Delaware Court of Chancery Unveils New Rule for Confidential Filings

On November 5, 2012, the Delaware Court of Chancery unveiled a change to its rules for handling confidential filings. The new rule, Rule 5.1, which will go into effect January 1, 2013, imposes stricter requirements on parties seeking to submit confidential filings, reduces the categories of information that are entitled to protection, and streamlines the process for challenging documents filed confidentially. The rule is limited, however, to filings presented to the Court, and does not affect the ability of parties to enter into confidentiality stipulations to govern discovery. In this Alert, we highlight the ways in which Rule 5.1 departs from prior practice, and explore the implications for individuals and businesses litigating cases involving sensitive information in the Delaware Court of Chancery.

“Good Cause” Standard for Confidential Treatment -

Rule 5.1 replaces Rule 5(g), which had governed the procedures for designating materials as confidential since 1990. Like its predecessor, Rule 5.1 requires the party seeking confidential treatment to show “good cause” as to why the information should be kept confidential. However, unlike Rule 5(g), which did not clearly define “good cause,” leading to the over-designation of material as confidential, Rule 5.1 specifies that “good cause” exists “only if the public interest in access to Court proceedings is outweighed by the harm that public disclosure of sensitive, non-public information would cause.” Examples of information for which there may be “good cause” for confidential treatment include trade secrets, sensitive proprietary information, sensitive financial and business information, as well as sensitive personal information such as medical records, social security numbers, and the names of minor children. By clarifying the “good cause” standard and better defining the types of information that will be considered confidential, Rule 5.1 will likely curtail the practice of over-designating material as confidential, and thereby enhance public access to judicial proceedings...

Please see full alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.