Union Oil Company v. Leavell, Dan ( 2000 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 99-3084
Union Oil Company of California,
Plaintiff-Appellee,
v.
Dan Leavell, et al.,
Defendants-Appellants.
Appeal from the United States District Court
for the Southern District of Illinois.
No. 98-4243-JLF--James L. Foreman, Judge.
Argued June 8, 2000--Decided July 18, 2000
Before Easterbrook, Kanne, and Williams, Circuit
Judges.
Easterbrook, Circuit Judge. Members of the
Leavell family bought some equipment for their
recycling business in 1992. (A closely held
corporation was the purchaser. For simplicity we
use "the Leavells" to refer to the persons and
business entities involved.) Four years later the
Leavells demanded that Unocal, the seller, remove
the machinery and compensate them for
environmental harm that, they insisted, it had
caused. According to the Leavells, Unocal’s
equipment led to the concentration of radium 226,
an element naturally present in soil, whose decay
produces radon gas, which plagues the basements
of many homes. With the aid of a district judge
the parties settled their differences: Unocal
took back the equipment, paid the Leavells
$435,000, and deposited another $100,000 into an
escrow account that could be drawn on for
approved cleanup work. In exchange the Leavells
promised that they would fully clean up the site
and that the work
shall be performed in full cooperation with and
to the complete satisfaction of the Illinois
Department of Nuclear Safety (’IDNS’). IDNS shall
monitor the remediation from inception to
conclusion and shall review and approve all
decommissioning plans or work plans prior to
remediation work beginning at the Property. The
Leavells shall remediate the Property and dispose
of any contaminated material in the manner set
out in the decommissioning plan or work plan
approved by IDNS. . . . All parties understand and
acknowledge that after remediation has taken
place, it is impossible to predict the time it
will take for the IDNS to provide information
concerning the Property’s qualification for use,
but the Leavells agree to use their best, good
faith efforts to obtain an unrestricted use
classification for the Property.
Notwithstanding this promise, the Leavells began
the cleanup before submitting a plan or obtaining
approval, making it impossible for the IDNS to
"monitor the remediation from inception to
conclusion". The escrow agent (Don C. Staab, the
Leavells’ original lawyer) was unfaithful,
disbursing all but $2,000 without assuring
compliance with the conditions. This litigation
under the diversity jurisdiction ensued. After
the suit was under way the Leavells at last
submitted a work plan to the IDNS, but by then the
Leavells had finished their planned work, which
led the IDNS to reject the application and require
the Leavells to start over, with the aid of
appropriate engineering expertise. Unocal asked
the district court to direct the Leavells to
submit a plan to the IDNS, obtain approval, and
follow the approved plan to the letter. The
Leavells, who believe that they have done enough
already, named the IDNS as a third-party
defendant, seeking $25 million in damages (and a
bar on future agency oversight) because the IDNS
refused to approve the Leavells’ methods.
The district judge put the third-party claim on
the back burner while dealing with the dispute
between Unocal and the Leavells. After an
exasperating series of conferences and hearings
at which the Leavells revealed that they knew
little and cared less about their obligations
under the contract (or for that matter state
environmental law), the district court granted
summary judgment for Unocal and entered an order
of specific performance. The judge directed the
Leavells to carry out eight tasks. For example,
the first was to "[o]btain the services of a
qualified health physics consultant approved by
IDNS."
Although the Leavells did not seek a stay from
either the district court or this court, their
lawyer informed us at oral argument that they
have not performed any of these tasks and have no
intention of doing so now or in the future.
Surprisingly, the district judge has declined to
enforce the order, stating that the notice of
appeal deprives him of jurisdiction. This is not
so. A notice of appeal does not stay enforcement
of a district court’s order. Thornton v. Wahl,
787 F.2d 1151 (7th Cir. 1986). A judge may--and
should--enforce an un-stayed injunction while an
appeal proceeds. Resolution Trust Corp. v. Smith,
53 F.3d 72, 76 (5th Cir. 1995); Chrysler Motors
Corp. v. Industrial Workers, 909 F.2d 248, 250
(7th Cir. 1990); Charles Alan Wright, Arthur R.
Miller & Edward H. Cooper, 16 Federal Practice
and Procedure sec.3921.2 (2d ed. 1996). Otherwise
the judge deprives the prevailing parties of the
benefit of their judgment and rewards defiance.
A notice of appeal "divests the district court of
its control over those aspects of the case
involved in the appeal." Griggs v. Provident
Consumer Discount Co., 459 U.S. 56, 58 (1982)
(emphasis added), but whether the addressee of an
injunction has complied is not a subject
"involved in the appeal." Whether the judge
should have held a contempt hearing last year is
water under the bridge, however.
Because the third-party claim remains pending in
the district court, appellate jurisdiction is
questionable. Although the IDNS should have been
dismissed immediately--for the eleventh amendment
bars the claim to the extent it relies on state
law, see Pennhurst State School & Hospital v.
Halderman, 465 U.S. 89, 117 (1984), and the
federal law to which the Leavells allude does not
treat states and their agencies as "persons"
subject to suit, see Arizonans for Official
English v. Arizona, 520 U.S. 43, 69 (1997); Will
v. Michigan Department of State Police, 491 U.S.
58 (1989)--that did not occur, and the unresolved
third-party claim means that the decision in the
Unocal-Leavell portion of the case is not
"final." The parties contend that the district
court entered a partial final judgment under Fed.
R. Civ. P. 54(b), but the district judge did not
explain why the case should be cleaved in two--
especially not when it is so easy to resolve the
claim against the IDNS and produce a genuine final
judgment. Nor does the use of Rule 54(b) make
sense, given 28 U.S.C. sec.1292(a)(1), which
authorizes immediate appeal of interlocutory
injunctions. The district judge did not use the
magic word "injunction," but his order is
injunctive in nature, requiring the Leavells to
perform enumerated steps under threat of the
contempt power. If the district judge had entered
a money judgment--say, one requiring the Leavells
to refund what they have received from Unocal--an
appeal might well be premature while the claim
against the IDNS is unresolved. But as an appeal
from an injunction it is securely within our
jurisdiction.
On the merits, the Leavells’ appeal is
frivolous. They did not produce affidavits or any
other evidence in response to Unocal’s motion for
summary judgment, so the record is lopsided and
demonstrates that from the get-go the Leavells
ignored their undertakings. The Leavells’ current
lawyer believes that denials in the answer to
Unocal’s complaint block summary judgment, but
this misunderstands federal practice. See Fed. R.
Civ. P. 56(e). We attend only to the evidence of
record, which demonstrates that the Leavells
began cleanup work before seeking the IDNS’s
approval, thus violating their promise that the
"IDNS shall monitor the remediation from inception
to conclusion and shall review and approve all
decommissioning plans or work plans prior to
remediation work beginning at the Property"
(emphasis added). Most of the Leavells’ troubles
with the IDNS stem from their work-first-approval-
later approach, reversing the contractual
sequence. Breach is established.
Specific performance was an appropriate remedy.
Unocal bargained for a clean site, with a clean
bill of health from the IDNS, to avoid a risk of
liability to those who may purchase the land from
the Leavells or neighbors who may say that radon
gas has wafted from the Leavells’ land to theirs.
Damages cannot produce that surety. And the
Leavells’ argument that they should be relieved
of their promise because cleanup according to the
IDNS’s rules is more costly than they anticipated
is a poor excuse, for contracts are designed to
allocate risks such as this; the Leavells
obtained a fixed payment, not an open purse. What
is more, a contract may be set aside on the basis
of mutual mistake (the doctrine closest to the
Leavells’ position, to the extent we can decipher
it) only if it can be unwound. To obtain release
from their undertaking, the Leavells must offer
to return the $535,000 Unocal paid. Fleming v.
U.S. Postal Service, 27 F.3d 259 (7th Cir. 1994).
But the Leavells have so far tendered not a
penny; they want to keep the money and shirk
their obligations, an outcome no court could
tolerate.
No more need be said about the merits, but a
procedural matter requires attention. Almost
every document filed in this case, even the
district court’s opinions, orders, and judgment,
bears the legend "FILED UNDER SEAL". As far as we
can tell, the district court has kept not only
the details but also the existence of this case
from public view. The briefs and other papers the
parties have filed in this court are similarly
designated "UNDER SEAL", and the parties
evidently anticipated that secrecy would
continue. But appellate proceedings may be sealed
only by order of this court (which neither side
sought), so we directed the parties to show cause
why the briefs and other papers should not be
placed in the public record. The Leavells asked
us to unseal everything. Unocal responded by
asking us not only to seal the briefs and record
but also to hold the oral argument in a courtroom
closed to the public and to use only pseudonyms
in any opinion. We denied the latter requests
before argument, see New York Times Co. v. United
States, 403 U.S. 944 (1971) (denying a motion to
close even a portion of the argument in the
Pentagon Papers case); Coe v. Cook County, 162
F.3d 491 (7th Cir. 1998) (discussing the
presumptive inappropriateness of anonymity in
litigation), but took under advisement the
request to seal the briefs and record.
The district judge did not explain his sealing
order. Unocal’s proffered justification is that
the parties agreed to keep their settlement
confidential, and that "Unocal should not be
forced to sacrifice that benefit of the bargain
. . . simply because [the Leavells] have breached
other portions of the settlement agreement." If
indeed the Leavells’ intransigence leads to
publicity, then Unocal may be entitled to damages
for any ensuing harm, but the parties’
confidentiality agreement can not require a court
to hide a whole case from view. Litigation about
trade secrets regularly is conducted in public;
the district court seals only the secrets (and
writes an opinion omitting secret details); no
one would dream of saying that every dispute
about trade secrets must be litigated in private.
Even disputes about claims of national security
are litigated in the open. Briefs in the Pentagon
Papers case, New York Times Co. v. United States,
403 U.S. 713 (1971), and the hydrogen bomb plans
case, United States v. Progressive, Inc., 467 F.
Supp. 990, rehearing denied, 486 F. Supp. 5 (W.D.
Wis.), appeal dismissed, 610 F.2d 819 (7th Cir.
1979), were available to the press, although
sealed appendices discussed in detail the
documents for which protection was sought. See
also In re United States, 872 F.2d 472 (D.C. Cir.
1989) (a national security case with public
briefs and opinions, although parts of one
opinion were redacted to protect confidences).
Calling a settlement confidential does not make
it a trade secret, any more than calling an
executive’s salary confidential would require a
judge to close proceedings if a dispute erupted
about payment (or termination). Many a litigant
would prefer that the subject of the case--how
much it agreed to pay for the construction of a
pipeline, how many tons of coal its plant uses
per day, and so on--be kept from the curious
(including its business rivals and customers),
but the tradition that litigation is open to the
public is of very long standing. See Nixon v.
Warner Communications, Inc., 435 U.S. 589, 597-99
(1978); In re Reporters Committee for Freedom of
the Press, 773 F.2d 1325, 1331-33 (D.C. Cir.
1985) (Scalia, J.). People who want secrecy
should opt for arbitration. When they call on the
courts, they must accept the openness that goes
with subsidized dispute resolution by public (and
publicly accountable) officials. Judicial
proceedings are public rather than private
property, U.S. Bancorp Mortgage Co. v. Bonner
Mall Partnership, 513 U.S. 18, 27-29 (1994); In
re Memorial Hospital of Iowa County, Inc., 862
F.2d 1299, 1302-03 (7th Cir. 1988), and the
third-party effects that justify the subsidy of
the judicial system also justify making records
and decisions as open as possible. What happens
in the halls of government is presumptively
public business. Judges deliberate in private but
issue public decisions after public arguments
based on public records. 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 fiat,
which requires compelling justification.
This is not the first time we have encountered
requests to seal proceedings in order to
implement the parties’ preference for seclusion.
The requests have been uniformly rejected. See,
e.g., United States v. Ladd, No. 99-2301 (7th
Cir. June 27, 2000); Citizens First National Bank
v. Cincinnati Insurance Co., 178 F.3d 943 (7th
Cir. 1999); Pepsico, Inc. v. Redmond, 46 F.3d 29
(7th Cir. 1995) (chambers opinion); Grove Fresh
Distributors, Inc. v. Everfresh Juice Co., 24
F.3d 893 (7th Cir. 1994); In re Krynicki, 983
F.2d 74 (7th Cir. 1992) (chambers opinion); In re
Continental Illinois Securities Litigation, 732
F.2d 1302 (7th Cir. 1984). Ever since Continental
Illinois, we have insisted that only genuine
trade secrets, or information within the scope of
a requirement such as Fed. R. Crim. P. 6(e)(2)
("matters occurring before the grand jury"), may
be held in long-term confidence. Portions of
discovery may be conducted in private to expedite
disclosure. See Seattle Times Co. v. Rhinehart,
467 U.S. 20 (1984). Much of what passes between
the parties remains out of public sight because
discovery materials are not filed with the court.
But most portions of discovery that are filed and
form the basis of judicial action must eventually
be released, id. at 36-37--and it should go
without saying that the judge’s opinions and
orders belong in the public domain. Both
litigants and judges may protect properly
confidential matters by using sealed appendices
to briefs and opinions.
At oral argument Unocal conceded that none of
the documents sealed in this case meets the
standards of Citizens First National Bank and its
predecessors. Accordingly, we direct the clerk of
this court to place all appellate papers in the
public record. On remand, the district court must
do the same, dissolving any confidentiality
orders entered in the case. After unsealing the
record, the district judge should dismiss the
third-party action and promptly determine whether
the Leavells are in contempt of court.
Affirmed and Remanded