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The plaintiff, Debbie Foltz, charged that State Farm, one of the nation's largest automobile insurance carriers, conspired with a utilization review company to defraud her of Personal Injury Protection (PIP) benefits owed under her automobile policy. The case was litigated for over four years, after which the parties entered into a confidential settlement which apparently included a stipulation that the Court should seal all documents the parties had filed with the Court. Whitman Affidavit, paras. 6-9.

Because the sealing of this file was accomplished by agreement of the parties, no one called the Court's attention to either law or fact which would impede such a purge. Intervenors present both, and urge the Court to reconsider its decision to restrict public access to the Court's file.

Although intervenors' knowledge of the litigation is necessarily limited because of the Court's sealing order, they were able to determine some information about it from the four documents and the minute orders that were not sealed by the Court. Whitman Affidavit, paras. 8-9. Foltz sued State Farm and California Institute in 1994 for bad faith and fraud in denying her claim for benefits under the Personal Injury Protection ("PIP") coverage in her State Farm insurance policy after her son was injured in a car accident. She alleged that State Farm conspired with California Institute to fraudulently deny her benefits by engaging California Institute for the purpose of conducting a sham review of the reasonableness and necessity of medical treatment her son received. The complaint prayed for $10,000 in economic damages, $100,000 in non-economic damages, and $10,000,000 in punitive damages.⁽¹⁾ Id., para. 8.

All parties vigorously litigated the case for over four years. In the course of the litigation, State Farm sought and obtained a protective order shielding documents it had produced in discovery from public disclosure. Whitman Affidavit, para. 6. Both defendants filed Motions to Dismiss and Motions for Summary Judgment, which were denied. Id. There were numerous discovery motions filed, including motions to compel and motions to intervene to modify the protective order. Id. Including all of the parties' filings and the Minute Orders issued by the Court, the record in this case should contain more than 450 documents. Id.

On August 18, 1998, the Court entered a Minute Order reflecting the parties' stipulation that they were to "file amended pleadings to those documents they desire to remain open to the public and all other documents will be sealed." Whitman Affidavit, para. 7. Thus, it is possible that even the few pleadings that do remain in the file were sanitized for public view. The parties agreed to settle the case and on or about November 12, 1998, the Court entered the Stipulated Judgment of Dismissal. Id.

The Court deleted the case caption and docket sheet from its computerized recordkeeping system. Whitman Affidavit, para. 3; see also Affidavit of Sarah Posner ("Posner Affidavit"), paras. 2-5. As a result, any member of the public seeking to view the record of this case may well be told that no such case ever existed. Whitman Affidavit, para. 3; Posner Affidavit, paras. 4-6. With some additional diligence, a person may determine that the case existed, but would be prevented from viewing all but four of the pleadings and several minute orders, just a fraction of the hundreds of court records of the case. Whitman Affidavit, para. 4-5.

The sealing of court records may be justified under very limited, even extraordinary, circumstances. A proponent of the secrecy of a court file must demonstrate compelling reasons for secrecy and identify specific documents or sections thereof which contain material which should be protected from public scrutiny. As set forth in greater detail below, the test for public disclosure is not whether information in those documents reflects badly on a party, but whether that party would be impermissibly damaged by the disclosure, as in the case of trade secrets or confidential research or development.

Once the proponent of sealing has met that burden, the trial court must determine whether the potential harm alleged by the proponent overcomes the "strong burden in favor of public access." If the court agrees to seal some part of the file, it must make specific factual findings of the harm that would result from the continued public access to the court's file, and articulate a "compelling reason" why the private litigant's interest in secrecy outweighs the public's strong interest in access to its court files. None of these conditions for sealing any portion of the record, much less the entire file, have been met here. The court's file should be unsealed, and the case caption and docket sheet restored to the Court's recordkeeping system.

1. The Public Has A Presumptive Right Of Access To Court Records Under The First Amendment And At Common Law.

Numerous courts, including the Ninth Circuit, have recognized that the common law gives the public a right of access to court records. "The existence of a common law right of access to judicial proceedings and to inspect judicial records is beyond dispute." Publicker Industries, Inc. v. Cohen, 733 F.2d 1059, 1066 (1984). The right is anchored in English common law, and can be traced back to the Statute of Marlborough in 1287 (Publicker, 733 F2d at 1068-69). "One of the most conspicuous features of English justice, that all judicial trials are held in open court, to which the public have free access, * * * appears to have been the rule in England from time immemorial." E. Jencks, The Book of English Law 73-74 (6th ed. 1967) (emphasis added), quoted in Publicker, 733 F2d at 1069. In evaluating claims involving the public common law right of access to court records, the Ninth Circuit "require[s] courts to start with a strong presumption in favor of access." Hagestad v. Tragesser, 49 F.3d 1430, 1434 (9^th Cir. 1995). Publicker, 733 F.2d at 1068-1069 (tracing presumption of openness in all court proceedings from the Statute of Marlborough of 1287). The English right of public access to courts was continued in the American colonies and later memorialized in the Constitutions of colonies and the first states. Id. at 1069.

In addition, numerous courts have held that there is a First Amendment right of access to court records and proceedings. Globe Newspaper Co. v. Superior Court, 102 S.Ct. 2613, 2619-20, 457 U.S. 602, 603-07 (1982). In Globe, the Supreme Court recognized that the First Amendment granted to press and public alike a constitutional right of access to criminal trials. Although the Ninth Circuit has not had an opportunity to rule whether this Constitutional right also extends to civil trials, see Hagestad, 49 F.3d at 1434 n. 6, other circuits have concluded that the policy in favor of making a criminal justice system transparent and accessible to the people applies with equal force to the civil justice system. See, e.g., Publicker Industries, 733 F.2d 1059, 1070 (3^rd Cir. 1984) (quoting Globe Newspaper, 102 S.Ct. at 2618-19, 457 U.S. at 604-5); Rushford v. New Yorker Magazine, Inc., 846 F.2d 249, 253 (4^th Cir. 1988); Brown v. Advantage Engineering, Inc., 960 F.2d 1013, 1016 (11^th Cir. 1992). As Justice Powell has said:

It is clear that the courts of this country recognize a general right to inspect and copy public records and documents, [FN7] including judicial records and documents. Nixon v. Warner Communications, Inc., 435 U.S. 589, 597, 98 S.Ct. 1306, 1311, 55 L.Ed.2d 570 (1978).

Under either the First Amendment or the common law, the right of access extends to all documents filed with the court. "[T]here is a presumptive right to public access to all material filed in connection with nondiscovery pretrial motions, whether these motions are case dispositive or not." Leucadia, Inc. v. Applied Extrusion Technologies, Inc., 998 F.2d 157, 165 (3^rd Cir. 1993). Thus, the public has a presumptive right of access to all the records in this case, including pleadings, motions, briefs, exhibits and affidavits.

Once a matter is brought before a court for resolution, it is no longer solely the parties' case, but the public's case. Absent a showing of extraordinary circumstances set forth by the district court in the record consistent with [11^th Circuit precedent], the court file must remain accessible to the public.

The, because it is the rights of the public, an absent third party, that are at stake, any member of the public has standing to view documents in the court file that have not been sealed in strict accordance with [precedent], and to move the court to unseal the file in the event the record has been improperly sealed.

Brown v. Advantage Engineering, Inc., 960 F.2d 1013, 1016 (11^th Cir. 1992).

2. There Is No Compelling Reason Overcoming The Public's Presumptive Right Of Access To The Records In This Case.

"[T]o limit the public's access to civil trials there must be a showing that the denial serves an important governmental interest and that there is no less restrictive way to serve that governmental interest." Publicker, 733 F2d at 1070, citing Globe Newspaper Co. v. Superior Court, 457 U.S. at 606-07. The record must demonstrate "an overriding interest based on findings that closure is essential to preserve higher values and is narrowly tailored to serve that interest." Press- Enterprise Co. v. Superior Court of California, Riverside County, 464 US 501, 509, 104 S.Ct. 819, 824, 78 L.Ed.2d 629 (1984). In order to overcome the presumption in favor of access to court records, the Ninth Circuit has held that "the district court must base its decision on a compelling reason and articulate the factual basis for its ruling, without relying on hypothesis or conjecture." Hagestad, 49 F.3d at 1434. Factors to weigh include "the public interest in understanding the judicial process and whether disclosure of the material could result in improper use of the material for scandalous or libelous purposes or infringement upon trade secrets." Id. quoting EEOC v. Erection Co., Inc., 900 F.2d 168, 170 (9^th Cir. 1990). The Ninth Circuit has held that it is an abuse of discretion for a district court to seal an entire case file without articulating a compelling reason for overcoming the presumption of the public's right of access. Hagestad, 49 F.3d at 1434-35.

The sealing of an entire record is a far more radical step than protective orders -- even the blanket protective orders which the Ninth Circuit has also disapproved. Discovery, "which is ordinarily conducted in private[,] stands on a different footing than does a motion filed by a party seeking action by the court," because "a motion or a settlement agreement filed with the court is a public component of a civil trial." Bank of America Trust and Savings Ass'n v. Hotel Rittenhouse Associates, 800 F.2d 339, 343-44 (3^rd Cir. 1986). In contrast, motions filed with the Court "are matters which the public has a right to know about and evaluate." Id. Once a document is lodged with the Court, "it becomes a judicial record, and subject to the access accorded such records." Id. at 345. Therefore, courts recognize that judicial records should enjoy less confidentiality protections than protective orders provide to discovery materials, and that courts can thereby avoid endorsing "what are essentially secret judicial proceedings." Id.

Nevertheless, the Ninth Circuit has specifically disapproved such wholesale protections as is offered by a "blanket protective order" because it cannot be based on a sufficiently specific and articulated reason. Federal Rule of Civil Procedure 26(c) authorizes the Court to grant a protective order for discovery materials "for good cause shown" (a lesser threshold than is applied to an order sealing a court file, as shown above). A litigant can protect specific materials produced in discovery from public disclosure, but not every document produced in the case. The Ninth Circuit has made clear in Beckman Industries, Inc., v. International Ins. Co., that a blanket discovery protective order, without a showing of specific harm from disclosure, is never justified:

[A party's reliance interest in allowing discovery or settling the case] will be less with a blanket order, because it is by nature overinclusive...because the protective order was a stipulated blanket order, [the party opposing disclosure] never had to make a 'good cause' showing under Fed.R.Civ.P. 26(c) of the need for protection...nor does it allege specific prejudice or harm now. Broad allegations of harm, unsubstantiated by specific examples or articulated reasoning, do not satisfy the Rule 26(c) test.

966 F.2d 470, 476 (9^th Cir. 1992) (internal quotation omitted) (emphasis supplied).

3. The Litigants Cannot Justify Closure of This File.

In light of the Ninth Circuit precedent in Hagestad and Beckman, it is clear that this Court must reverse its sealing order and restore the public record of this case to the court's system and make the records available to the public.

Plaintiff Foltz alleges that State Farm, one of the nation's largest automobile insurance carriers, conspired with a utilization review company to defraud its policyholder. These allegations are of interest to millions of Americans who purchase insurance from the "good neighbor."

Nevertheless, the case has been virtually erased from the public record. No docket sheet can be found. No record of the case exists in the Court's computer. A person with considerable research skills and persistence might gain access to a scant number of the 450 documents which were originally available. All the remaining documents in the case are sealed. The parties have accomplished this by agreement; there is no indication that either party could or did present the Court with either law or fact contrary to their private interest.

The sealing of this court record prevents the public, including other State Farm policyholders both present and future, from access to formerly-public information. If the sealing order in this case stands, the public will never know the details of Foltz's allegations, what facts came to light in the course of discovery, the facts which prevented defendants from obtaining a summary judgment, the identity and interest of intervenors, or the terms of settlement and dismissal. Indeed, the public may not even be able to find out that the case was even filed, because docket sheet and the record of the case has been deleted from the Court's computer system.

Deletion of the record of the case and sealing the court's entire file is prejudicial to the administration of justice. Access to records of judicial proceedings is critical to the integrity of the judicial system and to public confidence in that integrity. See, e.g, Publicker, 733 F.2d at 1070 (quoting Globe Newspaper Co., 102 S.Ct. at 2618-19, 457 U.S. at 605-5).. By engaging in formal litigation, parties submit to the public nature of the process in exchange for the benefits conferred by the court's supervision. A settlement which stipulates to the retroactive sealing of the court's file is a naked attempt to erase this history. Litigants may be able to buy and sell their own silence; they should not be able to obtain the cooperation of the Court simply by agreeing that it would be a good idea to pretend that the litigation had never occurred.

In this case, there is no evidence that defendants articulated any reason whatsoever to overcome the public's right of access to these court records. Nor could they. There is no reason why materials concerning whether Debbie Foltz could or could not establish her claim that State Farm defrauded her of insurance benefits would be used for scandalous or libelous purposes; there is even less a possibility that such information would infringe on any "trade secret" owned by State Farm. A generalized desire for privacy can't be the basis for protecting information that has already been public. In fact, the records in this case are of significant public concern: the public has an interest in gathering information about insurance carriers and understanding the insurer's obligations and the policyholder's rights under the law. See Affidavit of Cher McIntyre, paras. 5-6; Affidavit of Dan Lambe, paras. 2-4.

Hagestad applies: the Court should restore the public record to reflect the existence of this case, and to make the public record available to the public.

Closing the public record of this case violates a fundamental principle of our justice system. The parties cannot, by their private agreement, abrogate the public's right of access or justify a pretense that the case they litigated in the public courts never existed.

For the foregoing reasons, Intervenors request that their Motion to Unseal the court's file in this matter be granted.

DATED this ___ of May, 1999.

Lawrence Baron, OSB No. 81144
Matthew Whitman, OSB No. 98376
Law Office of Lawrence Baron, P.C.
621 S.W. Morrison, Suite 950
Portland, Oregon 97205
Phone: (503) 417-1117
 

Kathryn Clarke, OSB No. 79189
921 S.W. Washington, Suite 764
Portland, Oregon 97205
Phone: (503) 224-7963
 

Sarah Posner
Trial Lawyers for Public Justice, P.C.
1717 Massachusetts Ave. N.W., Suite 800
Washington, D.C. 20036
Phone: (202) 797-8600
Attorneys for Intervenors

ENDNOTE

1.Shortly before the parties settled this case, a jury awarded the plaintiff $9.5 million in punitive damages in a very similar case against State Farm in Idaho. State Farm moved for a judgment notwithstanding the verdict, which was denied. Robinson v. State Farm Mut. Automobile Ins. Co., No. CV OC 94-98099D (District Court of the Fourth Judicial District, Ada County, Idaho), Memorandum Decision (August 7, 1998). That case is now on appeal.