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Aug. 22 — Sealed documents in class actions are on federal courts' radars as they balance litigants' confidentiality interests against the public's right of access to the courts.
The Sixth and Ninth circuits took different paths this year in toppling sealing orders, but they voiced the same concern over the proper standard for keeping court records confidential ( Shane Grp. Inc. v. Blue Cross Blue Shield of Mich., 2016 BL 181998, 6th Cir., No. 15-1544, 6/7/16 ; Ctr. for Auto Safety v. Chrysler Grp. LLC, 809 F.3d 1092 (9th Cir. 2016)).
The decisions “underscore the public's right to know what is happening in the court system, and whether justice is being done there,” Arthur Bryant, chairman of Public Justice, a non-profit consumer advocacy organization in Washington, recently told Bloomberg BNA.
Two recent, high profile sealing disputes at the trial court level have involved class litigation against now-defunct Trump University and a wrongful death case against Remington Arms Co.
Some defense lawyers tell Bloomberg BNA the balance was skewed by the U.S. Court of Appeals for the Ninth Circuit's decision in Center for Auto Safety.
The split decision set a new standard for sealing records in civil cases. District courts must now decide whether sealing documents is appropriate based on whether the seal will affect the court's ability to adjudicate the dispute.
“This case presents an issue of enormous practical importance to all litigators because if a ‘good cause' protective order can be nullified simply by your opponent filing your confidential documents as an attachment to their motion, that would change the nature of class action practice and civil litigation generally,” Thomas Dupree Jr., of Gibson Dunn's Washington office, told Bloomberg BNA in an e-mail.
Dupree represents Chrysler Group, now known as FCA US LLC, in a petition asking the U.S. Supreme Court to review the Ninth Circuit decision ( FCA US LLC v. The Ctr. for Auto Safety, U.S., No. 15-1211, filed 3/29/16 ). The Supreme Court will consider the petition Sept. 26, according to court records.
The Center for Auto Safety, a public interest group represented by Public Justice, intervened in the district court to unseal certain Chrysler documents filed with a motion for a preliminary injunction.
It argued disclosure of the documents would reveal the extent of the defect and its effect beyond the settlement class, but the Central District of California declined to unseal the documents under the “good cause” standard of Federal Rule of Civil Procedure 26.
Rule 26(b)(1) protects disclosures of “trade secret or other confidential research, development, or commercial information.”
The Ninth Circuit reversed in a 2-1 decision. It said the district court should have been more receptive to the request to unseal the documents because a preliminary injunction motion “frequently requires the court to address the merits of a case, which often includes the presentation of substantial evidence.”
Wherever the line between confidential documents and open courts is drawn, it was crossed in Shane Group, according to the Sixth Circuit.
It held in June that the Eastern District of Michigan's sealing of an expert's report and other records prevented public scrutiny of a proposed $30 million deal in price-fixing litigation against Blue Cross Blue Shield of Michigan (17 CLASS 740, 7/22/16).
Deborah Hensler, a professor at Stanford University Law School in Stanford, Calif., said the sealing order obscured the deal for some class members.
“What is particularly interesting to me about Shane Group is that the Sixth Circuit found—I think appropriately—that sealing the documents in that case made it impossible for class members to assess the merits of the proposed settlement and either object or not,” said Hensler, who writes extensively on complex litigation and class actions.
Named parties in the suit agreed to the settlement after reviewing the sealed documents, and the unnamed class members “are entitled to do the same, subject to the right of the parties and third parties to make the showings necessary to seal,” the court said.
Bryant, of Public Justice, said the judge is the “key player” in protecting the public's interests in such cases (17 CLASS 258, 3/11/16).
“The judge is the one who is supposed to insist that the public interest be protected, and that the law be complied with even if the parties have agreed to secrecy,” Bryant said.
Yet, Center for Auto Safety and Shane Group may signal the importance of judicial discretion more than any sea change in class action litigation, defense lawyer Douglas Smith, of Kirkland & Ellis in Chicago, recently told Bloomberg BNA in an e-mail.
“As a threshold matter, both decisions recognize that, regardless of the standard applied, the trial court’s decision regarding whether to seal documents is a discretionary one,” said Smith, whose practice includes mass tort and product liability litigation.
As for the Ninth Circuit test, Smith said “it is not clear how much of a practical effect the new standard the court articulated will have.”
Appellate courts likely will have no shortage of such controversies as state and federal trial courts weigh the competing interests.
News organizations came up short Aug. 2 in their effort to gain access to Republican presidential nominee Donald Trump's videotaped deposition testimony in Cohen v. Trump University, a federal racketeering case in which ex-students claim they were cheated with false promises.
Judge Gonzalo P. Curiel of the Southern District of California acknowledged several factors weighing in favor of disclosure, including the degree of public interest in the content of the depositions, the “legitimate interest” of the public in Trump's demeanor and his diminished privacy interest as a public figure.
But other factors central to the fairness of the proceedings outweighed those interests, the court said.
A “substantially weaker” presumption of public access applies to discovery materials not yet “evidence or exhibits properly attached to dispositive motions or introduced at trial,” it said (17 CLASS 787, 8/12/16).
Disclosure of the videotapes could taint the jury pool, the court said, adding that it was “loath to increase the difficulty of the challenge of seating an impartial jury in order to achieve a limited public benefit.”
It's unclear whether Curiel's ruling would suffice under the Center for Auto Safety standard if the sealed documents were attached to a court pleading.
Another confidentiality debate is playing out in Soto v. Bushmaster Firearms Int'l, pending in Connecticut Superior Court.
The case involves personal injury and wrongful death claims brought by an injured teacher and the parents of children killed in the Sandy Hook massacre (17 CLASS 782, 8/12/16).
Remington Arms Co. moved in July for a protective order covering corporate documents it produced in discovery, citing a need to protect its “proprietary commercial information.”
The plaintiffs objected, and argued the same transparency required for “later stages of the proceedings” should apply even in discovery.
“Preserving gun industry secrets and strategies is not in the public interest, because public health and safety are implicated,” the plaintiffs assert.
Where the court draws the line between confidentiality and transparency in that case remains to be seen.
To contact the reporter on this story: Steven M. Sellers in Washington at email@example.com.
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
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