ASHTON WOODS HOLDINGS L.L.C. et al v. USG CORPORATION et al

Filing 36

MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE MICHAEL M. BAYLSON ON 12/1/2015. 12/1/2015 ENTERED AND COPIES E-MAILED TO LIAISON COUNSEL. (SEE PAPER # 329 IN 13-MD-2437) (ems)

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA

IN RE: DOMESTIC DRYWALL
ANTITRUST LITIGATION

MDL No. 2437
13-MD-2437
CIVIL ACTION 15-1712

THIS DOCUMENT RELATES TO:
Ashton Woods Holdings, L.L.C., et al.,
v.
USG Corp., et al.

MEMORANDUM RE: PLAINTIFFS’ MOTION
TO FILE AMENDED COMPLAINT UNDER SEAL
Baylson, J.
I.

December 1, 2015

Introduction
Plaintiffs have filed an unopposed Motion to File the First Amended Complaint Under

Seal. (15-1712, ECF 32). The Court will deny this Motion for the reasons set forth below.
II.

Relevant Background
This case was originally filed in the Northern District of California on March 17, 2015,

and was transferred by the Judicial Panel on Multidistrict Litigation to the undersigned as a “tagalong” case, following which Defendants filed Motions to Dismiss the Complaint under Rule 12.
A quick review of the memorandum in support of the Motion to Dismiss shows that it is
based on numerous grounds, including failure to state a plausible claim for relief (referring to
Defendants summary judgment motions), that Plaintiffs are indirect purchasers barred by
Supreme Court doctrine, that Plaintiffs’ state law claims do not meet constitutional standing and
due process requirements, or state law requirements, and that the allegations under state laws are
inadequately pled.

Pursuant to Rule 15, Plaintiffs were entitled to file their First Amended Complaint (151712, ECF 30), as a matter of right which requires the Court to deny Defendants’ Motions to
Dismiss as moot.
The First Amended Complaint (15-1712, ECF 30, 166 pages) is substantially more
detailed than the original Complaint (15-1247, N.D. Ca., ECF 1, 84 pages).
On August 5, 2013, this Court approved a Protective Order in this Multi-District
Litigation (“MDL”) (ECF 56). The scope of the Protective Order is revealed by the wording of
the first three paragraphs of the Order, which repeatedly reference the purpose of the Order as
facilitating discovery and maintaining confidentiality for documents uncovered during discovery.
At the conclusion of these three paragraphs, the Order explicitly states that it governs “the
pretrial disclosure and use by the Parties of all documents, electronically stored information
(‘ESI’), testimony, and other information produced during the course of discovery.” (13-MD2437, ECF 56, at 2 (emphasis added)).
After this case was transferred to the undersigned, counsel for Plaintiffs and liaison
counsel for all Defendants entered a stipulation in this Court (15-1712, ECF 15), dated June 8,
2015, which the Court approved, that Plaintiffs in this case would agree to the Protective Order
that had previously been entered in this Court (ECF 56), as noted above.
The Court infers that Plaintiffs’ counsel have had access to the discovery which had taken
place in this District as part of the pretrial consolidated proceedings, and used some of that
discovery in preparing the First Amended Complaint for filing.
The Court notes in passing that the non-settling defendants in the original cases
consolidated before the undersigned have filed extensive motions for summary judgment, the
attachments to which were all filed under seal pursuant to the Protective Order. These

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defendants did not move to dismiss the original complaint filed in this Court, but filed an answer.
The Court also notes that on November 23, 2015, this Court held an extensive oral argument in
Courtroom 3A, at which time many counsel and the Court quoted liberally from various facts
revealed during discovery produced by the parties. A transcript of that argument is being
prepared and presumably will be filed of record which will be public.
Further, the Court notes that Defendants’ Motion to Dismiss the original Complaint in
this case made reference to the discovery which had already taken place in the MDL. If
Defendants repeat that argument in their response to the First Amended Complaint, then the
Court may have to, under Rule 12(d), convert any motion to dismiss to a motion for summary
judgment and allow discovery to proceed before making any ruling.
III.

Discussion
Plaintiffs contend that the Protective Order requires their First Amended Complaint to be

filed under seal because it is a document that reflects information that Defendants have deemed
confidential. Although the Court appreciates Plaintiffs’ attempt to comply with the outstanding
Protective Order, the Court rejects the argument that Plaintiffs must, or are entitled to, file a
complaint under seal when they seek to rely on facts secured during discovery subject to a
Protective Order as in this case. Plaintiffs may assert that they are between the proverbial “rock
and a hard place,” but the Court believes that the importance of pleadings being public takes
precedence.
The Court intended the Protective Order to relate only to discovery and did not intend for
the Order to reach any pleadings filed in this MDL. Plaintiffs’ First Amended Complaint is a
pleading, not a discovery document, and pleadings are public documents. Thus, although § 4.4
of the Protective Order requires “[a]ny document . . . filed with the Court that reveals or

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discloses any Protected Material” to be submitted under seal, the term “document” in this context
does not include a pleading such as the First Amended Complaint.
Although this Court had good reason to approve a Protective Order which provided that
confidential information exchanged during discovery would remain confidential, that should be
the beginning and the end of a protection for confidential information, barring interests of
national security. Allowing complaints to be sealed because they contain information which the
parties have agreed is confidential threatens the principle that our courts are open to the public.
The next step may be to close courtrooms when confidential information is introduced into
evidence ending up with an ordeal similar to Kafka’s Josef K.
This conclusion is buttressed by the inherent distinction between discovery documents
and pleadings. The point of discovery is to allow counsel to gather evidence, including
confidential information, for possible use during trial without the confidential information being
public. A complaint, however, is for making allegations. Indeed pleadings, the means by which
parties invoke the authority of the court, are especially deserving of the right to access. 1 The
important policy reasons requiring that pleadings be public in nature are well-documented, see:
Pansy v. Borough of Stroudsburg, 23 F.3d 772, (3d Cir. 1994) (recognizing the strong
presumption of access to judicial proceedings and records); Manley v. Premium Spray Prods.,
Inc., No. 14-3379, 2015 WL 1475310 (E.D. Pa. Mar. 31, 2015) (denying defendant’s motion to
seal complaint and strike certain paragraphs, finding that defendant’s allegations calling the
material scandalous and disparaging “do not outweigh the strong presumption in favor of
openness”); Dombrowski v. Bell Atl. Corp., 128 F. Supp. 2d 216 (E.D. Pa. 2000) (unsealing non-

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The only instance in which Congress has specified that a complaint be filed under seal is for qui tam cases pursuant to the False
Claims Act, 31 U.S.C. § 3730(a)(2). Although Rule 5.2 F.R.Civ.P. allows for redacted filings and filings under seal, the intent is,
as the title makes clear, “Privacy Protection for Filings Made with the Court” to protect personal identifiers and other confidential
personal information, not to allow wholesale sealing of an entire complaint in any type of civil case.

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privileged paragraphs of a complaint amid claims of embarrassment, stating “[a]s a general rule
judicial records such as pleadings and other papers filed with the court in civil actions are public
documents available for inspection and review by any interested person.” The “Third Circuit
clearly favors openness absent good cause to the contrary,” (citing Glenmede Trust Co. v.
Thompson, 56 F.3d 476, 484-85 (3d Cir. 1995); Miller v. Indiana Hosp., 16 F.3d 549, 551 (3d
Cir. 1994))).
If Defendants move under Rule 12(b)(6) to dismiss a new unsealed First Amended
Complaint for failure to state a claim, Plaintiffs may at that time seek leave to submit additional
factual allegations, under seal, with service on defense counsel, for the Court to consider in
conjunction with Defendants’ motion to dismiss. The Court will then assess the sufficiency of
Plaintiffs’ allegations without the additional sealed material. The Court may, in its discretion, if
it deems necessary, consult the additional factual allegations submitted under seal, presumably
from the discovery which has taken place in the case, in considering whether Plaintiffs have
stated a claim upon which relief can be granted. By this sequencing, the importance of pleadings
being public, but Plaintiffs not being disadvantaged by not alleging facts they secured from
protected confidential material in their amended complaint, will be respected.
Because the Protective Order does not capture pleadings and the Court finds no other
facts justifying sealing the First Amended Complaint, Plaintiffs’ Motion is DENIED. (15-1712,
ECF 32). Plaintiffs must file a new amended complaint that does not disclose facts protected by
the Protective Order within Fourteen (14) days. Defendants shall respond within thirty (30)
days.
IV.

Conclusion
Our justice system, which has from time immemorial prized the transparency afforded by

public courts, requires that pleadings likewise be public.
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An appropriate order follows.

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