Limits on Confidentiality Orders

Limits on Confidentiality Orders

A confidentiality order that a court properly entered can still be pressed from three directions: by a litigant who says it silences speech, by the public's claim to the documents the court uses to decide the case, and by later events, such as the case's changing needs or a stranger's demand for the material. The usual textual source of such an order is Rule 26(c)(1)(G), which lets a court require that a trade secret or other confidential research, development, or commercial information not be revealed or be revealed only in a specified way.¹ Good cause justifies entry of that order. Each of the three pressures asks a further question about an order already supported by good cause: can it restrain this speech, can it cover this use of the material, and should it continue against this demand?

The questions arise because a confidentiality order is granted on a specific showing, for a particular purpose, at a particular stage, and each limit marks a place where that purpose or stage runs out. The constitutional question comes first, since it fixes how much room a court has to restrict the use of discovered information at all.

First Amendment Challenges

An order that bars a litigant from publishing what discovery produced is a court order restraining speech, and the restrained litigant can argue that the First Amendment forbids it. Some courts and commentators had thought that such an order is a prior restraint that must be justified by First Amendment standards.² The Supreme Court rejected that view in Seattle Times Co. v. Rhinehart. It held that when a protective order is entered on a showing of good cause as required by Rule 26(c), is limited to the context of pretrial civil discovery, and does not restrict the dissemination of the information if gained from other sources, it “does not offend the First Amendment.”³ The order there issued under Washington's civil rule, which is virtually identical to Federal Rule 26(b) and (c), so the decision governs the analysis of a federal order.⁴

The history of the order shows what good cause looked like. The trial court first denied the motion for a protective order because the facts alleged were too conclusory to show good cause, though it left the respondents free to move again for specifically described discovery materials on a factual showing.⁵ Persuaded by later affidavits, it issued an order covering discovery information about the plaintiffs' financial affairs and the names and addresses of the Aquarian Foundation's members, contributors, and clients. The order prohibited the petitioners from publishing, disseminating, or using that information except where necessary to prepare for and try the case, and by its terms it did not apply to information gained by other means.⁶ The trial court recognized that the order would restrict the petitioners' right to publish, but it found the restriction necessary to avoid the “chilling effect” that dissemination would have on a party's willingness to bring his case to court.⁷

The petitioners urged a stricter rule. On their view, an order limiting expression is valid only if its proponent shows a compelling governmental interest by more than speculation, the order is narrowly drawn and precise, and no alternative intrudes less directly on expression.⁸ The Court asked a different question. It considered whether the practice furthers an important or substantial governmental interest unrelated to the suppression of expression, and whether the limit on First Amendment freedoms is no greater than necessary or essential to protect that interest.⁹ Three features of discovery answered that question for the order before it.

First, the order reaches only what the court's own process delivered. Such an order prevents a party from disseminating only information obtained through discovery, so the party remains free to disseminate the identical information if it is gained through means independent of the court's processes.¹⁰ Continued court control over that information therefore does not raise the same specter of government censorship that such control might suggest in other situations.¹¹ A newspaper that learns a fact from a source it developed keeps every right to print it, and the order touches only the copy that exists because the court compelled disclosure.

Second, pretrial discovery is not a traditionally public source of information. Pretrial depositions and interrogatories are not public components of a civil trial: they were not open to the public at common law, and they are generally conducted in private as a matter of modern practice.¹² Courthouse records do not change that. Jurisdictions that require filing of discovery materials customarily let trial courts order that the materials not be filed or be filed under seal, and federal districts may adopt local rules that the fruits of discovery are not filed except on court order.¹³ Restraints on discovered but not yet admitted information are therefore not restrictions on a traditionally public source.¹⁴ The phrase “not yet admitted” sets the boundary of this reasoning, because material the court later uses to decide the case reaches the record by another route, which is the subject of the next section.

Third, the order is not a classic prior restraint. An order prohibiting dissemination of discovered information before trial is not the kind of classic prior restraint that requires exacting First Amendment scrutiny, and limits on a party's ability to disseminate pretrial discovery implicate that party's First Amendment rights to a far lesser extent than restraints on dissemination in other contexts.¹⁵

Against that lightened speech interest stands a substantial governmental interest unrelated to suppressing expression. Litigants can obtain, incidentally or purposefully, information that is irrelevant and that could damage reputation and privacy if publicly released, and the government has a substantial interest in preventing that abuse of its processes.¹⁶ The trial court's worry about a party's willingness to bring a case to court points the same way.¹⁷ Rule 26(g) supplies the initial control on discovery abuse: signing a discovery paper certifies that it is warranted by law, serves a proper purpose, and is not unduly burdensome or expensive.¹⁸ A protective order addresses what remains risky once discovery has produced information.

The Court did not second-guess the trial court's discretion. It was enough that the state's highest court found no abuse of discretion in the decision to issue the order under a constitutional state law.¹⁹ A concurring Justice joined the opinion because the respondents' interests in privacy and religious freedom were sufficient to justify the order and to overcome the protections that the First Amendment affords expression.²⁰ That reasoning treats the First Amendment as still in play, and it asks whether real interests, shown on a record, justify the particular order.

An exam stem usually tests the holding by changing what the order covers, so the useful question is which of the three conditions the order satisfies and which it drops.

The first order stands because every feature the Court relied on is present. The added clause fails the independent-source condition, since it restricts information that never came from the court's process and the reasoning about discovery does not reach it. An order resting only on an assertion that material is sensitive lacks the first condition as well, as the trial court in Seattle Times itself recognized when it first denied the motion as conclusory.²¹

Two errors recur. Some students read “a far lesser extent” as “no scrutiny,” although the Court still asked about an important or substantial interest and tailoring, and the concurring Justice weighed the respondents' interests against expression. Others apply prior-restraint doctrine to every confidentiality order, which overlooks the independent-source carve-out and the Court's statement that a discovery order is not a classic prior restraint.

That a discovery order is constitutional does not make it wise. Some states have adopted statutes or rules that go a long way toward public access to discovery, and there have been proposals for a general rule of public access. Two respected scholars have argued against such a shift from the traditional view that discovery is essentially private, on the ground that current doctrine works well and radical change would be risky.²²

Public Access at Adjudication

Confidentiality that a court grants to material exchanged in discovery does not carry over automatically to material the court uses to decide the case, and Joy v. North draws that line. The court held that documents used by parties moving for, or opposing, summary judgment “should not remain under seal absent the most compelling reasons.”²⁴ It began from Rule 26(c), which authorizes protective orders in the course of discovery and whose important purpose is “to preserve the confidentiality of materials which are revealed in discovery but not made public at trial.”²⁵ The two statements fit together because they address different stages, and the reason the stages differ tells you how to apply each.

Discovery is compulsory process. A party surrenders private material because the lawsuit needs it for orderly preparation, not to educate or titillate the public. Protective orders keep discovery from becoming a club, a threat to disclose matters that will never be used at trial, and private matters that are discoverable may, on a showing of cause, be put under seal in the first instance.²⁶ Sealing such material costs the public little, because nothing the court decides rests on it. Seattle Times points the same way: pretrial discovery is not a public component of a civil trial, and trial courts customarily control whether discovery materials are filed at all.²⁷

A decision, by contrast, rests on its documents. The Joy court could not understand the argument that derivative actions may be routinely dismissed on the basis of secret documents. It said that confidence in the administration of justice would be severely weakened by such a practice and that any other rule might well create serious constitutional issues.²⁸ Reasons that no outsider can read are reasons that no one can test. Seattle Times draws the same boundary, since its reasoning concerned restraints on information that is discovered but not yet admitted.²⁹

Joy does not require that everything come into the open. The court said it was not holding that every piece of evidence, no matter how tangentially related to the issue or how damaging to a party disclosure might be, must invariably be subject to public scrutiny. It called instead for an exercise of judgment: the importance of the material to the adjudication, the damage disclosure might cause, and the public interest in such materials should all be taken into account before a seal is imposed.³⁰ Each factor pulls in its own direction. A document on which the ruling turns is highly important, and the public's interest in understanding the ruling is strong. An exhibit attached for completeness and never discussed in the decision weighs very little. Damage counts too, and confidential commercial information of the kind Rule 26(c)(1)(G) lets a court require to be revealed only in a specified way³¹ can add real weight on that side of the scale.

Umbrella orders presumptively cover all material the disclosing party deems confidential, and they typically require designated information to be filed under seal if it is filed with the court or introduced into evidence.³² That designation records the producing party's own view that the material is confidential, and the view sufficed while the material sat in discovery. It tells the court nothing about how important a document is to a decision or what the public interest in it might be, so the party seeking continued sealing must justify it at the adjudication stage.

Exam answers go wrong in opposite directions here. Some treat the protective-order designation as settling the question at summary judgment, and others conclude that filing a dispositive motion unseals the whole discovery record. Joy supports neither answer, because its rule covers documents the parties use on the motion, and it asks the court to weigh the factors instead of applying a flat rule.

Modification and Outside Demands

A protective order is entered early, on the needs then visible, and the court that entered it keeps control of it. In Pearson v. Miller, the Third Circuit observed that the parties may later seek to modify the order as appropriate at a later stage, and it repeated that “[i]t is well-established that a district court retains the power to modify or lift confidentiality orders that it has entered.”³⁴ The court also tied its suggested restriction to the modest needs of the early stage. Counsel for Ms. Pearson said her attorneys were simply developing her case and would not object to an order preventing anyone but counsel from viewing the material, and the court thought that restriction “entirely sensible” at that point. Given the considerable interests in confidentiality at stake, it added, the district court could properly permit no greater release than was absolutely necessary for the purposes for which the information was sought.³⁵

The power to modify follows from how such an order is made. A counsel-only restriction is calibrated to what the case needs at the stage it has reached, and those needs grow as the case moves toward experts, motions, and trial. If a court could never revisit its order, it would have to guess at the outset how much access the whole case will require, and the guess would err toward too much secrecy or too little. The power to modify lets a court start with the narrowest audience and widen it when the record justifies. The power belongs to the court, however. A party who breaches a protective order is in contempt, so a party who thinks an order has outlived its purpose must ask the court to change it.³⁶

A private confidentiality agreement stands on different footing from a court order, even though the parties who sign one may think of it as equivalent. Public policy generally voids agreements to withhold evidence from judicial proceedings, and the intrusive power of the subpoena trumps the protection of contract.³⁷ A protective order rests on the court's own authority, which is why breach is punishable as contempt, and litigants who want enforceable protection therefore ask the court for an order instead of relying on a contract alone.

Even a court order does not make material immune from an outside demand. A protective order is sometimes overcome by a subpoena in another case if the party seeking the discovery can demonstrate a substantial need or that the order was improvidently granted in the first action.³⁸ The first judge calibrated the order to the first case, and the second litigant's need was never before that judge. The order is also a different kind of protection from work product. A Rule 26(c)(1)(G) order is a judge's direction that confidential information not be revealed or be revealed only in a specified way,³⁹ while work-product protection is the protection that applicable law provides for material prepared in anticipation of litigation or for trial.⁴⁰

The weighing also reaches confidentiality that parties bought through settlement. In Kalinauskas v. Wong, a party sought to depose Donna Thomas and to discover documents from her settled suit against Caesars, which had been settled under a confidentiality order. The court gave two reasons against letting that order bar discovery. Preventing the deposition would condone buying a witness's silence with a settlement agreement, and Thomas's deposition was likely to lead to relevant evidence, so blocking it could force wasteful efforts to generate discovery that already existed.⁴¹ The court accepted that shielding the underlying facts was in Caesars's interest and that Caesars said the case would not have settled without the order. It nevertheless held that, despite the freedom to contract, courts must carefully police the circumstances under which litigants seek to protect their interests while concealing legitimate areas of public concern. It added that the concern grows more pressing as more individuals are harmed by identical or similar action.⁴² The settlement and the sealing order are interests to be weighed, not an automatic bar to a witness with relevant knowledge.

A grand jury can also demand protected material. Rule 26(c) lets a court seal discovery depositions and forbid disclosure beyond the litigants, and the federal courts are divided on whether such an order prevents a grand jury from obtaining the sealed material.⁴³ Three positions have emerged:

• In Martindell v. International Telephone and Telegraph Corp., the Second Circuit held that an order issued because critical witnesses would otherwise have invoked the privilege against self-incrimination to refuse deposition testimony prevailed over a grand jury subpoena for the record of that testimony.⁴⁴
• Several other circuits hold that the grand jury subpoena always trumps a protective order. They reason that the grand jury needs the testimony to test whether immunized testimony is truthful, and that letting the order prevail would operate as a judicial grant of immunity, contrary to the executive branch's authority over immunity grants.⁴⁵
• A middle position, followed by the Third Circuit in In re Grand Jury, presumes that the subpoena will prevail but allows rebuttal, so the subpoenaed party must show exceptional circumstances that clearly favor enforcing the protective order.⁴⁶

The positions differ over whether to protect reliance on the order or the grand jury's compulsory process. Martindell protects witnesses whose testimony exists only because of the order, while the other two weigh the grand jury's need and the allocation of the immunity power more heavily. The middle position keeps room for a case in which reliance of that kind is strong. A stem in which a grand jury subpoenas sealed transcripts therefore calls for identifying which position the jurisdiction follows. Under the middle position the subpoena is presumed to prevail, and the party resisting it carries the burden.

Step one does most of the work on exam stems, because the label “confidential” describes the parties' hope and does not tell you whether a court order stands behind it. Skipping it produces two errors: treating a private agreement as a wall against the whole world, and treating a court order as permanent or as a privilege that no outside demand can reach.