Union Oil Company v. Leavell, Dan ( 2000 )


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  • 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