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Republic of Philippines v. Westinghouse Electric Corp.

November 8, 1991


On Appeal from the United States District Court for the District of New Jersey; D.C. Civil No. 88-05150.

Sloviter, Chief Judge, and Scirica, Circuit Judge.

Author: Sloviter


Sur Motion for a Stay

Appellants Westinghouse Electric Corporation and Westinghouse International Projects Company (collectively Westinghouse) have moved this court for a stay pursuant to Fed. R. App. P. 8(a) pending their appeal of the order of the district court directing the unsealing of material filed in support of or in opposition to the motion for summary judgment filed by Westinghouse. In accordance with this court's procedure, the motion for a stay was directed to a two-judge motion panel. We will deny the stay, but set forth the analysis underlying our decision in order to explicate an important legal issue raised by the movant and our standards for acting on stays pending appeal.


Procedural and Factual History

On December 1, 1988, the Republic of the Philippines (the Republic) and National Power Corporation (NPC), the Philippine government agency that oversees electrical power generation, filed a 15-count complaint in the District Court for the District of New Jersey against the two Westinghouse companies and Burns and Roe Enterprises, Inc. The complaint alleged, inter alia, that fourteen years earlier Westinghouse had secured a turnkey contract from NPC to construct a nuclear power plant in the Philippines by bribing then-President Ferdinand Marcos, and that Burns and Roe Enterprises had procured the consulting contract and the architectural and engineering subcontract by the same means. The bribes were allegedly effected through defendants' payment of commissions to Herminio T. Disini, a special sales representative retained by defendants, who allegedly paid over to President Marcos all or a substantial part of the commissions. Disini was a close friend of President Marcos, and his wife was Mrs. Marcos' cousin and personal physician.

The complaint included a claim for tortious interference with the fiduciary duty allegedly owed by former President Marcos and claims under RICO and other federal statutes and state law. The Republic and NPC sought rescission of the contracts and damages. Westinghouse filed a motion to stay the action pending arbitration pursuant to the arbitration clause contained in the construction contract. The district court stayed all claims relating to work under the contract and those alleging fraud in the inducement or execution thereof pending arbitration, but left pending and unstayed the tortious interference claim and a related conspiracy claim.

By agreement of the parties (but apparently at the instigation of Westinghouse) the magistrate entered an "umbrella" protective order on October 26, 1989, by which Westinghouse could designate certain information produced as confidential. Soon thereafter the parties began an extensive program of discovery. In December 1989, the Republic, pursuant to the terms of the protective order, challenged the confidentiality designations of approximately 500 documents. The magistrate held two hearings. Thereafter, at the magistrate's direction, the parties agreed to an amended protective order in which some of the initial constraints placed upon the use of confidential discovery material were relaxed. The magistrate approved the amended protective order on March 6, 1990.*fn1

Defendants filed motions for summary judgment on the two claims which were not subject to arbitration. They asserted the lack of any evidence that defendants paid bribes to President Marcos or that he influenced the contract award, and they also asserted, inter alia, the statute of limitations, laches and estoppel. On May 28, 1991, the district court heard oral argument on the defendants' motions for summary judgment. The hearing was open to the public, and the evidence in the court record was freely discussed and quoted during the hearing. The transcript of the oral argument, including discussion of the evidence, was filed in the public record and reported in the press.

On September 20, 1991, the district court filed for publication an extensive opinion denying defendants' motions for summary judgment. The Republic of the Philippines v. Westinghouse Electric Corp., No. 88-5150, 774 F. Supp., (D.N.J. Sept. 20, 1991). The court found "ample evidence to permit a reasonable jury to find that the Disini commissions were intended to be paid in whole or in part to President Marcos and were in fact paid in whole or in part to him or upon his direction." Id. at *16-17. In addition, the district court rejected the defendants' argument that former President Marcos stood above the law and that there could be no recovery even had a bribe been paid. Id. at *39-84. Finally, the court refused to limit damages, as defendants suggested, based either on the act of state doctrine or other doctrines asserted. Id. at *90-93.

On August 23, 1991, Public Citizen, Inc., Essential Information, Inc., and Dr. Jorge Emmanuel (collectively the intervenors)*fn2 filed a motion to intervene for the limited purpose of moving for modification of the protective order to assure public access to future filings, and to unseal court records that had already been placed under seal.*fn3 The intervenors argued that sealing the summary judgment record was inconsistent with both the common law right of access to judicial records and the First Amendment. The intervenors called on Westinghouse to identify any specific materials that would warrant limiting public access to this information.

Following oral argument, the district court entered an order on October 18, 1991, partially granting the intervenors' motion to unseal the court records and to modify the amended protective order. In particular, the district court ordered that "all materials filed in support of or in opposition to the summary judgment motion [be unsealed]." The Republic of the Philippines v. Westinghouse Electric Corp., 139 F.R.D. 50,, at *2. The district court also modified the amended protective order so that no materials could be filed under seal in the future without an order entered by the magistrate made after due notice to the intervenors. In its accompanying opinion, the district court stated that it "examined the record and observed nothing that would overcome the applicable [common law] presumption of access." Id. at *39.

The district court delayed the effective date of its order to unseal the documents for seven days to permit Westinghouse to seek further relief. Westinghouse did not seek to supplement the record in the district court to provide support for its claim of confidentiality, nor did it seek reconsideration to allow it to demonstrate that particular materials in the summary judgment record merited confidential status.

The district court denied Westinghouse's motion for a stay pending appeal but, with the consent of the intervenors, entered a ten day stay to permit Westinghouse to appeal. Westinghouse appealed from the court's order directing unsealing of the documents filed in connection with the motion for summary judgment.*fn4 At the expiration of that period, we extended the stay for the short period necessary to analyze the relevant issues and prepare this opinion.


Standards for a Stay Pending Appeal

Because this court ordinarily grants or denies a stay pending appeal without opinion, there is little reported authority discussing the standard we apply in entering such orders. We are guided, however, by the relatively recent opinion of the Supreme Court in Hilton v. Braunskill, 481 U.S. 770, 95 L. Ed. 2d 724 , 107 S. Ct. 2113 (1987), considering the standard applicable under Fed. R. App. P. 8(a) for granting a stay of a district court's order pending appeal. Although the issue in Hilton involved the grant of a stay of an order granting a petition for habeas corpus, and thus implicated the issue of federal comity to state courts not applicable in this case, the Court explained that it was "logical to conclude that the general standards governing stays of civil judgments should also guide courts when they must decide whether to release a habeas petitioner pending the State's appeal."

Id. at 776. It follows that the factors enunciated by the Court in Hilton are equally applicable to this court's consideration of ...

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