In re Thomas

583 B.R. 385
CourtUnited States Bankruptcy Court, E.D. Kentucky
DecidedMarch 1, 2018
DocketCASE NO. 17–20527
StatusPublished
Cited by4 cases

This text of 583 B.R. 385 (In re Thomas) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, E.D. Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Thomas, 583 B.R. 385 (Ky. 2018).

Opinion

Tracey N. Wise, Bankruptcy Judge

Parties who settled an adversary proceeding have asked the Court to restrict public access to settlement-related documents filed in the record because they agreed to keep their settlement terms confidential. In fact, they suggest that the settlement will "blow up" if the Court does not seal the documents. But the parties have failed to show that they are entitled to this extraordinary relief, and the Court rejects the proffered "no seal, no deal" position.

Debtor Brittany R. Thomas filed a class-action lawsuit in this Court (Adv. No. 17-2024) against AT & T Corp. and DirecTV, LLC (the "AP Defendants"). Debtor quickly settled her individual claims with the AP Defendants. Debtor then moved the Court in her chapter 13 bankruptcy case to approve the settlement under Federal Rule of Bankruptcy Procedure 90191 and provided a copy of the fully-executed Settlement Agreement to the Court for review. And, because the parties want to keep the terms of their settlement confidential, Debtor also filed two motions [ECF Nos. 32, 39) ] (the "Seal Motions") to seal the Settlement Agreement and a related explanatory memorandum in the record in this case.

As explained below, documents in a bankruptcy court's record are presumptively accessible to the public. 11 U.S.C. § 107(a). The parties have failed to establish a basis to seal the records at issue under § 107(b) ; therefore, the Seal Motions will be denied.

BACKGROUND

Co-Debtors Brittany Thomas and Andrew Thomas filed a chapter 13 bankruptcy petition on April 19, 2017. Just over seven months later, Debtor Brittany Thomas filed an adversary proceeding against the AP Defendants, alleging generally *387that they engaged in a repeated course of conduct that violated the automatic stay under § 362:

Defendants purposely disregard the Bankruptcy Code and illegally collect or attempt to collect amounts from debtors, which they are prohibited from collecting. Defendants' routine and persistent attempted collection and/or collection of prepetition obligations from debtors, are an abuse of process and are in violation of the automatic stay provided to Chapter 13 Debtors by Section 362(a) of the United States Bankruptcy Code ("Code").

[AP No. 17-2024, ECF No. 1 ¶ 2.] Not only did Debtor seek to proceed on her own behalf against the AP Defendants, she filed her Complaint as a proposed class action on behalf of "[a]ll persons who entered into contracts for telecommunication services or satellite television services, with [the AP Defendants] between April 19th 2012 and the present, who filed then filed [sic] a Chapter 13 bankruptcy petition in the Eastern District of Kentucky and who received documents which substantially conform to" documents sent to Debtor. [Id. ¶ 34.]

About seven weeks after Debtor filed her Complaint, however, the parties filed a Notice of Settlement in the adversary proceeding. In her chapter 13 bankruptcy case, Debtor filed her first Seal Motion [ECF No. 32] and filed the fully-executed Settlement Agreement in the record under a provisional seal for the Court's review; it reflects a settlement between the AP Defendants and Debtor individually respecting the claims in the adversary proceeding.2 Shortly thereafter, Debtor filed a Motion to Compromise Controversy Under Rule 9019 with AT & T Corp. and DirecTV, LLC [ECF No. 35] ("Motion to Compromise"). Stating that Debtor and the AP Defendants "have entered into the Settlement Agreement and Release which will be filed under seal with the Court," Debtor asked the Court "to approve the [Settlement] Agreement and retain jurisdiction to enforce its terms." [Id. ¶¶ 7, 9.]

In other words, Debtor halted her class action lawsuit in favor of a quick settlement of her own claims. Because she sought to settle post-petition claims that are property of her chapter 13 bankruptcy estate under § 1306(a)(1), Debtor moved the Court to approve the settlement. Thus, the Court must "determine if the settlement is fair and equitable based on the facts of the case." In re Equine Oxygen Therapy Res., Inc. , Case No. 14-51611, 2015 WL 1331540, at *2, 2015 Bankr. LEXIS 900 at *5 (Bankr. E.D. Ky. March 20, 2015) (citations omitted). The public has a right to know the basis for the Court's decision on that motion. "This policy of open inspection, established in the Bankruptcy Code itself, is fundamental to the operation of the bankruptcy system and is the best means of avoiding any suggestion of impropriety that might or could be raised." In re Bell & Beckwith , 44 B.R. 661, 664 (Bankr. N.D. Ohio 1984) ; see also Geltzer v. Andersen Worldwide, S.C. , Case No. 05 Civ. 3339 (GEL), 2007 WL 273526, at *4, 2007 U.S. Dist. LEXIS 6794, at *13 (S.D.N.Y. Jan. 30, 2007) (stating that the public is entitled to "monitor the appropriateness of the Court's decision" to approve a settlement).3

*388Debtor's first Seal Motion with respect to the Settlement Agreement quotes § 107(b) and Bankruptcy Rule 9018,4 but does not mention the primary right of public access codified in § 107(a). Debtor inaccurately avers that "a bankruptcy court may enter a seal order under the broad confidentiality protections in bankruptcy proceedings where necessary to protect confidential information." [ECF No. 32 ¶ 14, citing In re Global Crossing Ltd. , 295 B.R. 720, 725 (Bankr. S.D.N.Y 2003).5 ] Debtor claims that "[t]he Settlement Agreement contains settlement terms, the confidentiality of which form the basis of the settlement. Due to the confidential and sensitive nature of the Settlement Agreement, the Debtor respectfully submits that no alternative method would adequately protect the Settlement Agreement." [Id. ¶ 16.] Debtor also reports that she "has delivered copies of the Settlement Agreement to the Court for in camera review, and either have [sic] delivered, or will deliver the Settlement Agreement to the Chapter 13 Trustee on a confidential basis." [Id. ¶ 17.]

Importantly, Debtor's motion does not offer any evidence to show that the Settlement Agreement falls within a category of documents subject to protection from disclosure under § 107(b). Debtor's tendered order (1) does not contain any findings of fact or conclusions of law,6 and (2) would seal the entire Settlement Agreement in perpetuity pending a subsequent Court order. [ECF No. 32-1.]

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Cite This Page — Counsel Stack

Bluebook (online)
583 B.R. 385, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-thomas-kyeb-2018.