The litigation process is a “public” procedure, all set forth in an official court record which can be accessed by the public. Sometimes, one (or both) of the parties want to file papers, but keep them confidential and not open to public view. Maybe there are good reasons for such a request, but maybe not. Kentucky federal courts are governed by law coming out of the Sixth Circuit Court of Appeals. The Sixth Circuit has a series of 2016 cases which very clearly enforce the notion that court proceedings are public endeavors absent some really good reasons to the contrary.
In short, the Sixth Circuit Court of Appeals had three opportunities to explain its position, and it is perfectly clear. The cases are the following: Rudd Equip. Co. v. John Deere Constr. & Forestry Co., 834 F.3d 589 (6th Cir. 2016); Klingenberg v. Fed. Home Loan Mortg. Corp., 2016 US App LEXIS 12884 (6th Cir 2016) and Shane Group, Inc. v. Blue Cross Blue Shield of Mich., 825 F.3d 299 (6th Cir. 2016). The party seeking to seal the court record must set forth some “compelling reason” for sealing, the trial court must make “specific findings and conclusions” which justify sealing, even if no party objects, and any sealing that is done must be as “narrowly tailored” as possible to give protection. Specific fact findings require evidence, not just arguments of counsel. In Shane, a class action settlement case, the Court noted that without the sealed information about the settlement, the class members couldn’t “participate meaningfully” and couldn’t “assess for themselves” the merits of the settlement seeking to be approved. Thank you, Justices, for looking out for the little guys.
The Eastern District Bankruptcy Court (J. Wise) recently issued an opinion fully discussing the law on sealing, and specifically, in the bankruptcy context in light of 11 U.S.C. §107(a) and (b). Sealing anything in the bankruptcy context is “extraordinary relief” since “documents in a bankruptcy court’s record are presumptively accessible to the public.” Keeping a settlement secret in a bankruptcy, when others are impacted, is very rare indeed. See In re Thomas, Case 17-20527. Required reading for local practitioners, since sealing documents comes up in many different contexts.
As a party or as counsel, think long and hard about why – really why – someone is asking to seal something, because transparency is almost always warranted. Boilerplate words will not pass scrutiny, and evidence of specific facts is needed. As they say, sunlight is the best disinfectant.
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DelCotto Law Group is Kentucky’s asset protection law firm known for its commitment to the lifetime success of its clients. With offices located in Lexington, Louisville and Danville, DLG serves Kentuckians with complicated financial matters, especially in the areas of bankruptcy, complex litigation, and estate planning. For more information about chapter 9 or DelCotto Law Group, please call (859) 231-5800 or email [email protected].