In the bankruptcy of Garlock Sealing Technology, allegations were raised that national counsel for mesothelioma victims had engaged in fraud, deceit, and other activities prohibited by the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1961-1968, in settling their clients’ claims. After the bankruptcy judge ordered the hearing closed, Legal Newsline filed an emergency motion to keep the hearing at which these issues were raised open to the media and the public.
Following Media General Operations, Inc. v. Buchanan, 417 F.3d 424, 431 (4th Cir. 2005), the district court held that sealing the hearing and documents “shifted the presumption that favors open courts to a presumption favoring the closure of proceedings based on confidentiality designations by counsel, improvidently shifting the burden to the public and the press to disprove the contours of a need to seal which has also not been described.” In restricting public access to a hearing or documents, a court is required to “state the reasons for its decision to seal supported by specific findings, and the reasons for rejecting alternatives to sealing to provide this court with sufficient information for meaningful appellate review.” Media General Operations, Inc. v. Buchanan, 417 F.3d 424, 431 (4th Cir. 2005). Here the only basis for closing the hearing was the attorney seeking to ave matters sealed was that they were confidential. An assertion of confidentiality, however, is not the endpoint, but instead the bankruptcy court is “required to ‘show its work’ by providing sufficient information concerning the reasons such exceptional relief [is] merited….” (Emphasis added.) This requires both specific findings supporting sealing of documents and also consideration of less drastic alternatives.
The district court recognized that it was itself “complicit in the practice of entering lengthy protective orders”, but made clear that designation by the parties of confidential mattes does not by itself result in automatic sealing, but that the court “simply cannot delegate that responsibility to the litigants by giving deference to protective orders.” The district court then referenced its own Local Rule 6.1 as the appropriate means of address requests for sealing matters. Similar Local Rules exist for the Eastern and Middle District courts in North Carolina, but none of the three bankruptcy courts appear to currently have such requirements. As such, confidentiality becomes the rule, rather than the exception.
Additionally, while Legal Newsline asked the district court to determine the source of the right of access, either the common-law presumption which favors access to all judicial proceedings and filings or the First Amendment guarantee of access. While the district court remanded this question to the bankruptcy court, it seems that none of the parties have taken note of the additional requirements under 11 U.S.C. § 107 that protect trade secrets, confidential research & development, commercial information or scandalous or defamatory matters. This may displace or supplement the common-law presumption, but obviously not the First Amendment protections.
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