You are representing Small Widget Company (SWC) in a lawsuit against one of its former managers (Manager). SWC claims that Manager has intentionally interfered with its business opportunities. In the course of discovery, Manager has requested that SWC provide documents related to its alleged lost business opportunities.
But SWC fears that competitors could use some of that information to gain a business advantage by discovering how its pricing structures work. SWC also considers some of the other information-for instance, the amount of its revenues and the profits it generated-to be private and wants to keep it confidential, even though the company admits it would not provide any business advantage to competitors. At the same time, the parties are close to resolving their dispute, and SWC is also worried about the terms of any settlement agreement becoming public.
Your first inclination is to allay SWC's fears by assuring it that parties in litigation routinely agree to protective orders requiring that discovery information be kept confidential, and those orders are usually approved by the courts. You are also tempted to explain to SWC that a protective order could include a requirement that all the potentially protected information would be filed with the court under seal. Finally, you want to tell SWC that any settlement could include a confidentiality agreement that would prevent anyone from learning about its terms.
Though that advice would be consistent with the experience of many attorneys, it may now be out of touch with reality-and the emerging law. Since 2001, when the Judicial Council adopted new rules on sealing court records, the ability to limit the public's right to access court records has been substantially limited. So you are better off telling SWC that it may well be able to get a protective order keeping discovery materials confidential. However, you should also caution that if any of those discovery materials are used at trial or as part of a substantive motion, such as a motion for summary judgment, most of the materials will probably become part of the public record. And, finally, you should tell your client that though any settlement agreement can include a confidentiality provision stopping Manager from publicizing its terms, if there is future litigation pertaining to the agreement, its terms will probably become public.
A History of Judicial Discretion
In the past there was little guidance for courts and parties to rely on in considering whether and how court records could be sealed. In 1968 one court attempted to synthesize the holdings in several cases by establishing the rule that when there is no contrary statute or countervailing public policy, "the right to inspect public records must be freely allowed." The court specified, "In this regard the term 'public policy' means anything which tends to undermine that sense of security for individual rights, whether of personal liberty or private property, which any citizen ought to feel has a tendency to be injurious to the public or the public good." (Craemer v. Superior Court, 265 Cal. App. 2d 216, 222 (1968).)
The Craemer court, however, did not provide much guidance about how courts should weigh public policy against the right to inspect public records, leaving that to the discretion of the individual trial courts.
Nine years later the issue of sealing court records was considered in Estate of Hearst. (67 Cal. App. 3d 777 (1977).) In Hearst, William Randolph Hearst's trustees attempted to seal certain records in the probate files after his death. They were particularly concerned about documents that would reveal personal information and endanger the safety of various family members in the wake of Patricia Hearst's kidnapping. The probate court first sealed, then unsealed, the records. On appeal, considering the rule set out in Craemer, the court stated that the issue was "the reasonableness of the trial court's sealing and unsealing orders under the circumstances of the case." The opinion also stated that a court has the power to restrict public access to records under exceptional circumstances and on a showing of good cause. (67 Cal. App. 3d at 784-85.) Once again, the Hearst court left trial courts and litigants with little guidance about what would constitute good cause.
In 1988 another appellate court noted that the question of sealing documents remained "an area where customs and practices vary greatly and little written guidance exists." (Champion v. Superior Court, 201 Cal. App. 3d 777, 785 (1988).) The court found "no guidance" in the California Rules of Court. Although the Champion court was considering the appropriateness of sealing records in an appellate court, it clearly was mindful of most courts' practice of accepting parties' agreements to prohibit public access to records. The court commented that "however appealing it may be to merely accept a stipulation by the parties to seal a record, the temptation must be resisted." It instructed that it was "clearly improper, even on stipulation of the parties, for the court to issue an order designed not to preserve the integrity and efficiency of the administration of justice, but to subvert public policy."
Finally, cautioning that courts must be "vigilant to ensure that nothing presented ... is sealed without a strong justification," the opinion set forth procedures that required litigants to segregate arguably confidential portions of documents from the public record. (201 Cal. App. 3d at 787-89.) Though providing clear procedures for litigants seeking to have certain documents in court files sealed, there was still little substantive guidance for courts struggling with whether to grant such requests.
With no uniform standards in place, parties who wished to keep information confidential often continued the practice of entering stipulations with opposing parties and submitting them to the court for approval. When no agreement could be reached, they filed motions. Many attorneys found that if their stipulations or motions articulated a relatively low threshold of privacy concerns, such as the release of embarrassing or private information, protective orders allowing documents to be sealed would often be granted. After all, the vast majority of cases did not-and still do not-garner attention from the media or the public. Rarely would any third party be paying enough attention to a particular matter to challenge the sealing of records.
The Public Right to Access
In 1996 the media was paying attention when Sondra Locke sued Clint Eastwood for breaching alleged promises to assist her in developing motion picture projects. The trial court ordered the public and the press excluded from any proceedings that took place outside the presence of the jury. The court also ordered those portions of the trial transcript sealed. The local NBC affiliate challenged the order. By the time the California Supreme Court considered the issue, the trial was over. But the state's high court took the case because it presented an important question affecting the public interest that was capable of repetition: "whether there is a constitutional right of public access to civil trials." (NBC Subsidiary, Inc. v. Superior Court, 20 Cal. 4th 1178, 1190-91 (1999).)
The NBC court concluded that the public's right to access in civil cases was protected by the First Amendment. And it added, "We believe that the public has an interest, in all civil cases, in observing and assessing the performance of its public judicial system, and that interest strongly supports a general right of access in ordinary civil cases." (20 Cal. 4th at 1210.)
The NBC court held that the First Amendment right of public access to the courts means that in ordinary civil cases proceedings are "presumptively open." It also noted that such a presumption can only be overcome if the court holds a hearing and expressly finds that the closure or sealing involves an overriding interest supporting it; includes a substantial probability that the interest will be prejudiced without it; is narrowly tailored to serve the overriding interest; and "there is no less restrictive means of achieving the overriding interest." (20 Cal. 4th at 1217-18.)
Judicial Council Standards
The California Judicial Council recently adopted rules 243.1 and 243.2 of the California Rules of Court "to provide a standard and procedures for courts to use when a request is made to seal a record." (See, Advisory Committee Comment (2004) to California Rule of Court 243.1, declaring the standard to be based on the NBC case.) These rules not only set forth the factors a court should consider when ruling on a motion to seal a part of the court file but also finally established a uniform set of procedures that litigants must follow in making such a motion.
It is noteworthy that these rules do not apply to discovery materials filed with a court in conjunction with discovery motions. (See, Rule 243.1(a)(2).) There is no public right of access to discovery materials that are not used at trial or in conjunction with a substantive motion. (See generally, Seattle Times Co. v. Rhinehart, 467 U.S. 20 (1984).) Thus, unless discovery materials are used substantively in a court proceeding, a court is free to fashion whatever protective order it finds appropriate, including sealing documents submitted as part of discovery motions.
However, do not assume that obtaining a protective order pertaining to discovery materials will necessarily result in a further order sealing those materials if they are used in a substantive proceeding. In fact, the procedures that must be followed and the standards the court is compelled to apply warrant serious consideration before a litigant should be encouraged to expend the time and legal fees that will be incurred in the process of requesting that any portion of the court file be sealed.
A prudent attorney will discuss with his or her client the expense of attempting to seal any part of the court file. Getting a sealing order will require the party to file a motion-which will be public, at least in redacted form-specifically setting out the basis for the sealing and including a declaration with supporting facts. The court will be required to make specific factual findings, which usually will come only after a relatively involved hearing.
Even before considering whether the client can meet the tough standards to overcome the public's qualified right to access, the question should be, "Does it matter?" Second thought should be given to making a motion to seal any part of the record unless the affected party has a true interest, beyond principle, to protect. For example, individuals and companies often have a visceral reaction to opening their financial information to public scrutiny. However, if there is no true concern that public access could result in harming the litigant, a party might be better advised to save its resources for the underlying substantive dispute.
The procedures set out in Rules 243.1 and 243.2 apply to any effort to seal any part of the court file or court record-even a single sentence in a single document. Rule 243.1(b)(1) defines a record as "all or a portion of any document, paper, exhibit, transcript, or other thing filed or lodged with the court." Rule 243.1(c) reiterates the finding in NBC that court records are presumed to be open.
Rule 243.1(d) provides that a court may order a record to be filed under seal only if it expressly finds facts that establish an overriding interest that overcomes the right of public access to the record, as well as a substantial probability that interest will be prejudiced if the record is not sealed. In addition, the proposed sealing must be narrowly tailored, and there must be no less-restrictive means to achieve the overriding interest.
Rule 243.1(e) generally requires that an order sealing the record must specifically set forth the facts supporting the court's findings and must direct the sealing of only those portions of documents containing the material that needs to be placed under seal.
Thus, before an order sealing the record can be issued, some interest that is threatened by disclosure must be identified, and that interest must be shown to be so significant as to outweigh the qualified right to access of the public. The Judicial Council did not define what may constitute an "overriding interest," leaving that to case law. (See, Advisory Committee Comment (2004) to Rule 243.1.)
The NBC court did provide some guidance about interests that might require protection. Some of the more common examples in civil litigation include protection of a civil litigant's right to a fair trial, protection of a witness from extreme embarrassment or intimidation, protection of trade secrets, protection of privileged information, and the enforcement of binding contractual obligations not to disclose. (20 Cal. 4th at 1223, n.46.)
As made clear by Rule 243.1, identifying a potential overriding interest is not enough. The proponent of the sealing order must also demonstrate that there is a substantial probability that the interest will be prejudiced absent sealing. (Huffy Corp. v. Superior Court, 112 Cal. App. 4th 97, 107 (2003).) As demonstrated by recent appellate court opinions, it is critical to make a detailed factual showing of the potential harm of the disclosure and to seek to seal only portions of documents that are necessary to protect the articulated interest. (See Huffy, 112 Cal. App. 4th at 107-8 (refusing to seal settlement agreement with confidentiality provisions because there was no showing of prejudice to legitimate business interest and no request to seal only particular parts of the settlement agreement); Universal City Studios v. Superior Court, 110 Cal. App. 4th 1273 (2003) (refusing to seal confidential settlement agreement because no showing of prejudice to "confidential business practice").) Notably, the Universal court indicated that financial information involving confidential matters relating to business operations that could interfere with the company's ability to effectively compete in the marketplace would normally be worthy of sealing. However, because the information had already been publicly disclosed in another matter, it could not be sealed. (110 Cal. App. 4th at 1286.)
Motions for Sealing Orders
You must follow very specific procedures to make a motion to seal records. Rule 243.2(b)(1) requires the moving party to file a motion or application, memorandum of points and authorities, and a declaration setting forth the supporting facts.
Of course, in almost all cases, the motion and supporting papers will include the very information that the proponent seeks to have sealed. In addition, take care to comply with Rule 243.2, which allows documents to be filed in redacted form for the public record and to be lodged "conditionally under seal" in unredacted form while the motion is pending.
Mitchell J. Langberg specializes in entertainment, defamation, and First Amendment litigation with Stroock & Stroock & Lavan in Los Angeles.