Delaware Coalition for Open Government v. Strine

894 F. Supp. 2d 493, 2012 WL 3744718, 2012 U.S. Dist. LEXIS 123980
CourtDistrict Court, D. Delaware
DecidedAugust 30, 2012
DocketCivil Action No. 1:11-1015
StatusPublished
Cited by7 cases

This text of 894 F. Supp. 2d 493 (Delaware Coalition for Open Government v. Strine) is published on Counsel Stack Legal Research, covering District Court, D. Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Delaware Coalition for Open Government v. Strine, 894 F. Supp. 2d 493, 2012 WL 3744718, 2012 U.S. Dist. LEXIS 123980 (D. Del. 2012).

Opinion

MEMORANDUM

McLAUGHLIN, District Judge.

This is a challenge to a confidential arbitration proceeding established by Delaware law and implemented by the Delaware Court of Chancery.1 The plaintiff argues that the First Amendment’s qualified right of access prevents the defendants from closing this proceeding to the public and press. Both parties have cross-moved for judgment on the pleadings.2

The Court will grant the plaintiffs motion and deny the defendants’ motion. The First Amendment protects a qualified right of access to criminal and civil trials. Except in limited circumstances, those proceedings cannot be closed to the public. Under the Delaware law and Chancery Court rules, a sitting judge of the Chancery Court, acting pursuant to state authority, hears evidence, finds facts, and issues an enforceable order dictating the obligations of the parties. The Court concludes that the Delaware proceeding functions essentially as a non-jury trial before a Chancery Court judge. Because it is a civil trial, there is a qualified right of access and this proceeding must be open to the public.

1. The Delaware Proceeding

In April of 2009, the Delaware State Legislature amended the rules governing the resolution of disputes in the Court of Chancery. 10 Del. C. § 349 (West 2012); Compl. ¶ 12. This law gives the 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.” 10 Del. C. § 349(a). The arbitration procedure is “intended to preserve Delaware’s pre-eminence in offering cost-effective options for resolving disputes, particularly those involving commercial, corporate, and technology matters.” Del. H.B. No. 49, at 4 (2009).

Access to this arbitration procedure requires the parties’ consent. There is no requirement that the parties have an agreement to arbitrate their disputes prior to the dispute arising, but both must consent to participate at the time the dispute is submitted to the court. 10 Del. C. § 349(a). In addition, parties must meet certain eligibility criteria to participate. Id. §§ 349(a), § 347(a), (b). At least one party must be a “business entity” and one party must be a citizen of the state of [495]*495Delaware, although the same party can meet both criteria. Id. § 347(a)(2), (3); Oral Arg. Tr. Feb. 9, 2012 at 8. Thus both businesses and individuals can utilize the procedure. If the remedy sought includes only monetary damages, the amount in controversy must be more than one million dollars; if any equitable remedy is sought, even in conjunction with monetary damages, there is no amount-in-controversy requirement. 10 Del. C. § 347(a)(5).

The parties cannot submit their dispute for arbitration if either is a “consumer,” defined as an individual who purchases or leases merchandise for personal use. Id. § 347(a)(4); 6 Del. C. § 2731(1) (West 2012). The procedure is accessible for “business disputes” and the law provides no limit to the type of controversy that may be submitted. Because the law allows parties seeking only monetary damages to submit their disputes to the Chancery Court, it allows some cases which would otherwise be excluded under the Chancery Court’s limited equitable jurisdiction to be decided by Chancery Court judges. Kevin F. Brady & Francis G.X. Pileggi, Recent Key Delaware Corporate and Commercial Decisions, 6 N.Y.U. J.L. & Bus. 421, 456 (2010).

On January 5, 2010, the Chancery Court adopted Rules 96, 97, and 98 in order to administer the arbitration proceeding. Compl. ¶ 13. To initiate the proceeding, the parties file a petition with the Register in Chancery, stating the nature of the dispute, the claims made, and the remedies sought. The parties must certify that the eligibility criteria described above are met. Del. Ch. Ct. R. 97(a). Once a petition is filed, the Chancellor appoints a Chancery Court judge to preside over the case as the arbitrator.3 Id. 96(d)(2).

Within ten days of the petition’s filing, the arbitrator holds a preliminary conference with the parties, and then, as soon as practicable, a preliminary hearing. Id. 97(c)-(d). At the preliminary hearing, the parties and arbitrator discuss the claims of the case, damages, defenses asserted, legal authorities to be relied upon, the scope of discovery, and the timing, length, and evidence to be presented at the arbitration hearing. Id. 96(d)(4). At the preliminary hearing, the parties also consider “the possibility of mediation or other non-adjudicative methods of dispute resolution.” Id.

An arbitration hearing occurs approximately ninety days after the petition’s filing. Id. 97(e). At any stage of this process, the parties can agree to mediation through the Chancery Court or can seek the assistance of the judge in pursuing and reaching a settlement agreement. Id. 93(d)-(e).

Prior to the arbitration hearing, the parties exchange “information necessary and appropriate for the parties to prepare for the arbitration hearing and to enable the Arbitrator to understand the dispute.” Id. 97(f). The parties can agree to the scope of information to be exchanged or can have the arbitrator decide the scope of discovery. Id. Court of Chancery Rules 26 through 37, which govern depositions and discovery in all Chancery Court matters, apply to the arbitration proceeding unless the parties and arbitrator together agree to different rules. Id. 96(c). Some discovery matters, such as the procedure for issuing subpoenas, must be created by the parties and the arbitrator. Id. 96(d)(4). All parties must participate in the arbitra[496]*496tion hearing and at least one representative “with authority to resolve the matter must participate....” Id. 98(a).

The arbitrator has the power to issue a final award and to make interim, interlocutory, or partial rulings during the course of the proceeding. Id. 98(f). The arbitrator’s final award, issued after the hearing, can include “any remedy or relief that the Arbitrator deems just and equitable and within the scope of any applicable agreement of the parties.” Id. 98(f)(1). Finally, “[u]pon the granting of a final award, a final judgment or decree shall be entered in conformity therewith and be enforced as any other judgment or decree.” Id. 98(f)(3).

Either party may apply to the Supreme Court of Delaware “to vacate, stay, or enforce an order of the Court of Chancery.” 10 Del. C. § 349(c). The Supreme Court can consider these motions only “in conformity with the Federal Arbitration Act [ (“FAA”) ].” Id. § 349(c); Compl. ¶ 12. Under the FAA, an arbitration award cannot be vacated on the grounds of legal error. An arbitration judgment can only be vacated if there is a showing of fraud, corruption, undue means in procuring the award; partiality, corruption, or certain misconduct on the part of the arbitrator; or the arbitrator exceeded his powers or failed to make a final award. 9 U.S.C. § 10(a) (2006). Awards can also be modified if there was a material miscalculation of figures, if the arbitrator exceeded his authority, or if the modification would not affect the merits of the controversy. Id. § 11.

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Bluebook (online)
894 F. Supp. 2d 493, 2012 WL 3744718, 2012 U.S. Dist. LEXIS 123980, Counsel Stack Legal Research, https://law.counselstack.com/opinion/delaware-coalition-for-open-government-v-strine-ded-2012.