Sealed Documents Decision May Disclose Safety Problems

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By Martina Barash

Jan. 19 — A recent Ninth Circuit decision may have a significant impact in consumer safety-related cases as it makes it harder for automobile and other product makers to seal court-filed documents, the head of the auto-safety group that prevailed in the case says.

“When you look at protective orders, they hide serious safety and public health problems,” Clarence Ditlow, executive director of the Center for Auto Safety, told Bloomberg BNA recently. “And so by raising the standards, putting a higher burden of proof on manufacturers to get a protective order, that's a very good step forward to uncover safety defects.”

Such a higher level of proof was mandated Jan. 11 by the Ninth Circuit ruling, Ditlow said.

A majority of the appeals court panel said that FCA US LLC, the successor to defendant Chrysler LLC, will have to give a trial court “compelling reasons” to keep defect-related documents in a class action over some of Chrysler's power modules under seal (The Ctr. for Auto Safety v. Chrysler Grp., LLC, 2016 BL 6286, 9th Cir., No. 15-55084, 1/11/16) (44 PSLR 50, 1/18/16)

The modules can control many car electronics and, if faulty, allegedly can cause stalling, air-bag and other safety-related problems, Ditlow said.

But another consumer attorney who has litigated for access to sealed court records says the appellate panel's majority wrote only a clarifying opinion that won't change what most courts are already doing.

Meanwhile, FCA US hasn't tipped its hand as to whether it will seek a rehearing by the full U.S. Court of Appeals for the Ninth Circuit.

The appeal resulted in separate opinions by each member of the three-judge panel. One was a sharp dissent that accused the majority of disregarding binding Ninth Circuit precedent and relying on a theory that “erodes the concept that law can be applied as written.” Objections like these could increase the full court's appetite for a rehearing.

Michael Palese, a spokesman for FCA US, said Jan. 12 that the company “is currently reviewing the decision and considering its legal options.”

No Bright Line Rule

The majority, in its Jan. 11 ruling, rejected a “bright line” rule for sealing documents based on whether the motion attaching the documents is dispositive or non-dispositive, joining the Third and Eleventh Circuits.

The key to choosing the right standard for keeping documents confidential is whether the motion attaching the documents “is more than tangentially related to the merits” of the case, not whether a ruling on it would fully resolve an issue, the court said.

When a motion is more than tangentially related to the merits, a company must provide compelling reasons to keep associated documents secret, but otherwise a less stringent “good cause” burden of proof applies, the court ruled.

While the Center for Auto Safety was appealing the U.S. District Court for the Central District of California's ruling on the sealing issue, FCA US and the plaintiffs in the underlying case agreed to a settlement and obtained preliminary approval from the district court (43 PSLR 1069, 9/14/15).

FCA US initiated a recall over the totally integrated power modules under the terms of the settlement. It also agreed to provide an extended warranty and take other steps.

Papers Sought for Petition

“We wanted the documents to use in a defect petition with the National Highway Traffic Safety Administration,” Ditlow, with the Center for Auto Safety, told Bloomberg BNA Jan. 12.

Even though a recall exists and it's known that the proposed repairs affect the fuel pump relay, the documents would still shed light on two issues, Ditlow said: “one, the safety consequences of the defect; and second, does it go further than just the settlement class.”

“Our petition went to about 4 million vehicles” and the settlement class consisted of owners of about 400,000 vehicles, he said.

The Center continues to get reports of malfunctions associated with the power module, Ditlow said. “It controls a lot of different electrical functions in the vehicle. One of the most serious hazards is certainly stalling, but it also seems to deactivate the air bag, because the air bag warning light comes on.

“Getting access to those documents would have shed light on whether or not the air bag system was being shut off,” he said.

Big Impact?

The decision “brings the Ninth Circuit in line with some of the other circuits,” Ditlow said. Until now, the Ninth Circuit has been “lagging behind,” he said.

“If this decision stands, it's going to have a tremendous impact beyond autos to other types of safety hazards,” he said.

But Scott Michelman, an attorney with the Public Citizen Litigation Group in Washington, D.C., told Bloomberg BNA Jan. 13, “It doesn't represent a departure from the existing body of caselaw.”

“What it does do is provide a helpful clarifying frame on the caselaw that I think other courts will find useful in deciding how to apply the right to public access to documents they haven't addressed before,” Michelman said.

“The opinion nicely captures the state of the law” on the standard, he said, and “pragmatically moves beyond the dispositive/nondispositive line, the terminology most courts use in stating when various standards apply to motions to unseal.”

The majority opinion recognizes that distinction “doesn't always explain a lot of the results,” he said. “It can be hard to apply and doesn't take into account all the circumstances in which courts do in fact apply heightened standards.”

To contact the reporter on this story: Martina S. Barash in Washington at mbarash@bna.com

To contact the editor responsible for this story: Steven Patrick at spatrick@bna.com