4th Circuit throws open courtroom windows in ‘Company Doe’ ruling
I plow through a lot of appellate opinions. Few of them make me want to stand up and read aloud in the Reuters newsroom. But a couple of sentences, from a ruling Wednesday by the 4th U.S. Circuit Court of Appeals, just about pushed me out of my chair. “A corporation very well may desire that the allegations lodged against it in the course of litigation be kept from public view to protect its corporate image, but the First Amendment right of access does not yield to such an interest,” the three-judge 4th Circuit panel wrote. “Whether in the context of products liability claims, securities litigation, employment matters or consumer fraud cases, the public and press enjoy a presumptive right of access to civil proceedings and documents filed therein, notwithstanding the negative publicity those documents may shower upon a company.” What an unwavering endorsement of open courts!
It’s all the more appropriate that the 4th Circuit underscored the public’s right to know because the case that prompted its ruling implicates the government’s discretion to protect public safety. In 2011, an unidentified local government agency submitted an incident report to the Consumer Product Safety Commission. The CPSC notified the company that manufactures the supposedly dangerous product, which insisted that the report was materially inaccurate and should not be published on the recently-established CPSC database for reports of unsafe products. The Commission agreed to some concessions, but ultimately said it intended to publish the report. The company sued in federal court in Greenbelt, Maryland, to enjoin the publication. It also moved to seal the litigation and to proceed under the pseudonym “Company Doe.”
Public Citizen, the Consumer Federation of America and the Consumers Union intervened to join the CPSC in opposing the company’s request to litigate in secret, but U.S. District Judge Alexander Williams sided with Company Doe. If the company were forced to reveal its identity in the litigation, the judge reasoned, it would suffer exactly the same reputational harm it was trying to avert through its injunction suit. The only way to protect the company from unwarranted damage, Williams said, was to permit the pseudonym and sealing until he reached a determination.
The judge ended up granting Company Doe summary judgment, barring the CPSC from publishing the dangerous product report and maintaining the seal order on the records of the case. Even his 73-page ruling is heavily redacted to remove any clues about Company Doe’s identity or the allegedly harmful product it makes.
Both the CPSC and the consumer groups appealed the case to the 4th Circuit; the government challenged the injunction, and the public interest groups focused on the seal order. The CPSC dropped the appeal without explanation in December 2012. Company Doe’s lawyers at Gibson, Dunn & Crutcher asked Judge Williams to reconsider the standing of Public Citizen and the other groups. He revoked their intervention, and Gibson Dunn moved to dismiss the 4th Circuit appeal, arguing that the public interest groups don’t have an interest in the underlying litigation and don’t have constitutional standing.
In Wednesday’s decision, the 4th Circuit panel (Judge Henry Floyd and Senior Judges Clyde Hamilton and Andre Davis) held that members of the public have the same right as news organizations to appeal sealing orders. The public is injured when it’s denied access to the courts, Judge Floyd wrote in the panel’s opinion, because access “protects the public’s ability to oversee and monitor the workings of the judicial branch promotes the institutional integrity of the judicial branch.” The consumer groups met the constitutional requirement of a concrete and particularized injury, the court said, because they “advocate directly on the issues to which the underlying litigation and the sealed materials relate.” The sealing order denying them access to the case records gave them “a direct stake in having a concrete injury redressed,” according to the 4th Circuit.
The right of access to court records, codified to slightly different degrees in common law and the First Amendment, can be rebutted only in rare circumstances, the opinion said, when some countervailing interest in confidentiality heavily outweighs the public interest in open courts. Company Doe could show no such interest, according to the 4th Circuit. Its fear that the litigation would hurt its reputation was at best speculative, and its argument that public litigation would cause it the same harm as the CPSC’s publication of the report underestimates the public, the opinion said.
“The district court’s sealing determination seems to be rooted in a concern that the public would be unable to appreciate the court’s determination that the information contained in the challenged report of harm was materially inaccurate and failed to relate to Company Doe’s product,” the 4th Circuit said. “The court’s apprehension over the ramifications of disclosing the facts germane to this case cannot be squared with the principles of public discourse that underlie the First Amendment.” (I just love this opinion!)
The 4th Circuit remanded the case to Judge Williams with an order that he unseal the record in its entirety and require Company Doe to litigate under its real name, even if its image may suffer from being “embroiled in litigation against the government over the safety of one of its products,” the appeals court said. The company made the choice to sue, the opinion said. When you go to court, you subject yourself to the public’s right to know.
Scott Michelman of Public Citizen, who argued for the consumer groups at the 4th Circuit, told me the court’s broad defense of public access will “stand as a bulwark against future efforts to conduct litigation in secret” in areas beyond consumer cases. “The opinion says this is a basic part of our democracy,” Michelman said.
“We agree with both the district and circuit courtsâ€™ statements that the CPSC report in question was false and misleading,” Baruch Fellner of Gibson Dunn, who argued for Company Doe, said in an email statement. “Importantly, too, as has been noted by the courts, the product in question was not related to the death of an infant, and the CPSC is not pursuing any claims against Company Doe. I would hope that if the name of Company Doe is revealed, both the media and the public will readily understand that these false and misleading reports harm a company that has a perfect record of product safety. We will continue to review the courtâ€™s decision to determine further action.”
So for now, all future Company Does are on notice: If you go to court in the 4th Circuit, youâ€™d better expect to be unmasked.
(Updates with comment from Gibson Dunn attorney)
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