NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other
than opinions or orders designated for publication are not
precedential and should not be cited except when relevant under the
doctrines of law of the case, res judicata, or collateral estoppel.
(The decision of the Court is referenced in a "Table of Decisions
Without Reported Opinions" appearing in the Federal Reporter.)
CHURCH OF SCIENTOLOGY INTERNATIONAL, a California Non-Profit Religious
Steven FISHMAN; Uwe W. Geertz, Defendants/Appellees.
United States Court of Appeals, Ninth Circuit.
Argued and Submitted Aug. 2, 1994.
Decided Aug. 30, 1994.
Appeal from the United States District Court, for the Central District of
California, DC No. CV-91-6426 HLH-T; Harry L. Hupp, District Judge, Presiding.
REVERSED AND REMANDED.
Before: BROWNING, FARRIS and LEAVY, Circuit Judges.
**1 The Church of Scientology International appeals the district court's
denial of its motion to seal or return certain documents in the district
court's case file. We have jurisdiction pursuant to 28 U.S.C. s 1291. We
review for abuse of discretion. See Nixon v. Warner Communications, Inc.,
435 U.S. 589 (1978). We conclude that resolution of the issue before the court
requires that the district court make factual findings regarding whether the
disputed documents (1) contain trade secrets or (2) were relevant to any
defenses that defendants might have raised, or were merely surplusage filed for
motives not pertinent to this case.
I. Public access to judicial records
We reject defendants' argument that the district court lacked authority to
seal or return the disputed documents. We have held that there is a "strong
presumption" in favor of the public's right of access to judicial records.
Valley Broadcasting Co. v. United States Dist. Ct., 798 F.2d 1289, 1294 (9th
Cir.1986). However, that right is not absolute:
Every court has supervisory power over its own records and files, and access
has been denied where court files might have become a vehicle for improper
purposes. For example, the common-law right of inspection has bowed before the
power of a court to insure that its records are not "used to gratify private
spite or promote public scandal" through the publication of "the painful and
sometimes disgusting details of a divorce case." Similarly, courts have
refused to permit their files to serve as reservoirs for libelous statements
for press consumption, or as sources of business information that might harm a
litigant's competitive standing.
Nixon, 435 U.S. at 598 (citations omitted); see also Valley
Broadcasting, 798 F.2d at 1294 (citing Nixon ).
Defendants' reliance on Seattle Times Co. v. Rhinehart, 467 U.S. 20 (1984)
for the proposition that the First Amendment prohibits a court from sealing any
materials a party obtains from means other than discovery is misplaced. In
Seattle Times, the Court ruled that upon a showing of good cause, courts
could issue protective orders limiting a party's right to disseminate
information obtained through discovery so long as such orders do "not restrict
the dissemination of the information if gained from other sources." Id. at
37. Thus, Seattle Times might prohibit the district court from issuing an
order preventing the defendants from disseminating the disputed documents since
those documents were not obtained through discovery. Seattle Times does
not, however, prevent the district court from sealing or returning documents
contained in its files.
For similar reasons, defendants' argument that sealing the documents would
constitute an impermissible prior restraint on speech is without merit. In
Rodgers v. United States Steel Corp., 536 F.2d 1001, 1005 n. 8 (3d
Cir.1976), the district court had ordered that "counsel for the Plaintiffs
shall not disclose or disseminate the content of any information or matters
contained in" a certain deposition. The Third Circuit held that because the
protective order prohibited plaintiffs' counsel from disclosing information
obtained through means other than discovery, it constituted a prior restraint
on speech. Id. at 1007-1008. Here, Scientology has specifically
represented to this court that it is not seeking an order preventing defendants
from disseminating information which they obtained through means other than
discovery. See Opening Brief at 19 ("CSI has not requested any relief which is
directed to the [defendants'] future conduct with regard to the Advanced
**2 Thus, the district court had the authority to issue a protective order
sealing or returning the disputed documents.
II. The Establishment and Free Exercise Clauses
We also reject Scientology's argument that the district court's failure to
seal or return the documents violated the Establishment and Free Exercise
Clauses of the First Amendment. The district court did not "overrule"
Scientology's ecclesiastical judgment on a matter of faith and doctrine.
Compare Serbian Eastern Orthodox Diocese v. Milivojevich, 426 U.S. 696, 709
(1976). The district court did not in any way rely on or interpret
Scientology's religious doctrines. Scientology has pointed to no record
evidence that its religion played any role in the district court's decision.
Milivojevich and the other cases cited by Scientology are inapplicable.
Scientology's argument that the district court's denial of its motion to seal
constituted a non-neutral governmental action that impinged on the free
exercise of religion is also without merit. It relies on Church of Lukumi
Babalu Aye v. Hialeah, 113 S.Ct. 2217 (1993). In Hialeah, the Court
overturned an ordinance prohibiting animal sacrifices because (1) the purpose
of the ordinance was to suppress elements of the Santeria worship service and
(2) it was not justified by a compelling state interest. Like Hialeah,
Scientology argues that the district court's action was non-neutral because the
district court's "revelation" of upper level materials affects only one group:
the Church of Scientology and its parishioners. The district court did not
"reveal" upper level materials to anyone. Further, Scientology has pointed to
no evidence indicating that the district court's actions were motivated by its
desire to affect the exercise of the Scientology religion. Compare Hialeah,
113 S.Ct. at 2227 ("The record in this case compels the conclusion that
suppression of the central element of the Santeria worship service was the
object of the ordinances.").
III. Failure to Make Factual Findings
Scientology urges that the disputed documents be sealed or returned to the
defendants because they contain trade secrets and are irrelevant to any
defenses that might have been raised in the underlying libel suit. In
determining whether to grant or deny the protective order sought, district
courts must balance the parties' and the public's respective interests. See
Brown Bag Software v. Symantec Corp., 960 F.2d 1465, 1470 (9th Cir.), cert.
denied, 113 S.Ct. 198 (1992); Valley Broadcasting, 798 F.2d at 1294;
see also Federal Open Mkt. Comm. of Fed. Reserve Sys. v. Merrill, 443 U.S.
340, 363 (1979). The absence of factual findings regarding whether the
disputed documents contained trade secrets or were relevant to any potential
defenses precludes proper balancing.
IV. Considerations on Remand
A. Trade Secrets
On remand the district court should first consider whether the disputed
documents contain trade secrets of the Church of Scientology. Under California
law, a trade secret is defined as
**3 information ... that: (1) Derives independent economic value, actual
or potential, from not being generally known to the public or to other persons
who can obtain economic value from its disclosure or use; and (2) Is the
subject of efforts that are reasonable under the circumstances to maintain its
Cal.Civ.Code s 3426.1(d).
Contrary to defendants' assertion, we have not held that upper level materials
can never be entitled to trade secret protection. In Religious Technology
Center v. Scott, 869 F.2d 1306, 1309-10 (9th Cir.1989), we held that
Scientology's upper level materials might be protectable as trade secrets if
Scientology could prove it obtained "actual economic advantage over
competitors" (in addition to the other elements of a trade secret) through the
use of the upper level materials. Since our decision in Scott, at least one
court has held that the upper level materials constitute trade secrets.
Bridge Publications, Inc. v. Vien, 827 F.Supp. 629 (S.D.Cal.1993).
The district court may conduct whatever additional inquiry is necessary to
determine whether the disputed documents contain trade secrets. It may wish to
take into consideration some of the observations we have made while reviewing
the record. Many of the documents Scientology seeks to seal contain specific
information regarding upper levels OT-I through OT-VIII. Defendants filed the
declarations of Matthew D. Berger and Gordon J. Calhoun in the district court
(C.R. 717 and 603) to support their argument that Scientology upper level
materials are widely publicized and therefore not entitled to trade secret
protection. Our review of those declarations indicates that materials for
upper levels OT-I, OT-II and OT-III have been widely publicized. However, only
one of the approximately one-hundred press articles in those declarations
(Exhibit 10 of the Berger Declaration) contains any specific information about
upper levels OT-IV, OT-V and OT-VI, and this information is very limited. None
of the exhibits contain specific information about upper levels OT-VII and OT-
B. Relevance of disputed documents to possible defendants
Defendants have failed to explain how the inclusion of the upper level
materials as exhibits to various court filings could have helped them in their
defense to the underlying libel suit. On remand, the district court should
consider and make findings regarding whether the upper level materials were
relevant to any defenses defendants might have raised. Fed.R.Civ.P. 12(f).
C. Circumstances Warranting a Protective Order
The district court should order that the documents be sealed or returned to
the defendants if, on remand, Scientology can establish that the disputed
documents (1) contain trade secrets and (2) are irrelevant to any defenses. In
such case, the failure to issue a protective order would allow the defendants
to use the district court's files as a "vehicle for an improper purpose," i.e.
misappropriation of trade secrets.
**4 If the district court determines that the disputed documents contain
trade secrets, but were relevant to potential defenses, then the district court
should weigh Scientology's "claim to privacy against the need for
disclosure." Merrill, 443 U.S. at 362. We note, however, that unlike most
cases involving requests for protective orders, the alleged trade secrets are
in the possession of the party seeking their disclosure, i.e. the defendants.
Their interest in disclosure is therefore minimal. Thus, the district court
should balance Scientology's interest in keeping trade secrets confidential
only against the public's interest in obtaining access to judicial records.
The district court may, of course, order the documents sealed or returned if
it determines that the defendants were intentionally abusing the judicial
We remand for the district court to make factual findings regarding the trade
secret status and relevance of the disputed documents. The district court's
review should be limited to the documents listed in the excerpts of record
filed with this court at pages 358-362. To assist the district court in
locating those documents, Scientology is ordered to provide the district court
with the docket entry number of each document.
Our review of the voluminous record convinces us that both parties have filed
numerous frivolous motions and documents with the district court. On remand,
the parties should limit their court filings to the narrow issue now before the
court. If either party continues to file frivolous materials relating to this
or any other issue, the district court, of course, recognizes its broad
discretion to impose sanctions.
REVERSED and REMANDED
FN* This disposition is not appropriate for publication and may not be
cited to or by the courts of this circuit except as provided by 9th Cir.R.