Federal Trade Commission et al v. Penn State Hershey Medical Center et al

Filing 97

MEMORANDUM AND ORDER - AND NOW, this 30th day of March 2016, IT IS ORDERED that on or before April 8, 2016, the plaintiffs shall file a fully unredacted complaint in this case. Signed by Magistrate Judge Martin C. Carlson on March 30, 2016. (kjn)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
FEDERAL TRADE COMMISSION and :
COMMONWEALTH OF
:
PENNSYLVANIA,
:
:
Plaintiffs
:
:
v.
:
:
PENN STATE HERSHEY MEDICAL
:
CENTER, et al.,
:
:
Defendants
:

Civil No. 1:15-CV-2362

(Judge Jones)
(Magistrate Judge Carlson)

MEMORANDUM AND ORDER
I.

Statement of Facts and of the Case

This case involves a matter of undeniable public interest and importance;
efforts by the Federal Trade Commission and the Pennsylvania Attorney General to
block the merger and consolidation of two major regional health care providers on the
grounds that the merger would reduce competition in ways which would be
detrimental to the public’s interest. Despite the manifest public interest in the
outcome of this litigation, the complaint itself remains partially shrouded in secrecy,
with only a redacted copy of the complaint available for public viewing and
inspection. The parties are now engaged in a dispute regarding the extent to which
the previously redacted portion of the complaint should be unsealed, with each party

seeking to seal portions of the complaint, largely to avoid disclosing competitive
business information. While each party seeks some redactions, each party also in
some instances argues that the redactions sought by the opposing party are
inappropriate.
Upon consideration of the competing views of the parties we choose a third
path, one which promotes the greatest transparency on this matter of public
importance. For the reasons set forth below, we order the parties to file a fully
unredacted complaint in this matter.
The pertinent facts can be simply stated: The defendants, Penn State Hershey
Medical Center and PinnacleHealth System, have been engaged in merger
negotiations. The plaintiffs, the Federal Trade Commission and the Commonwealth
of Pennsylvania, have now filed this action in federal court seeking to enjoin this
corporate merger. The district court has set an accelerated schedule for discovery and
an evidentiary hearing in this case, and the parties have entered into a protective order
governing confidential information, (Doc. 48.), which has subsequently been
amended by the court. (Doc. 53.)
The complaint that has been filed in this case was submitted in a redacted
format with a number of paragraphs deleted in part. According to the parties, these
redactions are designed to delete sensitive business information. Our review of the
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redacted passages, however, discloses that the business information concealed by
these redactions relates to fairly general observations regarding how various hospitals
compete in the regional marketplace; their competitive positions vis a vis one another;
the various lines of service in which they compete; and the ways in which health care
consumers use competition among providers to try to secure the greatest services at
the lowest expense.
As discussed below, none of these matters–which appear to entail little more
than the straightforward application of basic tenets of capitalism to this dispute – are
matters of sufficient gravity to overcome the strong presumption in favor of full
public access to court records.
II.

Discussion

In assessing the suggestions by counsel that certain aspects of this lawsuit
should remain shrouded in secrecy and concealed from the public we begin with the
proposition that: “It is well-settled that there exists, in both criminal and civil cases,
a common law public right of access to judicial proceedings and records. Littlejohn
v. BIC Corporation, 851 F.2d 673, 677–78 (3d Cir.1988). The public's right of access
extends beyond simply the ability to attend open court proceedings. Rather, it
envisions ‘a pervasive common law right “to inspect and copy public records and
documents, including judicial records and documents.” ’ Leucadia, Inc. v. Applied
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Extrusion Tech., Inc., 998 F.2d 157, 161 (3d Cir.1993).” In re Cendant Corp., 260
F.3d 183, 192 (3d Cir. 2001). Further:
Although our courts recognize a general common law right to inspect
and to copy judicial records and documents, the right is not absolute.
Nixon, 435 U.S. at 598, 98 S.Ct. at 1312. “Every court has supervisory
power over its own records and files, and access has been denied where
court files might have become a vehicle for improper purposes.” Id.
The common law thus merely establishes a presumption of public access
to court proceedings and court records. Id. at 602, 98 S.Ct. at 1314. In
resolving claims of access to trial evidence, “the strong common law
presumption of access must be balanced against the factors militating
against access.” Bank of America, 800 F.2d at 344. Despite the
presumption, courts may deny access to judicial records, for example,
where they are sources of business information that might harm a
litigant's competitive standing. Nixon, 435 U.S. at 598, 98 S.Ct. at
1312.
Littlejohn v. Bic Corp., 851 F.2d 673, 678 (3d Cir. 1988).
This right of access is fundamental to our courts and is an essential attribute of
our system of justice for good reason.

“Public access serves to promote

trustworthiness of the judicial process, to curb judicial abuses, and to provide the
public with a more complete understanding of the judicial system, including a better
perception of its fairness.” Littlejohn v. Bic Corp., 851 F.2d 673, 682 (3d Cir. 1988).
Recognizing the important public interests served by this common law public right
of access to court records, it has also been held that:
In order to override the common law right of access, the party seeking
the . . . the sealing of part of the judicial record “bears the burden of
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showing that the material is the kind of information that courts will
protect” and that “disclosure will work a clearly defined and serious
injury to the party seeking closure.” Miller, 16 F.3d at 551 (citing
Publicker, 733 F.2d at 1071). In delineating the injury to be prevented,
specificity is essential. See Publicker, 733 F.2d at 1071. Broad
allegations of harm, bereft of specific examples or articulated reasoning,
are insufficient. As is often the case when there are conflicting interests,
a balancing process is contemplated. “[T]he strong common law
presumption of access must be balanced against the factors militating
against access. The burden is on the party who seeks to overcome the
presumption of access to show that the interest in secrecy outweighs the
presumption.” Leucadia, 998 F.2d at 165 (quoting Bank of Am. Nat'l
Trust and Sav. Ass'n v. Hotel Rittenhouse Assoc., 800 F.2d 339, 344 (3d
Cir.1986)).
In re Cendant Corp., 260 F.3d 183, 194 (3d Cir. 2001).
Judged against these standards we find that the public’s interest is best served
here by complete transparency with respect to the allegations made by the state and
United States regarding the community impact of this proposed merger. Such
transparency “serves to promote trustworthiness of the judicial process, to curb
judicial abuses, and to provide the public with a more complete understanding of the
judicial system, including a better perception of its fairness.” Littlejohn v. Bic Corp.,
851 F.2d 673, 682 (3d Cir. 1988).
In reaching this judgment we acknowledge that the subject matter of this
litigation is a matter of enduring interest to all Pennsylvanians. In their lives every
member of the public will require health care services. Therefore, litigation relating

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to issues of competition in this vitally important marketplace, and the costs of quality
of health care services, is a matter of paramount public interest.
Given the undeniable public interest in the issues raised by this litigation, we
also find that the parties have not demonstrated that redaction of the complaint is
necessary since they have not carried their dual “burden of showing that the material
is the kind of information that courts will protect” and that “disclosure will work a
clearly defined and serious injury to the party seeking closure.” Miller, 16 F.3d at
551 (citing Publicker, 733 F.2d at 1071). On this score, while we concede that
“courts may deny access to judicial records, for example, where they are sources of
business information that might harm a litigant's competitive standing,” Littlejohn
v. Bic Corp., 851 F.2d 673, 678 (3d Cir. 1988), it is also clear that the “burden is on
the party who seeks to overcome the presumption of access to show that the interest
in secrecy outweighs the presumption.” Leucadia, 998 F.2d at 165. Furthermore, this
burden may not be met through “[b]road allegations of harm, bereft of specific
examples or articulated reasoning.” In re Cendant Corp., 260 F.3d 183, 194 (3d Cir.
2001).
In the instant case, when we consider the allegations of harm proffered by the
parties in support of their proposed redactions, we find that they simply do not
overcome this presumption of public access. In our view the redacted information
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does not constitute sensitive competitive information of a type which might disrupt
the marketplace or whose disclosure might lead to some fundamental competitive
imbalance. Rather, the redacted information seems to consist largely of a series of
fairly commonplace, and commonly understood, free market principles: Major health
care providers regard other major health care providers as their primary competitors
in the regional health care marketplace. Smaller providers, who offer a lesser array
of services, are not viewed as competitive rivals to major providers in this particular
marketplace. Health insurers and other consumers of health care services prefer a
more competitive marketplace since it allows them to shop between competitors and
use that competition to secure lower costs for goods and services. None of these
observations are matters of such a sensitive financial import that they overcome the
public’s interest in having full access to information regarding the business of the
courts in litigation which may ultimately affect all Pennsylvanians as health care
consumers. Accordingly, finding that this litigation raises matters of paramount
public interest, concluding that the strong presumption in favor of untrammeled
public access to court records applies here , and holding that this presumption has not
been overcome, we will order the parties to file a fully unredacted copy of the
complaint in this action.
An appropriate order follows:
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III.

Order

AND NOW, this 30th day of March 2016, IT IS ORDERED that on or before
April 8, 2016,1 the plaintiffs shall file a fully unredacted complaint in this case.

S/Martin C. Carlson
Martin C. Carlson
United States Magistrate Judge

We have set this April 8 deadline by design in order to allow any party who
is aggrieved by this ruling the opportunity to appeal this decision to the district
court if that party believes that there is a clearly demonstrated and narrowly
articulated private interest at stake here that overcomes the broad public interest in
access to court records.
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