Bernstein v. Bernstein Litowitz Berger & Grossmann LLP

814 F.3d 132, 41 I.E.R. Cas. (BNA) 162, 2016 U.S. App. LEXIS 3233
CourtCourt of Appeals for the Second Circuit
DecidedFebruary 24, 2016
DocketNo. 15-0374-cv
StatusPublished
Cited by2 cases

This text of 814 F.3d 132 (Bernstein v. Bernstein Litowitz Berger & Grossmann LLP) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bernstein v. Bernstein Litowitz Berger & Grossmann LLP, 814 F.3d 132, 41 I.E.R. Cas. (BNA) 162, 2016 U.S. App. LEXIS 3233 (2d Cir. 2016).

Opinion

JOHN M. WALKER, JR., Circuit Judge.

Attorney Bruce Bernstein sued his former law firm, Bernstein Litowitz Berger & Grossmann LLP (“BLB & G”), and five of its partners, alleging that he had been forced to resign after blowing the whistle on what he considered to be the firm’s unethical litigation conduct. The firm argued that the relevant facts were “confidential client information” that could not be disclosed by Bernstein in a complaint raising claims of, inter alia, retaliatory breach of contract. Bernstein sought and obtained permission from the United States District Court for the Southern District of New York (P. Kevin Castel, Judge) to file a complaint under seal, with the sealing to automatically expire fourteen days after service of process on defendants, unless extended by the court. Thirteen days after the complaint was filed, the parties settled the suit on confidential terms. The parties then sought an order directing the clerk of court to close the file while leaving it permanently sealed.

The United States District Court for the Southern District of New York (Valerie E. Caproni, Judge) denied the parties’ request. The court concluded that the complaint is a judicial document subject to a presumption of public access under the First Amendment and the common law. The district court also held that keeping the complaint secret was not necessary to protect “confidential client communications.” Finally, applying the balancing test for the common-law right of access, the court found that the weak private interests at stake did not rebut the presumption of access, which is supported by substantial public interests. We agree with the district court and AFFIRM.

BACKGROUND

We recite the facts alleged in the complaint that are necessary to understand the substantial public interest in the complaint’s disclosure, as the complaint in a case discloses the nature of the proceeding. We emphasize, however, that at this point in the proceeding the facts alleged are exactly that — simply allegations, the truth of which has not been proven.

Bernstein became of counsel with BLB & G in 2008. At the firm, he worked on In [137]*137re Satyam Computer Services, Ltd., Securities Litigation, a class action which arose from a “massive financial scandal involving ... Satyam Computer Services, Ltd. (Satyam), one of India’s largest information technology and outsourcing companies.” 609 F.Supp.2d 1375, 1375 (J.P.M.L.2009). Suits brought by various investors against Satyam and others were consolidated in the Southern District of New York by the Judicial Panel on Multidistrict Litigation. Id. In May 2009, the Mississippi Public Employees’ Retirement System (“MPERS”) was appointed as one of four lead plaintiffs in the case. In re Satyam Comput. Servs., Ltd., Sec. Litig., 1:09-md-0202 BSJ [Doc. No. 8] (May 12, 2009). The Office of the Mississippi Attorney General (“AG’s Office”) was inside counsel for MPERS. BLB & G was outside counsel.

In September 2010, BLB & G partner Steven Singer informed Bernstein that a solo practitioner based in Jackson, Mississippi, Yaterria Martin, would act as “local counsel” and “occasionally check on the status of the case for MPERS, even though BLB & G was already providing this information directly” to the AG’s Office. In December 2010, the lead plaintiffs in the Satyam class action reached an agreement in principle to settle with Sa-tyam for $125 million. On February 16, 2011, Satyam and the lead plaintiffs executed a stipulation setting forth the terms of the agreement.1

On March 1, 2011 — after the agreement in principle with Satyam had been reached and the stipulation had been executed- — ■ another BLB & G partner, Max Berger, “assigned two unnecessary legal research projects” to Martin. Bernstein protested the assignment, but his concerns were dismissed, with Singer saying, “Do you ever want us to work with Mississippi again?” Martin ultimately produced an eighteen-page memorandum on April 26, 2011, several weeks after the case was settled in principle. Singer and Berger agreed with Bernstein that the memorandum “addressed the wrong pleading,” “contained no meaningful analysis,” and was “ridiculous.” Martin reported a total of 207 hours’ work on the case, primarily spent producing the useless memorandum.

After the settlement became final, Bernstein learned from BLB & G’s comptroller that the firm had paid Martin $112,500 from the proceeds of the Satyam class settlement. BLB & G did not disclose the payment to the court in its August 1, 2011 fee petition.2 Concerned with the ethical and legal implications of the arrangement, [138]*138Bernstein inquired further. He learned that Martin had been admitted to the bar only five years before Satyam was filed, and was married to Deshun T. Martin, a special assistant attorney general in the AG’s Office.

Bernstein allegedly raised his ethical concerns again in several contentious meetings with partners. The firm’s leadership — Berger, Salvatore Graziano, and Edward Grossmann — dismissed Bernstein’s misgivings. Graziano and Berger informed Bernstein that there was “local pressure on the Mississippi AG” to use “local firms,” told him “you need to drop this,” and made a veiled threat to “blackball” Bernstein if he became “a whistle-blower.”

In December 2011, Bernstein reported his concerns to the U.S. Attorney’s Office for the Southern District of New York. Soon afterward, Bernstein became concerned about BLB & G’s conduct in another class action, in which the firm allocated work to Mississippi firms that lacked relevant experience.

Bernstein claims that the issue took its toll on his relationship with the firm’s leadership. In October 2012, after realizing that his termination was inevitable, he resigned from the firm. Bernstein alleges that after his departure, BLB & G interfered with his relationship with a lead plaintiff in one case, and BLB & G partners made various threats toward him before attempting to “buy [his] silence” by offering him compensation from a future settlement in an unrelated case on the condition that he keep the Mississippi— counsel arrangement secret. Bernstein declined.

At two mediation sessions held before Bernstein filed suit, BLB & G expressed its belief that Bernstein’s claims were based on facts learned in the course of representation of a client and thus could not be disclosed under the New York Rules of Professional Conduct. Bernstein, by contrast, maintained that the facts underlying his claims were “neither privileged nor confidential” and that he was free to disclose them in court filings.

Notwithstanding Bernstein’s position that he was free to disclose the facts at issue, Bernstein filed a motion with the district court prior to filing the complaint requesting — “out of an abundance of caution” — the entry of “an order sealing all materials filed in case until the Court resolves these issues of confidentiality.”

Judge P. Kevin Castel, sitting in Part I, granted the motion on July 24, 2014, before the suit was filed. Noting that “it is doubtful that sealing is appropriate,” the district court nevertheless out “abundance of caution” ordered that “[t]he action filed under seal and the sealing shall expire within 14 days of service of process on defendants unless extended by order of the judge to whom the case is assigned.”

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Bluebook (online)
814 F.3d 132, 41 I.E.R. Cas. (BNA) 162, 2016 U.S. App. LEXIS 3233, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bernstein-v-bernstein-litowitz-berger-grossmann-llp-ca2-2016.