 at 2:21-24.) 	As such, Atlas Defendants are the
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“proponent[s] of sealing” Defendant DiRoberto’s and Petersen’s personal financial data in
Exhibit 150, and Atlas Defendants are the “proponent[s] of sealing” Atlas shareholders’
personal financial data in Exhibit 150.
Unlike Exhibits 5, 6, and 7, which the Court previously granted Defendants’ requests
to seal (see ECF No. 226), Exhibit 150 contains a mix of numerical values and expository
analysis of Defendants’ personal financial data. 	On the one hand, the Court finds the
numerical values in the personal data are unnecessary for determining the merits of the
case—factoring towards sealing that information. See Wang, 2022 WL 14814116, at *1.
Since courts have found individuals to possess significant privacy interests in their
financial information warranting sealing, See F.D.I.C., 2012 WL 1327856, at *2, the Court
finds Atlas Defendants have demonstrated compelling reasons to seal personal financial
data contained in Exhibit 150.
On 	the 	other 	hand, 	the 	Court 	finds 	that 	expository 	analysis 	of 	Defendants
DiRoberto’s and Petersen’s tax contributions in Exhibit 150 is relevant for determining the
merits of the present case. 	Though tax records are declared confidential by the Internal
Revenue Code (“IRC”), see 26 U.S.C. § 6103(a), the IRC also permits tax information to
be revealed where the taxpayer is party to a judicial proceeding and the treatment of certain
tax information is related to the resolution of an issue in a proceeding, see 26 U.S.C. §
6103(h)(4)(A)-(B). 	Here, expert analysis of Defendants DiRoberto’s and Petersen’s tax
contributions as unusual financial activity is relevant for determining whether the other
Atlas Defendants acted as a common enterprise for purposes of liability under the Federal
Trade Commission Act, 15 U.S.C. § 45(a). (See ECF No. 234 at 9:8-17, 31:21-16). Thus,
sealing the entirety of Exhibit 150 would not be “narrowly tailored,” as required by
Kamakana, 447 F.3d at 1183.
Accordingly, the Court 	GRANTS IN PART 	and 	DENIES IN PART 	Atlas
Defendants’ request to seal Exhibit 150, by redacting only specific dollar amounts and
numerical values in Exhibit 150. 	Cf In re NCAA Student-Athlete Name & Likeness
Licensing Litig., No. C 09-1967 CW, 2014 WL 662545, at *1 (N.D. Cal. Feb. 20, 2014)
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(“only specific dollar amounts” may be sealed, even though the public disclosure of the
entire term could harm party’s competitive business standing). (See ECF Nos. 233, 238.)
iii. 	Plaintiff’s Memoranda in Support of Opposition to Atlas
Defendants’ Motion for Summary Judgment
Given that Plaintiff’s memorandum in support of its opposition to Atlas Defendants’
motion for summary judgment (ECF No. 234 at 9:8-17) does not contain any of the specific
dollar amounts or numerical values in Exhibit 150, the Court DENIES Atlas Defendants’
request to redact Plaintiff’s references to Exhibit 150 in its memorandum. (See ECF Nos.
233, 238.)
* * *
For the reasons above, the Court GRANTS IN PART and DENIES IN PART Atlas
Defendants’ request to seal Exhibit 150, by redacting only specific dollar amounts and
numerical values relating to Defendants DiRoberto’s and Petersen’s tax contributions.
(ECF No. 233.) Further, the Court DENIES redacting portions of Plaintiff’s memorandum
in support of its opposition to Atlas Defendants’ motion for summary judgment that
reference Exhibit 150. (Id.)
III. 	JOINT 	MOTION 	FOR 	EXTENSION 	OF 	TIME 	TO 	FILE 	JOINT
STATEMENT OF UNDISPUTED MATERIAL FACTS (ECF No. 253)
Parties filed a joint motion requesting extension of time for their Joint Statement of
Undisputed Material Facts. (ECF No. 253). Since Parties met, conferred, and agreed upon
an extension, the Court finds good cause to GRANT the joint motion. 	(ECF No. 253.)
Parties must submit their Joint Statement of Undisputed Material Facts on or before
February 20, 2026.
IV. 	CONCLUSION
For the reasons discussed, the Court VACATES AS MOOT Plaintiff’s prior motion
for summary judgment. (ECF No. 204.)
Next, the Court GRANTS IN PART and DENIES IN PART Atlas Defendants’
request to seal Exhibit 150, by redacting only specific dollar amounts and numerical values
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relating to Defendants DiRoberto’s and Petersen’s tax contributions. (ECF No. 233.) The
Court 	also 	DENIES 	Atlas 	Defendants’ 	request 	to 	redact 	portions 	of 	Plaintiff’s
memorandum in support of its opposition to Atlas Defendants’ motion for summary
judgment that reference Exhibit 150. (ECF No. 233)
If either Party wishes to file a renewed motion to seal for the denied requests, they
may do so no later than March 11, 2026, after the issuance of this order. Otherwise, Parties
are instructed to file the unredacted versions of the aforementioned documents as directed
by the Court in this Order on the public docket no later than March 11, 2026. 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. Further, the Clerk of Court shall ACCEPT and FILE
UNDER SEAL any documents accompanying ECF No. 234.
Lastly, the Court GRANTS Parties’ joint motion for extension of time to file their
Joint Statement of Undisputed Material Facts. (ECF No. 253.) 	Parties must submit their
Joint Statement of Undisputed Material Facts on or before February 20, 2026.
IT IS SO ORDERED.
DATED: February 11, 2026
Hon. Cynthia Bashant, Chief Judge
United States District Court
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