Delaware Coalition for Open Go v. Leo Strine, Jr., et al
Filing
35
ECF FILER: ELECTRONIC AMICUS/INTERVENOR BRIEF on behalf of The Reporters Committee for Freedom of the Press, et al. in support of Appellee/Respondent, filed. Certificate of Service dated 01/14/2013 by US mail, ECF. (MLB)
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.; THE HON. JOHN W. NOBLE; THE HON.
DONALD F. PARSONS, JR.; THE HON. J. TRAVIS LASTER; THE HON. SAM
GLASSCOCK III; IN THEIR OFFICIAL CAPACITIES
Defendants-Appellants
______________________________________________
On Appeal from the United States District Court for the District of Delaware
Honorable Mary A. McLaughlin, U.S. District Judge
Case No. 1:11-cv-01015
BRIEF OF AMICI CURIAE THE REPORTERS COMMITTEE FOR FREEDOM
OF THE PRESS AND TWELVE NEWS ORGANIZATIONS IN SUPPORT OF
PLAINTIFF-APPELLEE
Bruce D. Brown*
The Reporters Committee
for Freedom of the Press
1101 Wilson Blvd., Suite 1100
Arlington, VA 22209
703-807-2100
bbrown@rcfp.org
*Application for admission
forthcoming
Michael Berry
Levine Sullivan Koch & Schulz, LLP
1760 Market Street, Suite 1001
Philadelphia, PA 19103
215-988-9773
mberry@lskslaw.com
Counsel for Amici Curiae
OF COUNSEL:
Gregg P. Leslie; Robert J. Tricchinelli
The Reporters Committee for Freedom of the Press
*Additional amici counsel listed at the end of the document
January 14, 2013
CORPORATE DISCLOSURE STATEMENT
The Reporters Committee for Freedom of the Press is an unincorporated
association of reporters and editors with no parent corporation and no stock.
American Society of News Editors is a private, non-stock corporation that
has no parent.
The Associated Press is a global news agency organized as a mutual news
cooperative under the New York Not-For-Profit Corporation law. It is not publicly
traded.
Atlantic Media, Inc. is a privately held, integrated media company, and no
publicly held corporation owns 10% or more of its stock.
Bloomberg L.P. has no parent corporation, and no publicly held corporation
owns 10% or more of its stock.
News Corporation, a publicly held company, is the indirect parent
corporation of Dow Jones, and Ruby Newco LLC, a subsidiary of News
Corporation and a non-publicly held company, is the direct parent of Dow Jones.
No publicly held company owns 10% or more of Dow Jones’ stock.
The E.W. Scripps Company is a publicly traded company with no parent
company. No individual stockholder owns more than 10% of its stock.
i
Gannett Co., Inc. is a publicly traded company and has no affiliates or
subsidiaries that are publicly owned. No publicly held company holds 10% or more
of its stock.
The Maryland-Delaware-District of Columbia Broadcasters Association is a
nonprofit organization that has no parent organization and issues no stock.
The New York Times Company is a publicly traded company and has no
affiliates or subsidiaries that are publicly owned. No publicly held company owns
10% or more of its stock.
NPR, Inc. is a privately supported, not-for-profit membership organization
that has no parent company and issues no stock.
Reuters America LLC is an indirect, wholly owned subsidiary of Thomson
Reuters Corporation, a publicly held company. No publicly held company owns
10% or more of the stock of Thomson Reuters Corporation.
WP Company LLC d/b/a The Washington Post is a wholly owned subsidiary
of The Washington Post Co., a publicly held corporation. Berkshire
Hathaway, Inc., a publicly held company, has a 10% or greater ownership interest
in The Washington Post Co.
ii
TABLE OF CONTENTS
CORPORATE DISCLOSURE STATEMENT ......................................................... i
TABLE OF AUTHORITIES ................................................................................... iv
IDENTITY AND INTEREST OF AMICI CURIAE ..................................................1
SUMMARY OF ARGUMENT .................................................................................6
ARGUMENT .............................................................................................................7
I. The public has a First Amendment right of access to judicial proceedings,
including civil trials. ...............................................................................................7
A. The Supreme Court has recognized a First Amendment right of access to
criminal proceedings. ...........................................................................................7
B. This Court has recognized a First Amendment right of public access to
civil matters..........................................................................................................8
II. The district court correctly applied the First Amendment right of access to
this case. ................................................................................................................10
A. Despite the “arbitration” label, the Delaware scheme is tantamount to a
civil trial under a broader application of the experience and logic test.............11
B. The Delaware scheme allows sitting judges to decide high-profile cases
of important public interest in secrecy, where similar schemes are used
elsewhere only for relatively minor proceedings. .............................................14
C. Because the Delaware scheme is tantamount to a civil trial, the
experience and logic test demands a First Amendment presumption of public
access. ................................................................................................................19
CONCLUSION ........................................................................................................21
CERTIFICATE OF COMPLIANCE .......................................................................23
CERTIFICATE OF BAR ADMISSION .................................................................24
CERTIFICATE OF SERVICE ................................................................................25
iii
TABLE OF AUTHORITIES
Cases
AT&T Mobility LLC v. Concepcion, 131 S.Ct. 1740 (2011) ...................................12
Bank of Am. Nat’l Trust and Sav. Ass’n v. Hotel Rittenhouse Assocs., 800 F.2d 339
(3d Cir. 1986) ........................................................................................................10
Brook v. Peak Int’l, Ltd., 294 F.3d 668 (5th Cir. 2002) ..........................................13
Del. Coal. for Open Gov’t v. Strine, --- F. Supp. 2d ---, 2012 WL 3744718 (D. Del.
August 30, 2012).................................................................................. 9, 12, 14, 15
Detroit Free Press v. Ashcroft, 303 F.3d 681 (6th Cir. 2002) .................................11
El Vocero de P.R. v. Puerto Rico, 508 U.S. 147 (1993) ..........................................12
Globe Newspaper Co. v. Superior Court, 457 U.S. 596, 606 (1982) ........................8
In re Cendant Corp., 260 F.3d 183 (3d Cir. 2001) ..................................................10
Khan v. Dell Inc., 669 F.3d 350 (3d Cir. 2012) .......................................................13
N. Jersey Media Grp., Inc. v. Ashcroft, 308 F.3d 198 (3d Cir. 2002) .............. 10, 20
N.Y. Civil Liberties Union v. N.Y.C. Transit Auth., 684 F.3d 286 (2d Cir. 2012) ...11
NAACP v. Button, 371 U.S. 415 (1963)...................................................................12
Press-Enterprise Co. v. Superior Court, 464 U.S. 501 (1984)..................................8
Press-Enterprise Co. v. Superior Court, 478 U.S. 1 (1986)................... 8, 10, 11, 12
Publicker Indus., Inc. v. Cohen, 733 F.2d 1059 (3d Cir. 1984) ................... 9, 10, 19
Richmond Newspapers, Inc. v. Virginia, 448 U.S. 555, 580 (1980) .............. 7, 8, 19
United States v. A.D., 28 F.3d 1353 (3d Cir. 1994) .................................................10
United States v. El-Sayegh, 131 F.3d 158 (D.C. Cir. 1997) ....................................12
iv
United States v. Simone, 14 F.3d 833 (3d Cir. 1994) ..............................................11
United States v. Smith, 776 F.2d 1104 (3d Cir. 1985) .............................................10
United Steelworkers of America v. Warrior & Gulf Navig. Co., 363 U.S. 574
(1960) ....................................................................................................................14
Statutes
Cal. Civ. Proc. Code § 1141.10(a) ...........................................................................15
Conn. Gen. Stat. §§ 51-193l–u.................................................................................15
Del. Code Ann. tit. 10, § 347(a)(5) ..........................................................................16
Del. Code Ann. tit. 10, § 349(a) ...............................................................................14
Other Authorities
N.Y. Advisory Comm. J. Ethics, Op. No. 07-12 .....................................................15
Rules
Cal. Civ. Rule 3.814(a). ...........................................................................................15
D.C. Super. Ct. R. P. for the Small Claims and Conciliation Branch, R. for
Arbitration, R. 1 ....................................................................................................15
Del. Ch. Ct. R. 29 .....................................................................................................13
Del. Ch. Ct. R. 96(d) ................................................................................................13
Del. Ch. Ct. R. 97(b) ................................................................................................13
News Coverage
Airgas Hostile-Takeover Bid Ends With Court Ruling, Phila. Inquirer, February 7,
2011.......................................................................................................................17
Brian JM Quinn, Skyworks fireworks, M&A Law Prof Blog (November 4, 2011) 18
v
Jef Feeley, Ancestry.com Must Disclose Permira Sale Details, Bloomberg News
(Dec. 17, 2012) .....................................................................................................17
Jeffrey Cane, Wilson Sonsini Hires Delaware Chief Judge, N.Y. Times DealBook
Blog (May 19, 2011) .............................................................................................17
Peter Lattman, In Unusual Move, Delaware Supreme Court Rebukes a Judge, N.Y
Times DealBook Blog (Nov. 9, 2012) ..................................................................18
Steven M. Davidoff , Lessons From the Vulcan Materials Ruling, N.Y. Times
DealBook Blog (May 7, 2012) .............................................................................17
Steven M. Davidoff, The Life and Death of Delaware’s Arbitration Experiment,
N.Y. Times DealBook Blog (August 31, 2012) ...................................................16
vi
IDENTITY AND INTEREST OF AMICI CURIAE
Amicus curiae The Reporters Committee for Freedom of the Press (“The
Reporters Committee”) is a voluntary, unincorporated association of reporters and
editors that works to defend the First Amendment rights and freedom of
information interests of the news media. The Reporters Committee has provided
representation, guidance and research in First Amendment and Freedom of
Information Act litigation since 1970.
With some 500 members, American Society of News Editors (“ASNE”) is
an organization that includes directing editors of daily newspapers throughout the
Americas. ASNE changed its name in April 2009 to American Society of News
Editors and approved broadening its membership to editors of online news
providers and academic leaders. Founded in 1922 as American Society of
Newspaper Editors, ASNE is active in a number of areas of interest to top editors
with priorities on improving freedom of information, diversity, readership and the
credibility of newspapers.
The Associated Press (“AP”) is a news cooperative organized under the Notfor-Profit Corporation Law of New York, and owned by its 1,500 U.S. newspaper
members. The AP’s members and subscribers include the nation’s newspapers,
magazines, broadcasters, cable news services and Internet content providers. The
1
AP operates from 300 locations in more than 100 countries. On any given day,
AP’s content can reach more than half of the world’s population.
Atlantic Media, Inc. is a privately held, integrated media company that
publishes The Atlantic, National Journal, Quartz, and Government Executive.
These award-winning titles address topics in national and international affairs,
business, culture, technology and related areas, as well as cover political and public
policy issues at federal, state and local levels. The Atlantic was founded in 1857
by Oliver Wendell Holmes, Ralph Waldo Emerson, Henry Wadsworth Longfellow
and others.
Bloomberg L.P., based in New York City, operates Bloomberg News, which
is comprised of more than 1,500 professionals in 145 bureaus around the world.
Bloomberg News publishes more than 6,000 news stories each day, and The
Bloomberg Professional Service maintains an archive of more than 15 million
stories and multimedia reports and a photo library comprised of more than 290,000
images. Bloomberg News also operates as a wire service, syndicating news and
data to over 450 newspapers worldwide with a combined circulation of 80 million
people in more than 160 countries. Bloomberg News operates the following: cable
and satellite television news channels broadcasting worldwide; WBBR, a 24-hour
business news radio station that syndicates reports to more than 840 radio stations
2
worldwide; Bloomberg Markets and Bloomberg Businessweek magazines; and
Bloomberg.com, which receives 3.5 million individual user visits each month.
Dow Jones & Company, Inc. is the publisher of The Wall Street Journal, a
daily newspaper with a national circulation of over two million, WSJ.com, a news
website with more than one million paid subscribers, Barron’s, a weekly business
and finance magazine and, through its Dow Jones Local Media Group, community
newspapers throughout the United States. In addition, Dow Jones provides realtime financial news around the world through Dow Jones Newswires, as well as
news and other business and financial information through Dow Jones Factiva and
Dow Jones Financial Information Services.
The E.W. Scripps Company is a diverse, 131-year-old media enterprise with
interests in television stations, newspapers, local news and information websites
and licensing and syndication. The company’s portfolio of locally focused media
properties includes: 10 TV stations (six ABC affiliates, three NBC affiliates and
one independent); daily and community newspapers in 13 markets; and the
Washington-based Scripps Media Center, home of the Scripps Howard News
Service.
Gannett Co., Inc. is an international news and information company that
publishes 82 daily newspapers in the United States, including USA TODAY, as well
as hundreds of non-daily publications. In broadcasting, the company operates 23
3
television stations in the U.S. with a market reach of more than 21 million
households. Each of Gannett’s daily newspapers and TV stations operates Internet
sites offering news and advertising that is customized for the market served and
integrated with its publishing or broadcasting operations.
The Maryland-Delaware-District of Columbia Broadcasters Association
unites public and commercial radio and television across Maryland, DC, and
Delaware. The main purpose of MDCD is to represent and further the interests of
broadcasters, communicate relevant information to broadcasters through meetings
and publications, and provide educational services through webinars, workshops,
or other appropriate means in order to better serve the public.
The New York Times Company is a leading global multimedia media news
and information company, which publishes The New York Times, the International
Herald Tribune, and The Boston Globe and operates NYTimes.com,
BostonGlobe.com, Boston.com, About.com and related properties.
NPR, Inc. is an award-winning producer and distributor of noncommercial
news programming. A privately supported, not-for-profit membership
organization, NPR serves a growing audience of more than 26 million listeners
each week by providing news programming to 285 member stations that are
independently operated, noncommercial public radio stations. In addition, NPR
provides original online content and audio streaming of its news programming.
4
NPR.org offers hourly newscasts, special features and 10 years of archived audio
and information.
Reuters, the world’s largest international news agency, is a leading provider
of real-time multi-media news and information services to newspapers, television
and cable networks, radio stations and websites around the world. Through
Reuters.com, affiliated websites and multiple online and mobile platforms, more
than a billion professionals, news organizations and consumers rely on Reuters
every day. Its text newswires provide newsrooms with source material and readyto-publish news stories in twenty languages and, through Reuters Pictures and
Video, global video content and up to 1,600 photographs a day covering
international news, sports, entertainment, and business. In addition, Reuters
publishes authoritative and unbiased market data and intelligence to business and
finance consumers, including investment banking and private equity professionals.
The Washington Post publishes one of the nation’s daily leading
newspapers, as well as a website (washingtonpost.com) that draws an average of
more than 20 million unique visitors per month.
Amici have a strong interest in ensuring the right of public access to court
proceedings, which includes proceedings akin to civil trials in the Delaware Court
of Chancery. The Chancery Court routinely handles cases involving large
businesses that attract significant public attention. Amici request that this Court
5
recognize the strong presumption in favor of open access to judicial proceedings
and the access rights of the public and the press under the First Amendment and
affirm the order issued by the district court.
SUMMARY OF ARGUMENT
The Reporters Committee for Freedom of the Press, joined by listed amici,
urges this Court to affirm the district court’s order. The U.S. Supreme Court and
this Court have recognized a First Amendment right of public access to judicial
proceedings, including civil trials. Under the Supreme Court’s “experience and
logic” test, civil trials are open to the public because they historically have been
open and because public scrutiny protects the integrity of the legal process and
fosters fairness.
Here, Delaware law and the Delaware Chancery Court have established a
scheme under which confidential arbitration proceedings between businesses may
be overseen by a sitting Chancery Court judge, acting as arbitrator. Ordinary
private arbitration proceedings are typically closed to the public, but just because
the Chancery Court labeled its scheme as “arbitration” does not mean this Court
must uncritically analyze it as such. A state may not skirt its constitutional
obligations simply by renaming a proceeding. Delaware’s framework is unique in
that it provides for sitting Chancery Court judges to secretly and confidentially
6
arbitrate claims that they could otherwise hear in an open court proceeding where
all constitutional presumptions of access would apply. Allowing a court that plays
such an essential role in resolving disputes in corporate America to act under a veil
of secrecy would run counter to important, well-established public interests. As
such, the district court correctly held that proceedings under this scheme are
sufficiently like civil trials to trigger First Amendment rights of public access. This
Court should uphold that finding.
ARGUMENT
I.
The public has a First Amendment right of access to judicial
proceedings, including civil trials.
Under Supreme Court and Third Circuit precedent, there is an important
First Amendment right of public access to judicial proceedings, in order for the
public to provide a meaningful check on the legal process.
A.
The Supreme Court has recognized a First Amendment right of
access to criminal proceedings.
The United States Supreme Court held in Richmond Newspapers that the
public has a First Amendment right of access to criminal judicial proceedings. See
Richmond Newspapers, Inc. v. Virginia, 448 U.S. 555, 580 (1980). In his plurality
opinion, Chief Justice Burger observed that the right of public access to criminal
trials stretched back hundreds of years, and “a presumption of openness inheres in
7
the very nature of a criminal trial under our system of justice.” Id. at 573. This
openness ensures fairness to all concerned and discourages “perjury, the
misconduct of participants, and decisions based on secret bias or partiality.” Id. at
569.
The Supreme Court has repeatedly reaffirmed these principles of openness.
The first time was in Globe Newspaper Co., where the Court declared that public
scrutiny of a trial preserves the integrity of the factfinding process, fosters an
environment of fairness, and allows the public to serve as a check on the judicial
system. See Globe Newspaper Co. v. Superior Court, 457 U.S. 596, 606 (1982).
The Court extended the right of public access to pretrial criminal judicial
proceedings, see Press-Enterprise Co. v. Superior Court, 464 U.S. 501, 508–10
(1984) (“Press-Enterprise I”), and to preliminary hearings in the criminal context.
See Press-Enterprise Co. v. Superior Court, 478 U.S. 1, 7–10 (1986) (“PressEnterprise II”). In the latter case, the Supreme Court held that the character and
purpose of a preliminary hearing were so similar to that of a criminal trial that the
same principles of openness apply. See id. at 12.
B.
This Court has recognized a First Amendment right of public
access to civil matters.
The Supreme Court has never directly addressed whether these same
principles of openness apply to civil trials. In Richmond Newspapers, however, the
Court did observe that the historical considerations were similar. See Richmond
8
Newspapers, 448 U.S. at 580 n.17 (plurality opinion) (“Whether the public has a
right to attend trials of civil cases is a question not raised by this case, but we note
that historically both civil and criminal trials have been presumptively open.”).
As the district court correctly observed, “Many of the same rationales
supporting openness in criminal trials apply equally to civil trials.” Del. Coal. for
Open Gov’t v. Strine, --- F. Supp. 2d ---, 2012 WL 3744718, at *5 (D. Del. August
30, 2012). This Court has found a First Amendment right of public access to civil
trials, which it labeled as “inherent in the nature of our democratic form of
government.” Publicker Indus., Inc. v. Cohen, 733 F.2d 1059, 1069 (3d Cir. 1984).
In a searching review of historical authorities and legal precedent, this Court
recognized important justifications for public access to civil trials:
From these authorities we conclude that public access to
civil trials enhances the quality and safeguards the
integrity of the factfinding process. It fosters an
appearance of fairness and heightens public respect for
the judicial process. It permits the public to participate in
and serve as a check upon the judicial process -- an
essential component in our structure of self-government.
Public access to civil trials, no less than criminal trials,
plays an important role in the participation and the free
discussion of governmental affairs. Therefore, we hold
that the First Amendment embraces a right of access to
civil trials to ensure that this constitutionally protected
discussion of governmental affairs is an informed one.
Id. at 1070 (citations and quotation marks omitted). The Court has affirmed this
First Amendment right in numerous cases since Publicker. See, e.g., In re Cendant
9
Corp., 260 F.3d 183, 198 n.13 (3d Cir. 2001); United States v. A.D., 28 F.3d 1353,
1357 (3d Cir. 1994); Bank of Am. Nat’l Trust and Sav. Ass’n v. Hotel Rittenhouse
Assocs., 800 F.2d 339, 343 (3d Cir. 1986); United States v. Smith, 776 F.2d 1104,
1109 (3d Cir. 1985).
II.
The district court correctly applied the First Amendment right of access
to this case.
To determine whether a public right of access to a particular proceeding
exists, Supreme Court precedent mandates review of both the “experience and
logic” of allowing such access. See Press-Enterprise II, 478 U.S. at 8. To satisfy
the “experience” part of the test, this Court considers “whether the place and
process have historically been open to the press and general public.” Id. at 10–12;
see also Publicker, 733 F.2d at 1067–69; N. Jersey Media Grp., Inc. v. Ashcroft,
308 F.3d 198, 206–09 (3d Cir. 2002). To satisfy the “logic” part, this Court
considers “whether public access plays a significant positive role in the functioning
of the particular process in question.” Press-Enterprise II, 478 U.S. at 12–13;
Publicker, 733 F.2d at 1069–70; N. Jersey Media Grp., Inc., 308 F.3d at 205–07.
If both parts are satisfied, then a First Amendment presumption of openness
applies to the proceeding.
The district court found that an arbitration proceeding was a “civil judicial
proceeding” and therefore entitled to all the corresponding First Amendment rights
10
of public access. The court therefore did not “reiterate the thorough analysis of the
experience and logic test performed by” this Court in previous cases. Del. Coal.
for Open Gov’t, 2012 WL 3744718, at *10. Instead of ignoring the experience and
logic test, as appellants claim, the district court applied it — and applied it
correctly — by analogizing Delaware’s scheme to a civil trial and holding that
First Amendment access rights apply.
A.
Despite the “arbitration” label, the Delaware scheme is
tantamount to a civil trial under a broader application of the
experience and logic test.
The Supreme Court has said that “the First Amendment question cannot be
resolved solely on the label we give the event, i.e., ‘trial’ or otherwise, particularly
where the [proceeding at issue] functions much like a full-scale trial.” PressEnterprise II, 478 U.S. at 7; see also United States v. Simone, 14 F.3d 833, 839 (3d
Cir. 1994) (holding that post-trial proceedings carry identical First Amendment
rights of public access as the trial itself); N.Y. Civil Liberties Union v. N.Y.C.
Transit Auth., 684 F.3d 286, 299 (2d Cir. 2012) (holding that public access
“focus[es] not on formalistic descriptions of the government proceeding but on the
kind of work the proceeding actually does and on the First Amendment principles
at stake”); Detroit Free Press v. Ashcroft, 303 F.3d 681, 695–96 (6th Cir. 2002)
(rejecting “categorical distinction[s]” to define rights of public access in favor of a
functional approach); United States v. El-Sayegh, 131 F.3d 158, 160–61 (D.C. Cir.
11
1997) (treating a completed plea agreement as “equivalent to a trial” in terms of a
First Amendment right of public access). If the Delaware scheme were truly a
private arbitration, an extensive experience and logic review of private arbitration
would be appropriate. Instead, the district court correctly concluded that “[t]he
label Delaware gives the proceeding offers little guidance.” Del. Coal. for Open
Gov’t, 2012 WL 3744718, at *6.
Mere labeling of a proceeding by a State does not obviate the importance of
judicial review, and it certainly does not remove the functional nature of the
proceeding from the ambit of the Constitution. See, e.g., NAACP v. Button, 371
U.S. 415, 429 (1963) (“[A] state cannot foreclose the exercise of constitutional
rights by mere labels.”). A state may not use word choice and linguistic scheming
to write its way around the Constitution. If a type of proceeding is “sufficiently
like a trial,” despite a different name, it is still subject to the same First
Amendment right of access. See El Vocero de P.R. v. Puerto Rico, 508 U.S. 147,
149 (1993); Press-Enterprise II, 478 U.S. at 12.
Arbitration and litigation have important differences that blur under this
scheme. Ordinary private arbitration is designed to foster flexibility, efficiency,
informality, and speed in a way markedly different from civil litigation. See AT&T
Mobility LLC v. Concepcion, 131 S.Ct. 1740, 1749 (2011) (“The point of affording
parties discretion in designing arbitration processes is to allow for efficient,
12
streamlined procedures tailored to the type of dispute. . . . And the informality of
arbitral proceedings is itself desirable, reducing the cost and increasing the speed
of dispute resolution.” ).
One feature of ordinary private arbitration is that the parties select their own
arbitrator. See, e.g., Khan v. Dell Inc., 669 F.3d 350, 354 (3d Cir. 2012)
(referencing that “arbitration is a matter of contract” and that parties have a
“designated arbitrator”); Brook v. Peak Int’l, Ltd., 294 F.3d 668, 672–73 (5th Cir.
2002). Here, however, as in litigation, the parties have no flexibility in
determining the arbitrator. See Del. Ch. Ct. R. 97(b) (“Upon receipt of a petition,
the Chancellor will appoint an Arbitrator.”).
Having tailor-made discovery rules for every dispute is an important part of
ordinary private arbitration, but Chancery Court rules are the default for this
framework. See Del. Ch. Ct. R. 96(d). Although the parties may agree to their
own discovery rules under the scheme, they may also do so under Chancery Court
rules in civil litigation. See Del. Ch. Ct. R. 29 (“Unless the Court orders otherwise,
the parties may by written stipulation . . . modify the procedures provided by these
Rules for other methods of discovery.”)
As the district court observed, sitting Chancery Court judges would conduct
proceedings under this framework in the Chancery courthouse with the assistance
13
of Chancery Court staff, while receiving their usual salaries for doing so.1 See Del.
Coal. for Open Gov’t, 2012 WL 3744718, at *9.
In short, Appellants offer little reason for why the Delaware scheme differs
from civil litigation in any meaningful way beyond its total secrecy.
B.
The Delaware scheme allows sitting judges to decide high-profile
cases of important public interest in secrecy, where similar
schemes are used elsewhere only for relatively minor proceedings.
In some instances, private arbitration deviates from civil litigation in ways
that do not render it functionally equivalent to a civil trial. See, e.g., United
Steelworkers of America v. Warrior & Gulf Navig. Co., 363 U.S. 574, 578 (1960)
(“In the commercial case, arbitration is the substitute for litigation.”) In this case,
however, unique features of the Delaware scheme counsel in favor of finding its
functional equivalence to a civil trial.
The framework here gives the Delaware Court of Chancery “the power to
arbitrate business disputes when the parties request a member of the Court of
Chancery, or such other person as may be authorized under rules of the Court, to
arbitrate a dispute.” Del. Code Ann. tit. 10, § 349(a) (West 2012). As the district
court noted, “[e]ven with the proliferation of alternative dispute resolution in
1
These are but a few examples of the thorough similarity between proceedings
under the Delaware scheme and civil litigation. In their brief, the Appellee
provides further illustrations of how the particular procedural contours of the
Delaware scheme hardly vary from routine civil litigation. See Brief of Appellee
at 19–31.
14
courts, judges in this country do not take on the role of arbitrators.” Del. Coal. for
Open Gov’t, 2012 WL 3744718, at *8. Arbitration is for retired judges, not sitting
judges.
Several states allow judges to arbitrate some types of claims, but none of
those procedures comes close to the facts here. For example, in New York, the
District of Columbia, California, and Connecticut, sitting judges can arbitrate small
claims.2 As for other states, Appellants acknowledge that their arbitration rules
pertain only to “part-time judges, administrative law judges, and magistrates” or
“senior judges.” Brief of Appellant at 45.
Relying on rules for small claims courts in other states is particularly
unpersuasive considering the important corporate cases that define the dockets in
2
Appellants cite N.Y. Advisory Comm. J. Ethics, Op. No. 07-12 (Sept. 6, 2007),
which states that there is no ethical prohibition against a New York State trial
judge volunteering as an arbitrator in a small claims court. For the District of
Columbia, Appellants cite a court rule that small claims court judges must be
“ready to serve as referee or arbitrator.” D.C. Super. Ct. R. P. for the Small Claims
and Conciliation Branch, R. for Arbitration, R. 1 (Jan. 2012). In California,
Appellants cite that state’s Code of Civil Procedure, Section 1141.18, which states:
“A judge may also serve as an arbitrator without compensation.” However, the
California Rules make clear that arbitration under that section is for “small civil
cases” only. See Cal. Civ. Proc. Code § 1141.10(a) (West 2012). Furthermore,
California narrows that procedure even more by limiting arbitration panels to
“active or inactive members of the State Bar, retired court commissioners who
were licensed to practice law before their appointment as commissioners, and
retired judges.” Cal. Civ. Rule 3.814(a). Connecticut law says nothing about
“arbitration;” although it is unclear whether the “magistrates” referred to in those
section are analogous to arbitrators, they are only empowered to handle small
claims and motor vehicle violations. See Conn. Gen. Stat. §§ 51-193l–u (West
2012).
15
Delaware. As Appellants note, nearly 1 million business entities have their legal
home in Delaware, including more than half of all publicly traded companies in the
United States and 63 percent of all Fortune 500 companies. See Brief of Appellant
at 8. Rules that apply to govern the disputes of small claimants and motor vehicle
regulation violators in other states are plainly inadequate to uphold the
constitutional adequacy of a scheme that would allow billion-dollar corporations to
prosecute million-dollar civil claims behind closed doors. Potential claims under
this framework rise to such significance: A claim for monetary damages must be at
least $1 million to even be eligible. See Del. Code Ann. tit. 10, § 347(a)(5) (West
2012).
Additionally, when large, publicly traded companies have disputes,
shareholders must not be left in the dark. As one commentator observed, “[h]aving
companies litigate private disputes may have been tolerable, but the Delaware
arbitration provisions had the potential to lock shareholders out of many claims as
companies shifted these claims to arbitration in order to keep them confidential and
stop shareholder class action lawsuits.” Steven M. Davidoff, The Life and Death
of Delaware’s Arbitration Experiment, N.Y. Times DealBook Blog (August 31,
2012), http://dealbook.nytimes.com/2012/08/31/the-life-and-death-of-delawaresarbitration-experiment/. These kinds of concerns are not at all relevant to the
arbitration schemes in other states that Appellants cite.
16
The Delaware Chancery Court has been recognized as “the most important
court for corporate law in the country.” Jeffrey Cane, Wilson Sonsini Hires
Delaware Chief Judge, N.Y. Times DealBook Blog (May 19, 2011),
http://dealbook.nytimes.com/2011/05/19/wilson-sonsini-hires-delaware-chiefjudge/. This prestige carries with it significant public interest and responsibilities.
As always, the Chancery Court continues to hear cases that have attracted media
coverage. Recent illustrations include the proposed $1.6 billion sale of the familyhistory site Ancestry.com, see Jef Feeley, Ancestry.com Must Disclose Permira
Sale Details, Bloomberg News (Dec. 17, 2012),
http://www.bloomberg.com/news/2012-12-17/ancestry-com-sale-to-permirabarrred-from-proceeding-1-.html, construction company Marietta Materials’
attempt to acquire competitor Vulcan Materials, see Steven M. Davidoff , Lessons
From the Vulcan Materials Ruling, N.Y. Times DealBook Blog (May 7, 2012),
http://dealbook.nytimes.com/2012/05/07/the-lessons-from-the-vulcan-materialsruling/, Airgas Inc.’s “controversial defense” against a multi-billion dollar takeover
bid by a rival, see Harold Brubaker, Airgas Hostile-Takeover Bid Ends With Court
Ruling, Phila. Inquirer, February 7, 2011, available at
http://articles.philly.com/2011-02-17/business/28549862_1_airgas-board-airgasshareholders-john-l-reed, and the lawsuit between fashion designer Tory Burch and
her husband, see Peter Lattman, In Unusual Move, Delaware Supreme Court
17
Rebukes a Judge, N.Y Times DealBook Blog (Nov. 9, 2012),
http://dealbook.nytimes.com/2012/11/09/in-unusual-move-the-delaware-supremecourt-rebukes-a-judge/. Cases like these typically result in lengthy, thoroughly
reasoned opinions with precedential value — all of which would be lost going
forward here.
The Delaware scheme empowers sitting Chancery Court judges to hear, in
complete secrecy, the same kind of cases they would ordinarily hear in full view of
the public in a civil trial. While many arbitrations are disputes that might have
otherwise proceeded to trial, Appellants cite no authority to indicate a sitting judge
can hear the same kind of case in private as he or she would in public without
being subject to First Amendment access requirements. If this scheme were to
continue, the public would be kept ignorant with the complicity of the Chancery
Court. “The problem with trying to follow a dispute like this from the outside is
that nothing is public unless the parties want it to be. So, we end up getting bits
and drabs of information here and there. It becomes very difficult for an observer,
or the market, to get any idea what the issues are.” Brian JM Quinn, Skyworks
fireworks, M&A Law Prof Blog (November 4, 2011),
http://lawprofessors.typepad.com/mergers/2011/11/skyworks-fireworks.html.
If Delaware’s bid for secrecy passes constitutional muster, other states may
rush to enact similar procedures, and high-value business arbitrations that affect
18
the public and the markets will proliferate behind closed doors, with the
government’s endorsement. This end-run around three decades of constitutional
law would be in direct conflict with Chief Justice Burger’s admonition that
“[p]eople in an open society do not demand infallibility from their institutions, but
it is difficult for them to accept what they are prohibited from observing.”
Richmond Newspapers, 448 U.S. at 572.
C.
Because the Delaware scheme is tantamount to a civil trial, the
experience and logic test demands a First Amendment
presumption of public access.
Ordinary private arbitration has not been historically open to the public, but
Delaware’s law does not regulate ordinary private arbitration. Sitting judges
would be hearing the same matters they would hear in open court under nearly
identical rules and procedures. The district court correctly ruled that such
proceedings are “sufficiently like a trial” to merit the same First Amendment right
of public access.
Hundreds of years of legal history compel the conclusion that civil trials
meet the “experience” half of the test. See Publicker Indus., Inc., 733 F.2d at
1068–70; Smith, 776 F.2d at 1109 (“We have also found that these societal
interests and a long history of public access mandated recognition of a First
Amendment right of access to civil trials.”). The values served by open judicial
proceedings, both criminal and civil, also satisfy the “logic” half of the test:
19
[1] promotion of informed discussion of governmental
affairs by providing the public with the more complete
understanding of the judicial system; [2] promotion of
the public perception of fairness which can be achieved
only by permitting full public view of the proceedings;
[3] providing a significant community therapeutic value
as an outlet for community concern, hostility and
emotion; [4] serving as a check on corrupt practices by
exposing the judicial process to public scrutiny; [5]
enhancement of the performance of all involved; and [6]
discouragement of perjury.”
N. Jersey Media Grp., Inc., 308 F.3d at 217.
All of these factors are implicated here. Confidential arbitration conducted
by sitting judges would diminish public understanding of the Chancery Court and
the major cases it processes. This would lead to fundamental unfairness by
creating suspicion that a different set of rules apply to corporations pursuing
multimillion dollar civil claims against each other.
20
CONCLUSION
This Court should affirm the judgment of the District Court.
January 14, 2013
Respectfully submitted,
/s/ Michael Berry
_
Michael Berry (PA86351)
Levine Sullivan Koch & Schulz, LLP
1760 Market Street, Suite 1001
Philadelphia, PA 19103
215-988-9773
mberry@lskslaw.com
Bruce D. Brown,
application for admission
forthcoming
Gregg P. Leslie
Robert J. Tricchinelli
The Reporters Committee
for Freedom of the Press
1101 Wilson Blvd., Suite 1100
Arlington, VA 22209
703-807-2100
Counsel for Amicus Curiae
The Reporters Committee
for Freedom of the Press
Counsel for Amici Curiae
Additional amici counsel:
Kevin M. Goldberg
Fletcher, Heald & Hildreth, PLC
1300 N. 17th St., 11th Floor
Arlington, VA 22209
Counsel for American Society of
News Editors and MarylandDelaware-District of Columbia
Broadcasters Assocation
Bruce L. Gottlieb
General Counsel
Atlantic Media, Inc.
600 New Hampshire Ave., NW
Washington, DC 20037
Charles J. Glasser, Jr.
Global Media Counsel
Bloomberg L.P.
731 Lexington Avenue
New York, NY 10022
Karen Kaiser
Associate General Counsel
The Associated Press
450 W. 33rd Street
New York, NY 10001
21
Jason Conti
Dow Jones & Company, Inc.
1211 Avenue of the Americas
7th Floor
New York, NY 10036
Denise Leary
Ashley Messenger
NPR, Inc.
635 Massachusetts Ave., NW
Washington, DC 20001
David M. Giles
Vice President/
Deputy General Counsel
The E.W. Scripps Company
312 Walnut St., Suite 2800
Cincinnati, OH 45202
Gail C. Gove
Chief Counsel, News
Reuters America LLC
3 Times Square, 16th Floor
New York, NY 10036
Eric N. Lieberman
James A. McLaughlin
Legal Counsel
The Washington Post
1150 15th St., NW
Washington, DC 20071
Barbara W. Wall
Vice President/Senior
Associate General Counsel
Gannett Co., Inc.
7950 Jones Branch Drive
McLean, VA 22107
David McCraw
V.P./Assistant General Counsel
The New York Times Company
620 Eighth Avenue
New York, NY 10018
22
CERTIFICATE OF COMPLIANCE
Pursuant to Federal Rule of Appellate Procedure 32(A)(7)(C) and Third
Circuit Rule 31.1(c), I hereby certify that this brief:
(i) complies with the type-volume limitation of Rule 32(a)(7)(B) because it
contains 4,795 words, including footnotes and excluding the parts of the brief
exempted by Rule 32(a)(7)(B)(iii);
(ii) complies with the typeface requirements of Rule 32(a)(5) and the type
style requirements of Rule 32(a)(6) because it was prepared using Microsoft Word
2010 and is set in 14-point Times New Roman font;
(iii) is identical to the ten hard copies sent to the Clerk of the Court; and
(iv) has been scanned with Norton Internet Security and no virus was
detected.
Respectfully submitted,
/s/ Michael Berry
_
Michael Berry (PA86351)
Levine Sullivan Koch & Schulz, LLP
1760 Market Street, Suite 1001
Philadelphia, PA 19103
215-988-9773
mberry@lskslaw.com
Bruce D. Brown,
application for admission
forthcoming
The Reporters Committee
for Freedom of the Press
1101 Wilson Blvd., Suite 1100
Arlington, VA 22209
703-807-2100
Counsel for Amicus Curiae
The Reporters Committee
for Freedom of the Press
Counsel for Amici Curiae
23
CERTIFICATE OF BAR ADMISSION
Pursuant to L.A.R. 46.1, I hereby certify that at least one of the attorneys
whose names appear on this brief is a member of the bar of this Court.
Respectfully submitted,
/s/ Michael Berry
_
Michael Berry (PA86351)
Levine Sullivan Koch & Schulz, LLP
1760 Market Street, Suite 1001
Philadelphia, PA 19103
215-988-9773
mberry@lskslaw.com
Bruce D. Brown,
application for admission
forthcoming
The Reporters Committee
for Freedom of the Press
1101 Wilson Blvd., Suite 1100
Arlington, VA 22209
703-807-2100
Counsel for Amicus Curiae
The Reporters Committee
for Freedom of the Press
Counsel for Amici Curiae
24
CERTIFICATE OF SERVICE
I hereby certify that on January 14, 2013, 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 a hard copy each to the following:
David L. Finger, Esq.
Finger & Slanina
1201 Orange Street
One Commerce Center, Suite 725
Wilmington, DE 19801
Lawrence A. Hamermesh
Widener University School of Law
4601 Concord Pike
P.O. Box 7474
Wilmington, DE 19803
Andre G. Bouchard
Joel E. Friedlander
Jeffrey M. Gorris
Bouchard, Margules & Friedlander
222 Delaware Avenue, Suite 1400
Wilmington, DE 19801
Andrew J. Pincus
Mayer Brown
1999 K Street, NW
Washington, DC 20006
Respectfully submitted,
/s/ Michael Berry
_
Michael Berry (PA86351)
Levine Sullivan Koch & Schulz, LLP
1760 Market Street, Suite 1001
Philadelphia, PA 19103
215-988-9773
mberry@lskslaw.com
Bruce D. Brown,
application for admission
forthcoming
The Reporters Committee
for Freedom of the Press
1101 Wilson Blvd., Suite 1100
Arlington, VA 22209
703-807-2100
Counsel for Amicus Curiae
The Reporters Committee
for Freedom of the Press
Counsel for Amici Curiae
25
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