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Friday, August 23, 2019

Fourth Circuit sides with court transparency

By Heather Isringhausen Gvillo | May 9, 2014

RICHMOND, Va. (Legal Newsline) - The Fourth Circuit Court of Appeals tackled one of the nation's hottest litigation topics when it ruled that a sealed case involving a government entity should be made public in an effort to maintain transparency and public access.

The opinion, published on April 16 in the United States Court of Appeals for the Fourth Circuit, vacated in part, reversed in part and remanded the case with instructions.

Judge Henry Franklin Floyd delivered the opinion with Judge Andre Davis joining. Judge Clyde Hamilton concurred with the judgment but wrote a separate opinion.

Floyd identified the important of transparency and public access to court proceedings, especially when it involves a government entity, saying it monitors the functioning of the courts as well as the integrity of the judiciary.

Citing Judge Frank H. Easterbrook, of the Seventh Circuit Court of Appeal, Floyd wrote, "'The political branches of government claim legitimacy by election, judges by reason. Any step that withdraws an element of the judicial process from public view makes the ensuing decision look more like a fiat and requires rigorous justification."

In this case, defendants Public Citizen, Consumer Federation of America and Consumers Union, collectively known as Consumer Groups in the opinion, appealed the case due to transparency issues in federal courts and the public's First Amendment and common-law rights of access to judicial records and documents.

The plaintiff, known only as 'Company Doe,' filed the lawsuit under the Administrative Procedure Act to prevent the United States Consumer Product Safety Commission from publishing a report that allegedly harmed the plaintiff in its online, public database. The report attributes the death of an infant to a product manufactured and sold by Company Doe, which it thinks is misleading.

The Consumer Product Safety Improvement Act was passed by Congress in 2008 in order to "establish more stringent safety and testing standards for manufactures of children's products," Floyd explained.

In an effort to improve public access to product safety information, the Consumer Product Safety Commission is required by the Act to create and maintain a publicly accessible database to provide product information and possible safety hazards.

Public Transparency Concerns

Addressing transparency concerns, Floyd wrote that the public has a strong interest in monitoring the functions of the court as well as the positions that its elected officials and government agencies take in litigation, meaning litigation is accentuated in cases where the government is concerned.

He added that this case specifically is important because it marks the first challenge to the accuracy of material intended to be posted on the Consumer Product Safety Commission's online database.

Because Company Doe failed to demonstrate any interest sufficient enough to defeat the public's First Amendment right of access, Floyd wrote that the sealed order must be reversed.

"Our determination to unseal the district court's memorandum opinion and the materials related to the parties' motions for summary judgment will bring to light the underlying facts, the information contained in the report of harm, and the evidence the district court relied upon in its adjudication of the claims," Floyd wrote. "It follows that Company Doe would have no countervailing interest that would justify continuing to keep the remaining documents sealed. Accordingly, we instruct the district court to unseal the case in its entirety on remand."

Procedural Background

The case at hand was originally filed in the United States District Court for the District of Maryland and stems from a 'report of harm' received from the Consumer Safety commission from an unidentified local government agency regarding a product manufactured by Company Doe. Judge Alexander Williams, Jr., presided over the district court case.

However, Company Doe filed a claim alleging the report was materially inaccurate and contained confusing, contradictory statements.

The Consumer Product Safety Commission attempted to correct the report by redacting the inaccurate information, but Company Doe was unsatisfied and requested that the report remain unpublished.

After multiple updated versions were proposed and the parties still couldn't reach an agreement, the Consumer Product Safety Commission intended on publishing the report anyway.

Company Doe filed a suit to prevent the 'report of harm' from being included in the database.

With its suit, Company Doe moved to litigate the case under seal and to proceed under a pseudonym.

"It claimed that exposing the content of the challenged 'report of harm' through court documents would vitiate the very relief it sought to obtain by fling suit," Floyd wrote. Disclosure of its identity as well as any facts that would enable the public to link its product to the harm alleged in the report, Company Doe argued, would have the same effect as disclosure via the Commission's database."

In response, the Consumer Groups filed a motion to unseal the briefing related to Company Doe's sealing request, but it took the district court nine months to rule on the motion.

As a result, the entire litigation - including Company Doe's motion for preliminary injunction, the Commission's motion to dismiss, Company Doe's motion to amend the complaint, the parties' motions for summary judgment and oral argument - occurred under seal.

During the time it took the court to rule on the Consumer Groups request, the court adjudicated that parties' summary judgment motions. It later the ruled in favor of Company Doe on the parties' cross motions for summary judgment - finding that the information contained in the report was materially inaccurate and failed to describe a harm or risk 'relating to the use' of Company Doe's products.

The court therefore concluded that the report was an "abuse of discretion" and, if published, it could harm Company Doe's reputational and pecuniary interests.

Accordingly, the court permanently "enjoined" the Commission from publishing the report in the online database.

After adjudicating the merits of Company Doe's claims, Floyd wrote that the district court denied the Consumer Groups' motion to unseal and granted Company Doe's motion to proceed under a pseudonym. The court justified its decision by stating it acknowledged the possible public interest in the sealed documents but determined the public's interest in obtaining information was outweighed by Company Doe's interest in preserving its reputation and finances.

"The district court reasoned that permanent sealing of certain documents and pseudonymity were necessary because drawing public attention to the report was the consequence Company Doe sought to avoid in bringing its suit," Floyd wrote.

Recognizing that the public retained some 'residential interest' in the memorandum opinion, the court did not seal the entire case. However, it allowed Company Doe to propose redactions to information it thought could be harmful in the memorandum opinion, which were adopted.

Floyd wrote that redactions were done to "virtually all of the facts, the court's analysis and the evidence supporting its decision."

The Consumer Groups responded with a post-judgment motion to intervene in order to appeal the district court's sealing and pseudonymity orders.

However the district court failed to rule on the intervention motion before the period to appeal, so Consumer Groups appealed the "'constructive denial'" of their motion to intervene as well as the sealing and pseudonymity rulings, Floyd explained.

As a result, the district court granted the intervention motion on Oct. 9, 2012, but then revoked the same motion on Jan. 14, 2013. Consumer Groups responded by filing an amended notice of appeal.

In response, Floyd stated that the district court didn't have authority to rule on the motion to intervene at all because the case was already before the court of appeals and vacated the Jan. 14 order denying intervention on the merits.

"By continuing to act on Consumer Groups' motion to intervene after we assumed jurisdiction over the matter and briefing had commenced, the district court purported to change the status of the appeal. In doing so, it acted outside its authority," Floyd wrote.

Appellate Review

Company Doe claims Consumer Groups do not have the authority to appeal the district court's sealing because they are non-parties.

The appeals court disagrees, finding that Consumer Groups' participation in the proceedings - as it pertains to the issues of sealing and pseudonymity - was similar to party participation.

"Because the orders from which Consumer Groups appeal deprive Consumer Groups of the very information they claim a right to inspect, their appeal falls squarely within the exception allowing non-parties to seek appellate review when necessary to preserve their rights," Floyd wrote.

Likewise, the court has allowed news organizations to file motions to unseal information in the past even though they were not parties in the cases because such organizations have a First Amendment right to inform public discourse.

He noted that allowing news media to appeal a district court's sealed order should not differ from a member of the general public. Therefore, anyone who seeks and is denied access to judicial records sustains an injury, Floyd stated.

"Consumer Groups are public interest organizations that advocate directly on the issues to which the underlying litigation and the sealed materials relate," Floyd wrote. "By seeking, and having been denied access to, documents they allege a right to inspect, Consumer Groups have a direct stake in having a concrete injury redressed."

The right of public access for media and the general public stems from the First Amendment and the common-law tradition that court proceedings are presumptively open to public scrutiny, Floyd explained.


Consumer Groups argue that the First Amendment right of access applies to all of the sealed documents. However, Company Doe counters that it has a compelling interest sufficient to defeat the First Amendment presumptive right of access.

Floyd wrote that the First Amendment right of access extends to materials submitted in conjunction with judicial proceedings that themselves would trigger the right to access.

Focusing on the redacted memorandum opinion and summary judgment motions, Floyd wrote that the public has an interest in learning the evidence and records filed in connection with these proceedings as well as the district court's decision ruling and grounds supporting its decision.

"Without access to judicial opinions, public oversight of the courts, including the processes and the outcomes they produce, would be impossible," he added.

Docket sheet entries were also hidden in the seal order, but Floyd wrote that this goes against the First Amendment rights.

"The docket sheet provides onlookers an overview of the court proceedings and allows them to ascertain the parties to the case, the materials that have been filed, and the trial judge's decisions," he explained.

"Access to docket sheets therefore enhances the appearance of fairness and enlightens the public both to the procedures the district court utilized to adjudicate the claims before it and to the materials it relied upon in reaching its determinations," he added.

Addressing Company Doe's arguments, Floyd wrote that the appellate court had to determine whether a compelling governmental interest negates the public's presumptive right of access to these documents.

Company Doe wanted the case sealed in order to preserve its reputational and fiscal health.

However, Floyd wrote that the First Amendment right of access does not yield such interest in keeping allegations lodged against a corporation from the public.

"Adjudicating claims that carry the potential for embarrassing or injurious revelations about a corporation's image, by contrast, are part of the day-to-day operations of federal courts," he wrote.

Floyd further explained that ever case the appeals court located found that a company's bare allegation of reputational harm was not a compelling interest sufficient to defeat the public's First Amendment right of access.

He added that Company Doe's evidence made no specific claims regarding how the sealed information could cause reputational or economic injury. In fact, the district court's judgment in favor of Company Doe vindicated the plaintiff and its product.

The appeals court also rejected the district court's conclusion that sealing the information was justified to safeguard the statutory right Company Doe sought to vindicate by bringing the underlying action, he continued.

"The relief Company Doe secured by prevailing on its claims was the right to keep the challenged report of harm removed from the online database," Floyd wrote. "That remedy is distinct from the right to litigate its claims in secret and to keep all meaningful facts about the litigation forever concealed from public view."

"We are not blind to the fact that a corporation's image or reputation may diminish by being embroiled in litigation against the government over the safety of one of its products. That is the nature of public litigation," he added.

The district court also contends that by allowing public access to the legal proceedings, Company Doe's First Amendment right to petition the courts would be impinged upon, which the appellate court disagreed with.

"Company Doe's argument contorts the First Amendment right to petition federal courts for redress of grievances and, if embraced, would allow any company that challenged the inclusion of a report in the Commission's database to litigate its claims behind closed doors," Floyd stated.

As for Company Doe's permission to litigate under a pseudonym, Floyd explained that the Federal Rules of Civil Procedures require the court to disclose the identities of the parties in a case.

"Pseudonymous litigation undermines the public's right of access to judicial proceedings. The public has an interest in knowing the names of the litigants, and disclosing the parties' identities furthers openness of judicial proceedings," he stated.

Agreeing that the public's interest in open proceedings must follow a district court's pseudonymity calculus, the appellate court still concluded that the lower court in this case abused its discretion in permitting Company Doe to litigate under a pseudonym.

"In allowing Company Doe to proceed anonymously, the district court gave no explicit consideration to the public's interest in open judicial proceedings," he added.

Hamilton's view

Expressing concern, Hamilton apprehensively concurred with the court's conclusion that Company Doe failed to establish a compelling governmental interest would be furthered by granting a sealed order.

However, Hamilton argued that if Company Doe had supported its motion to seal with expert testimony showing that an open case would cause it to suffer "substantial and irreparable economic harm," the appellate court's finding would have been completely different in his view.

"Common sense tells us that some harm will befall Company Doe by the publication of the false and misleading reports at issue in this case," Hamilton wrote. "In the electronically viral world that we live in today, one can easily imagine how such publications could be catastrophic to Company Doe's fiscal health, allowing it never to recover. In such a world, to say that the free flow of ideas will save Company doe is naive - the game often will be over before it begins."

He added that he understands the district court' concerns surrounding the impact these publications and open court documents could have on Company Doe, but the First Amendment requires more than a "common sense" feeling surrounding economic and reputational harm that could befall the company.

"Without a doubt, the district court's heart was in the right place, and it is regrettable that the majority opinion acknowledges neither the difficult task confronted by the district court, nor the care and genuine concern displayed by such court in ruling on the motion to seal," Hamilton wrote.

From Legal Newsline: Reach Heather Isringhausen Gvillo at asbestos@legalnewsline.com

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