Foundational and Contemporary Court Confidentiality.

AuthorBenham, Dustin B.

TABLE OF CONTENTS TABLE OF CONTENTS 211 I. INTRODUCTION 212 II. CURRENT STRUCTURE AND IMPACTS OF COURT CONFIDENTIALITY 213 A. Confidentiality Incentives 213 B. Off Ramps: Avoiding Public Access Rights Through Private Agreement 218 C. The Ball Rolls Down the Hill: Tradition, Inertia, and Confidentiality 220 1. Easy Access to Protective Orders 220 2. Ubiquitous Protective Orders Lead to Pervasive Sealing 224 3. Secret Settlements 228 III. LIMITATIONS ON COURT CONFIDENTIALITY 229 A. Limitations on Private Confidentiality Agreements 230 1. The First Amendment 230 2. Contract Law 231 3. #MeToo Sunshine 232 4. Traditional Sunshine Legislation 232 5. Federal Tax Law 234 B. A Proposal for Brighter "Sunshine" 235 C. A "New" Limitation on Court-Issued Protective Orders 241 1. The History of the First Amendment and Protective Orders 242 2. Implications of Constitutionalizing "Good Cause" 246 3. Impact of a Constitutional Reading of "Good Cause" on Common Discovery Practices 249 D. Limitations on Sealing Judicial Records 254 IV. CONCLUSION 260 I. INTRODUCTION

An integrated confidentiality system now pervades American dispute resolution. This system was created over the course of decades by legislatures, rule makers, and courts. Proponents of confidentiality have long justified expansive secrecy by claiming that the benefits of withholding litigation information outweigh any potential public harm. (1) Recent evidence undermines this premise. (2) In some of the most important public-harms cases of the past two decades, critical health-and-safety information was kept secret in court files. (3) People died or were injured in the meantime. It has also become apparent that consolidating cases in multi-district litigation has the potential to accelerate and homogenize confidentiality nationally. (4) The recent evidence of these trends is concerning and would prompt any conscientious observer to reconsider the status quo.

This Article first considers the structure and impact of court confidentiality. Much of the current system is driven by inertia, tradition, and player incentives (in addition to formal rules). Next, the Article examines some of the existing limitations on court confidentiality and proposes a few alternatives. These proposals include new limitations on private confidentiality agreements for litigation information, an appropriately expanded role for the First Amendment in protective-order disputes, and limitations on umbrella protective orders and sealing orders.

  1. CURRENT STRUCTURE AND IMPACTS OF COURT CONFIDENTIALITY

    The current system arose from player incentives. These incentives keep many disputes out of court altogether, settled pursuant to private (but judicially-enforceable) confidentiality agreements or submitted to private arbitration. For disputes that do make it into a court, a web of procedural rules, traditions, repeat-player relationships, and litigant preferences provide ready confidentiality. Largely absent from the creation or operation of these systems is the public.

    1. Confidentiality Incentives

      A vast amount of litigation information is kept from public view, temporarily or permanently. This veil of secrecy justifiably obscures benign private information, such as social security numbers, medical records. (5) But it also conceals information critically important to public safety--the identity and location of pedophile priests, the poisoning of a water supply, dangerous automobiles. (6) While specific reasons for keeping information confidential vary from case to case, player incentives have driven confidentiality into the DNA of modern American litigation. (7)

      Much litigation, and pre-litigation, is asymmetrical, and the incentive relationship is driven, at least in part, by this asymmetry. In personal injury, employment, civil rights, and other contexts, defendants typically have superior resources and access to information. Plaintiffs may have little to no resources, and many rely on the resources of an attorney retained on a contingent fee. Another asymmetry: defendants often face repeating claims over the same or related conduct. (8) Distributing thousands of products, supervising thousands of employees, or employing policies that affect thousands of people can create a significant volume of litigation. (9) Plaintiffs, on the other hand, are typically in a one-off situation, litigating a single case over a single injury (though their attorneys may have multiple similar cases). (10)

      In this reality, several incentives drive parties to keep information confidential. First, company-defendants want to avoid the reputation harm, and related commercial injury, caused by the release of confidential information. (11) This is true even if the defendant has a potential defense to a claim (for instance, its product is not actually dangerous) because of the risk that the media or public might misconstrue the information. Second, defendants are incentivized to stifle similar claims, even if those claims are meritorious. (12) Assuming a repeating case context, potential claimants could feed off information from the first case or other similar cases. (13) More cases to defend means more money in defense costs and judgment liability. Additionally, more cases--particularly meritorious cases--will likely cause the defendant greater reputation injury. Third, the defendant-company will have a strong incentive to protect its intellectual property. (14) To the extent the design of a product or information about a process is valuable, its public disclosure could eviscerate its value. (15)

      Plaintiffs also have potentially strong incentives to keep litigation information--even defendants' information--secret. Because defendants are often incentivized to keep litigation information from the public, the plaintiff who obtains such information holds something of value to sell back to the defendant at settlement. (16) Indeed, parties to a settlement often exchange money for a promise of silence from the plaintiff. (17) But the value in this type of bargain can only be realized if the underlying information is not generally known. For if the information were widely known, a defendant would never pay to keep it secret. Thus, plaintiffs have an incentive to develop the maximum amount of damaging information, keep it secret in the interim, and then sell that secrecy back to defendants for money. (18) Additionally, the plaintiff will need to obtain discovery to litigate her claim. Agreeing to broad confidentiality may make this easier. According to some, opposing confidentiality sets up grueling discovery fights with defendants who might otherwise offer to produce information in exchange for a "standard" protective order. (19)

      Moreover, confidentiality in the case may also suit the plaintiff's reputational interests. Imagine, for instance, that the plaintiff's toxicology screens at the time of the injury showed that the plaintiff had cocaine in her system. A plaintiff would almost certainly want to keep this information private.

      In most litigation, this leaves one final player to account for--the court. And courts, like litigants, have incentives to keep information confidential. (20) At the outset, there is the idea--true or not--that defendants will more vigorously contest discovery in the absence of confidentiality. Many courts loathe discovery fights and prefer the lubricating effect of a blanket protective order. (21) Moreover, courts are incentivized to resolve cases on their dockets, and confidentiality has been recognized as an aid to settlement. (22) Additionally, many judges work admirably as stewards of the public interest but see their primary role as resolving individual cases on the merits. (23) Many are reticent to facilitate media investigations or be a public repository for scandalous information. (24)

      Thus, the typical players, in the typical case, simply are not incentivized to litigate in public. On the other hand, the players with incentives to make litigation information public are often absent. (25) This includes the media, citizen action groups, and even government. (26) These groups represent the public's interest in knowing about danger and public malfeasance. Such groups can intervene and seek the release of litigation information. (27) But the standards for succeeding in such an endeavor can be daunting. (28) The cost of litigation is high, beyond the reach, in many cases, of media and public-interest organizations. Beyond the cost, perhaps the biggest hurdle to third-party intervention is that third parties simply do not know what they do not know about confidential litigation. (29)

      It is true that the basic factual allegations (in most cases) will be publicly available in the complaint, but the media is aware that those allegations require little corroboration in advance of filing. (30) Without access to proof, sorting the wheat from the chaff in the court system is quite difficult. (31) Thus, while the media and the public have incentives to seek access to information important to public safety and governance, the practical hurdles to doing so remain quite high. As a result, third-party intervention remains relatively infrequent.

    2. Off Ramps: Avoiding Public Access Rights Through Private Agreement

      Pre-incident non-disclosure agreements ("NDAs") and arbitration agreements keep important information out of court and out of public view. Arbitration agreements, and some NDAs, are part of adhesion contracts that precede any incident that might give rise to a dispute. Sometimes, court rules even suggest or require the practice. (32)

      Pre-incident NDAs effectively muzzle potential claimants--often employees with a harassment claim--and arbitration agreements remand entire disputes to a private forum. These disputes are routinely settled, also on a promise of secrecy, or litigated to a conclusion in private arbitration. (33) Often, no public docket or documents exist to alert the public...

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