IDT Corp v. AR Public Law Center ( 2013 )

United States Court of Appeals
For the Eighth Circuit
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No. 11-3009
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IDT Corp; Net2Phone, Inc.
lllllllllllllllllllll Plaintiffs - Appellees
v.
eBay; Skype, Inc.; Skype Technologies, S.A.
lllllllllllllllllllll Defendants - Appellees
Arkansas Public Law Center
lllllllllllllllllllllIntervenor - Appellant
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Appeal from United States District Court
for the Western District of Arkansas - Texarkana
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Submitted: April 16, 2012
Filed: February 11, 2013
Before LOKEN, COLLOTON, and SHEPHERD, Circuit Judges.
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COLLOTON, Circuit Judge.
The Arkansas Public Law Center (“APLC”) moved to unseal a complaint filed
by IDT Corp. and Net2Phone, Inc. in a civil suit against eBay, Inc., Skype, Inc., and
Skype Technologies S.A. The district court1 denied APLC’s motion. We discern no
abuse of discretion in the district court’s decision to seal sensitive business
information included in the complaint, but we vacate the order and remand for the
district court either to explain why sealing of the entire pleading is warranted or to
unseal a redacted version of the complaint.
I.
Skype, eBay, IDT, and Net2Phone, which we will sometimes describe
collectively as “the companies,” were adverse parties in a series of patent disputes
that have been settled. Net2Phone sued eBay and Skype for patent infringement in
2006. eBay sued IDT for patent infringement in 2008. Because the litigation
triggered the exchange of sensitive financial and technological information, the
parties conducted discovery in both cases pursuant to protective orders filed in
accordance with Federal Rule of Civil Procedure 26(c). See Seattle Times Co. v.
Rhinehart, 467 U.S. 20, 32-36 (1984).
As trial approached in the patent disputes, IDT and Net2Phone filed an antitrust
suit against eBay and Skype, alleging a conspiracy to monopolize, monopolization,
and attempted monopolization, in violation of 15 U.S.C. § 2. The only public record
of this document is a civil cover sheet on file with the district court. The plaintiffs
submitted an unopposed motion to file their complaint under seal on the ground that
the complaint referred to information that was produced subject to protective orders
in the patent infringement actions. The district court granted the motion, and the
complaint was filed under seal. Three weeks later, the parties reached a settlement
in all three cases, and they filed a joint stipulation of dismissal in the antitrust case.
The district court then dismissed the antitrust suit with prejudice as a result of the
1
The Honorable Harry F. Barnes, United States District Judge for the Western
District of Arkansas.
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settlement, and retained jurisdiction over the matter for the purpose of enforcing the
settlement.
APLC then moved to intervene in the antitrust suit, pursuant to Federal Rule
of Civil Procedure 24(b), and moved to unseal the complaint. The district court
granted the motion to intervene. After in camera review of the complaint, however,
the court denied APLC’s motion to unseal the pleading, stating that the “parties’
interests in protecting their confidential information outweighs any general interest
of public access.” APLC now appeals.
II.
There is a common-law right of access to judicial records. Nixon v. Warner
Commc’ns, Inc., 435 U.S. 589, 597 (1978). The Court in Nixon explained that “the
courts of this country recognize a general right to inspect and copy public records and
documents, including judicial records and documents,” but that “the right to inspect
and copy judicial records is not absolute.” Id. at 597-98 (footnotes omitted). This
right of access bolsters public confidence in the judicial system by allowing citizens
to evaluate the reasonableness and fairness of judicial proceedings, Leucadia, Inc. v.
Applied Extrusion Techs., Inc., 998 F.2d 157, 161 (3d Cir. 1993), and “to keep a
watchful eye on the workings of public agencies.” Nixon, 435 U.S. at 598. It also
provides a measure of accountability to the public at large, which pays for the courts.
See Citizens First Nat’l Bank of Princeton v. Cincinnati Ins. Co., 178 F.3d 943, 945
(7th Cir. 1999).
This court, noting the agreement of the parties, applied the common-law right
of access to a civil proceeding in Webster Groves School District v. Pulitzer
Publishing Co., 898 F.2d 1371, 1376-77 (8th Cir. 1990). Ten other circuits have held
that the common-law right applies in the civil context. See Mann v. Boatright, 477
F.3d 1140, 1149 (10th Cir. 2007); Lugosch v. Pyramid Co. of Onondaga, 435 F.3d
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110, 119-24 (2d Cir. 2006); SEC v. Van Waeyenberghe, 990 F.2d 845, 848-49 (5th
Cir. 1993); Republic of Phil. v. Westinghouse Elec. Corp., 949 F.2d 653, 659-62 (3d
Cir. 1991); EEOC v. Erection Co., Inc., 900 F.2d 168, 169-70 (9th Cir. 1990) (per
curiam); Rushford v. New Yorker Magazine, Inc., 846 F.2d 249, 252-54 (4th Cir.
1988); FTC v. Standard Fin. Mgmt. Corp., 830 F.2d 404, 408 & n.4 (1st Cir. 1987);
Wilson v. Am. Motors Corp., 759 F.2d 1568, 1570-72 (11th Cir. 1985) (per curiam);
Matter of Cont’l Ill. Sec. Litig., 732 F.2d 1302, 1308-09 (7th Cir. 1984); Brown &
Williamson Tobacco Corp. v. FTC, 710 F.2d 1165, 1178-79 (6th Cir. 1983). The
D.C. Circuit likewise decided in light of Nixon to “take it as a given that there is a
tradition of public access to court records, and that that right is not absolute.” In re
Reporters Comm. for Freedom of the Press, 773 F.2d 1325, 1333 (D.C. Cir. 1985)
(Scalia, J.). The companies here do not rely on a categorical exemption for civil
litigation. We agree with the other circuits that the common-law right of access
applies to judicial records in civil proceedings.
The companies also do not dispute that the antitrust complaint in this case is
a “judicial record” to which a common-law right of access attaches. There may be a
historical case to be made that a civil complaint filed with a court, but then soon
dismissed pursuant to settlement, is not the sort of judicial record to which there is
a presumption of public access. See id. at 1333-36 & n.8; Schmedding v. May, 48
N.W. 201, 202 (Mich. 1891); Cowley v. Pulsifer, 137 Mass. 392, 394 (1884) (Holmes,
J.); but cf. Campbell v. New York Evening Post, 157 N.E. 153, 155-56 (N.Y. 1927).
The companies, however, acquiesce in what appears to be a modern trend in federal
cases to treat pleadings in civil litigation (other than discovery motions and
accompanying exhibits) as presumptively public, even when the case is pending
before judgment, see San Jose Mercury News, Inc. v. United States Dist. Court, 187
F.3d 1096, 1101-02 (9th Cir. 1999); Siedle v. Putnam Inv., Inc., 147 F.3d 7, 8-10 (1st
Cir. 1998), or resolved by settlement, see Brown v. Advantage Eng’g, Inc., 960 F.2d
1013, 1015 (11th Cir. 1992); Bank of Am. Nat’l Trust and Sav. Ass’n v. Hotel
Rittenhouse Assocs., 800 F.2d 339, 343 (3d Cir. 1986). The companies argue only
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that the interests of the parties in protecting confidential information outweighed the
public’s generalized interest in access. Whatever the merit of a narrower approach
to the meaning of “judicial record,” the companies here have waived any claim to its
application.
As the case comes to us, therefore, the question is whether there were sufficient
grounds to override the common-law right of access and to justify the district court’s
order sealing the entire antitrust complaint. We review the district court’s
determination on that point for abuse of discretion. Webster Groves Sch. Dist., 898
F.2d at 1376.
APLC asserts that the district court abused its discretion because the parties to
the underlying litigation did not present sufficient reasons to justify the order. Where
the common-law right of access is implicated, the court must consider the degree to
which sealing a judicial record would interfere with the interests served by the
common-law right of access and balance that interference against the salutary
interests served by maintaining confidentiality of the information sought to be sealed.
See id. The Second Circuit usefully observed that judicial records and documents
generally will “fall somewhere on a continuum from matters that directly affect an
adjudication to matters that come within a court’s purview solely to insure their
irrelevance.” United States v. Amodeo, 71 F.3d 1044, 1049 (2d Cir. 1995). “[T]he
decision as to access is one best left to the sound discretion of the trial court . . . in
light of the relevant facts and circumstances of the particular case.” Nixon, 435 U.S.
at 599; see also United States v. McDougal, 103 F.3d 651, 657-58 (8th Cir. 1996);
United States v. Webbe, 791 F.2d 103, 106 (8th Cir. 1986).
APLC urged the district court to unseal the complaint in the interest of “an
open court system,” and the companies responded that the document should be sealed
to protect the confidentiality of sensitive business information. See Nixon, 435 U.S.
at 598. The district court found that the complaint contains information that was
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produced subject to a protective order that covers trade secrets and other confidential
research. The district court presided over the patent litigation for several years and
was familiar with the details of the underlying disputes and the protective orders in
question. The court’s in camera review of the complaint was a sufficient procedure
in these circumstances to determine whether that document contained information
subject to the protective orders. See In re Iowa Freedom of Info. Council, 724 F.2d
658, 663 (8th Cir. 1984). We thus see no clear error in the court’s finding that the
complaint contained “confidential and competitively sensitive information.”
In weighing the competing interests, the district court referred to APLC’s
“generalized interest in access to the complaint,” and we think the court properly
treated as minimal the public’s interest in access to this antitrust complaint. Modern
cases on the common-law right of access say that “the weight to be given the
presumption of access must be governed by the role of the material at issue in the
exercise of Article III judicial power and resultant value of such information to those
monitoring the federal courts.” Amodeo, 71 F.3d at 1049; see also Lugosch, 435 F.3d
at 119; In re Boston Herald, Inc., 321 F.3d 174, 198 (1st Cir. 2003). The complaint
in this case “play[ed] only a negligible role in the performance of Article III duties.”
Amodeo, 71 F.3d at 1050. The court never adjudicated any aspect of the claims on
the merits; its only action before APLC’s intervention was to enter a stipulated
dismissal based on a settlement. The antitrust complaint is thus analogous to the
complaint documents in Riker v. Federal Bureau of Prisons, 315 F. App’x 752 (10th
Cir. 2009), where the public’s interest in access was “weak,” because the court
considered the documents “only to determine whether to seal them,” and they “had
little to do with the district court’s exercise of judicial power.” Id. at 755. In this
circumstance, “the weight of the presumption is low and amounts to little more than
a prediction of public access absent a countervailing reason.” Amodeo, 71 F.3d at
1050.
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For these reasons, we conclude that the district court did not abuse its
discretion in determining that the potential harm in unsealing “confidential and
competitively sensitive information” outweighs APLC’s “generalized interest in
access to the complaint.” After reviewing the complaint and the district court’s order,
however, it is unclear to us why the court concluded that the entire document should
remain under seal. While the district court was justified in sealing information
derived from materials produced under the protective orders, portions of the
complaint may be amenable to public access without jeopardizing the confidentiality
of sensitive information exchanged in the patent infringement litigation. See Amodeo,
44 F.3d at 147 (concluding that “it is proper for a district court, after weighing
competing interests, to edit and redact a judicial document in order to allow access
to appropriate portions of the document”). On the other hand, confidential
information may be so embedded in a pleading that line-by-line redaction is
impossible, see In re Search Warrant for Secretarial Area Outside Office of Gunn,
855 F.2d 569, 574 (8th Cir. 1988), or redaction might be insufficient to protect the
interests that justify sealing, see Goff v. Graves, 362 F.3d 543, 550 (8th Cir. 2004).
On the present record, there is not a sufficient explanation from the district court for
us to evaluate whether redaction was a reasonable alternative to sealing the entire
complaint.*
*
We reject APLC’s alternative contention that a right of public access grounded
in the First Amendment applies to the antitrust complaint, such that a more stringent
standard must be satisfied before the pleading may be sealed. This circuit has not
decided whether there is a First Amendment right of public access to the court file in
civil proceedings. See Webster Groves Sch. Dist., 898 F.2d at 1377. For such a right
to be recognized, the Supreme Court’s decisions establish at least two prerequisites:
(1) a historical tradition of accessibility, and (2) a significant positive role for public
access in the functioning of the judicial process in question. See Press-Enterprise Co.
v. Superior Court of Cal., Cnty. of Riverside, 478 U.S. 1, 8 (1986). Whatever the
evolution of the federal common-law right of access, APLC has not established a
strong historical tradition of public access to complaints in civil cases that are settled
without adjudication on the merits. See In re Reporters Comm. for Freedom of the
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For these reasons, we vacate the district court’s order denying the motion to
unseal the complaint. We remand the case for the district court to assess whether
redaction of confidential business information is practicable. The court should either
unseal a redacted complaint or deny the motion to unseal with an explanation why the
entire complaint should remain under seal.
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Press, 773 F.2d at 1333-36 & n.8. And public access to the complaint would add
little if any value to the judicial process where, as here, the court’s only action was
to seal the complaint and sign a stipulated dismissal.
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