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  • SEAN DEBOTTE VS. KING DIGITAL ENTERTAINMENT PLC SECURITIES/INVESTMENT document preview
  • SEAN DEBOTTE VS. KING DIGITAL ENTERTAINMENT PLC SECURITIES/INVESTMENT document preview
  • SEAN DEBOTTE VS. KING DIGITAL ENTERTAINMENT PLC SECURITIES/INVESTMENT document preview
  • SEAN DEBOTTE VS. KING DIGITAL ENTERTAINMENT PLC SECURITIES/INVESTMENT document preview
  • SEAN DEBOTTE VS. KING DIGITAL ENTERTAINMENT PLC SECURITIES/INVESTMENT document preview
  • SEAN DEBOTTE VS. KING DIGITAL ENTERTAINMENT PLC SECURITIES/INVESTMENT document preview
  • SEAN DEBOTTE VS. KING DIGITAL ENTERTAINMENT PLC SECURITIES/INVESTMENT document preview
  • SEAN DEBOTTE VS. KING DIGITAL ENTERTAINMENT PLC SECURITIES/INVESTMENT document preview 
						
                                
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KEVIN P. MUCK (CSB No. 120918)
kmuck@fenwick.com

DEAN S. KRISTY (CSB No. 157646)
dkristy@fenwick.com

MARIE C. BAFUS (CSB No. 258417)
mbafus@fenwick.com

FENWICK & WEST LLP

555 California Street, 12th Floor

San Francisco, California 94104
Telephone: (415) 875-2300
Facsimile: (415) 281-1350

Attorneys for Defendants

King Digital Entertainment PLC,
Hope Cochran, Robert S. Cohn and
E. Stanton McKee

ELECTRONICALLY
FILED

Supertor Court of Callfornia,
County of San Francisco

12/28/2016
Clerk of the Court
BY:ANNA TORRES

Deputy Clerk

SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF SAN FRANCISCO

IN RE KING DIGITAL ENTERTAINMENT
ple SHAREHOLDER LITIGATION

This Document Relates To:

ALL ACTIONS

Lead Case No. CGC-15-544770
CLASS ACTION

MEMORANDUM OF POINTS AND
AUTHORITIES IN SUPPORT OF KING
DEFENDANTS’ MOTION TO FILE
PORTIONS OF THEIR SUPPLEMENTAL
SUBMISSION REGARDING PLAINTIFFS’
MOTION FOR PRELIMINARY
APPROVAL OF SETTLEMENT AND
DEFENDANTS’ EXHIBITS 2, 3, 5, 8, 9, 10
AND 11 TO THE APPENDIX OF EXHIBITS
THERETO UNDER SEAL

Date: January 12, 2017

Time: 4:00 p.m.

Dept: 304

Judge: The Honorable Curtis E.A. Karnow

Action Filed: March 17, 2015

MEM. OF PTS. & AUTHS. ISO
KING DEFS.’ MOT. TO SEAL

LEAD CASE NO. CGC-15-544770w

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I. INTRODUCTION AND BACKGROUND

During the November 17, 2016 hearing on plaintiffs’ motion for preliminary approval of
the settlement in the above-captioned action, the Court requested that the parties provide
additional information regarding the merits and defenses to plaintiffs’ allegations, as well as
causation and damages, to further assist the Court in its preliminary evaluation of the fairness of
the settlement. 11/17/2016 Hearing Tr. at 7-12. On December 28, 2016, in accordance with
this request, defendants King Digital Entertainment plc (“King” or the “Company”), Hope
Cochran, Robert S. Cohn, and E. Stanton McKee (collectively with King, the “King
Defendants”) filed their Supplemental Submission Regarding Plaintiffs’ Motion for Preliminary
Approval of Settlement (“Supplemental Submission”) and the accompanying Appendix of
Exhibits (“Appendix”),' within which they attached, cited, quoted, or discussed certain
documents produced in discovery by King and non-party Fred Alger Management, Inc.
(“FAM”) that had been designated as “Confidential” or “Highly Confidential” under the terms
of the Stipulation and Protective Order Regarding Confidential Information entered by this
Court on September 11, 2015 (the “Protective Order”). Pursuant to the terms of the Protective
Order and California Rule of Court (“Rule”) 2.551, the King Defendants lodged the
Supplemental Submission and Defendants’ Exhibits 2, 3, 5, 6, 8, 9, 10 and 11 conditionally
under seal and publicly filed a redacted version of the Supplemental Submission and Appendix.

The King Defendants now move pursuant to Rule 2.551(b) to permanently seal
Defendants’ Exhibits 2, 3, 5, 8, 9, 10 and 11(in their entirety) and the unredacted version of the
Supplemental Submission. Specifically, the King Defendants move to seal only Defendants’

Exhibits 2, 3, 5, 8, 9, 10 and 11 and narrowly redacted portions of the Supplemental Submission

' All references to “Defendants’ Exhibit(s)” or “Def. Ex(s).” refer to exhibits attached to the
King Defendants’ Appendix of Exhibits in Support of Supplemental Submission Regaridng
Plaintiffs’ Motion for Preliminary Approval of Settlement filed concurrently with the
Supplemental Submission.

? Defendants’ Exhibit 6 was designated by FAM as “Highly Confidential” pursuant to the
Protective Order, and page 3 lines 26-28, page 4 lines 1-3, page 4 line 5, page 7 lines 7-9, and
page 8 lines 22-24 of the Supplemental Submission references and quotes Defendants’ Exhibit
6. Concurrent with the provisional lodging of the Supplemental Submission and Defendants’
Exhibit 6 under seal, the King Defendants gave non-party FAM notice of the lodging pursuant
to Rule 2.551(b)(3).

MEM. OF PTS. & AUTHS. ISO 1 LEAD CASE NO. CGC-15-544770
KING DEFS.’ MOT. TO SEALw

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because they reflect King’s confidential business information, including King’s internal
business forecasts, projections and budgets, King’s non-public financial information and
analyses thereof, confidential communications among King’s management and between King’s
CFO and its Board of Directors (the “Board”). For the reasons described further below, such
sealing is necessary and narrowly tailored to prevent public disclosure of King’s confidential

business information.

IL. ARGUMENT

A. Legal Standard for Sealing Court Records

A court possesses inherent power to restrict access to judicial records containing
sensitive and confidential information. Nixon v. Warner Commce’ns, Inc., 435 U.S. 589, 598
(1978). Pursuant to Rule 2.550, a court may order a record sealed if it finds that: “(1) There
exists an overriding interest that overcomes the right of public access to the record; (2) The
overriding interest supports sealing the record; (3) A substantial probability exists that the
overriding interest will be prejudiced if the record is not sealed; (4) The proposed sealing is
narrowly tailored; and (5) No less restrictive means exist to achieve the overriding interest.”
Cal. Rule of Court 2.550(d). The protection of private and confidential business matters has
consistently been recognized as an appropriate interest that justifies the sealing of records. See
Universal City Studios, Inc. v. Superior Court, 110 Cal. App. 4th 1273, 1286 (2003)
(confidential matters relating to the business operations of a party are ordinarily considered
proper for sealing); KNSD Channels 7/39 v. Superior Court, 63 Cal. App. 4th 1200, 1203
(1998) (“The common law right of access to judicial records is not absolute, but ‘must be

reconciled with legitimate countervailing public or private interests”) (citation omitted).

By its terms, however, Rule 2.550 does not apply to “discovery materials,” unless they
are used at trial or submitted “as a basis for adjudication.” Cal. Rule of Court 2.550(a)(3); see
Mercury Interactive Corp. v. Klein, 158 Cal. App. 4th 60, 89-90 (2007) (quoting NBC
Subsidiary (KNBC-TV), Inc. v. Superior Court, 20 Cal. 4th 1178, 1209 n.25 (1999)) (finding no

right of public access to documents produced during discovery and subsequently attached as

exhibits to complaint). In instances where Rule 2.550 does not apply, a court may order the

MEM. OF PTS. & AUTHS. ISO 2 LEAD CASE NO. CGC-15-544770
KING DEFS.’ MOT. TO SEALw

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sealing of the record simply upon a showing that there is “good cause” to justify the sealing or
that the materials to be sealed contain confidential information. See Overstock.com v. Goldman
Sachs Group, Inc.., 231 Cal. App. 4th 471, 484, 506-11 (2014) (holding that, in situations
where Rule 2.550 does not apply, the common law provides that documents can be sealed based
on a showing of “good cause”); Mercury Interactive Corp., 158 Cal. App. 4th at 106
(suggesting that, for documents not subject to Rule 2.550, a movant seeking a sealing order
need only show that the documents in question contain confidential material). Here, because
the King Defendants are submitting the confidential discovery materials solely at the Court’s
request, and not “as a basis for adjudication” of a disputed issue with plaintiffs, the King
Defendants respectfully submit that the appropriate standard to apply here is the common law
“good cause” standard.

In either case—whether Rule 2.550 or the common law “good cause” standard applies—
Defendants’ Exhibits 2, 3, 5, 8, 9, 10 and 11 and the unredacted version of the Supplemental

Submission should be sealed for the reasons explained below.

B. Defendants’ Exhibits 2, 3, 5, 8, 9, 10 and 11 and the Unredacted
Supplemental Submission Should Be Sealed

The documents sought to be sealed are Defendants’ Exhibits 2, 3, 5, 8, 9, 10 and 11 (in
their entirety) and the narrow redactions appearing at the following pages of the Supplemental

Submission:

Page(s) Lines
2 22-25
1-4
22-24
14-15
16-17
18-19
21-22
23
20-22
Footnote 4
24-25
2
Footnote 5
Footnote 6

Blo}el oo] P] ala} a} a) a] afoofes
do

MEM. OF PTS. & AUTHS. ISO 3 LEAD CASE NO. CGC-15-544770
KING DEFS.’ MOT. TO SEALw

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Defendants’ Exhibits 2, 3, 5, 8, 9, 10 and 11 and the redacted information in the
Supplemental Submission contain confidential business information of King that should be
sealed. They reflect information designated by King during discovery as “Confidential” under
the Protective Order: namely, King’s internal business forecasts, projections and budgets (one
of which extends through 2018), King’s non-public financial and business performance
information and analyses thereof, confidential communications among King’s management and
between King’s CFO and the Board regarding King’s confidential financial and business
performance data and analyses, and information regarding specific technical issues arising in
connection with King’s games on third-party platforms. The games discussed in these
documents remain active games, and the forecasts, projections, budgets and analyses regarding
these games and their performance reflect how King views these opportunities and are therefore
confidential to the Company. King does not disclose that detailed information and analyses to
the public. See Declaration of Dean S. Kristy (“Kristy Decl.”) §] 5-8. Plaintiffs have not
disputed the confidential nature of this information. And, as indicated above, this information
is being filed solely at the Court’s request in connection with plaintiffs’ pending motion, and
King would not otherwise have filed them with the Court. Under the circumstances, the King
Defendants believe that King has an overriding interest that overcomes the public’s need — if
any — for such information, that overriding interest supports sealing these records, and a
substantial probability exists that King’s interest will be prejudiced if these records are not
sealed.

Finally, the King Defendants move to seal this information by the least restrictive means
available. The King Defendants seek to seal only Defendants’ Exhibits 2, 3, 5, 8, 9, 10 and 11,
and limited portions of the Supplemental Submission as they reflect King’s sensitive and
confidential business information, and the information to be sealed is narrowly tailored such
that the public continues to have access to the gravamen of the Supplemental Submission.
Sealing this information is the only way to ensure that King’s confidential business and
financial information does not become a matter of public record. See Universal City Studios,

110 Cal. App. 4th at 1286 (“[O]ther than sealing, no less restrictive means exists to protect

MEM. OF PTS. & AUTHS. ISO 4 LEAD CASE NO. CGC-15-544770
KING DEFS.’ MOT. TO SEAL1]| defendant’s legitimate proprietary interests.”).

2]| Il. CONCLUSION

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For the foregoing reasons, the King Defendants respectfully request that the Court grant

4] this motion and issue and order sealing Defendants’ Exhibits 2, 3, 5, 8, 9, 10 and 11 (in their

5] entirety) and the unredacted version of the Supplemental Submission.
6|| DATED: December 28, 2016 FENWICK & WEST LLP
7
/s/ Dean S. Kristy
8 DEAN S. KRISTY (CSB No. 157646)
KEVIN P. MUCK (CSB No. 120918)
9 MARIE C. BAFUS (CSB No. 258417)
555 California Street, 12th Floor
10 San Francisco, CA 94104

Telephone: 415/875-2384
I 415/281-1350 (fax)

12 kmuck@fenwick.com
mbafus@fenwick.com

Attorneys for Defendants King Digital
14 Entertainment ple, Hope Cochran,
Robert S. Cohn and E. Stanton McKee

MEM. OF PTS. & AUTHS. ISO 5 LEAD CASE NO. CGC-15-544770
KING DEFS.’ MOT. TO SEAL