Chancery Rejects Confidential Treatment for Embarrassing Allegations

The Sequoia Presidential Yacht Group LLC v. FE Partners LLC, C.A. No. 8270-VCG (Del. Ch. July 15, 2013).

This ruling amplifies the relative paucity of judicial interpretation of the rather new Court of Chancery Rule 5.1 that defines the standard that must be met before filings with the court will be kept confidential or redacted from what would otherwise be public access. This decision denied an attempt to keep confidential the allegations of attorney misconduct referred to in a prior decision in this case highlighted on these pages.

In essence, mere embarrassment from allegations, even if proven false, is not sufficient to warrant confidential treatment under Court of Chancery Rule 5.1 The court reasoned that:

Sequoia seeks to keep confidential allegations that it forged or altered communications, and evidence of Sequoia’s alleged destruction of evidence and witness intimidation.  None of this information falls under, or is similar to, the prescribed categories of trade secrets; sensitive proprietary information; sensitive financial, business, or personnel information; or personal information such as medical records, social security numbers, financial account numbers, and the names of minor children.29  Rather, it appears that Sequoia merely wishes to avoid the embarrassment it would face if I were to unseal the record, mostly due to its alleged conduct in the course of the litigation itself.