Litigants and third parties subpoenaed to produce information in litigation who believe that information that they deem confidential will not ever become part of the public record so long as a discovery protective order is in place, and their counsel, beware.
In a case thus far met with little fanfare, but with potentially broad practical impact, the Sixth Circuit recently reiterated that parties (and even non-parties) involved in federal litigation must meet stringent requirements in order to have any materials filed under seal, irrespective of the terms of any prior discovery protective order. In Shane Group, Inc. v. BlueCross Blue Shield of Mich., the court considered whether the district court had abused its discretion when it placed so much of the record under seal that class members objecting to a class settlement claimed they were unable to review enough of the record to adequately assess its fairness. The court agreed with the objecting class members, vacating the district court’s orders placing numerous filings under seal as well as the approval of the settlement.
Shane Group involves a civil class action alleging violations of the Sherman Antitrust Act in conjunction with reimbursement rate agreements. During discovery, the parties negotiated several protective orders allowing the designation of discovery materials as confidential and subject to restrictions on use and disclosure. Thereafter, numerous filings, including a motion for class certification and plaintiffs’ expert’s report (upon which the valuation of the proposed settlement was based) were filed under seal. The sole justification for the motions to seal, which was accepted by the district court, was that all of the filings included quotations, information, and references to numerous discovery materials designated as confidential by Blue Cross or a third party.
In analyzing the issue, the Sixth Circuit emphasized the difference between discovery “protective orders” on the one hand, which can be entered upon a showing of mere “good cause,” and orders to seal court records, which require that the party seeking to seal materials overcome a “strong presumption in favor of openness.” While this presumption is not new, having been articulated by the court years ago in Brown & Williamson Tobacco Corp. v. F.T.C., 710 F.2d 1165 (6th Cir. 1983), the court made clear in Shane Group that attempts to seal court records will face heightened scrutiny: “The proponent of sealing therefore must ‘analyze in detail, document by document, the propriety of secrecy, providing reasons and legal citations.’” Moreover, “a district court that chooses to seal court records must set forth specific findings and conclusions ‘which justify nondisclosure to the public.’” Importantly, the district court’s obligation “is independent of whether anyone objects to” the sealing, and the reasons for sealing a specific document or documents must be set forth in detail. None of those standards was met in this case, and the court reversed the orders permitting filing under seal.
Protective orders allowing the designation and protection of confidential information are commonplace in litigation. In part, they are motivated by relatively recent increases in privacy rights, including statutes such as HIPAA and other privacy protections, as well as historic, general concerns regarding proprietary and otherwise confidential business and personal information. In practice, parties and counsel often take for granted that any “confidentiality” or “trade secret” designations made pursuant to such a protective order will entitle their client’s so-designated materials to protection from disclosure even if they are later made a part of the record. Requesting documents to be sealed when filed with the court because they have been designated confidential pursuant to a protective order is a routine practice, and courts have routinely granted these requests.
Shane Group, however, reiterates and highlights that counsel must be cognizant that the protections afforded by a protective order entered in discovery will not automatically extend to confidential materials placed in the court record. Rather, the party or non-party seeking to seal documents must be prepared to analyze each document – and even each page of a document – to articulate the reasons that each document or page should be kept confidential, and the district court must also perform a similar analysis. Perfunctory designations of confidentiality pursuant to a previously entered protective order will not serve to justify sealing, and any order to file under seal based on such designations is subject to reversal.
In the second part of this three-part series, we will examine an unpublished decision from the Sixth Circuit, Beauchamp v. Fed. Home Loan Mortgage Corp., in which the court applied the Shane Group standards. We will also discuss strategic approaches for parties to keep documents confidential and/or under seal. Finally, the third part of this series will discuss potential impacts of Shane Group on third parties responding to subpoenas.
