The U.S. Court of Appeals for the Sixth Circuit just issued an opinion that should have all litigators who practice in its courts revisiting their preferred form of protective order to ensure that it contemplates the proper standard for filing documents under seal. Often, litigants will agree in a stipulated protective order to seek leave to file under seal any documents that have been designated as "confidential" by the parties during the discovery process. Frequently, such motions for leave are granted as a matter of routine. According to the Sixth Circuit, however, stamping a document "confidential" or even "attorneys' eyes only" during discovery, pursuant to a valid protective order, is insufficient to assure the sealing of those same documents when the material is placed in the court record.
In finding that "every document that was sealed by the district court [in Michigan] was sealed improperly," the Sixth Circuit reasoned that the district court relied upon "protective-order justifications, not sealing-order ones." Shane Grp., Inc. v. Blue Cross Blue Shield, Nos. 15-1544/1551/1552, 2016 U.S. App. LEXIS 10264, at *13 (6th Cir. 2016) (emphasis added). In vacating each order of the district court that sealed documents, the Sixth Circuit held that "[t]he proponent of sealing . . . must 'analyze in detail, document by document, the propriety of secrecy, providing reasons and legal citations.'" Id. at *12 (emphasis added). The trial court must do the same. Id. at *11 ("a district court that chooses to seal court records must set forth specific findings and conclusions 'which justify non-disclosure to the public'").
As a result of Shane Group, litigants must be prepared to: (1) revisit their protective orders to ensure that they contemplate the correct standard for filing under seal; (2) brief their motions for leave to file under seal with more robust explanations of why specific documents should be shielded from public view; and (3) advise clients that courts in the Sixth Circuit are likely to undertake a more deliberate approach to seal requests than what they may be used to seeing.
"There is a Stark Difference" Between the Standard for
Filing Under Seal and the Standard for Shielding Certain Documents During Discovery
Shane Group was an antitrust class action, in which Blue Cross Blue Shield of Michigan was accused of conditioning the reimbursement rates it would pay hospitals on the requirement that hospitals charge higher prices for medical care to other commercial health-insurers. Id. at *3-4. In other words, Blue Cross agreed to pay hospitals a higher percentage of its insureds' bills so long as the hospital charged other insurance companies more money for the same services. Such practices raised the overall cost of health care in violation of the Sherman Act. Id. at *4. The DOJ filed a complaint against Blue Cross, and shortly thereafter various individual and corporate plaintiffs filed a putative class action "against Blue Cross based upon the same price-fixing scheme." Id. at *4. When class members received notice that a proposed settlement had been preliminarily approved by the trial court, they found "that most of the key documents were either heavily redacted or . . . completely sealed." Id. at *8. In appealing the trial court's approval of the settlement, the objecting class members argued successfully that their ability to assess the settlement's fairness was "impaired." Id.
On review of the record, the Sixth Circuit found that each document sealed by the trial court – including class certification briefing and all 90 exhibits, as well as Blue Cross's Daubert motion and all 34 exhibits – was sealed improperly. Id. at *5-6, 15. The Court reasoned that "there is a stark difference between so-called 'protective orders' entered pursuant to the discovery provisions of Federal Rule of Civil Procedure 26, on the one hand, and orders to seal court records, on the other." Id. at *8. "Discovery concerns the parties' exchange of information that might or might not be relevant to their case." Id. ("Secrecy is fine at the discovery stage, before the material enters the judicial record."). "At the adjudication stage, however, very different considerations apply," and "[t]he line between these two stages, discovery and adjudicative, is crossed when the parties place material in the court record." Id. at *9. "Unlike information merely exchanged between the parties, '[t]he public has a strong interest in obtaining the information contained in the court record.'" Id. at *9-10.
According to Shane Group, courts should not seal a document simply because one of the parties has chosen to designate it "confidential" during the discovery process. Indeed, the Court observed that, "typically," very few categories of documents are shielded from disclosure: "[i]n civil litigation, only trade secrets, information covered by a recognized privilege (such as the attorney-client privilege), and information required by statute to be maintained in confidence (such as the name of a minor victim of a sexual assault), is typically enough to overcome the presumption of access." Id. at *17 (internal quotation marks omitted). Accordingly, a litigant seeking to seal court records must first satisfy a "heavy" burden of proof:
The courts have long recognized . . . a strong presumption in favor of openness as to court records. The burden of overcoming that presumption is borne by the party that seeks to seal them. The burden is a heavy one: Only the most compelling reasons can justify non-disclosure of judicial records. Moreover, the greater the public interest in the litigation's subject matter, the greater the showing necessary to overcome the presumption of access. For example, in class actions—where by definition some members of the public are also parties to the case—the standards for denying public access to the record should be applied . . . with particular strictness. And even where a party can show a compelling reason why certain documents or portions thereof should be sealed, the seal itself must be narrowly tailored to serve that reason. The proponent of sealing therefore must analyze in detail, document by document, the propriety of secrecy, providing reasons and legal citations.
Id. at *10-11 (emphasis added) (internal citations and quotation marks omitted). Likewise, a court order sealing records "must set forth specific findings and conclusions which justify non-disclosure to the public." Id. at *11 (emphasis added). Indeed, "a court's failure to set forth those reasons—as to why the interests in support of nondisclosure are compelling, why the interests supporting access are less so, and why the seal itself is no broader than necessary—is itself grounds to vacate an order to seal." Id. at *11-12.
In Shane Group, the above standards "went unmet" by both the litigants and the trial court, which was particularly problematic because "[a] class action based . . . [on] price-fixing to the detriment of millions of Michigan citizens, is a case in which the public has a keen and legitimate interest." Id. at *1-2 (emphasis added). Furthermore, "class-action settlements affect not only the interests of the parties and counsel who negotiate them, but also the interests of unnamed class members who by definition are not present during the negotiations." Id. at *21. Given the significance of the public's interest in such litigation, "the parties' asserted bases for sealing off . . . information were brief, perfunctory, and patently inadequate." Id. at *13. For example, when plaintiffs sought to seal their brief in support of their Motion for Class Certification (including all 90 exhibits) — "arguably the most important filing in any putative class action" — "the Plaintiffs' entire justification for filing these materials under seal was the following": "The Class Certification Brief includes quotations, information, and references to multiple depositions and documents designated as confidential by Blue Cross or the third party entity that produced the document or deposition." Id. When the trial court granted the motion to seal the class certification brief, Blue Cross thereafter filed its opposition under seal as well without even bothering to seek leave first. Id. at *14. The entire process was unsatisfactory to the Sixth Circuit: "The parties' motions to seal the other filings and exhibits, and the court's orders granting them, follow the same perfunctory pattern, usually with the same one-sentence justification." Id. at *14. In vacating all seal orders, the Sixth Circuit did not mince words with respect to the failures of the parties and the trial court:
In sealing all these documents and exhibits, the parties and the district court plainly conflated the standards for entering a protective order under Rule 26 with the vastly more demanding standards for sealing off judicial records from public view. That Blue Cross presumed to decide for itself whether to file under seal its opposition to the class-certification motion is telling in that respect. So is the complete absence of any explanation, by the parties or the court, as to why the interests in favor of closure were compelling, or why those interests outweighed the public interest in access to court records—this, in a case of great importance to the public—or why the decision to seal off broad swaths of the court record was nonetheless narrowly tailored. One can only conclude that everyone in the district court was mistaken as to which standard to apply. But one point is unmistakable: on the showings set forth in this record, every document that was sealed in the district court was sealed improperly."
Id. at *14-15 (emphasis added).
Takeaways and Practice Tips
Given the stern and plainly-stated directive expressed in Shane Group, trial courts in the Sixth Circuit have no choice but to be more deliberate in their analyses of motions for leave to file under seal. While oftentimes standard forms of protective orders oblige opposing counsel to seek leave to file confidential information under seal, this approach is no longer sufficient. The logistical issues should be self-evident. If you wish for a certain confidential document to remain confidential in the record, then relying opposing counsel to seek leave to file it under seal at the outset makes little sense when the burden to support sealing ultimately rests on you. Gone are the days where counsel can simply invoke the justification that a document or deposition was marked "confidential" during discovery pursuant to a protective order, and thus it should be treated as such in the judicial record. Further complicating the mechanics of filing under seal is the fact motions for summary judgment (for example) may involve the submission of many "confidential" documents produced in discovery. A party may know that the motion is coming, but not necessarily which of its confidential documents its opponent plans to introduce into the judicial record. At the end of the day, logistically, how do litigators protect their clients' confidential documents post-Shane Group?
1. Revise your old protective order. In all likelihood, the preferred form of protective order you used in the Sixth Circuit pre-Shane Group must be retooled. The protective order does not necessarily need to address how you file your own client's confidential documents under seal, but it should contemplate some process for giving your opponent the opportunity to protect its confidential documents that you wish to file. With the Shane Group decision only a few weeks old, no standard protocol has evolved yet in Sixth Circuit district courts. Accordingly, parties may need to be creative with the mechanics of how to give opponents the opportunity to move to seal their client's confidential documents, at the same time accounting for strategic and other concerns.
a. For example, a stipulated protective order submitted to the trial court for approval might require the parties to give each other several days notice before "confidential" documents are to be used in a filing, so as to give other parties a chance to move to seal certain of those documents. However, such an arrangement could have strategic downsides. Notice requirements requiring disclosure of "each" document to be used might, for example, force parties to finalize papers before issues can be fully developed. This issue might prompt some litigants to over-disclose the universe of "confidential" documents it wishes to use, which could escalate costs needlessly as the party wishing to maintain confidentiality scurries to prepare more arguments than may be necessary.
b. Consider a possible alternative: a stipulated protective order under which the litigants agree that the party wishing to file "confidential" documents of the other party must first seek "preliminary" leave to file such documents under seal. Upon the granting of such a motion and the filing of such documents under seal, the party wishing to permanently maintain the documents' confidentiality in the judicial record must file a brief in support of their request within "X" days. Otherwise, the documents will be automatically unsealed after "Y" days. While this may be an appealing solution for litigants, the parties should be mindful that such an order may place additional burden on the trial court to seal/unseal records, automatically, and thus parties should try to incorporate provisions that will take as much burden off of the court as possible.
2. Do what you can up front to keep your clients' most sensitive documents out of the discovery process if their relevance is questionable. Keep in mind that Fed. R. Civ. P. 26(b)(1) recently changed the scope of discoverable information, limiting disclosure to information that is "relevant to any party's claim or defense" (subject to the weighing of multiple factors, including burden), as opposed to the old standard that allowed for the discovery of any information that could "lead to" the discovery of "admissible evidence." Given Shane Group, litigants concerned about confidentiality should consider investing time early in the litigation to fight the necessary relevancy battles pursuant to Rule 26(b)(1) because, once a document is produced, no amount of confidentiality branding will guarantee that it stays out of the public domain.
3. Make sure your clients are in the know that branding their document as "confidential" in discovery might not be enough to keep it confidential in the court record. Only two district courts in the Sixth Circuit have interpreted Shane Group to date, but both demonstrate that the courts are taking a deliberate approach to deciding motions to file under seal. Kelley v. Apria Healthcare, Inc., No. 3:13-cv-096-PLR-HBG, 2016 U.S. Dist. LEXIS 84976, at *4 (E.D. Tenn. June 30, 2016) ("Because it remains unclear as to what documents should be publicly filed, sealed, and/or redacted, the Court DIRECTS the Defendant to analyze in detail, document by document, the propriety of secrecy, providing reasons and legal citations for each document it wishes to be filed under seal. The Defendant is ORDERED to refile its proposed filings within (14) days of filing the instant Order. Accordingly, the Defendant's Motion for Leave to File Under Seal [Doc. 236] is HELD IN ABEYANCE.") (emphasis in original); Graiser v. Visionworks of Am., Inc., No. 1:15-CV-2306, 2016 U.S. Dist. LEXIS 86622, at *3-4, 5 n.18 (N.D. Ohio July 5, 2016) (denying motion to file summary judgment motion under seal where defendant argued that sales figures were competitively sensitive, reasoning that defendant was unable to show that disclosure of sales data would harm its "competitive standing" and failed to "allege that the sales data is entitled to protection as a trade secret"). The latter case shows that, absent status as a trade secret or a showing of a demonstrable threat to "competitive standing," not all business information can be shielded from disclosure. Thus, some clients familiar with federal court litigation practice might be used to prior instances in which confidentiality branding "sealed the fate" of a document downstream, so to speak. Make sure your client is aware that the procedure is changing, briefing must be more robust, and, consequently, parties will necessarily need to be more selective with respect to pursuing confidentiality of certain documents in the record.