Stafford v. Int'l Bus. MacHs. Corp.

22-1240-cv
Stafford v. Int’l Bus. Machs. Corp.
United States Court of Appeals
for the Second Circuit
August Term 2022
Argued: June 16, 2023
Decided: August 14, 2023
No. 22-1240
ELIZABETH STAFFORD,
Petitioner-Appellee,
v.
INTERNATIONAL BUSINESS MACHINES CORPORATION,
Respondent-Appellant.
On Appeal from the United States District Court
for the Southern District of New York
Before: PARK, NARDINI, and NATHAN, Circuit Judges.
Elizabeth Stafford is a former employee of International
Business Machines Corporation (“IBM”) who signed a separation
agreement requiring confidential arbitration of any claims arising
from her termination. Stafford arbitrated an age-discrimination
claim against IBM and won. She then filed a petition in federal court
under the Federal Arbitration Act (“FAA”) to confirm the award,
attaching it to the petition under seal but simultaneously moving to
unseal it. Shortly after she filed the petition, IBM paid the award in
full. The district court (Oetken, J.) granted Stafford’s petition to
confirm the award and her motion to unseal.
On appeal, IBM argues that (1) the petition to confirm became
moot once IBM paid the award, and (2) the district court erred in
unsealing the confidential award. We agree. First, Stafford’s
petition to confirm her purely monetary award became moot when
IBM paid the award in full because there remained no “concrete”
interest in enforcement of the award to maintain a case or controversy
under Article III. Second, any presumption of public access to
judicial documents is outweighed by the importance of
confidentiality under the FAA and the impropriety of Stafford’s effort
to evade the confidentiality provision in her arbitration agreement.
We thus VACATE the district court’s confirmation of the award and
REMAND with instructions to dismiss the petition as moot. We
REVERSE the district court’s grant of the motion to unseal.
SHANNON LISS-RIORDAN, Lichten & Liss-Riordan, P.C.,
Boston, MA, for Petitioner-Appellee.
ANTHONY J. DICK, Jones Day, Washington, DC (Matthew
W. Lampe, Jones Day, New York, NY; J. Benjamin
Aguiñaga, Jones Day, Dallas, TX, on the brief), for
Respondent-Appellant.
PARK, Circuit Judge:
Elizabeth Stafford is a former employee of International
Business Machines Corporation (“IBM”) who signed a separation
agreement requiring confidential arbitration of any claims arising
from her termination. Stafford arbitrated an age-discrimination
claim against IBM and won. She then filed a petition in federal court
under the Federal Arbitration Act (“FAA”) to confirm the award,
2
attaching it to the petition under seal but simultaneously moving to
unseal it. Shortly after she filed the petition, IBM paid the award in
full. The district court (Oetken, J.) granted Stafford’s petition to
confirm the award and her motion to unseal.
On appeal, IBM argues that (1) the petition to confirm became
moot once IBM paid the award, and (2) the district court erred in
unsealing the confidential award. We agree. First, Stafford’s
petition to confirm her purely monetary award became moot when
IBM paid the award in full because there remained no “concrete”
interest in enforcement of the award to maintain a case or controversy
under Article III. Second, any presumption of public access to
judicial documents is outweighed by the importance of
confidentiality under the FAA and the impropriety of Stafford’s effort
to evade the confidentiality provision in her arbitration agreement.
We thus vacate the district court’s confirmation of the award and
remand with instructions to dismiss the petition as moot. We
reverse the district court’s grant of the motion to unseal.
I. BACKGROUND
A. Facts
In June 2018, IBM terminated Elizabeth Stafford. 1 Stafford
signed a separation agreement (the “Agreement”) in exchange for
1Stafford is one of many former employees who brought claims
under the Age Discrimination in Employment Act of 1967 (“ADEA”)
against IBM. See, e.g., In re IBM Arb. Agreement Litig., No. 22-1728, 2023 WL
4982010, at *1 (2d Cir. Aug. 4, 2023); Smith v. Int’l Bus. Machs. Corp., No. 22-
11928, 2023 WL 3244583, at *1 (11th Cir. May 4, 2023); Estle v. Int’l Bus.
Machs. Corp., 23 F.4th 210, 211 (2d Cir. 2022); Rusis v. Int’l Bus. Machs. Corp.,
529 F. Supp. 3d 178, 188-89 (S.D.N.Y. 2021).
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severance payments and other benefits. The Agreement included a
class- and collective-action waiver requiring claims arising from her
termination—including claims under the ADEA—to be resolved “by
private, confidential, final and binding arbitration.” J. App’x at
JA28.
The Agreement included a “Privacy and Confidentiality”
provision that stated:
To protect the confidentiality of proprietary information,
trade secrets or other sensitive information, the parties
shall maintain the confidential nature of the arbitration
proceeding and the award. The parties agree that any
information related to the proceeding, such as
documents produced, filings, witness statements or
testimony, expert reports and hearing transcripts is
confidential information which shall not be
disclosed, . . . except as may be necessary in connection
with a court application for a preliminary remedy, a
judicial challenge to an award or its enforcement, or
unless otherwise required by law or judicial decision by
reason of this paragraph.
Id. at JA32.
B. Procedural History
In January 2019, Stafford filed a demand for arbitration,
alleging age discrimination under the ADEA. An arbitrator
conducted a hearing in March 2021 and entered an award in favor of
Stafford on July 12, 2021.
One week later, Stafford filed a petition to confirm her
arbitration award under the FAA in the U.S. District Court for the
Southern District of New York. She attached her confidential award
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to the petition, filing it under seal but simultaneously asking the
district court to “exercise its inherent authority to unseal this award
so that the public may access it.” J. App’x at JA37. Stafford argued
that the confidentiality provision in the Agreement was an “attempt
to prevent employees from sharing information obtained in their
cases with other employees . . . thus severely hampering the ability of
individuals pursuing these claims to obtain the information needed
to build a case.” Id. at JA37 n.1 (cleaned up).
IBM made the final payments under the arbitration award to
Stafford on September 17, 2021 and thereby “fully satisfied all the
terms of the Final Award.” Id. at JA65. That same day, IBM filed
an opposition to Stafford’s motion to unseal. IBM argued against
unsealing based on Stafford’s lack of standing and equitable estoppel.
The district court granted Stafford’s petition to confirm the
award and her motion to unseal. Stafford v. Int’l Bus. Machs. Corp.,
No. 21-CV-6164, 2022 WL 1486494, at *1 (S.D.N.Y. May 10, 2022). It
rejected IBM’s standing and equitable estoppel arguments against
unsealing. Applying the common-law framework, the district court
found that “numerous district court decisions” have found such
confidential arbitration awards to be “judicial documents” when
attached to a petition to confirm. Id. at *2. The court observed that
“IBM has failed to identify factors that overcome the strong
presumption of public access.” Id. at *3. In particular, it held that
enforcement of the confidentiality provision did not “outweigh the
presumption of public access to judicial documents,” and that “IBM’s
vague and hypothetical statements that competitors may use this
information . . . [are] not the sort of specific evidence required to
overcome the presumption of public access.” Id. IBM timely
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appealed. The district court stayed the unsealing of the award
pending resolution of this appeal. See id.
II. DISCUSSION
On appeal, IBM argues that Stafford’s petition to confirm
became moot when IBM fully paid the award. We agree and hold
that Stafford’s right to confirm the arbitration award is by itself
insufficient to establish a “concrete” injury to maintain a “live” case
or controversy under Article III.
Moreover, the district court erred by failing to weigh the
importance of confidentiality under the FAA and Stafford’s improper
effort to evade the confidentiality provision of the Agreement against
a diminished presumption of access to judicial documents.
A. Mootness
Stafford’s petition to confirm her award is now moot. Stafford
claims that she will suffer a concrete injury unless her award is
confirmed under the FAA. But the availability of a statutory action
does not provide a “concrete” injury for Article III purposes.
1. Legal Standards
Article III of the Constitution provides that the “judicial power
shall extend to all Cases” and “Controversies.” U.S. Const. art. III,
§ 2. “A case becomes moot—and therefore no longer a ‘Case’ or
‘Controversy’ for purposes of Article III—when the issues presented
are no longer ‘live’ or the parties lack a legally cognizable interest in
the outcome.” Already, LLC v. Nike, Inc., 568 U.S. 85, 91 (2013)
(internal quotation marks omitted).
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Mootness is “standing set in a time frame.” Arizonans for Off.
Eng. v. Arizona, 520 U.S. 43, 68 n.22 (1997). “The doctrine of standing
generally assesses whether that interest exists at the outset, while the
doctrine of mootness considers whether it exists throughout the
proceedings.” Uzuegbunam v. Preczewski, 141 S. Ct. 792, 796 (2021).
“[T]o establish standing, a plaintiff must show (i) that he suffered an
injury in fact that is concrete, particularized, and actual or imminent;
(ii) that the injury was likely caused by the defendant; and (iii) that
the injury would likely be redressed by judicial relief.” TransUnion
LLC v. Ramirez, 141 S. Ct. 2190, 2203 (2021). A “concrete” injury is
“real, and not abstract.” Id. at 2204 (quoting Spokeo, Inc. v. Robins,
578 U.S. 330, 340 (2016)). While “Congress may elevate harms that
exist in the real world before Congress recognized them to actionable
legal status, it may not simply enact an injury into existence.” Id. at
2205 (cleaned up).
“An actual controversy must be extant at all stages of review,
not merely at the time the complaint is filed.” Alvarez v. Smith, 558
U.S. 87, 92 (2009) (cleaned up). “No matter how vehemently the
parties continue to dispute the lawfulness of the conduct that
precipitated the lawsuit, the case is moot if the dispute ‘is no longer
embedded in any actual controversy about the plaintiffs’ particular
legal rights.’” Already, LLC, 568 U.S. at 91 (quoting Alvarez, 558 U.S.
at 93). In other words, “no live controversy remains where a party
has obtained all the relief she could receive on the claim through
further litigation.” Ruesch v. Comm’r of Internal Revenue, 25 F.4th 67,
70 (2d Cir. 2022) (internal quotation marks omitted).
The FAA provides that “at any time within one year after the
award is made any party to the arbitration may apply to the court so
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specified for an order confirming the award, and thereupon the court
must grant such an order unless the award is vacated, modified, or
corrected.” 9 U.S.C. § 9. The “confirmation of an arbitration award
is a summary proceeding that merely makes what is already a final
arbitration award a judgment of the court.” Florasynth, Inc. v.
Pickholz, 750 F.2d 171, 176 (2d Cir. 1984); see 9 U.S.C. § 13.
Confirmation is a “mechanism[] for enforcing arbitration
awards.” Hall St. Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576, 582
(2008). “A party, successful in arbitration, seeks confirmation by a
court generally because he fears the losing party will not abide by the
award.” Florasynth, 750 F.2d at 176. Confirmation gives “the
winning party . . . a variety of remedies” for enforcement. Id. This
includes “plac[ing] the weight of a court’s contempt power behind the
award, giving the prevailing party a means of enforcement that an
arbitrator would typically lack.” Unite Here Loc. 1 v. Hyatt Corp., 862
F.3d 588, 596 (7th Cir. 2017) (cleaned up). An arbitration award,
however, “need not actually be confirmed by a court to be valid.”
Florasynth, 750 F.2d at 176. “An unconfirmed award is a contract
right that may be used as the basis for a cause of action,” and “in the
majority of cases the parties to an arbitration do not obtain court
confirmation.” Id.Article III’s case-or-controversy requirement applies to actions
governed by the FAA. The Supreme Court recently affirmed that
the FAA’s provisions authorizing “applications to confirm, vacate, or
modify arbitral awards . . . do not themselves support federal
jurisdiction.” Badgerow v. Walters, 142 S. Ct. 1310, 1316 (2022).
IBM did not argue that the petition to confirm was moot in the
district court, but subject-matter jurisdiction “can never be forfeited
8
or waived,” Arbaugh v. Y&H Corp., 546 U.S. 500, 514 (2006). We
“have an independent obligation to satisfy ourselves of the
jurisdiction of this court and the court below.” Melito v. Experian
Mktg. Sols., Inc., 923 F.3d 85, 92 (2d Cir. 2019) (internal quotation
marks omitted). We review questions of mootness de novo. Conn.
Citizens Def. League, Inc. v. Lamont, 6 F.4th 439, 444 (2d Cir. 2021).
2. Application
Although Stafford had standing when she filed her petition to
confirm (before the award had been satisfied), the petition is moot
because she now lacks any “concrete interest” in confirmation. Knox
v. SEIU, 567 U.S. 298, 307 (2012). IBM could have moved to vacate
or modify the award under the FAA, but it did not do so. See 9
U.S.C. § 12. Indeed, it is undisputed that IBM has satisfied the
award in full and that it does not entitle Stafford to any other relief.
She has thus already “obtained all the relief she could receive on [her]
claim,” Ruesch, 25 F.4th at 70 (cleaned up), and no longer has any
“concrete interest” in enforcement, Knox, 567 U.S. at 307.
Two of our sister courts of appeals, in determining whether
petitions to confirm are moot, have similarly looked to whether the
prevailing party has some concrete interest in enforcement of the
award. See Brown & Pipkins, LLC v. SEIU, 846 F.3d 716, 728-29 (4th
Cir. 2017) (dispute over payment); Unite Here Loc. 1, 862 F.3d at 598(prospective relief). In Brown & Pipkins, the losing party in
arbitration claimed that payment had been made in full, but the
prevailing party disagreed. See 846 F.3d at 729. This dispute over
payment—a “monetary harm,” TransUnion, 141 S. Ct. at 2204—
rendered the petition to confirm not moot. See Brown & Pipkins, 846
F.3d at 729. Similarly, in Unite Here Local 1, there was “plainly a live
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dispute” about whether the losing party was “in fact acting in
compliance with the awards” of prospective relief. 862 F.3d at 598.
The parties’ interests in the “ongoing controversy” over enforcement
of the awards was sufficient for Article III purposes. See id. at 598-
99; cf. Teamsters Loc. 177 v. United Parcel Serv., 966 F.3d 245, 250, 253
(3d Cir. 2020) (finding Article III standing when there was a risk of
“future violations” of the award). Under the logic of these cases, a
petition to confirm an arbitration award is moot when there is no
longer any issue over payment or ongoing compliance with a
prospective award.
Stafford points to Zeiler v. Deitsch, 500 F.3d 157 (2d Cir. 2007),
to argue that “confirmation does not require a ‘live’ dispute related to
compliance with the award.” Appellee’s Br. at 12. But Zeiler
involved an award of prospective relief, see 500 F.3d at 161, which is
not at issue here. In any event, Zeiler did not address standing or
mootness, and “drive-by jurisdictional rulings of this sort have no
precedential effect.” Green v. Dep’t of Educ. of City of N.Y., 16 F.4th
1070, 1076 n.1 (2d Cir. 2021) (cleaned up). Stafford also points to
Ottley v. Schwartzberg, 819 F.2d 373 (2d Cir. 1987), for the same
proposition. Appellee’s Br. at 12. But in Ottley, there was a dispute
as to compliance with the award. See 819 F.2d at 375. No such
dispute exists here. And like Zeiler, Ottley did not directly address
standing or mootness.
Stafford no longer has any concrete interest in enforcement of
her award, so the only remaining question is whether her statutory
right to seek confirmation under the FAA is itself enough to create a
“live” controversy. It is not. The Supreme Court has clearly stated
that “Article III standing requires a concrete injury even in the context
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of a statutory violation.” Spokeo, 578 U.S. at 341; see also TransUnion,
141 S. Ct. at 2205 (“[U]nder Article III, an injury in law is not an injury
in fact.”). Stafford fails to show that holding an unconfirmed
arbitration award is itself a concrete injury that “has a close
relationship to a harm traditionally recognized as providing a basis
for a lawsuit in American courts.” 2 TransUnion, 141 S. Ct. at 2204
(cleaned up). The FAA’s process for confirming an arbitration
award still requires Article III injury, and § 9 of the FAA does not itself
confer standing.
In sum, Stafford’s petition to confirm her arbitration award
became moot when IBM fully paid the award, and her petition should
have been dismissed as moot.
B. Sealing
The district court erred by granting Stafford’s motion to unseal
the arbitration award because it failed to weigh the FAA’s strong
policy in favor of confidentiality and Stafford’s improper effort to
evade the confidentiality provision of the Agreement against the
presumption of public access to judicial documents.
1. Legal Standards
“The common law right of public access to judicial documents
is firmly rooted in our nation’s history.” Lugosch v. Pyramid Co. of
2 The Third Circuit’s statement in Teamsters Local 177 v. United Parcel
Service, 966 F.3d 245 (3d Cir. 2020), that “the dispute the parties went to
arbitration to resolve is ‘live’ until the arbitration award is confirmed and
the parties have an enforceable judgment in hand” is inapposite. Id. at 252.
That case involved a petition to confirm an arbitration award conferring
prospective relief. See id. at 249. Also, it was decided before the Supreme
Court’s decision in TransUnion v. Ramirez, 141 S. Ct. 2190 (2021).
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Onondaga, 435 F.3d 110, 119 (2d Cir. 2006). “The presumption of
access is based on the need for federal courts, although
independent—indeed, particularly because they are independent—to
have a measure of accountability and for the public to have
confidence in the administration of justice.” Id. (quoting United
States v. Amodeo (“Amodeo II”), 71 F.3d 1044, 1048 (2d Cir. 1995)).
This Court’s law regarding sealing is “largely settled.” Brown v.
Maxwell, 929 F.3d 41, 47 (2d Cir. 2019).
“First, the court determines whether the record at issue is a
‘judicial document’—a document to which the presumption of public
access attaches.” Mirlis v. Greer, 952 F.3d 51, 59 (2d Cir. 2020).
Second, “if the record sought is determined to be a judicial document,
the court proceeds to determine the weight of the presumption of
access to that document.” Id. (internal quotation marks omitted).
Third, “the court must identify all of the factors that legitimately
counsel against disclosure of the judicial document, and balance those
factors against the weight properly accorded the presumption of
access.” Id.We have recently rejected similar attempts by Stafford’s
counsel to unseal confidential documents obtained in individual
arbitrations by filing them in court. See In re IBM Arb. Agreement
Litig., 2023 WL 4982010, at *7; Chandler v. Int'l Bus. Machs. Corp., No.
22-1733, 2023 WL 4987407, at *1 (2d Cir. Aug. 4, 2023); Lodi v. Int'l Bus.
Machs. Corp., No. 22-1737, 2023 WL 4983125, at *1 (2d Cir. Aug. 4,
2023); Tavenner v. Int'l Bus. Machs. Corp., No. 22-2318, 2023 WL
4984758, at *1 (2d Cir. Aug. 4, 2023). In those cases, we affirmed the
district courts’ decisions to grant IBM’s motions to seal. See, e.g., In
re IBM Arb. Agreement Litig., 2023 WL 4982010, at *7. We reasoned
12
that the “FAA’s strong policy protecting the confidentiality of arbitral
proceedings” and the “impropriety” of efforts “to evade the
Agreement’s Confidentiality Provision” outweighed the
“presumption of public access.” Id.“When reviewing a district court’s order to seal or unseal a
document, we examine the court’s factual findings for clear error, its
legal determinations de novo, and its ultimate decision to seal or
unseal for abuse of discretion.” Olson v. Major League Baseball, 29
F.4th 59, 87 (2d Cir. 2022) (cleaned up).
2. Application
First, an arbitration award attached to a petition to confirm that
award is ordinarily a judicial document. “In order to be designated
a judicial document, the item filed must be relevant to the
performance of the judicial function and useful in the judicial
process.” Lugosch, 435 F.3d at 119 (internal quotation marks
omitted). Here, the arbitration award attached to Stafford’s petition
to confirm is a judicial document because it is “relevant” to the court’s
decision to confirm that award. Id.Second, the presumption of access to judicial documents,
however, is weaker here because the petition to confirm the award
was moot. The lack of jurisdiction over the underlying dispute does
not, on its own, resolve the sealing issue. See Gambale v. Deutsche
Bank AG, 377 F.3d 133, 139-40 (2d Cir. 2004). But the “weight of the
presumption [of access] is a function of (1) the role of the material at
issue in the exercise of Article III judicial power and (2) the resultant
value of such information to those monitoring the federal courts.”
Bernstein v. Bernstein Litowitz Berger & Grossmann LLP, 814 F.3d 132,
142 (2d Cir. 2016) (internal quotation marks omitted). The
13
confidential award played no “role in the exercise of Article III
judicial power” because the petition should have been denied as
moot. See In re IBM Arb. Agreement Litig., 2023 WL 4982010, at *7
(cleaned up).
Third, the district court erred in failing to consider and give
appropriate weight to the “countervailing factors” at issue. Lugosch,
435 F.3d at 120. In weighing disclosure, courts must consider not
only “the sensitivity of the information and the subject” but also “how
the person seeking access intends to use the information.” Amodeo
II, 71 F.3d at 1051; see also Brown, 929 F.3d at 47 (“[T]he Supreme Court
[has] observed that, without vigilance, courts’ files might ‘become a
vehicle for improper purposes.’” (quoting Nixon v. Warner Commc’ns,
Inc., 435 U.S. 589, 598 (1978))). “[C]ourts should consider personal
motives . . . at the third[] balancing step of the inquiry, in connection
with any asserted privacy interests, based on an anticipated injury as
a result of disclosure.” Mirlis, 952 F.3d at 62 (cleaned up).
Here, Stafford continued to seek confirmation and unsealing of
her arbitration award even after it had been fully satisfied. Her
stated purpose—as argued to the district court and to us—was to
enable her counsel to use the award in the litigation of ADEA claims
of other former IBM employees. Such efforts to evade the
confidentiality provision to which Stafford agreed in her arbitration
agreement are a strong countervailing consideration against
unsealing. See In re IBM Arb. Agreement Litig., 2023 WL 4982010, at
*7.
Confidentiality is “a paradigmatic aspect of arbitration.”
Guyden v. Aetna, Inc., 544 F.3d 376, 385 (2d Cir. 2008); see also Am.
Express Co. v. Italian Colors Rest., 570 U.S. 228, 233 (2013) (“[C]ourts
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must rigorously enforce arbitration agreements according to their
terms.” (internal quotation marks omitted)). We have affirmed
decisions to keep judicial documents subject to confidentiality
provisions in arbitration or settlement agreements under seal. See,
e.g., Gambale, 377 F.3d at 143-44 (confidential settlement); DiRussa v.
Dean Witter Reynolds Inc., 121 F.3d 818, 826 (2d Cir. 1997) (confidential
arbitration award).
The district court’s conclusion that “the enforcement of
contracts . . . does not constitute a higher value that would outweigh
the presumption of public access to judicial documents” did not fully
account for the context of Stafford’s unsealing motion. Stafford, 2022
WL 1486494, at *3 (cleaned up). “[A]llowing unsealing under such
circumstances would create a legal loophole allowing parties to evade
confidentiality agreements simply by attaching documents to court
filings.” In re IBM Arb. Agreement Litig., 2023 WL 4982010, at *7. In
short, the presumption of access to judicial documents is outweighed
here by the interest in confidentiality and because Stafford’s apparent
purpose in filing the materials publicly is to launder their
confidentiality through litigation. We conclude that the district
court should not have granted Stafford’s motion to unseal the award.
III. CONCLUSION
We have considered all of the parties’ remaining arguments
and have found them to be without merit. For the reasons set forth
above, the judgment of the district court is vacated and remanded
with instructions to dismiss as moot. The district court’s grant of the
motion to unseal is reversed.
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