January 23, 2018 Practice Points

Federal Court Refuses to Seal Judicial Record of Arbitration

By Mark Kantor

A recent decision of the D.C. district court offers a reminder of the hurdle a party must meet to seal a proceeding to confirm or vacate an arbitration award. XPO INTERMODAL, INC. v. American President Lines, Ltd., Civ. Action No. 17-2015 (PLF) (D.D.C., October 16, 2017).

In XPO Intermodal, XPO sought an order sealing its petition to confirm an arbitration award, as well as its exhibits, which included the binding mediation decision, the parties' Amended and Restated Services Agreement, and certain schedules. In support of its motion, XPO referred to the confidentiality provisions of the services agreement underlying the dispute, and stated that the award and exhibits contained “highly sensitive” proprietary and commercial information, including information regarding the parties' "rates and business practices." The district court characterized XPO’s petition as a request to deny public access to “what, in effect, amounts to the entire substantive record in this case.”

The district court began its analysis by referring to the “strong tradition”—and presumption—of public access to judicial proceedings.

This country has a "strong tradition of access to judicial proceedings." United States v. Hubbard, 650 F.2d 293, 317 n.89 (D.C. Cir. 1980). "[A]s a general rule, the courts are not intended to be, nor should they be, secretive places for the resolution of secret disputes." United States v. Bank Julius, Baer & Co., 149 F. Supp. 3d 69, 70 (D.D.C. 2015) (citing Nixon v. Warner Communications, Inc., 435 U.S. 589, 597 (1978)). . . .

To determine whether a party seeking to seal court records has overcome this presumption, the court referenced a six-factor balancing test to assess:

(1) the need for public access to the documents at issue; (2) the extent of previous public access to the documents; (3) the fact that someone has objected to disclosure, and the identity of that person; (4) the strength of any property and privacy interests asserted; (5) the possibility of prejudice in those opposing disclosure; and (6) the purposes for which the documents were introduced during the judicial proceedings.

Nevertheless, the court did not address each of these six factors. Instead, it ruled that:

Given the strong presumption in favor of public access and the ease with which confidential information may be redacted from documents before they are publicly filed, the Court concludes that this matter can and should be open to the public to the greatest extent possible.

Importantly, the court was not persuaded that exhibits should be sealed in their entirety just because they contain or refer to confidential information. It ruled that generalized business interests in confidentiality simply:

"[D]o[] not rise to the level of the privacy and property interests that courts have permitted to outweigh the public's right of access. . . .This is particularly so where trade secrets, pricing, and other sensitive information regarding business practices or strategies may be redacted. . . .”

The court noted in particular a line of cases rejecting the argument that confidentiality provisions in the underlying contract are sufficient to justify sealing the judicial record.

The court acknowledged that XPO’s confirmation filings appeared to contain “some potentially sensitive business information, including rates and schedules.” Accordingly, it ordered the parties to try to agree on redactions to the documents:

The Court . . . sees no reason why the Petition itself should not be made publicly available in full, nor any reason why the exhibits thereto should not be made generally available, with only the most sensitive information redacted. The Court is confident that a more rigorous examination undertaken in good faith will lead to a more tailored and appropriate proposal for redaction.

The lesson from XPO is that requests to seal the entirety of a judicial proceeding to confirm an arbitration award are likely to fail and to be met with an instruction to identify particular redactions of “only the most sensitive information.”

Mark Kantor is a member of the College of Commercial Arbitrators in Washington, D.C.

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