Delaware Coalition for Open Go v. Leo Strine, Jr., et al

Filing 24

ECF FILER: ELECTRONIC AMICUS/INTERVENOR BRIEF on behalf of Amici Curiae the Chamber of Commerce of the United States of America and Business Roundtable in support of Appellant/Petitioner, filed. Certificate of Service dated 12/18/2012 by ECF, 3rd party. (RTE)

No. 12–3859
__________________________________________________________________
In the United States Court of Appeals
For the Third Circuit
__________________________________________________________________
DELAWARE COALITION FOR OPEN GOVERNMENT, INC.,
Plaintiff-Appellee,
v.
THE HON. LEO E. STRINE, JR., et al.,
Defendants-Appellants.
__________________________________________________________________
ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
__________________________________________________________________
BRIEF OF AMICI CURIAE THE CHAMBER OF COMMERCE OF THE
UNITED STATES OF AMERICA AND THE BUSINESS ROUNDTABLE IN
SUPPORT OF DEFENDANTS-APPELLANTS AND REVERSAL OF THE
JUDGMENT BELOW
__________________________________________________________________
Roy T. Englert, Jr.
Mark A. Hiller
ROBBINS, RUSSELL, ENGLERT,
ORSECK, UNTEREINER & SAUBER LLP
1801 K Street, N.W. Suite 411L
Washington, D.C. 20006
[phone]

Robin S. Conrad
Sheldon Gilbert
NATIONAL CHAMBER
LITIGATION CENTER, INC.
1615 H Street, N.W.
Washington, D.C. 20062
[phone]

Counsel for Amici Curiae

Counsel for the Chamber of
Commerce of the United
States of America

[Additional counsel listed on the following page]

Maria Ghazal
BUSINESS ROUNDTABLE
300 New Jersey Avenue, N.W.
Suite 800
Washington, D.C. 20001
[phone]
Counsel for Business
Roundtable

CORPORATE DISCLOSURE STATEMENT
Pursuant to Federal Rules of Appellate Procedure 26.1 and 29, Amici state
that they have no parent corporations and that no publicly traded corporation owns
10% or more of their stock.

i

TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES ................................................................................... iii 
INTEREST OF AMICI CURIAE ...............................................................................1 
INTRODUCTION .....................................................................................................2 
SUMMARY OF ARGUMENT .................................................................................4 
ARGUMENT .............................................................................................................6 
I. 

Arbitration Offers Businesses A Cost-Effective And Efficient
Alternative To Litigation..............................................................................6 

II. 

Arbitration By Court Of Chancery Judges Is Especially Promising
In Light Of The Judges’ Expertise Resolving Complex Business
Disputes ......................................................................................................11 

III. 

Because Confidentiality Is Essential To Arbitration, Businesses
Will Not Arbitrate Publicly Before Court Of Chancery Judges, Thus
Vitiating Any Benefits Of Openness, While Imposing Substantial
Public Cost .................................................................................................15 

IV. 

Court Of Chancery Arbitration Differs Markedly From Civil
Litigation, And The District Court Erred By Conflating The Two
Processes ....................................................................................................25 

CONCLUSION ........................................................................................................28 

ii

TABLE OF AUTHORITIES
Page(s)
Cases 
AT&T Mobility LLC v. Concepcion,
131 S. Ct. 1740 (2011) .................................................................................... 9, 18
Delaware Coal. for Open Gov’t v. Strine,
No. 1:11–1015, 2012 WL 3744718 (D. Del. Aug. 30, 2012) ................... 3, 25, 26
Dluhos v. Strasberg,
321 F.3d 365 (3d Cir. 2003) .................................................................................26
Dreyer v. Illinois,
187 U.S. 71 (1902) ...............................................................................................28
Harrison v. Nissan Motor Corp.,
111 F.3d 343 (3d Cir. 1997) .................................................................................26
Hay Group, Inc. v. E.B.S. Acquisition Corp.,
360 F.3d 404 (3d Cir. 2004) .................................................................................10
Hays & Co. v. Merrill Lynch, Pierce, Fenner & Smith, Inc.,
885 F.2d 1149 (3d Cir. 1989) ...............................................................................10
Iberia Credit Bureau, Inc. v. Cingular Wireless LLC,
379 F.3d 159 (5th Cir. 2004) ................................................................................18
Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc.,
473 U.S. 614 (1985) .............................................................................................10
North Jersey Media Group, Inc. v. Ashcroft,
308 F.3d 198 (3d Cir. 2002) ......................................................................... passim
Press-Enterprise Co. v. Super. Ct. of Cal.,
478 U.S. 1 (1986) .................................................................................................16
Preston v. Ferrer,
552 U.S. 346 (2008) ...............................................................................................9
Swanson v. Citibank, N.A.,
614 F.3d 400 (7th Cir. 2010) ..................................................................................8
iii

TABLE OF AUTHORITIES—Cont’d.
Page(s)
Statutes and Rules 
9
1
0 U.S.C. § 10(a) .......................................................................................................12
2
08 U.S.C. § 652(d) ...................................................................................................20
1
3
00 Del. C. § 349(b)...................................................................................................12
1
A
3
00 Del. C. § 349(c) ...................................................................................................12
1
B
3
00 Del. C. § 351 .......................................................................................................12
C
4
0 al Civ. Proc. Code § 1141.18(a) ............................................................................27
D
A
8
5
0 .C. Super. Ct. R. Proc. For Small Claims and Conciliation Branch, R. 1,
Arbitration (2012) .................................................................................................27
D
9
0 el. Ch. Ct. R. 96(b) ................................................................................................14
D
A
0
1 el. Ch. Ct. R. 96(c) ................................................................................................11
D
B
0
1 el. Ch. Ct. R. 96(d)(2) ...........................................................................................13
D
C
0
1 el. Ch. Ct. R. 97(a)(3)............................................................................... 11, 14, 17
D
0
1 el. Ch. Ct. R. 97(a)(4)............................................................................................12
D
F
0
1 el. Ch. Ct. R. 97(c) ................................................................................................12
D
G
0
1 el. Ch. Ct. R. 97(d) ................................................................................................12
D
H
0
1 el. Ch. Ct. R. 97(e) ................................................................................................12
D
I
0
1 el. Ch. Ct. R. 97(f) .................................................................................................11
D
J
0
1 el. Ch. Ct. R. 98(a) ................................................................................................12
D
K
0
1 el. Ch. Ct. R. 98(b) ................................................................................................12
D
L
0
1 el. Ch. Ct. R. 98(d) ................................................................................................13

iv

TABLE OF AUTHORITIES—Cont’d.
Page(s)
M
0
1 el. Ch. Ct. R. 98(e) ................................................................................................13
D
D
0
1 el. Ch. Ct. R. 98(f)(1) ............................................................................................12
D
1 el. Ch. Ct. R. 98(f)(2) ............................................................................................12
N
0
2
1 .C. Gen. Stat. § 90-21.62 .......................................................................................27
O
6
0 r. Rev. Stat. § 671.703 (2011) ...............................................................................27
Or. Unif. Trial Ct. R., ch. 13, Arbitration (2005) ....................................................27
W
7
0 . Va. Code § 158-13-4 (2005)...............................................................................27
W
0
3
1 yo. Code of Jud. Conduct R. II(A)(2) (2012).......................................................27
Other Authorities 
3
1
07-7 Md. Reg. 547 (2010)........................................................................................27
A
2
0 AA, 2011 President’s Letter & Financial Statements (May 2012),
available at http://www.adr.org/aaa/ShowPDF?doc=ADRSTG_019403 ............10
A
3
0 AA, Commercial Arbitration Rules & Mediation Procedures, R-23
(2009), available at http://www.adr.org/aaa/ShowProperty?nodeId=/
UCM/ADRSTG_004103&revision=latestreleased ..............................................19
A
4
0 AA & ABA, Code of Ethics for Arbitrators in Commercial Disputes,
Canon VI(B) (Feb. 9, 2004), available at
http://www.abanet.org/dispute/commercial_disputes.pdf ....................................19
A
5
0 dmin. Office of the U.S. Cts., 2011 Annual Report of the Director:
Judicial Business of the United States Courts (2012) ............................................7
M
6
0 ark E. Appel, Taking Your Case to the International Centre for Dispute
Resolution, available at
http://www.adr.org/aaa/ShowPDF?doc=ADRSTG_002580 ...............................10
7
0

v

TABLE OF AUTHORITIES—Cont’d.
Page(s)
Mark Bezant et al., Dispute Resolution in the Global Economy, FTI
JOURNAL (Apr. 2010), available at http://www.ftijournal.com/article/
Dispute-Resolution-in-the-Global-Economy .......................................................22
Nigel Blackaby & Constantine Partasides, Redfern and Hunter on
International Arbitration (2009) ..........................................................................20
A
8
0 lexander P. Blanck, Arbitration—a Substitute for Commercial
Litigation, 18 Bus. L.J. 19 (1931) ........................................................................21
M
9
0 ichael R. Bloomberg & Charles E. Schumer, Sustaining New York’s
and the US’ Global Financial Services Leadership (Jan. 2007),
available at http://www.nyc.gov/html/om/pdf/ny_report_final.pdf .............. 22, 24
J
1
0. Noble Braden, Sound Rules and Administration in Arbitration,
83 U. Pa. L. Rev. 189 (1934)................................................................................21
S
1
0 teven M. Davidoff, The Life and Death of Delaware’s Arbitration
Experiment, N.Y. TIMES (Aug. 31, 2012), available at
http://dealbook.nytimes.com/2012/08/31/the-life-and-death-ofdelawares-arbitration-experiment/........................................................................13
D
2
1
0 el. Div. of Corps., 2011 Annual Report, available at
http://corp.delaware.gov/2011CorpAR.pdf ..........................................................24
C
3
1
0 hristopher R. Drahozal & Stephen J. Ware, Why Do Businesses Use (or
Not Use) Arbitration Clauses?, 25 Ohio St. J. on Disp. Resol. 433
(2010)....................................................................................................................11
F
4
1
0 inancial Industry Regulatory Authority, FINRA Dispute Resolution,
Dispute Resolution Statistics, available at http://www.finra.org/
ArbitrationAndMediation/FINRADisputeResolution/
AdditionalResources/Statistics/index.htm............................................................11
A
5
1
0 rthur Garwin et al., ABA, Annotated Model Code of Judicial Conduct
(2d ed. 2011) .........................................................................................................27
H
6
1
0 .B. 49, 145th Gen. Assem. (Del. 2009) ......................................................... passim
vi

TABLE OF AUTHORITIES—Cont’d.
Page(s)
I
8
1
0nt’l Chamber of Commerce, Rules of Arbitration, Art. 26(3) (2012),
available at http://www.iccwbo.org/Products-and-Services/Arbitrationand-ADR/Arbitration/Rules-of-arbitration/Download-ICC-Rules-ofArbitration/ICC-Rules-of-Arbitration-in-several-languages/ ..............................19
I
9
1
0nt’l Inst. for Conflict Prevention and Resolution (“CPR”), Rules for
Non-Administered Arbitration, R. 18 (2007), available at
http://www.cpradr.org/Resources/ALLCPRArticles/tabid/265/ID/600/
2007-CPR-Rules-for-Non-Administered-Arbitration.aspx ..................................19
L
2
0 ewis H. Lazarus, Court of Chancery Arbitration Likely to Become More
Prevalent, DEL. BUS. COURT INSIDER (Sept. 28, 2011), available at
http://www.delawarebusinesslitigation.com/2011/09/articles/casesummaries/arbitration/court-of-chancery-arbitration-likely-to-becomemore-prevalent/.....................................................................................................15
J
1
2
0ohn Q. Lewis, et al., Jones Day Publications, The Delaware Court of
Chancery Offers New Arbitration Procedures for Confidential,
Efficient Resolution of Significant Business Disputes (Feb. 2010),
available at http://www.jonesday.com/delaware_court_of_chancery/ ................14
S
2
0 oia Mentschikoff, Commercial Arbitration,
61 Colum. L. Rev. 846 (1961)..............................................................................21
N
3
2
0 .Y. Adv. Comm. Jud. Eth. Op. No. 07-12 (Sept. 6, 2007) ....................................27
N
4
2
0 .Y. State Bar Ass’n, Task Force on N.Y. Law in Int’l Matters, Final
Report (June 25, 2011) ............................................................................ 22, 23, 24
R
5
2
0 obert J. Niemic et al., Guide to Judicial Management of Cases in ADR,
(2001), available at http://www.fjc.gov/public/pdf.nsf/lookup/
ADRGuide.pdf/$file/ADRGuide.pdf ...................................................................20
W
6
2
0 illiam H. Rehnquist, The Prominence of the Delaware Court of
Chancery in the State-Federal Joint Venture of Providing Justice,
48 Bus. Law. 351 (1992) ................................................................................. 7, 14

vii

TABLE OF AUTHORITIES—Cont’d.
Page(s)
L
7
2
0 isa A. Rickard, Townhall.com, Our Broken Legal System and its Impact
on Competitiveness (June 27, 2008), available at http://townhall.com/
columnists/lisaarickard/2008/06/27/our_broken_legal_system_and_its_
impact_on_competitiveness/page/full/ ...................................................................9
H
8
2
0 eather Rogers, Business-Killing Cuts to State Court Systems, Cal. Bar J.
(Nov. 2012), available at
http://www.calbarjournal.com/November2012/TopHeadlines/TH1.aspx .............7
A
9
2
0 my J. Schmitz, Untangling the Privacy Paradox in Arbitration,
54 U. Kan. L. Rev. 1211 (2006) .................................................................... 18, 21
U
3
0 nited Nations Comm’n on Int’l Trade Law, Arbitration Rules, Art.
28(3) (2010), available at http://www.uncitral.org/pdf/english/
texts/arbitration/arb-rules-revised/arb-rules-revised-2010-e.pdf .........................19
V
1
3
0 lad Vainberg, When Should Discovery Come with A Bill? Assessing
Cost Shifting for Electronic Discovery, 158 U. Pa. L. Rev. 1523 (2010) ..............8

viii

INTEREST OF AMICI CURIAE1
The Chamber of Commerce of the United States of America (“Chamber”) is
the world’s largest business federation. It represents 300,000 direct members and
indirectly represents the interests of more than 3 million businesses and
professional organizations of every size, in every industry sector, and from every
region of the country. For the past century, the Chamber has played a key role in
advocating on behalf of its membership. To that end, the Chamber has filed
amicus curiae briefs in many cases raising issues of vital concern to the nation’s
business community, including cases concerning the validity of arbitration
agreements and procedures.
The Business Roundtable (“BRT”) is an association of chief executive
officers (“CEOs”) of leading U.S. companies with more than $7.3 trillion in annual
revenues and more than 16 million employees. The BRT was founded on the
belief that businesses should play an active and effective role in the formation of
public policy, and participate in litigation as amicus curiae in a variety of contexts
where important business interests are at stake.
This is such a case. Arbitration offers businesses an essential alternative to
litigation. The required time and expense have increasingly rendered litigation
1

All parties have consented to the filing of this brief. No one besides Amici, their
members, or their counsel authored the brief in whole or in part or contributed
money that was intended to fund preparing or submitting the brief.

impractical. Businesses need a venue where they can settle their disagreements
fairly and efficiently. Arbitration by Court of Chancery judges is particularly
promising. It bears all the virtues of traditional arbitration, including flexibility,
informality, and cost effectiveness. And it has the added advantage of allowing
companies to have their disputes resolved by experienced adjudicators with
expertise in business law.

Amici’s members have a strong interest in the

availability of this forum and in the reversal of the judgment below.
INTRODUCTION
Delaware has offered businesses a valuable alternative to civil litigation.
Arbitration by Court of Chancery judges allows companies to resolve their disputes
before experts in corporate law, but without the trammels and expense of drawnout litigation. The district court held that such arbitration must be conducted in
public because it is tantamount to civil litigation—even though Delaware intended
the arbitration as an alternative to, and substitute for, such litigation.
The district court’s conclusion is, we respectfully submit, deeply mistaken.
Arbitration in the Court of Chancery is not litigation in the Court of Chancery by
any other name. Instead, as Appellants explain, the two processes differ in myriad
respects, not the least of which is that arbitration is consensual and, therefore, can
be tailored to the parties’ needs in ways litigation cannot be.

2

To determine whether arbitration by Court of Chancery judges is subject to a
limited public right of access, the Court applies the “experience and logic” test.
North Jersey Media Group, Inc. v. Ashcroft, 308 F.3d 198, 206 (3d Cir. 2002). A
key question arising under the logic prong of the test is what public benefit, if any,
is served by requiring such arbitration to be conducted in the open.

Ibid.

Appellants persuasively explained below why the answer is none. Confidentiality
is essential to arbitration. If arbitration by Court of Chancery judges were made
public, then businesses that would otherwise avail themselves of it would turn
instead to other non-public fora to resolve their disputes. Accordingly, whatever
public benefit might accrue in theory from open arbitration proceedings in the
Court of Chancery, none will be realized in practice. This consideration is central
to the analysis under the logic prong, but the district court dismissed it as
“speculation.” Delaware Coal. for Open Gov’t v. Strine, No. 1:11–1015, 2012 WL
3744718, at *10 (D. Del. Aug. 30, 2012).
The Chamber and BRT file this brief to apprise the Court that the
“speculation” is entirely accurate. Amici are well suited to speak to the question.
Their members represent the interests of millions of businesses and the CEOs of
America’s leading companies. They are precisely the entities Delaware expected
to arbitrate in the Court of Chancery. And the Chamber and BRT can say, with
confidence, that few if any businesses would participate if the arbitration were
3

public. The decision below thus denies businesses a promising alternative to
cumbersome litigation—a cost, we explain, that equally injures the public—while
not advancing any interest of openness.
Our brief proceeds in four parts. Part I reviews why businesses often prefer
arbitration to litigation. Part II explains why Court of Chancery arbitration in
particular offers a promising venue to settle disputes efficiently, especially
complex commercial ones. Part III explains why the decision below will deprive
businesses and the public of the benefits to be gained by such arbitration, while not
achieving any counterbalancing benefits of openness. And Part IV explains why
the district court erred in conflating the arbitration proceeding with civil litigation.
In short, everyone loses under the decision below, and does so
unnecessarily. The judgment should be reversed.
SUMMARY OF ARGUMENT
I.

Courts, including the Supreme Court and this Court, have repeatedly

recognized the advantages of arbitration as a method of dispute resolution.
Litigation is often slow, rigid, subject to gamesmanship and abuse, and very
expensive. Arbitration offers businesses a procedurally flexible and cost-effective
alternative. It is therefore not surprising that businesses often arbitrate their most
important disagreements.

4

II.

Arbitration by Court of Chancery judges is particularly promising.

The arbitration is consensual and confidential; allows parties to tailor discovery
rules to their needs, control the production of information, and waive appellate
review; is cost effective; and proceeds expeditiously.

Most important, the

arbitrators are experts in corporate law. Indeed, Delaware specifically designed the
proceeding to resolve large, complex business and technology disputes. Cases
involving consumers are expressly excluded.
III.

Requiring such arbitration to be conducted in the open will not

advance any public interest, but it will impose substantial public cost.
Confidentiality is an essential feature of arbitration, as reflected in uniform
industry practice. Among other things, confidentiality prevents dissemination of
trade secrets and sensitive financial information; prevents testimony from being
taken out of context and used unfairly against a company; and allows parties to
resolve disputes conclusively without setting precedent that will bind them or
others in future cases. If arbitration before Court of Chancery judges were made
public, few if any businesses would participate, and therefore no interest of
openness would be advanced. But the costs to businesses and the public would be
substantial. Businesses would lose the opportunity to adjudicate their disputes in
an efficient forum, injuring not just businesses, but also their millions of
shareholders and American financial markets generally. States will likewise lose
5

the ability to innovate (and generate much-needed revenue) by adopting similar
programs.
IV.

The district court held that confidential arbitration by Court of

Chancery judges is unconstitutional because the court equated that process with
civil litigation. Equating arbitration with litigation was error. Arbitration in the
Court of Chancery is no different from classic arbitration except for the fact that
the former is conducted by judges with extensive experience resolving business
disputes. But that one distinction, which should be lauded, does not dispositively
transform arbitration into litigation, as the district court held. This Court has made
clear that the defining feature of arbitration is its consensual nature, which is true
of arbitration by Court of Chancery judges and not true of litigation. Further, the
district court’s logic implies that any proceeding conducted by a judge and paid for
with public funds is in effect civil litigation and therefore subject to a qualified
right of public access.

But that conclusion is clearly overbroad and would

invalidate numerous state schemes, as well as the federal statute authorizing
magistrate judges to arbitrate disputes.
ARGUMENT
I.

Arbitration Offers Businesses
Alternative To Litigation

A

Cost-Effective

And

Efficient

The advantages of arbitration over litigation are well known and have been
repeatedly recognized by courts, including the Supreme Court and this Court.
6

Litigation is slow by design. Procedures must be formal to ensure that each
party receives due process.

The rules are many and are often subject to

gamesmanship, if not abuse. Chronic judicial underfunding and understaffing only
make matters worse.

The result is that litigation is time consuming and

expensive—often distressingly so.
The statistics do not portend a different course any time soon. All but eight
States reduced their courts’ budgets between 2008 and 2011. Heather Rogers,
Business-Killing Cuts to State Court Systems, Cal. Bar J. (Nov. 2012), available at
http://www.calbarjournal.com/November2012/TopHeadlines/TH1.aspx

(citing

statistics from the National Center for State Courts). Not surprisingly, “since 2008,
29 states have seen an increase in case backlogs, and 15 states have experienced an
increase in the time it takes for cases to go from filing through resolution.” Ibid.
The picture is no brighter in the federal courts, where in 2011 the average civil
case took 23.4 months just for trial to begin, and where 23% of all civil cases
pending were pending for two or more years. Admin. Office of the U.S. Cts., 2011
Annual Report of the Director: Judicial Business of the United States Courts,
Tables C-5, C-6 (2012); see also William H. Rehnquist, The Prominence of the
Delaware Court of Chancery in the State-Federal Joint Venture of Providing
Justice, 48 Bus. Law. 351, 355 (1992) (“The litigation explosion which has taken
place over [the past twenty-five years] has profoundly affected federal courts just
7

as it has state courts. The number of federal judgeships has more than doubled in
that time, but that increased number of judges work much harder than their
predecessors in the often vain hope of simply staying abreast of the vast increase in
criminal and civil jurisdiction which Congress has conferred on them.”). All told,
having the judiciary resolve a dispute under traditional litigation procedures
requires an investment of time and uncertainty that can easily approach a halfdecade.

When the dispute concerns critically important business issues that

implicate millions or even billions of dollars, not to mention jobs that might be at
stake, that uncertainty is a serious problem.
But time and uncertainty are just two of the costs of civil litigation today.
The advance of electronic discovery, in particular, has made litigation exceedingly
expensive. See, e.g., Vlad Vainberg, When Should Discovery Come with A Bill?
Assessing Cost Shifting for Electronic Discovery, 158 U. Pa. L. Rev. 1523, 1533–
34 (2010) (“[L]itigants spent $2.79 billion on electronic discovery in 2007, an
increase of 43% over 2006.”); Swanson v. Citibank, N.A., 614 F.3d 400, 411 (7th
Cir. 2010) (“With the electronic archives of large corporations or other large
organizations holding millions of emails and other electronic communications, the
cost of discovery to a defendant has become in many cases astronomical.”). This
is particularly unfortunate in today’s economic climate, where scarce resources
spent on attorneys, experts, and other litigation professionals could be put to more
8

productive uses elsewhere. See, e.g., Lisa A. Rickard, Townhall.com, Our Broken
Legal System and its Impact on Competitiveness (June 27, 2008), available at
http://townhall.com/columnists/lisaarickard/2008/06/27/our_broken_legal_system_
and_its_impact_on_competitiveness/page/full/

(“[C]ompanies

are

diverting

resources from productive purposes into legal and settlement costs. Using a large
company as an example, the drug maker Wyeth spent $25 billion on legal costs and
reserves between 1999 and 2004, but only invested $19 billion in researching and
developing new life-saving or life-improving pharmaceuticals.”).
In view of these problems, arbitration is often an effective alternative to civil
litigation. Litigation is slow, but arbitration can be quick. Litigation is formal, but
arbitration can be flexible. Litigation is expensive, but arbitration can be cost
effective. As the Supreme Court recently summarized, arbitration “allow[s] for
efficient, streamlined procedures tailored to the type of dispute.

It can be

specified, for example, that the decisionmaker be a specialist in the relevant field,
or that proceedings be kept confidential to protect trade secrets.

And the

informality of arbitral proceedings is itself desirable, reducing the cost and
increasing the speed of dispute resolution.” AT&T Mobility LLC v. Concepcion,
131 S. Ct. 1740, 1749 (2011); see also, e.g., Preston v. Ferrer, 552 U.S. 346, 357
(2008) (“A prime objective of an agreement to arbitrate is to achieve streamlined
proceedings and expeditious results.” (internal quotation marks omitted));
9

Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628
(1985) (“[Arbitration] trades the procedures and opportunity for review of the
courtroom for the simplicity, informality, and expedition of arbitration.”); Hay
Group, Inc. v. E.B.S. Acquisition Corp., 360 F.3d 404, 409 (3d Cir. 2004)
(recognizing “arbitration’s goal of resolving disputes in a timely and cost efficient
manner” (internal quotation marks omitted)); Hays & Co. v. Merrill Lynch, Pierce,
Fenner & Smith, Inc., 885 F.2d 1149, 1158 n.15 (3d Cir. 1989) (“Many authorities
have argued that arbitration is a less costly and quicker dispute resolution
process”).
In light of the comparative advantages of arbitration, businesses frequently
prefer it to litigation. In 2010, for example, the American Arbitration Association
alone conducted more than 143,000 alternative dispute resolution proceedings,
including arbitration. See Mark E. Appel, Taking Your Case to the International
Centre

for

Dispute

Resolution,

at

14

n.2,

available

at

http://www.adr.org/aaa/ShowPDF?doc=ADRSTG_002580 (last visited Dec. 3,
2012); see also, e.g., AAA, 2011 President’s Letter & Financial Statements, 5
(May

2012),

available

at

http://www.adr.org/aaa/ShowPDF?doc=

ADRSTG_019403 (in 2011, “[t]here were record numbers of international case
filings,” and “[t]echnology filings increased 29% and large complex cases in
particular rose 33%”); Financial Industry Regulatory Authority, FINRA Dispute
10

Resolution,

Dispute

Resolution

Statistics,

available

at

http://www.finra.org/ArbitrationAndMediation/FINRADisputeResolution/Addition
alResources/Statistics/index.htm (last visited Dec. 3, 2012) (noting thousands of
securities arbitration cases filed each year between 1997 and 2012). Notably, these
figures understate the popularity of arbitration because they do not account for the
large number of commercial agreements that contain arbitration clauses but that
have not given rise to an arbitrable controversy. See generally Christopher R.
Drahozal & Stephen J. Ware, Why Do Businesses Use (or Not Use) Arbitration
Clauses?, 25 Ohio St. J. on Disp. Resol. 433, 463–67 (2010) (discussing the
numerous industries that benefit from arbitration agreements).
II.

Arbitration By Court Of Chancery Judges Is Especially Promising In
Light Of The Judges’ Expertise Resolving Complex Business Disputes
Arbitration by Court of Chancery judges replicates many of arbitration’s

most desirable features, and then adds unique advantages.

Among the

proceeding’s attributes are its:
 Voluntary nature: Before parties may arbitrate, they must submit a petition
for arbitration “contain[ing] a statement that all parties have consented to
arbitration by agreement or stipulation.” Del. Ch. Ct. R. 97(a)(3).
 Flexibility of procedure: The normal rules of judicial discovery are just a
default. “The parties with the consent of the Arbitrator may change any of
these arbitration rules by agreement and/or adopt additional arbitration
rules.” Id. R. 96(c); see also id. R. 97(f) (calling for a prehearing exchange
of information but permitting the parties and the arbitrator to forgo such an
exchange).
11

 Flexibility of remedy: “The Arbitrator may grant any remedy or relief that
the Arbitrator deems just and equitable and within the scope of any
applicable agreement of the parties. In addition to a final award, the
Arbitrator may make other decisions, including interim, interlocutory, or
partial rulings, orders and awards.” Id. R. 98(f)(1)–(2).
 Flexibility of review: Appeal of an arbitration award is taken to the
Delaware Supreme Court, which reviews the award under the circumscribed
criteria of the Federal Arbitration Act, 9 U.S.C. § 10(a). See 10 Del. C.
§ 349(c). However, the parties may waive their right of appeal and agree
that the arbitration award is final and binding. Id. § 351. The Delaware
legislature explained the benefit of this alternative: “In many matters, parties
desire an answer and their dispute is narrow enough that even if they cannot
settle, they are willing to agree in advance to live with the outcome rendered
by the trial court. This section would give parties that voluntary option.”
H.B. 49, 145th Gen. Assem. (Del. 2009).
 Confidentiality: The filing of the initial petition requesting arbitration, as
well as the ensuing proceedings, are conducted in confidence. Del. Ch. Ct.
R. 97(a)(4), 98(b). “Arbitration hearings are private proceedings such that
only parties and their representatives may attend, unless all parties agree
otherwise. . . . All memoranda and work product contained in the case files
of an Arbitrator are confidential. Any communication made in or in
connection with the arbitration that relates to the controversy being
arbitrated, whether made to the Arbitrator or a party, or to any person if
made at an arbitration hearing, is confidential.” Id. § 98(b). The record is
not made public unless and until an appeal is taken to the Delaware Supreme
Court. See 10 Del. C. § 349(b); Del. Ch. Ct. R. 97(a)(4).
 Efficiency: The arbitration is conducted with characteristic alacrity. A
preliminary conference “shall occur” within 10 days of the commencement
of arbitration (unless the parties and Arbitrator agree otherwise). Id. § 97(c).
Then, a “preliminary hearing shall take place as soon as practicable”
thereafter. Id. § 97(d). In all events, the “arbitration hearing generally will
occur no later than 90 days following receipt of the petition.” Id. § 97(e).
Further, “[a]t least one representative of each party with an interest in the
issue or issues to be arbitrated and with authority to resolve the matter must
participate in the arbitration hearing.” Id. § 98(a).

12

 Reasonable cost: The fee to initiate an arbitration proceeding is $12,000.
There is an additional per-day fee of $6,000 for each day of arbitration after
the first day. Those fees are equally divided among the parties.
 Integration of other alternative dispute mechanisms: The arbitration
proceeding is designed to encourage settlement and to move seamlessly into
mediation, should the parties desire it. See id. § 98(e) (“The parties may
agree, at any stage of the arbitration process, to seek the assistance of the
Arbitrator in reaching settlement with regard to the issues identified in the
petition prior to a final decision from the Arbitrator.”); id. § 98(d) (“The
parties may agree at any stage of the arbitration process to submit the dispute
to the Court for mediation.”).
The features just discussed are advantageous in their own right. But what
makes Delaware’s innovation particularly promising is the identity of the
arbitrators: judges who are expert in business law. See id. § 96(d)(2). As a
leading scholar recently explained:
Delaware judges and its courts are already renowned for their expertise in
these matters. And with these provisions, the courts arbitrate not only
commercial and corporate matters but also intellectual property disputes,
adding some technology expertise. . . .
In some ways the arbitration provisions may be a victim of Delaware’s
success. The court’s five Chancery Court judges are really the best in the
country at adjudicating corporate law disputes involving shareholders. The
reason is not only their competence but their experience in deciding these
matters.
Steven M. Davidoff, The Life and Death of Delaware’s Arbitration Experiment,
N.Y. TIMES (Aug. 31, 2012), available at http://dealbook.nytimes.com/
2012/08/31/the-life-and-death-of-delawares-arbitration-experiment/. Chief Justice
Rehnquist conferred similar praise on the occasion of the bicentennial of the Court
13

of Chancery:

“The Delaware state court system has established its national

preeminence in the field of corporation law due in large measure to its Court of
Chancery. Because the Court of Chancery, by design, has no jurisdiction over
criminal and tort cases . . . corporate litigation can proceed quickly and effectively.
The Delaware Supreme Court, similarly, is poised to act quickly in important
corporate cases.” Rehnquist, supra, 48 Bus. Law. at 354.
Delaware designed the arbitration proceeding specifically to take advantage
of the Chancellor’s and Vice Chancellors’ corporate-law expertise. Consumer
disputes are expressly excluded from the court’s jurisdiction. Del. Ch. Ct. R.
97(a)(3). Instead, the proceeding is geared toward “business-to-business disputes
about major contracts, joint ventures, or technology.” H.B. 49, 145th Gen. Assem.
(Del. 2009); see also Del. Ch. Ct. R. 96(b) (“In the case of business disputes
involving solely a claim for monetary damages, a matter will be eligible for
arbitration only if the amount in controversy exceeds one million dollars.”); John
Q. Lewis, et al., Jones Day Publications, The Delaware Court of Chancery Offers
New Arbitration Procedures for Confidential, Efficient Resolution of Significant
Business

Disputes

(Feb.

2010),

available

at

http://www.jonesday.com/

delaware_court_of_chancery/ (“While many court-sponsored arbitration programs
have been targeted at smaller cases in an effort to reduce the strain on a court’s

14

docket, this program is aimed specifically at the large, complex corporate and
commercial cases in which the Court of Chancery has established expertise.”).
In sum, Delaware has offered an important addition to the roster of
alternative dispute resolution mechanisms, one marked by “[e]fficiency,
confidentiality, [and] first-rate decision-makers experienced in resolving complex
business disputes.” Lewis H. Lazarus, Court of Chancery Arbitration Likely to
Become More Prevalent, DEL. BUS. COURT INSIDER (Sept. 28, 2011), available at
http://www.delawarebusinesslitigation.com/2011/09/articles/casesummaries/arbitration/court-of-chancery-arbitration-likely-to-become-moreprevalent/.
III.

Because Confidentiality Is Essential To Arbitration, Businesses Will Not
Arbitrate Publicly Before Court Of Chancery Judges, Thus Vitiating
Any Benefits Of Openness, While Imposing Substantial Public Cost
In light of the promise that arbitration by Court of Chancery judges holds for

resolving complex disputes quickly and competently, the district court’s decision
striking down the proceeding is deeply disappointing. It is also erroneous under
the controlling “experience and logic” test. We limit our discussion to the logic
prong of the test, because that is where Amici (in their respectful view) can

15

advance the Court’s understanding by sharing the perspective of the businesses that
are the intended participants in the proceeding.2
The logic prong asks a straightforward question: “‘whether public access
plays a significant positive role in the functioning of the particular process in
question.’” North Jersey Media, 308 F.3d at 216 (quoting Press-Enterprise Co. v.
Super. Ct. of Cal., 478 U.S. 1, 8 (1986)).
straightforward:

No.

The answer here is equally

Requiring public access will not “pla[y] a significant

positive role in the functioning” of Court of Chancery arbitration because, if such
arbitration were made public, few if any businesses would participate in it.
Instead, they would turn to alternative arbitral tribunals.

The arbitration

proceeding therefore would not “functio[n]” at all.
Analysis under the logic prong must begin by recognizing that Court of
Chancery arbitration differs in a key respect from most, if not all, of the other
processes the Supreme Court or this Court has considered under the “experience
and logic” test. The difference is that it (like all arbitration) is entirely consensual.
See Part II, supra.

In other processes, such as litigation or administrative

proceedings, the analysis begins from the premise that the process will inevitably
2

Prevailing under the logic prong is necessary, but not sufficient, for Plaintiff to
satisfy its burden of proving a qualified First Amendment right of access to Court
of Chancery arbitration; Plaintiff must also prevail under the experience prong.
See North Jersey Media, 308 F.3d at 216 (“Even if we could find a right of access
under the . . . logic prong, absent a strong showing of openness under the
experience prong . . . we would find no such [First Amendment] right here.”).
16

occur—i.e., a party, like it or not, will be haled into court or before an agency—
and the only question is whether the process must take place openly. Not so here.
In arbitration, it takes two to tango, but only one to end the dance. If any party
does not agree to arbitrate before Court of Chancery judges, the arbitration will not
occur.

See Del. Ch. Ct. R. 97(a)(3) (requiring that “all parties” consent to

arbitration).
The prospect that openness will deter use of Court of Chancery arbitration is
critical to the logic prong analysis, because that prong asks not only whether
openness would play a positive role, but also whether openness would come at a
cost. As this Court explained, “whenever a court has found that openness serves
community values, it has concluded that openness plays a ‘significant positive
role’ in that proceeding. But that cannot be the story’s end, for to gauge accurately
whether a role is positive, the calculus must perforce take account of the flip side—
the extent to which openness impairs the public good.” North Jersey Media, 308
F.3d at 217; see also ibid. (“We note in this respect that, were the logic prong only
to determine whether openness serves some good, it is difficult to conceive of a
government proceeding to which the public would not have a First Amendment
right of access.”). Accordingly, under the logic prong, the Court must consider
whether requiring openness would push Court of Chancery arbitration into disuse,

17

and if so, whether such disuse would “impair[] the public good.” Ibid. The answer
to both questions is yes.
As to the first question, there can be little doubt that companies would not
arbitrate before Court of Chancery judges if the proceedings were made public.
Confidentiality is essential to arbitration. Indeed, it is a main reason companies
prefer to arbitrate rather than litigate. Among other things, confidentiality ensures
that trade secrets and sensitive financial information are not divulged to
competitors. See, e.g., Concepcion, 131 S. Ct. at 1749. It avoids the hassle and
uncertainty of litigating protective orders. It prevents testimony from being taken
out of context and used unfairly to a company’s disadvantage. It allows the parties
to control what information is produced in the arbitration. It is generally less
adversarial than litigation and therefore better able to preserve important business
relationships. And it allows parties to resolve disputes conclusively without setting
precedent that will bind or influence the resolution of future disputes among
themselves or others. As the Fifth Circuit aptly stated, confidentiality goes to the
“character of arbitration itself.” Iberia Credit Bureau, Inc. v. Cingular Wireless
LLC, 379 F.3d 159, 175 (5th Cir. 2004); see also, e.g., Amy J. Schmitz, Untangling
the Privacy Paradox in Arbitration, 54 U. Kan. L. Rev. 1211, 1222–28 (2006)
(discussing the benefits of confidential arbitration).

18

Uniform industry practice confirms the importance of confidentiality to
arbitration. Arbitration clauses in commercial agreements routinely require that
arbitration proceedings be kept confidential.

So do the rules of national and

international commercial arbitration organizations. See, e.g., AAA & ABA, Code
of Ethics for Arbitrators in Commercial Disputes, Canon VI(B) (Feb. 9, 2004),
available

at

http://www.abanet.org/dispute/commercial_disputes.pdf

(“The

arbitrator should keep confidential all matters relating to the arbitration
proceedings and decision.”); AAA, Commercial Arbitration Rules & Mediation
Procedures, R-23 (2009), available at http://www.adr.org/aaa/ShowProperty
?nodeId=/UCM/ADRSTG_004103&revision=latestreleased (“The arbitrator and
the AAA shall maintain the privacy of the hearings unless the law provides to the
contrary.”); Int’l Inst. for Conflict Prevention and Resolution (“CPR”), Rules for
Non-Administered Arbitration, R. 18 (2007), available at http://www.cpradr.org
/Resources/ALLCPRArticles/tabid/265/ID/600/2007-CPR-Rules-for-NonAdministered-Arbitration.aspx (“the parties, the arbitrators and CPR shall treat the
proceedings, any related discovery and the decisions of the Tribunal, as
confidential”); United Nations Comm’n on Int’l Trade Law, Arbitration Rules, Art.
28(3) (2010), available at http://www.uncitral.org/pdf/english/texts/arbitration/arbrules-revised/arb-rules-revised-2010-e.pdf (“Hearings shall be held in camera
unless the parties agree otherwise.”); Int’l Chamber of Commerce, Rules of
19

Arbitration, Art. 26(3) (2012), available at http://www.iccwbo.org/Products-andServices/Arbitration-and-ADR/Arbitration/Rules-of-arbitration/Download-ICCRules-of-Arbitration/ICC-Rules-of-Arbitration-in-several-languages/ (“Save with
the approval of the arbitral tribunal and the parties, persons not involved in the
proceedings shall not be admitted.”). Other leading international arbitral fora have
rules to similar effect. Nigel Blackaby & Constantine Partasides, Redfern and
Hunter on International Arbitration 136 (2009).
Congress too has recognized that confidentiality is essential to arbitration.
The statute authorizing federal courts to adopt alternative dispute resolution
methods (including arbitration) requires the proceedings to be kept confidential.
See 28 U.S.C. § 652(d) (“each district court shall . . . provide for the confidentiality
of the alternative dispute resolution processes and . . . prohibit disclosure of
confidential dispute resolution communications”). As the Federal Judicial Center
stated, “Confidentiality is generally considered a bedrock principle for most ADR
procedures. Thus, participants in court-based ADR are usually assured at the
outset of the process that their communications will be kept confidential.” Robert
J. Niemic et al., Guide to Judicial Management of Cases in ADR, 93–94 (2001),
available

at

http://www.fjc.gov/public/pdf.nsf/lookup/ADRGuide.pdf/$file/

ADRGuide.pdf (footnote omitted).

In making Court of Chancery arbitration

confidential, Delaware simply followed a long line of practice. See H.B. 49, 145th
20

Gen. Assem. (Del. 2009) (“because arbitration is traditionally private, the bill
maintains proceedings in the Court of Chancery as confidential”).3
There is thus little doubt that companies would not arbitrate before Court of
Chancery judges if the proceedings were made public. By definition, companies
seeking confidential arbitration want to resolve their disputes privately. If they
cannot do so in the Court of Chancery, they will just turn to other non-public fora.
Most likely businesses will go abroad. Filings in foreign arbitral tribunals
have steadily increased in the last two decades and have surged in recent years.
New claims filed in the London Court of International Arbitration increased by
55% between 2007 and 2008 and by another 14% in 2009; claims in the
3

That line extends back hundreds of years and antedates the nation’s Founding.
“The New York Chamber of Commerce, for example, established an arbitral
regime at the Chamber’s inception in 1768. It even relied on arbitration’s privacy
and independence to foster efficient resolution of disputes among American and
British merchants during and after the American Revolutionary War.” Schmitz,
supra, 54 U. Kan. L. Rev. at 1223 (footnotes omitted). Authorities throughout the
20th century likewise acknowledged the value of privacy in arbitration. See, e.g.,
Soia Mentschikoff, Commercial Arbitration, 61 Colum. L. Rev. 846, 849 (1961)
(“Although we do not know, we believe that the chief moving factors [for
individuated arbitration] are: (1) a desire for privacy . . . .”); J. Noble Braden,
Sound Rules and Administration in Arbitration, 83 U. Pa. L. Rev. 189, 195 (1934)
(“The privacy of arbitration is one of its great advantages. The public airing of
private matters, trade secrets, confidential operating costs and the like, to which
may be added the loss of prestige and goodwill, attendant upon the publicity of a
court trial, can be prevented by rules which insure that only the parties and the
arbitrators may be present at the hearing and that all will respect the confidence of
the proceeding.”); Alexander P. Blanck, Arbitration—a Substitute for Commercial
Litigation, 18 Bus. L.J. 19, 19 (1931) (“Very often settlement of a controversy by
arbitration, privately, outside of the court is infinitely superior to a victory that
might be achieved in court.”).
21

International Chamber of Commerce increased 11% in 2008 and 23% in 2009; and
claims in the Swiss Chambers’ Court of Arbitration and Mediation increased 15%
in 2008 and 53% in 2009. Mark Bezant et al., Dispute Resolution in the Global
Economy, FTI JOURNAL (Apr. 2010), available at http://www.ftijournal.com/article
/Dispute-Resolution-in-the-Global-Economy.
The popularity of foreign arbitral tribunals is no surprise.

America

continues to labor under the perception—too often accurate—that its “highly
complex and fragmented” legal system is unfriendly to businesses. Michael R.
Bloomberg & Charles E. Schumer, Sustaining New York’s and the US’ Global
Financial

Services

Leadership

ii

(Jan.

2007),

available

at

http://www.nyc.gov/html/om/pdf/ny_report_final.pdf (noting that this perception
“diminishes our attractiveness to international companies”). Meanwhile, foreign
nations have made concerted efforts to attract businesses by streamlining their own
arbitration fora and increasing the quality of their arbitrators. See, e.g., N.Y. State
Bar Ass’n, Task Force on N.Y. Law in Int’l Matters, Final Report 4 (June 25,
2011). In particular, several nations have enacted procedures like Delaware’s that
allow businesses to arbitrate their disputes before judges with expertise in business
issues.

“In 2010, at least three jurisdictions established specialized courts to

handle international arbitration matters—Australia, India and Ireland.

Several

other jurisdictions well-known for international arbitration, including France, the
22

United Kingdom, Switzerland, Sweden and China, have designated certain courts
or judges to hear cases to challenge or enforce arbitration awards.” Ibid. A main
reason Delaware authorized arbitration by Court of Chancery judges was to
compete against these foreign tribunals and thereby increase America’s
competitiveness in the global economy. See H.B. 49, 145th Gen. Assem. (Del.
2009).
That companies will not arbitrate publicly before Court of Chancery judges
directly affects the cost-benefit analysis under the logic prong. On the benefit side,
public access will not “pla[y] a significant positive role” (North Jersey Media, 308
F.3d at 216) in the functioning of the arbitration proceeding for the simple reason
that in most if not all cases there will be no such arbitration. Any benefit to be had
by public arbitration exists only in theory. But the costs of requiring openness in
the arbitration proceeding are real. Because businesses will not participate, they
will not benefit from the many advantages arbitration by Court of Chancery judges
has in resolving their complex and high-dollar disputes. See Part II, supra. The
decision below also will discourage other States from adopting similar arbitration
proceedings in what could be (and should be) a race to the top.
Denying businesses access to promising domestic arbitral fora injures not
just businesses, but the public. The companies that would arbitrate before Court of
Chancery judges are among the largest in the nation and the world. See Del. Div.
23

of

Corps.,

2011

Annual

Report,

available

at

http://corp.delaware.gov/

2011CorpAR.pdf (last visited Dec. 9, 2012) (63% of Fortune 500 companies
incorporate in Delaware, and there are more than 945,000 active business entities
in the state). Their presence greatly benefits domestic capital markets. But this
benefit may prove fleeting, because “as technology has virtually eliminated
barriers to the flow of capital, it now freely flows to the most efficient markets, in
all corners of the globe.” Bloomberg & Schumer, supra, at i. The decision below
strongly encourages businesses to arbitrate their disputes in one of the many
available foreign tribunals. Indeed, a major impetus for improving the quality of
those tribunals was “[foreign] governments’ recognition of the importance of
arbitration to their economies and to their position in today’s world of global
commerce.” N.Y. State Bar Ass’n, supra, at 4. At a time when the country, its
investors, and its markets would benefit greatly by likewise increasing the quality
of domestic arbitral tribunals, the decision below heads in exactly the wrong
direction.
For these reasons, public access will not “pla[y] a significant positive role”
in the functioning of Court of Chancery arbitration, but it will very much “impair[]
the

public

good.”

North

Jersey

24

Media,

308

F.3d

at

216–17.

IV.

Court Of Chancery Arbitration Differs Markedly From Civil Litigation,
And The District Court Erred By Conflating The Two Processes
The district court struck down confidential Court of Chancery arbitration

because the court concluded that it is “essentially a civil trial.” 2012 WL 3744718,
at *9. This conclusion is erroneous for many reasons, as Appellants show. We
add the following brief points to their analysis.
Virtually every feature of Court of Chancery arbitration the district court
identified is also a feature of arbitration in any other non-public forum, to which a
qualified right of access indisputably does not attach. For example, the court noted
the following characteristic features of arbitration:
 Arbitration is consensual. “The parties consent to be bound by the decision
of the arbitrator, and his resolution of the dispute is constrained by the
parties’ agreement.” Id. at *6. Indeed, “consent is one of arbitration’s
defining features.” Ibid.
 Arbitration allows “parties [to] agree to participate in a specified forum.” Id.
at *7. “In litigation, a court can compel an unwilling party.” Ibid.
 “Parties can craft arbitrations to their specific needs.” Ibid. They can
“specify the scope of the arbitrator’s authority and design the applicable
procedural rules.” Ibid. In contrast, “[l]itigation follows the court’s
procedures and guidelines.” Ibid.
 “[A]rbitration decisions are ad hoc, lacking any precedential value.” Ibid.
 And of course, “historically, arbitrations have been conducted outside the
public view.” Ibid.

25

Those features, which the district court identified as hallmarks of classic
arbitration, all describe arbitration before Court of Chancery judges. See Part II,
supra.

This is not surprising, given that Delaware viewed the arbitration

proceeding as an alternative to, and substitute for, civil litigation. See H.B. 49,
145th Gen. Assem. (Del. 2009) (“This bill is intended to preserve Delaware’s preeminence in offering cost-effective options for resolving disputes.”).
In concluding that the arbitration proceeding is nonetheless tantamount to
civil litigation, the district court relied on a single fact: That the arbitrators are
Court of Chancery judges. 2012 WL 3744718, at *9. But that fact cannot bear the
dispositive weight the district court assigned it. To start with, as the district court
itself recognized, consent is the “‘essence of arbitration.’” Id. at *6 (quoting
Dluhos v. Strasberg, 321 F.3d 365, 369 (3d Cir. 2003)); see also, e.g., Harrison v.
Nissan Motor Corp., 111 F.3d 343, 350 (3d Cir. 1997) (same). Court of Chancery
arbitration is consensual. Litigation is not. That the Court of Chancery arbitrator
also resolves other disputes between other parties in judicial proceedings governed
by other rules and resulting in precedential decisions does not somehow transform
consensual arbitration into non-consensual litigation. The two are simply different
animals.
The logic of the district court’s reasoning is also untenable. Because the
only distinction between classic arbitration and Court of Chancery arbitration is
26

that the latter is conducted by a judge, the district court’s reasoning amounts to a
per se rule that any proceeding conducted with public funds by a state judicial
officer is necessarily “civil litigation” and therefore subject to a qualified First
Amendment right of access. But that conclusion is clearly overbroad and contrary
to settled practice in courts throughout the country.

It would invalidate the

numerous state programs that authorize judges to act as arbitrators in courtannexed or similar arbitration programs. See, e.g., N.Y. Adv. Comm. Jud. Eth. Op.
No. 07-12 (Sept. 6, 2007) (sitting judges may serve as arbitrators in binding
arbitrations in small claims court); D.C. Super. Ct. R. Proc. For Small Claims and
Conciliation Branch, R. 1, Arbitration (2012) (same); Cal Civ. Proc. Code
§ 1141.18(a) (active judges may serve as arbitrators without compensation); N.C.
Gen. Stat. § 90-21.62 (emergency superior court judges may serve as arbitrators);
Or. Unif. Trial Ct. R., ch. 13, Arbitration (2005) (retired or senior judges may serve
as arbitrators); Or. Rev. Stat. § 671.703 (2011) (administrative law judges may
serve as arbitrators on contracts board); 37-7 Md. Reg. 547 (2010) (retired judges
may serve as arbitrators); W. Va. Code § 158-13-4 (2005) (administrative law
judges may serve as arbitrators); Wyo. Code of Jud. Conduct R. II(A)(2) (2012)
(part-time and retired judges may serve as arbitrators). See also, e.g., Arthur
Garwin et al., ABA, Annotated Model Code of Judicial Conduct 393–95 (2d ed.
2011) (authorizing judges to arbitrate disputes as part of their official duties). But
27

the Supreme Court has made clear that, under basic principles of federalism, the
allocation of authority among state branches of government is “for the
determination of the state,” not Article III judges. Dreyer v. Illinois, 187 U.S. 71,
84 (1902) (emphasis added).
For these reasons, in addition to those explained by Appellants, arbitration
by Court of Chancery judges is a far cry from civil litigation. The district court
erred by equating the two processes.
CONCLUSION
For all of these reasons, the Court should reverse the judgment below.

28

Dated: December 18, 2012.

Respectfully submitted,

/s/ Roy T. Englert, Jr.
Roy T. Englert, Jr. (DC Bar No. 358464)
Mark A. Hiller
ROBBINS, RUSSELL, ENGLERT,
ORSECK, UNTEREINER & SAUBER LLP
1801 K Street, N.W. Suite 411L
Washington, D.C. 20006
[phone]

Robin S. Conrad
Sheldon Gilbert
NATIONAL CHAMBER
LITIGATION CENTER, INC.
1615 H Street, N.W.
Washington, D.C. 20062
[phone]

Counsel for Amici Curiae

Counsel for the Chamber of
Commerce of the United
States of America
Maria Ghazal
BUSINESS ROUNDTABLE
300 New Jersey Avenue, N.W.
Suite 800
Washington, D.C. 20001
[phone]
Counsel for Business
Roundtable

29

CERTIFICATION OF BAR MEMBERSHIP
Pursuant to Third Circuit Rule 28.3(d), I hereby certify that I am a member
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admitted to that bar in November 1996.
/s/ Roy T. Englert, Jr.
Roy T. Englert, Jr.
ROBBINS, RUSSELL, ENGLERT,
ORSECK, UNTEREINER & SAUBER LLP
1801 K Street, N.W. Suite 411L
Washington, D.C. 20006
[phone]

CERTIFICATE OF SERVICE
I hereby certify that on December 18, 2012, I electronically filed the
foregoing Brief of Amici Curiae and Entry of Appearance with the Clerk of the
Court for the United States Court of Appeals for the Third Circuit by using the
CM/ECF system. I further certify that 10 hard copies of this Brief have been
mailed to the Clerk’s Office and hard copies of this Brief have been served upon
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Joel E. Friedlander, Esq.
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P.O. Box 7474
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Mayer Brown
1999 K Street, NW
Washington, DC 20006

/s/ Roy T. Englert, Jr.
Roy T. Englert, Jr.
ROBBINS, RUSSELL, ENGLERT,
ORSECK, UNTEREINER & SAUBER LLP
1801 K Street, N.W. Suite 411L
Washington, D.C. 20006
[phone]

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/s/ Roy T. Englert, Jr.
Roy T. Englert, Jr.
ROBBINS, RUSSELL, ENGLERT,
ORSECK, UNTEREINER & SAUBER LLP
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