“The Question Is Whether Delta [Airlines] Can Bring the Court a Dispute to Adjudicate in Secret”

Fight Censorship, Share This Post!

From Judge Gregory H. Woods’ decision Friday in Delta Air Lines, Inc. v. Bombardier, Inc., 2020 WL 2614704 (S.D.N.Y.):

One distinguishing facet of the American legal system is its commitment to public access to the trial process. This legacy of “open justice” is as old as America itself. Delta Air Lines, Inc. … has chosen to bring its breach of contract claim in one of these open, federal courts, but asks that all of the details of the contract at issue remain sealed. Because Delta has not overcome the strong presumption to public access that attaches to its complaint, its motion to seal is DENIED….

Delta has failed to meet its burden of proof that its complaint should be sealed…. [T]he presumption of public access to the information Delta seeks to shield from the public has extraordinarily substantial weight. Any decision that the Court makes in this matter will necessarily touch on its interpretation of the contract at issue and its terms—including the specific language that Plaintiff has requested be redacted. Delta recognizes that fact. Indeed, in its own words, the details of the “unique and multi-faceted pricing structure” in the purchasing contract “is integral to Delta’s claims.”

The Court cannot reach a decision regarding a contract’s interpretation without examining the contract; Delta cannot expect the Court to decide the principle issue in its case in secret. The presumption of public access to the structure and operation of the disputed contractual provisions at issue in this case is therefore extremely high. The weight of the presumption is arguably less with respect to the few references to the approximate amount at issue in the dispute that Delta proposes to shelter….

[The test for when a document may be sealed] requires that the Court consider the countervailing interests that weigh against public disclosure. The motion to seal is surprisingly lacking in particularity, despite the Court’s invitation to submit supplemental briefing in support of the application. Regardless, Delta relies primarily on two countervailing interests: 1) the fact that disclosure would cause both Delta and Bombardier, Inc. (“Bombardier”) competitive harm, and 2) an unqualified confidentiality provision in the purchasing contract at issue forbidding either party from disclosing its terms or conditions.

First, the Court acknowledges that courts “routinely permit parties to redact sensitive financial information” from public filings. But Delta has provided the Court with only a single affidavit from the Head of Legal Services at Bombardier, reiterating that the terms and conditions of this contract are heavily negotiated and must remain confidential lest the parties “be at a decided disadvantage in negotiation transactions with other purchasers.”

Although this argument is compelling, it does not override the extraordinary substantial weight this Court accords to the presumption of public access given the centrality of nearly all the proposed redactions to the parties’ dispute. And there is no support for Delta’s conclusory assertions that all of the proposed redactions—even those seeking to conceal generic references to the amount of money at stake in this litigation—are necessary to avoid causing either party competitive harm. Many of the redactions are broad, non-specific references to general terms in the contract. And the references to the dollar amounts involved in the dispute are only generic references to their order of magnitude.

Second, though Delta asserts that “[t]he Purchase Agreement contains an unqualified confidentiality provision forbidding either party from disclosing the terms or conditions of the Agreement,” the mere “existence of a confidentiality agreement covering judicial documents is insufficient to overcome the First Amendment presumption of access.” Courts in this district have long held that bargained-for confidentiality does not overcome the presumption of access to judicial documents.

And the text of the clause itself provides that the agreement “is confidential between the parties … except … as may be required by any statute, court or administrative order or decree or governmental ruling or regulation of any applicable jurisdiction ….” In other words, while the agreement might prohibit the parties from disclosing its terms, contrary legal obligations, including the presumption of public access, can qualify that prohibition. If the Court was to read the agreement as contracting away or rebutting the presumption of public access, “then it would not only eviscerate an express exception to that prohibition, but also sanction a loophole under which contracting parties could insert confidentiality clauses in their agreements in order to thwart the common law right of public access to judicial documents that is said to predate the Constitution.”

Delta argues that the Court can adjudicate the contractual provisions in dispute in this case without disclosing them to the public because it is not required to disclose that information in its public filings with the Securities and Exchange Commission. As Delta put it, “[t]he same considerations that exempt contract prices from public disclosure to the investing public also support confidential treatment of this lawsuit. The general public’s interest in monitoring civil litigation dockets should be no greater than the investing public’s interest in knowing the details of multi-billion dollar transactions.”

Of course, Delta offers no legal citation in support of this airy statement. Instead, this position seems to reflect the personal opinion of the company or its counsel. Id. (“The general public’s interest … should be ….” (emphasis added)). This take suggests a fundamental misunderstanding of the nature of the presumption of public access to judicial documents in federal litigation—a doctrine with longer pedigree than the federal securities laws, and one with Constitutional import.

The question here is not whether Delta is required to disclose this information to the investing public regardless of whether or not it wants to do so—the question is whether Delta can bring the Court a dispute to adjudicate in secret. The answer to that question is clear: “The act of bringing suit in a United States District Court is inherently a public act. It invokes the Court’s jurisdiction and asks that a constitutional officer, an Article III judge whose compensation is paid by the public, preside over a case or controversy in a public courthouse.” …


Fight Censorship, Share This Post!

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.