Legal Newsline v. Garlock Sealing Technologies LLC

518 B.R. 358, 2014 WL 3696576, 2014 U.S. Dist. LEXIS 100184
CourtDistrict Court, W.D. North Carolina
DecidedJuly 23, 2014
DocketNo. 3:13-CV-00464-MOC
StatusPublished
Cited by3 cases

This text of 518 B.R. 358 (Legal Newsline v. Garlock Sealing Technologies LLC) is published on Counsel Stack Legal Research, covering District Court, W.D. North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Legal Newsline v. Garlock Sealing Technologies LLC, 518 B.R. 358, 2014 WL 3696576, 2014 U.S. Dist. LEXIS 100184 (W.D.N.C. 2014).

Opinion

MEMORANDUM OF DECISION and ORDER

MAX O. COGBURN, District Judge.

THIS MATTER is before the court on a number of motions and appeals from the [361]*361Bankruptcy Court for the Western District of North Carolina, Honorable Judge George R. Hodges, Senior United States Bankruptcy Judge Presiding.

FINDINGS and CONCLUSIONS

I. Group I: Appeals Related to Access to Court Proceedings and Filings

For a number of years, Judge Hodges has presided over the bankruptcy of Gar-lock Sealing Technologies LLC (“Garlock”) and last year, in performance of those duties, conducted an estimation trial or hearing The purpose of that hearing was to make a reasonable and reliable aggregate estimate of Garlock’s liability for present and future mesothelioma claims. A central issue in the trial was whether consideration of Garlock’s past mesothelio-ma settlements constituted a reliable method for estimating Garlock’s present and future liability.

In the run up to making such determination, allegations surfaced that national counsel for mesothelioma victims had engaged in fraud, deceit, and other activities prohibited by the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1961-1968, in settling their clients’ claims with Garlock. While claims of fraud and violations of RICO are common in federal civil litigation and seldom garner any attention from the public, the allegations in Garlock were of interest to the public, the press, and other still solvent enterprises that were subject to asbestos related claims and had dealings with these attorneys.

As a corollary to its appeal, Legal Newsline asks this court to determine the source of the right of access, be it the common-law presumption which favors access to all judicial proceedings and filings or the First Amendment guarantee of access. The public right of access has two components: first, the right of access protects the public’s ability to oversee and monitor the workings of the federal courts, Columbus-Am. Discovery Grp. v. Atl. Mut. Ins. Co., 203 F.3d 291, 303 (4th Cir.2000) (finding that “[publicity of such records, of course, is necessary in the long run so that the public can judge the product of the courts in a given case.”); and second, public access promotes the institutional integrity of the judiciary. United States v. Cianfrani, 573 F.2d 835, 851 (3d Cir.1978) (holding that “[pjublic confidence [in the judiciary] cannot long be maintained where important judicial decisions are made behind closed doors_”). The Court of Appeals for the Fourth Circuit has long held that “the rights of the news media ... are coextensive with and do not exceed those rights of members of the public in general.” In re Greensboro News Co., 727 F.2d 1320, 1322 (4th Cir.1984). Indeed, anyone, be they a reporter or a member of the general public, who “seek[s] and is denied access to judicial records sustains an injury.” Doe v. Public Citizen, 749 F.3d 246, 263 (4th Cir.2014). However, Legal Newsline’s request that this court make such determination as to the source of the right of access in the first instance would require fact finding that is not appropriate and perhaps not possible on appellate review. Indeed, it appears that the Fourth Circuit routinely remands that issue to the trial court for determination. Stone v. University of Maryland Medical System Corp., 855 F.2d 178, 181 (4th Cir.1988) (holding that “[o]n remand, it [the district court] must determine the source of the right of access with respect to each document sealed. Only then can it accurately weigh the competing interests at stake.”).

Prior to the estimation trial, Legal Newsline filed its Emergency motion to keep the Estimation Trial open to the public, which Judge Hodges denied July 31, [362]*3622013. Legal Newsline filed that motion in response to the bankruptcy court’s earlier decision to close the courtroom to the media and the public during a witness’s testimony. Such denial of the first motion resulted in Legal Newsline’s “first appeal,” 3:13cv464, which asks whether the bankruptcy court’s closure of the courtroom and denial of its motion violated the substantive and procedural protections associated with the First Amendment right to attend court proceedings. As discussed below, the court agrees with Legal News-line that such proceedings were improperly closed, will reverse the closure and the denial of Legal Newsline’s motion, and remand the Order appealed from to Judge Hodges for farther consideration in light of prevailing law, in the manner discussed below.

The issue raised in the second appeal is whether Legal Newsline’s First Amendment and common law interests in access to judicial documents requires disclosure of the evidence upon which the bankruptcy court relied in reaching its decision. After the estimation trial was conducted in the summer of 2013, the estimation Order entered in January 2014; thereafter, Legal Newsline filed its second motion with the bankruptcy court, this time asking Judge Hodges to unseal the trial transcript and exhibits on which his estimation Order was based. For cause, Legal Newsline argued that the public and the press had a right to review for itself the evidence that supported the court’s conclusion. On April 11, 2014, Judge Hodges denied that motion as well as motions filed by other interested parties seeking to unseal that evidence and a second round of appeals followed not just from Legal Newsline, but from other interested parties, in particular, solvent corporations facing similar asbestos related claims.

As to both challenged determinations, the court finds that, although done with the best judicial intentions of providing for the efficient administration of justice, Judge Hodges decision to seal the estimation hearing and maintain the seal as to judicial filings and the transcript of those proceedings after his estimation Order was contrary to the requirements of prevailing case law. When a document or a hearing is sealed, a court is required to “state the reasons for its decision to seal supported by specific findings, and the reasons for rejecting alternatives to sealing to provide this court with sufficient information for meaningful appellate review.” Media General Operations, Inc. v. Buchanan, 417 F.3d 424, 431 (4th Cir.2005) (internal quotation marks omitted and corresponding citations). In Nixon v. Warner Communications, Inc., 435 U.S. 589, 98 S.Ct. 1306, 55 L.Ed.2d 570 (1978) the United States Supreme Court held, as follows:

[i]t is clear that the courts of this country recognize a general right to inspect and copy public records and documents, including judicial records and documents ....

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Bluebook (online)
518 B.R. 358, 2014 WL 3696576, 2014 U.S. Dist. LEXIS 100184, Counsel Stack Legal Research, https://law.counselstack.com/opinion/legal-newsline-v-garlock-sealing-technologies-llc-ncwd-2014.