Commercial Division Clarifies Standards For Sealing Court Records In Business Disputes

Published: 2025-03-26 10:11:09 ET MA

In a recent decision, the New York County Commercial Division reaffirmed the high bar that parties must meet when attempting to seal court documents in business disputes. In Linkable Networks, Inc. v. Mastercard Inc., the court ruled that Mastercard, despite having the consent of the plaintiff, was not entitled to an order sealing documents referenced in prior motion practice and produced in discovery. This ruling is another reminder of the high bar courts have set to seal documents, as discussed by my colleague Serene Carino in her blog post "Signed, Seal, Delivered." It also highlights the balance courts strike between protecting sensitive business information and upholding the public's right to access judicial records.

Under Section 216.1(a) of the Uniform Rules for Trial Courts, a court may seal or redact court records only upon a written finding of "good cause." The rule stipulates that such an order must specify the grounds for sealing and take into account both the interests of the parties involved and the public's right to transparency. In the business context, courts are more willing to seal records when trade secrets or competitive advantages are at risk.

In Linkable Networks v. Mastercard, Mastercard argued that certain documents should be sealed because they contained sensitive business information, such as specific contractual terms, business strategies, and competitive analyses. The company contended that revealing this information would harm its business relationships and disclose strategic measures employed with both parties and non-parties. The court, however, noted that while New York courts do permit sealing in cases involving trade secrets or competitive disadvantage, there is a "clear presumption" in favor of public access to court records.

Despite Mastercard's arguments, the court found that the documents at issue did not meet the threshold necessary for sealing. Specifically, the court held that the documents did not contain trade secrets or information that would jeopardize Mastercard's competitive edge. The court reinforced that sealing documents in commercial disputes should not be granted unless a party can demonstrate a tangible risk to its trade secrets or business interests.

This decision underscores the rigorous procedural standards the Commercial Division will adhere to when considering requests to seal court records. The public's right to access judicial proceedings and records is a foundational principle in New York's legal system, and the court will not lightly override this right, even in cases involving sensitive commercial information.

For commercial litigants, this ruling signals the need to approach sealing requests with caution. While protecting proprietary business information is crucial, parties seeking to seal records must be prepared to provide a strong and specific justification for why such an order is necessary. In light of this decision, businesses involved in litigation may need to adopt protective measures and implement confidential protective measures from the outset to better safeguard sensitive information. However, litigants should also be mindful of the court's high standard for sealing requests, knowing that simply arguing the confidential nature of the documents may not suffice.

In sum, Linkable Networks v. Mastercard Inc. serves as an important reminder that, in the Commercial Division, the public's right to access judicial records will generally take precedence over the desire to keep business documents confidential—unless there is clear and compelling evidence of harm to a party's trade secrets or competitive standing.

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