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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT ________________________
No. 12-16488 ________________________
D.C. Docket No. 1:09-cv-00955-TWT
FEDERAL TRADE COMMISSION,
Plaintiff - Counter Defendant - Appellee,
versus
ABBVIE PRODUCTS LLC,
Defendant - Appellant.
________________________
Appeal from the United States District Court for the Northern District of Georgia ________________________
(March 21, 2013)
Before MARCUS, BLACK and SILER, * Circuit Judges.
MARCUS, Circuit Judge:
Several years ago, Appellee Federal Trade Commission (“FTC”) began
investigating a settlement between Appellant AbbVie Products LLC, then known * Honorable Eugene E. Siler, Jr., United States Circuit Judge for the Sixth Circuit, sitting by designation. Case: 12-16488 Date Filed: 03/21/2013 Page: 2 of 33
as Solvay Pharmaceuticals (“Solvay”), and several other pharmaceutical
companies. The settlement, the FTC believed, violated the antitrust laws because
the companies effectively had colluded to preserve the monopoly profits from
Solvay’s highly lucrative patent on AndroGel, a topical testosterone gel. During
the course of the investigation, Solvay voluntarily disclosed a confidential
document called the Project Tulip Financial Analysis (“Tulip FA”), which
projected AndroGel’s profits and also discussed the appropriate terms of, and
benefits from, a settlement between Solvay and its competitors. The FTC filed an
antitrust suit against Solvay and the other pharmaceutical companies based on the
settlement and attached the Tulip FA as the sole exhibit to its complaint.
In 2010, Solvay convinced a district court judge in the Northern District of
Georgia to issue a protective order sealing the Tulip FA because the document
contained sensitive financial information that could be harmful to Solvay’s
business interests. The district court eventually dismissed the FTC’s suit, and a
panel of this Court affirmed. FTC v. Watson Pharm., Inc., 677 F.3d 1298 (11th Cir.
2012). In 2012, however, the Supreme Court issued a writ of certiorari to review
this Court’s decision in Watson, and the FTC returned to the district court and
asked for the Tulip FA to be unsealed so that the FTC and its amici could discuss
the document openly in the Supreme Court. The district court did so, based in large
part on its finding that the harms Solvay would suffer from the Tulip FA’s being
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made public have been reduced in the intervening three years. Solvay appeals the
district court’s decision to modify the earlier protective order and unseal the Tulip
FA. Because we conclude that the district court did not abuse its considerable
discretion to modify its own protective order, we affirm.
I.
A.
Solvay Pharmaceuticals, which was later acquired by Abbott Laboratories
and subsequently renamed AbbVie Products LLC, had a license to sell a topical
testosterone gel called AndroGel. Watson, 677 F.3d at 1304. AndroGel was
protected by a patent that expired in 2020, and therefore Solvay had a monopoly on
its sale, which resulted in more than $1.8 billion in revenue. However, a threat to
this very lucrative business emerged; two other drug manufacturers, Watson
Pharmaceuticals and Paddock Laboratories, developed generic versions of
AndroGel and sought FDA approval to begin selling those products. Id.
To defend its patent, Solvay filed a patent infringement lawsuit against
Watson and Paddock. Par Pharmaceuticals became involved in the lawsuit by
sharing the costs of litigation with Paddock in exchange for a share of the potential
profits. Id. Faced with the possibility that its patent would be invalidated, and the
generic entrants allowed into the market, Solvay opted to settle with Watson and
Par/Paddock. The settlement agreement featured a so-called “reverse payment,” in
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which Solvay paid Watson and Par/Paddock to delay marketing their generic
versions of AndroGel until 2015. Id. at 1305. The upshot of the settlement was that
Solvay got to keep its monopoly until 2015, with the reverse payments to its
potential competitors effectively giving them a share of the monopoly profits.
The FTC has contested the legality of reverse payments for some time,
claiming that “they closely resemble the sorts of horizontal agreements to suppress
competition that have previously been condemned under the antitrust laws” and
“[n]othing in the Patent Act legitimizes the use of reverse payments.” Brief for
Pet’r at 15-16, FTC v. Actavis, 133 S. Ct. 787 (No. 12-416). Upon learning of
Solvay’s settlement, the FTC began investigating the matter and ultimately filed an
antitrust lawsuit against Solvay, Watson, Par, and Paddock, which was transferred
to the Northern District of Georgia. Watson, 677 F.3d at 1305. During its
investigation, the FTC asked Solvay to divulge confidential documents regarding
the settlement of the patent litigation and the development, marketing, and sale of
AndroGel. The FTC’s written request stated that “[i]nformation submitted in
response to this letter will be afforded confidential treatment and is exempt from
disclosure under the Freedom of Information Act, as provided in 16 C.F.R.
§§ 4.10-4.11 and 15 U.S.C. §§ 46(f) and 57b-2(f), respectively.” Solvay
cooperated with the investigation.
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In particular, Solvay produced the Tulip FA, an April 2006 document that
contained revenue and profit projections for the AndroGel product line along with
recommendations for how to settle the patent infringement suit between Solvay
and its competitors. The Tulip FA was created by a Solvay financial analyst, Elaine
Yang, to assist Solvay’s management during settlement negotiations with Watson
and Paddock.
B.
In the underlying antitrust action, the FTC sought to attach the Tulip FA to
its second amended complaint and filed the document under temporary seal to give
Solvay an opportunity to seek a protective order from the district court sealing the
document. 1 Solvay promptly moved for a protective order sealing the Tulip FA,
which the district court granted in February 2010. Specifically, the district court
found that Solvay “ha[d] shown good cause for sealing indefinitely [the Tulip FA]
which contains sensitive and confidential information.”
During this time, Solvay sought to dismiss the complaint because, as a
matter of law, Eleventh Circuit precedent established that anticompetitive behavior
within the “scope of the patent” was not a violation of the antitrust laws. Prior to
sealing the exhibit, the district court dismissed the complaint on this basis, In re
1 Pursuant to 15 U.S.C. § 57b-2 and 16 C.F.R. § 4.10, the FTC may disclose documents received during an investigation in judicial proceedings, provided that the FTC gives the submitter notice and an opportunity to seek a protective order from the court. 5 Case: 12-16488 Date Filed: 03/21/2013 Page: 6 of 33
AndroGel Antitrust Litig., 687 F. Supp. 2d 1371, 1378-79 (N.D. Ga. 2010), and a
panel of this Court affirmed, Watson, 677 F.3d 1298. The panel in Watson based
its decision largely on prior precedent, which “establish[ed] the rule that, absent
sham litigation or fraud in obtaining the patent, a reverse payment settlement is
immune from antitrust attack so long as its anticompetitive effects fall within the
scope of the exclusionary potential of the patent.” Id. at 1312. The FTC sought
Supreme Court review, and the Supreme Court granted certiorari in the case on
December 7, 2012. FTC v. Actavis, Inc., 133 S. Ct. 787 (2012). The question
presented in that case is whether reverse-payment agreements, such as the one
between Solvay and its competitors, are per se lawful unless the underlying patent
litigation was a sham or the patent was obtained by fraud, or instead are
presumptively anticompetitive and unlawful. See Pet’n for Writ of Certiorari at I,
Actavis, 133 S. Ct. 787 (No. 12-416). The parties submitted the Tulip FA to the
Supreme Court in a sealed volume of the parties’ Joint Appendix.
Shortly after the grant of certiorari, the FTC moved the district court to
unseal the Tulip FA, claiming that both the FTC and its amici wished to discuss the
document’s contents in the Supreme Court, and that the public interest supported
unsealing the document. The FTC submitted evidence that, since Solvay’s
acquisition by Abbott, the company had disclosed information regarding the
volume of AndroGel sales and had also introduced a new version of the product,
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AndroGel 1.62%, which was different than the AndroGel 1% product discussed in
the Tulip FA.
Solvay opposed the motion and argued that the Tulip FA would allow both
competitors and counterparties to reverse-engineer Solvay’s profit margins, which
would give them an advantage in product pricing and rebate negotiations. Solvay
also disputed the FTC’s need for the document to be public and argued that it had
produced the document in reliance on the FTC’s promises of confidential
treatment. As for the proper test to apply, Solvay argued that “[t]he party seeking
modification of a protective order bears the burden of demonstrating good cause
for the modification, particularly where, as here, good cause was shown for entry
of the original protective order.”
The FTC responded by introducing additional evidence, including testimony
from the Tulip FA’s author, Yang. Yang testified that she could not reverse-
engineer Solvay’s profit margins using the Tulip FA alone. In addition, the FTC
presented testimony from Solvay’s then-CEO, Laurence J. Downey, who said that
the costs of producing AndroGel had changed in the months following the Tulip
FA’s creation. Finally, the FTC argued that Solvay had no valid reliance claim
because Solvay could not have reasonably expected that the document would not
be disclosed in a judicial proceeding.
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After oral argument, the district court immediately granted the motion to
modify its protective order and unseal the Tulip FA but granted Solvay’s motion to
stay the unsealing until Solvay had a chance to appeal. The court later issued a
brief written order embodying its decision. In relevant part, the court found:
a. There is a presumption that documents relevant to legal decisions are public.
b. The Supreme Court granted certiorari in this case on December 7, 2012. It is in the public interest for the parties to be able to discuss in their briefing and in oral arguments to the Supreme Court the details of the economic and financial projections in Exhibit A. The FTC may, for example, highlight the document as an illustration of its view that agreements like those at issue in this case are anticompetitive and in violation of the antitrust laws. The defendants, on the other hand, may want to show, should they choose to make the argument, the power that patent exclusivity gives them. This interest extends not just to the parties, but also to any amici, who should have access to the document and be able to discuss it openly in their briefing.
c. The sensitivity of the information and the potential for competitive injury to Solvay if the information is disclosed has been reduced, although not eliminated, with the passage of time. The Court takes very seriously Solvay’s concerns, particularly about the effect of disclosure on competitors’ pricing and on rebate negotiations, but the passage of time has reduced the likelihood of serious injury to Solvay in either of those areas.
d. The weight to be given to the public’s interest in knowing why decision-makers have made the decisions that they have made, or will make, has changed since the Court’s earlier orders sealing the document.
e. The public interest in making this record public outweighs the private interests of Solvay in its confidential information.
The district court granted Solvay a stay until January 2, 2013, to appeal. 8 Case: 12-16488 Date Filed: 03/21/2013 Page: 9 of 33
On December 26, 2012, Solvay filed an emergency motion for expedited
briefing and consideration or an extension of stay pending appeal. A panel of this
Court granted a temporary stay to rule on the motion and, on January 10, 2013,
granted Solvay a stay pending this appeal and expedited the case.
II.
District courts are in a superior position to decide whether to enter or modify
protective orders, and it is well established that “the decision as to access is one
best left to the sound discretion of the trial court . . . .” Nixon v. Warner
Commc’ns, Inc., 435 U.S. 589, 599 (1978); accord Pub. Citizen v. Liggett Grp.,
Inc., 858 F.2d 775, 790 (1st Cir. 1988) (“Control of pretrial discovery, including
the entry or modification of a protective order, is a matter falling peculiarly within
the discretion of the district court.”); In re Agent Orange Prod. Liab. Litig., 821
F.2d 139, 147 (2d Cir. 1987) (“Whether to lift or modify a protective order is a
decision committed to the sound discretion of the trial court.”).
Thus, we review a district court’s order lifting or modifying a protective
order and unsealing a document only for abuse of discretion. McCarthy v. Barnett
Bank of Polk Cnty., 876 F.2d 89, 91 (11th Cir. 1989). “A district court abuses its
discretion if it applies an incorrect legal standard, applies the law in an
unreasonable or incorrect manner, follows improper procedures in making a
determination, or makes findings of fact that are clearly erroneous,” Thomas v.
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Blue Cross & Blue Shield Ass’n, 594 F.3d 814, 821 (11th Cir. 2010) (internal
quotation marks omitted), and also “when it misconstrues its proper role, ignores
or misunderstands the relevant evidence, and bases its decision upon
considerations having little factual support.’” Jove Eng’g, Inc. v. IRS, 92 F.3d
1539, 1546 (11th Cir. 1996) (quoting Arlook v. S. Lichtenberg & Co., 952 F.2d
367, 374 (11th Cir. 1992)).
Solvay identifies several errors in the district court’s decision that, according
to Solvay, each qualifies as an abuse of discretion. First, Solvay claims that the
district court erred as a matter of law by treating the Tulip FA as a judicial record
to which the strong presumption of public access applies, because neither the
district court nor this Court relied at all on the Tulip FA in dismissing or affirming
the dismissal of the underlying antitrust case. Second, Solvay says that the district
court erred as a matter of law by failing to apply the right standard to the motion.
According to Solvay, the court should have modified its order only if the FTC
demonstrated “extraordinary circumstances,” not merely good cause. The
combination of the first two errors led the district court to presume the document
should have been unsealed rather than placing a heavy burden on the FTC to show
why the document should be unsealed. Third, Solvay argues that the district court
abused its discretion by failing to consider Solvay’s reliance on the protective
order. Finally, Solvay insists that, under either the extraordinary-circumstances or
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good-cause balancing test, the court abused its discretion by failing to find that the
balance of equities favors maintaining the protective order. None of these
arguments withstands close scrutiny.
Solvay first disputes whether the Tulip FA, which was the sole exhibit
attached to the FTC’s complaint, constitutes a judicial record subject to the
common-law right of access. The common-law right of access “establish[es] a
general presumption that criminal and civil actions should be conducted publicly”
and “includes the right to inspect and copy public records and documents.” Chi.
Tribune Co. v. Bridgestone/Firestone, Inc., 263 F.3d 1304, 1311 (11th Cir. 2001)
(per curiam). It is “an essential component of our system of justice” and “is
instrumental in securing the integrity of the process.” Id. However, “[t]he right to
inspect and copy is not absolute, . . . and a judge’s exercise of discretion in
deciding whether to release judicial records should be informed by a sensitive
appreciation of the circumstances that led to the production of the particular
document in question. . . . [T]he common-law right of access requires a balancing
of competing interests.” Id. (internal quotation marks, alterations, and citation
omitted).
“[W]hen applying the common-law right of access federal courts
traditionally distinguish between those items which may properly be considered
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public or judicial records and those that may not; the . . . public presumptively
ha[s] access to the former, but not to the latter.” Id. The test for whether a judicial
record can be withheld from the public is a balancing test that weighs “the
competing interests of the parties” to determine whether there is good cause to
deny the public the right to access the document. Id. at 1312. Our case law lists
several relevant factors to consider, including “whether the records are sought for
such illegitimate purposes as to promote public scandal or gain unfair commercial
advantage, [and] whether access is likely to promote public understanding of
historically significant events.” Newman v. Graddick, 696 F.2d 796, 803 (11th Cir.
1983).
Solvay does not contest that the FTC’s complaint itself is a judicial record,
nor could it. A complaint, which initiates judicial proceedings, is the cornerstone of
every case, the very architecture of the lawsuit, and access to the complaint is
almost always necessary if the public is to understand a court’s decision. Indeed,
the complaint is so fundamental to litigation that the plaintiff’s pleadings in the
complaint determine whether a federal court has jurisdiction to even entertain the
claim. See Louisville & Nashville R.R. Co. v. Mottley, 211 U.S. 149, 152-54
(1908). Moreover, a large number of lawsuits -- including the underlying
controversy between the FTC and Solvay that is currently before the Supreme
Court -- are disposed of at the motion-to-dismiss stage, where a court determines
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solely on the basis of the complaint whether the plaintiff has made sufficient
factual allegations to state a claim under Fed. R. Civ. P. 12(b)(6). See Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 555-56 (2007). For this reason, courts have
consistently treated complaints as judicial records for purposes of determining
whether the common-law right of access applies. See IDT Corp. v. eBay, --- F.3d -
---, 2013 WL 490751, at *2 (8th Cir. Feb. 11, 2013) (parties conceded “that the
antitrust complaint in this case is a ‘judicial record’” consistent with the “modern
trend in federal cases to treat pleadings in civil litigation (other than discovery
motions and accompanying exhibits) as presumptively public”); Mann v.
Boatright, 477 F.3d 1140, 1149 (10th Cir. 2007) (treating complaint as judicial
record); United States v. Martin, 746 F.2d 964, 968 (3d Cir. 1984) (the common-
law right of access encompasses “transcripts, evidence, pleadings, and other
materials submitted by litigants” (internal quotation marks omitted)).
Our case law is consistent with this treatment of the complaint as a judicial
record. In Chicago Tribune, we crafted the general rule “that material filed with
discovery motions is not subject to the common-law right of access, whereas
discovery material filed in connection with pretrial motions that require judicial
resolution of the merits is subject to the common-law right.” 263 F.3d at 1312. The
rationale for the distinction was that this “more refined approach” was necessary to
account for “the unique function discovery serves in modern proceedings.” Id. As
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another court of appeals has explained, “it must be recognized that an abundance
of statements and documents generated in federal litigation actually have little or
no bearing on the exercise of Article III judicial power.” United States v. Amodeo,
71 F.3d 1044, 1048 (2d Cir. 1995). The overwhelming majority of documents
disclosed during discovery are likely irrelevant to the underlying issues and will
not be “heard or read by counsel” or “by the court or other judicial officer.” Id.
Thus, we had ample reason in Chicago Tribune to exempt materials attached to
discovery motions from the presumption of public access while retaining that
presumption for materials that invoke “judicial resolution of the merits,” such as
complaints, motions to dismiss, or motions for summary judgment. See 263 F.3d at
1312 & n.11.
If a complaint is a judicial record, then it follows that attached exhibits must
also be treated as judicial records. Indeed, under the Federal Rules of Civil
Procedure, “[a] copy of a written instrument that is an exhibit to a pleading is a part
of the pleading for all purposes.” Fed. R. Civ. P. 10(c). At the motion-to-dismiss
stage, we consider the facts derived from a complaint’s exhibits as part of the
plaintiff’s basic factual averments. See Solis-Ramirez v. U.S. Dep’t of Justice, 758
F.2d 1426, 1430 (11th Cir. 1985) (per curiam). We even treat specific facts
demonstrated by exhibits as overriding more generalized or conclusory statements
in the complaint itself. See Griffin Indus., Inc. v. Irvin, 496 F.3d 1189, 1206 (11th
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Cir. 2007) (“[W]hen the exhibits contradict the general and conclusory allegations
of the pleading, the exhibits govern.” (citing Associated Builders, Inc. v. Ala.
Power Co., 505 F.2d 97, 100 (5th Cir. 1974))). Thus, to the same extent that the
FTC’s complaint is a judicial record, so too is the attached Tulip FA.
Solvay’s argument to the contrary is unavailing and misreads Chicago
Tribune and Amodeo. According to Solvay, the fact that the district court and the
panel of this Court in Watson did not rely on the Tulip FA or cite it in their
decisions indicates that the public does not need to have access to the document to
understand those decisions. Solvay places great weight on the fact that Chicago
Tribune cites Amodeo in a footnote, see Chi. Tribune, 263 F.3d at 1312 n.11, and
that Amodeo characterizes documents as falling along a “continuum” where “the
weight to be given the presumption of access [is] governed by the role of the
material at issue in the exercise of Article III judicial power and the resultant value
of such information to those monitoring the federal courts.” 71 F.3d at 1049. But
Chicago Tribune did not, by citing Amodeo, adopt an ad hoc standard that a
document’s status as a judicial record is dependent upon whether it played a
discernible role in the resolution of the case. The holding in Chicago Tribune
established a bright-line rule exempting discovery materials from the common-law
right of access. 263 F.3d at 1312. This is a simple rule to apply and does not
involve locating the exhibit on a continuum by determining the actual role the
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document played -- by, for instance, counting the number of times the district court
cited it while deciding a motion to dismiss. Instead, we determine whether a
document is a judicial record depending on the type of filing it accompanied. A
complaint and its exhibits, which are integral to the “judicial resolution of the
merits” of any action, are surely “subject to the common-law right.” Id.
In this case, the Tulip FA was not part of a discovery motion but rather was
the sole exhibit appended to the FTC’s complaint, and therefore was a judicial
record. The FTC’s complaint repeatedly referred to the exhibit in general terms,
although the complaint could not (and did not) discuss the Tulip FA’s contents in
detail due to the then-existing protective order. Thus, the district court was right to
weigh the public’s interest in viewing the document against Solvay’s interest in it
remaining confidential under the good-cause balancing test articulated in Chicago
Tribune.
Solvay raises one final point on this issue. Even granting that exhibits
attached to a complaint are ordinarily judicial records, Solvay asks us to draw a
narrow exception for “confidential, previously sealed documents.” If the public
could access confidential documents, Solvay claims, then plaintiffs could “exploit
the public access doctrine by obtaining highly confidential commercial documents
through pre-complaint investigations or discovery undertaken with assurances of
confidentiality, attaching them as exhibits to pleadings, and then seeking to
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publicly reveal those documents” for the purpose of pressuring defendants to settle.
But Solvay does not provide any precedent for this proposed exception, and,
notably, the policy reasons Solvay advocates are purely speculative and not at all
present in the circumstances of this case. The Tulip FA was the sole exhibit to the
FTC’s amended complaint and had a direct bearing on the economic advantages
that Solvay reaped by entering into a reverse-payment settlement. There is not the
slightest indication in this record that the document’s inclusion was a tactic by the
FTC, or that the document was included solely to coerce Solvay rather than to
influence the judicial resolution of this case. Moreover, insofar as this potential for
abuse does exist in other cases, there are already sufficient remedies to address it.
Indeed, the Second Circuit raised this possibility in Amodeo and elaborated
extensively upon those remedies: “professional sanctions may be available,” along
with “[m]onetary sanctions . . . under Federal Rule of Civil Procedure 11,” or “[a]n
action for wrongful civil proceedings.” 71 F.3d at 1049. And “a court can strike a
pleading as scurrilous under Federal Rule of Civil Procedure 12(f).” Id. Solvay
does not explain why these protections would be insufficient in an appropriate
case.
Thus, we can discern no abuse of discretion in the district court’s
characterization of the Tulip FA, attached as an exhibit to the FTC’s complaint, as
a judicial record.
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Next, Solvay argues that the district court applied the wrong legal standard
anyway and that “the burden should have been on the FTC to show extraordinary
circumstances justifying unsealing.” According to Solvay, because the motion had
already been litigated, and the district court had already found good cause to seal
the document, the FTC’s motion “was thus actually subject to the standards for a
motion for reconsideration.” And movants for reconsideration must show
“extraordinary circumstances justifying the reopening of a final judgment.”
Gonzalez v. Crosby, 545 U.S. 524, 535 (2005) (internal quotation marks omitted);
see also SEC v. TheStreet.com, 273 F.3d 222, 229 (2d Cir. 2001); Martindell v.
Int’l Tel. & Tel. Corp., 594 F.2d 291, 296 (2d Cir. 1979).
But Solvay waived this argument by not raising it in the district court and,
indeed, invited the claimed error by affirmatively arguing before the district court
for application of the good-cause balancing test rather than the extraordinary-
circumstances test it now advocates. “This Court has repeatedly held that an issue
not raised in the district court and raised for the first time in an appeal will not be
considered by this court.” Access Now, Inc. v. Southwest Airlines, Inc., 385 F.3d
1324, 1331 (11th Cir. 2004) (internal quotation marks omitted). “The reason for
this prohibition is plain: as a court of appeals, we review claims of judicial error in
the trial courts. If we were to regularly address questions . . . that district courts
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never had a chance to examine, we would not only waste our resources, but also
deviate from the essential nature, purpose, and competence of an appellate court.”
Id. While appellate review is especially inappropriate when the waived claim
contains a factual component, see id., courts regularly find that appellants waived
purely legal arguments as well -- including arguments regarding what standard
should have applied to decide an issue before the district court. See, e.g., G & S
Holdings, LLC v. Cont’l Cas. Co., 697 F.3d 534, 538 (7th Cir. 2012) (party waived
its argument that a state, and not federal, pleading standard should have applied to
a motion to dismiss by failing to make the argument in the district court);
Cronquist v. City of Minneapolis, 237 F.3d 920, 924-25 (8th Cir. 2001).
The doctrine of invited error also applies here. “It is a cardinal rule of
appellate review that a party may not challenge as error a ruling . . . invited by that
party.” In re Carbon Dioxide Indus. Antitrust Litig., 229 F.3d 1321, 1327 (11th
Cir. 2000) (internal quotation marks omitted); accord Pensacola Motor Sales, Inc.
v. E. Shore Toyota, LLC, 684 F.3d 1211, 1231 (11th Cir. 2012) (“A party that
invites an error cannot complain when its invitation is accepted.”). Or, as another
court of appeals has put it, it is “waiver in the truest sense” when a party goes
“beyond failing to raise a relevant argument” and in fact “affirmatively relie[s] on”
a “standard that they now argue is erroneous.” G & S Holdings, 697 F.3d at 538.
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Solvay never argued for this heightened standard in the district court and in
fact invited the very error for which it now faults the district court. Solvay claims
its argument regarding the proper standard is to be found at pages 15 and 16 of its
opposition to the FTC’s motion to unseal, but that section never cites the two
Second Circuit cases, TheStreet.com or Martindell, or otherwise advances the
notion that extraordinary circumstances should be the standard. Rather, Solvay’s
opposition brief states that, “[t]he party seeking modification of a protective order
bears the burden of demonstrating good cause for the modification, particularly
where, as here, good cause was shown for entry of the original protective order.”
The transcript of the oral argument on this motion similarly reveals no discussion
of the applicable standard. Under these circumstances, we would not fault the
district court for error, even if it had been error, that Solvay invited. 2
Solvay’s unwaived argument is that the district court erred by placing the
burden on Solvay, rather than on the FTC, to show good cause why the document
should remain under seal. As Solvay puts it, “[n]owhere did the district court’s oral
2 To excuse its waiver, Solvay argues that we may consider a new argument on appeal if it involves a pure question of law and our refusal to consider it would result in a miscarriage of justice. Ramirez v. Sec’y, U.S. Dep’t of Transp., 686 F.3d 1239, 1250 (11th Cir. 2012)). While “[i]t is not clear precisely how severe a potential miscarriage of justice must be to justify consideration of arguments not raised in the district court,” we generally find the necessary miscarriage of justice lacking when “the argument raised is weak on its merits.” Roofing & Sheet Metal Servs., Inc. v. La Quinta Motor Inns., Inc., 689 F.2d 982, 990 n.11 (11th Cir. 1982). In this case, the argument is unconvincing on the merits. It relies on out-of-Circuit authority that does not support Solvay’s position. As TheStreet.com makes clear, the extraordinary-circumstances test does not apply to documents that are judicial records. 273 F.3d at 230-31, 234. 20 Case: 12-16488 Date Filed: 03/21/2013 Page: 21 of 33
or written opinion suggest that the burden was on the FTC to justify modification.
On the contrary, the district court balanced the interest in public disclosure against
Solvay’s confidentiality interests under a presumption of public access, not a
presumption that the protective order should be maintained.”
The proper standard for district courts to apply in these circumstances is
whether there was good cause to unseal the document. A party who has already
shown good cause for sealing a document in the first instance should not bear the
burden of showing good cause once again if the same opposing party seeks
modification of the original protective order. Although Fed. R. Civ. P. 26(c) does
not address which party bears the burden in these circumstances, courts regularly
impose the burden on the party seeking modification. See Factory Mut. Ins. Co. v.
Insteel Indus., Inc., 212 F.R.D. 301, 303 (M.D.N.C. 2002) (“If good cause were not
required to be shown when the order was initially entered, the party who later
seeks to prevent disclosure . . . bears the burden of showing good cause. If good
cause were shown initially, however, the party seeking to modify the order must
show good cause.” (citation omitted)); Bayer AG & Miles, Inc. v. Barr Labs., Inc.,
162 F.R.D. 456, 463-64 (S.D.N.Y. 1995); Jochims v. Isuzu Motors, Ltd., 145
F.R.D. 499, 501 (S.D. Iowa 1992). Plainly, the FTC bore the burden of
demonstrating good cause for unsealing the document.
21 Case: 12-16488 Date Filed: 03/21/2013 Page: 22 of 33
The district court’s order does not explicitly state that it placed the burden on
the FTC. However, to hold that the district court abused its discretion, we must
find that the district court either applied the wrong legal standard or used an
improper procedure in deciding the motion. A fair reading of the district court’s
order indicates that it did place the burden on the FTC and, therefore, did not
commit an abuse of discretion.
To the extent that Solvay’s complaint is that the district court gave no weight
to its prior protective order and treated this motion to modify as if the court was
confronting the issue for the first time, we remain unconvinced. The district court’s
order begins with the general proposition that “[t]here is a presumption that
documents relevant to legal decisions are public.” Standing alone, this statement is
not legally erroneous. The Tulip FA is a judicial record to which the presumption
of public access ordinarily would apply. The order then goes on to conduct the
good-cause balancing test that we laid out in Chicago Tribune. The district court
described the public and FTC interests in the document in findings (b.) and (d.) of
its order, Solvay’s interests in finding (c.), and concluded that “[t]he public interest
in making this record public outweighs the privacy interests of Solvay in its
confidential information.”
Crucially, the language of the order indicates that the district court did not
reweigh the parties’ interests from scratch but in fact compared the strength of their
22 Case: 12-16488 Date Filed: 03/21/2013 Page: 23 of 33
interests relative to the time of its earlier order. Thus, for example, the order
describes the FTC and its amici’s interest in “hav[ing] access to the document and
be[ing] able to discuss it openly in their briefing” before the Supreme Court, and
then states that “[t]he weight to be given to the public’s interest . . . has changed
since the Court’s earlier orders sealing the document.” Similarly, the district court
did not weigh Solvay’s interests as if Solvay bore the burden; instead, the order
stresses that “[t]he sensitivity of the information and the potential for competitive
injury to Solvay . . . has been reduced, although not eliminated, with the passage of
time.” The district court’s reasoning -- that “the passage of time has reduced the
likelihood of serious injury to Solvay” -- explicitly compares Solvay’s current
interests to its original good-cause showing.
Moreover, the contents of the briefs on this motion demonstrate that the
burden was not placed on Solvay to prove that its interests remained as strong as
they were when the original protective order was entered. Rather, the FTC
submitted extensive new evidence regarding the changed circumstances that
lessened the possibility of harm to Solvay’s business interests. In particular, the
FTC showed that, since Solvay’s acquisition by Abbott, the company had disclosed
AndroGel sales information and had introduced a new version of the product,
AndroGel 1.62%. The FTC also introduced testimony from the Tulip FA’s author,
Yang, who stated that she could not reverse-engineer Solvay’s profit margins using
23 Case: 12-16488 Date Filed: 03/21/2013 Page: 24 of 33
the Tulip FA alone. In addition, the FTC presented testimony from Solvay’s past
CEO, who stated that some of the costs of producing AndroGel had changed after
the Tulip FA was written.
Because the district court did not apply the wrong test or employ an
improper procedure, it did not abuse its discretion in this respect.
C.
Solvay also finds fault in the district court’s silence regarding Solvay’s
reliance on the protective order. Solvay claims that Chicago Tribune mandated that
district courts consider reliance on a protective order before modifying it. “The
district court here gave no indication . . . that it considered the importance of
Solvay’s reliance on the previously issued protective order,” and that “failure alone
constitutes an abuse of discretion.” We disagree.
Chicago Tribune did not hold that a district court abuses its discretion by not
explicitly and specifically addressing reliance in every decision to modify a
protective order. The panel’s main holding in Chicago Tribune was that “the
district court must balance Firestone’s interest in keeping the information
confidential against the Press’s contention that disclosure serves the public’s
legitimate interest in health and safety.” 263 F.3d at 1314-15. In other words, what
the panel held that the district court must do is to conduct the good-cause balancing
test. The opinion faulted the district court because its order had stated that
24 Case: 12-16488 Date Filed: 03/21/2013 Page: 25 of 33
“concerns of public health and safety trump any right to shield such material from
public scrutiny” but had “made no factual findings . . . that support[ed] the
conclusion that the public’s health and safety [we]re sufficiently impacted by the
information contained in these specific documents to trump Firestone’s interest in
keeping trade secret information confidential.” Id. at 1315. Thus, the primary
purpose of the remand was to make adequate factual findings regarding the public
interest in that case. In a footnote at the end of this section, the panel also
instructed the district court to discuss “Firestone’s reliance on the terms of the
stipulated protective order.” Id. at 1315 n.15. This directive made sense in that
case, where “[a]t the beginning of the litigation, in what has become commonplace
in the federal courts, the parties stipulated to a protective order allowing each other
to designate particular documents as confidential and subject to protection under
Federal Rule of Civil Procedure 26(c)(7).” Id. at 1307. This passage in Chicago
Tribune suggests that discussion of reliance would be appropriate in cases
involving reliance on a protective order in force when the document was disclosed.
However, that type of reliance is not at issue here. As the FTC accurately
points out, Solvay could not have relied on a protective order to disclose the Tulip
FA because Solvay disclosed the Tulip FA before it moved for and received the
protective order. In Chicago Tribune, on the other hand, the protective order was
entered prior to discovery and was in force during document production. In those
25 Case: 12-16488 Date Filed: 03/21/2013 Page: 26 of 33
circumstances, it made sense to say that Firestone relied on the protective order to
disclose confidential information, and that the district court should have taken that
reliance into account. Only after Solvay disclosed the Tulip FA, and the
government attached the Tulip FA to its complaint, did Solvay move for a
protective order sealing the document. In these circumstances it makes less sense
to say that Solvay relied on the protective order. After all, Solvay could not have
relied ex ante on a protective order to which it had no entitlement, and which it was
uncertain of receiving as a matter of the district court’s discretion, when it
disclosed the Tulip FA.
Perhaps recognizing this, Solvay places great emphasis on the government’s
assurances of confidentiality. But the government did not promise complete
confidentiality. The government only promised that “[i]nformation submitted in
response to this letter will be afforded confidential treatment and is exempt from
disclosure under the Freedom of Information Act, as provided in 16 C.F.R.
§§ 4.10-4.11 and 15 U.S.C. §§ 46(f) and 57b-2(f), respectively.” Title 15 U.S.C.
§ 57b-2(d) provides that the FTC can disclose confidential information “in
Commission adjudicative proceedings or in judicial proceedings to which the
Commission is a party,” and 16 C.F.R. § 4.10(g) states that confidential
information may be disclosed so long as, “[p]rior to disclosure . . . , the submitter
will be afforded an opportunity to seek an appropriate protective or in camera
26 Case: 12-16488 Date Filed: 03/21/2013 Page: 27 of 33
order.” In other words, the FTC’s promise of confidentiality was that the
information would remain confidential unless and until the FTC filed suit against
Solvay, at which point Solvay would be entitled to seek a protective order.
Notably, the FTC’s regulations do not guarantee that, if Solvay failed to obtain a
protective order, the FTC would withdraw the confidential material. Thus, to the
extent that Solvay relied on the FTC’s promise, the FTC effectively promised
Solvay only the opportunity to apply for a protective order to seal the Tulip FA.
At all events, the briefs presented to the district court thoroughly addressed
the question of reliance. The district court did not abuse its considerable discretion
by not expressly discussing reliance in its decision.
D.
Lastly, Solvay claims that the district court “fail[ed] to recognize that the
balance of equities weighs strongly in favor of keeping the [Tulip FA] under seal.”
The district court’s conclusion that the equities favored unsealing the document,
however, was merely the product of several antecedent factual findings. In order to
conclude that the district court abused its discretion, therefore, we would have to
overturn those factual findings as clearly erroneous.
The key findings that the district court made were that “[t]he sensitivity of
the information and the potential for competitive injury to Solvay if the
information is disclosed has been reduced, although not eliminated, with the
27 Case: 12-16488 Date Filed: 03/21/2013 Page: 28 of 33
passage of time,” and that, with regard to “the effect of disclosure on competitors’
pricing and on rebate negotiations, . . . the passage of time has reduced the
likelihood of serious injury to Solvay in either of those areas.”
For us to conclude that those findings were clearly erroneous, we must be
“left with the definite and firm conviction that a mistake has been committed” after
reviewing the evidence as a whole. Anderson v. City of Bessemer, 470 U.S. 564,
573 (1985). But “[i]f the district court’s account of the evidence is plausible in
light of the record viewed in its entirety, [we] may not reverse it even though
convinced that had [we] been sitting as the trier of fact, [we] would have weighed
the evidence differently.” Id. at 573-74. “Where there are two permissible views of
the evidence, the factfinder’s choice between them cannot be clearly erroneous.”
Id. at 574.
Solvay insists that the competitively sensitive data in the Tulip FA retains
the potential to harm the company in its rebate negotiations and with regard to
competitors’ pricing of their products. However, this is the quintessential case
where there are two permissible views of the evidence, and therefore the district
court’s finding that the likelihood of injury has been ameliorated over time cannot
be clearly erroneous. The FTC came forward with substantial evidence that the
Tulip FA would no longer be as damaging to Solvay. For instance, in the oral
28 Case: 12-16488 Date Filed: 03/21/2013 Page: 29 of 33
arguments and their briefs before the district court, the FTC pointed at the
following pieces of evidence:
1. With regard to reverse-engineering profit, the analyst responsible for the
Tulip FA, Elaine Yang, testified that the Tulip FA did not contain the
financial assumptions for the financial models, only the results of those
models;
2. According to Yang, the cost and revenue numbers, along with modeling
assumptions, were contained in a backup spreadsheet that was not included
with the Tulip FA;
3. To rely on the numbers in the Tulip FA, one would need to assume that the
costs and profit projections had not changed in the intervening seven years;
4. Solvay has introduced a new product, AndroGel 1.62%, which does not
necessarily have the same cost structure or profit margin as the original
AndroGel product discussed in the Tulip FA;
5. With regard to profit margins, the profit margin of Abbott’s (Solvay’s
parent) pharmaceutical business as a whole is public knowledge and is 76.5
percent;
6. The Tulip FA does not include cost changes that have occurred in
subsequent years; the then-U.S. CEO of Solvay testified during an
29 Case: 12-16488 Date Filed: 03/21/2013 Page: 30 of 33
investigational hearing that AndroGel’s costs had changed during a three-
month period.
On the other side of the ledger, Solvay produced a declaration from James Hynd,
the current leader of the AndroGel unit, in which he stated that the profit on
AndroGel sales has never been publicly disclosed, and thus that disclosure of the
Tulip FA “would cause severe harm to [Solvay] if disclosed to the public.”
Neither side has a bulletproof case. The FTC’s strongest case is this: the
process of reverse-engineering the profits from the Tulip FA requires financial
assumptions not apparent on the face of the document itself. Moreover, the
document is old and cannot speak to how the company’s costs have changed over
time. In particular, Solvay has subsequently introduced a new AndroGel product
that may have a different cost structure and thus a different profit margin than the
former AndroGel product. And, in any case, we know the pharmaceutical unit’s
overall profit margin. On the other hand, Solvay’s strongest case is that the Tulip
FA contains a product-specific projection of profit that remains highly confidential
information.
But there appear to be holes in both accounts. Some of the FTC’s inferences
are unpersuasive. For instance, having the entire company’s profit margin -- 76.5
percent in this case -- hardly tells us or the public the product-by-product
breakdown of profits. As for Solvay’s account, the problem is that, even if one
30 Case: 12-16488 Date Filed: 03/21/2013 Page: 31 of 33
could calculate the per-unit profits from 2006, this figure would not necessarily aid
competitors or counterparties in present-day negotiations. Public knowledge of
AndroGel’s 2006 profit margin does not necessarily entail knowledge of
AndroGel’s 2013 profit margin. Moreover, since costs can change and have
changed in the past, it would be possible or even likely that the document’s
projections no longer reflect the current profit and loss of the product.
As an example of one fact-bound dispute between the parties, the FTC
argued that it had testimony from Solvay’s former CEO that AndroGel’s costs had
changed in the months following the Tulip FA’s creation. In its reply, Solvay
insists that this testimony reveals that its former CEO meant only that “costs
changed directly in proportion to sales,” and that “costs chang[ing] in proportion to
sales is precisely how margin percentages [i.e., profit] remain constant.” But the
testimony can be read to support either side’s position.
The district court had two conflicting but viable accounts of the evidence,
and we cannot now reweigh the evidence and reach our own independent
conclusion. The district court chose to endorse the FTC’s view by concluding that
the Tulip FA’s sensitivity has been reduced over time and that the likelihood of
injury to Solvay has been lessened. These factual findings were not clearly
erroneous. Having found those facts, the district court then did precisely what
Chicago Tribune commanded it to do. The district court weighed the public’s
31 Case: 12-16488 Date Filed: 03/21/2013 Page: 32 of 33
interest in the document against Solvay’s weakened confidentiality interests and
concluded that “[t]he public interest in making this record public outweighs the
private interests of Solvay in its confidential information.”
The common-law right of access to federal courts is designed to promote
public understanding of significant public events, including what a court does and
how a court goes about adjudicating cases. Wilson v. Am. Motors Corp., 759 F.2d
1568, 1570 (11th Cir. 1985) (per curiam) (“[A] common law right of access exists
as to civil proceedings. ‘What transpires in the courtroom is public property.’”
(quoting Craig v. Harney, 331 U.S. 367, 374 (1947)); Newman, 696 F.2d at 801
(“[O]pen proceedings may be imperative if the public is to learn about the crucial
legal issues that help shape modern society. Informed public opinion is critical to
effective self-governance.”). The district court’s decision to unseal the Tulip FA
enhanced the public’s ability to understand the judicial process and a significant
legal issue that will shape business practices in the future: whether the FTC is right
that so-called reverse payments are anticompetitive and, therefore, violative of
Section 1 of the Sherman Act. This issue inherently possesses public significance
and has done so since the day this controversy first appeared in court.
The district court had, as we stressed earlier, broad discretion to modify the
protective order that it entered three years ago. It found that the passage of time
had altered the balance enough so that the value of public access to the Tulip FA
32 Case: 12-16488 Date Filed: 03/21/2013 Page: 33 of 33
exceeded the value of confidentiality to Solvay. We find no abuse of the district
court’s discretion in this case and affirm its decision to make the Tulip FA publicly
accessible.
We also vacate the stay entered by a panel of this Court. Order Granting
Stay Pending Appeal, FTC v. Abbvie Prods. LLC, No. 12-16488 (11th Cir. Jan. 10,
2013).
AFFIRMED; STAY VACATED.