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Delaware Coalition For Open Government, Inc. v. Strine

United States Court of Appeals, Third Circuit

October 23, 2013

DELAWARE COALITION FOR OPEN GOVERNMENT, INC.
v.
THE HONORABLE LEO E. STRINE, JR.; THE HONORABLE JOHN W. NOBLE; THE HONORABLE DONALD F. PARSONS, JR.; THE HONORABLE J. TRAVIS LASTER; THE HONORABLE SAM GLASSCOCK, III; THE DELAWARE COURT OF CHANCERY; THE STATE OF DELAWARE The Honorable Leo E. Strine, Jr.; The Honorable John W. Noble; The Honorable Donald Parsons, Jr.; The Honorable J. Travis Laster; The Honorable Sam Glasscock, III, Appellants

Argued: May 16, 2013

On Appeal from the United States District Court for the District of Delaware (D.C. No. 1-11-cv-01015) District Judge: Honorable Mary A. McLaughlin

Andre G. Bouchard Joel E. Friedlander Jeffrey M. Gorris Bouchard, Margules & Friedlander Lawrence A. Hamermesh Widener University School of Law Andrew J. Pincus [Argued] Mayer Brown Attorneys for Appellants

David L. Finger [Argued] Finger & Slanina Attorney for Appellee

S. Mark Hurd Morris, Nichols, Arsht & Tunnell Attorney for Amicus Curiae The Corporation Law Section of the Delaware State Bar Association

Roy T. Englert, Jr. Robbins, Russell, Englert, Orseck & Untereiner Attorney for Amici Curiae The Chamber of Commerce of the United States of America and Business Roundtable

Scott L. Nelson Public Citizen Litigation Group Attorney for Amicus Curiae Public Citizen, Inc.

Bruce D. Brown The Reporters Committee for Freedom of the Press Attorney for Amici Curiae The Reporters Committee for Freedom of the Press and Twelve New Organizations

Before: SLOVITER, FUENTES, and ROTH, Circuit Judges

OPINION

SLOVITER, Circuit Judge.

This appeal requires us to decide whether the public has a right of access under the First Amendment to Delaware's state-sponsored arbitration program. Chancellor Strine and the judges of the Delaware Chancery Court ("Appellants"), who oversee the arbitrations, appeal a judgment on the pleadings entered in favor of the Delaware Coalition for Open Government (the "Coalition"). The District Court found that Delaware's proceedings were essentially civil trials that must be open to the public. Appellants dispute the similarities and argue that the First Amendment does not mandate a right of public access to Delaware's proceedings.

I.

In early 2009, in an effort to "preserve Delaware's pre-eminence in offering cost-effective options for resolving disputes, particularly those involving commercial, corporate, and technology matters, " Delaware amended its code to grant the Court of Chancery "the power to arbitrate business disputes." H.B. 49, 145th Gen. Assemb. (Del. 2009). As a result, the Court of Chancery created an arbitration process as an alternative to trial for certain kinds of disputes. As currently implemented, the proceeding is governed both by statute and by the Rules of the Delaware Court of Chancery. See 10 Del. Code Ann. tit. 10, § 349 (2009); Del. Ch. R. 96-98.

Delaware's government-sponsored arbitrations are not open to all Delaware citizens. To qualify for arbitration, at least one party must be a "business entity formed or organized" under Delaware law, tit. 10 § 347(a)(3), and neither party can be a "consumer, " id. § 347(a)(4). The statute is limited to monetary disputes that involve an amount-in-controversy of at least one million dollars. Id. § 347(a)(5).

Once qualified parties have consented "by agreement or by stipulation" to avail themselves of the proceeding, they can petition the Register in Chancery to start arbitration. Id. § 347(a)(1); Del. Ch. R. 97(a). The fee for filing is $12, 000, and the arbitration costs $6, 000 per day after the first day. Standing Order of Del. Ch. (Jan. 4, 2010). After receiving a petition the Chancellor selects a Chancery Court judge to hear the arbitration. See Del. Ch. R. 97(b); tit. 10, § 347(a).[1] The arbitration begins approximately ninety days after the petition is filed, and, as the parties agreed in oral argument, is conducted in a Delaware courthouse during normal business hours. See Del. Chr. R. 97(e). Regular Court of Chancery Rules 26-37, governing depositions and discovery, apply to the proceeding, but the rules can be modified by consensual agreement of the parties. See id. at 96(c); id. at 26-37.

The Chancery Court judge presiding over the proceeding "[m]ay grant any remedy or relief that [s/he] deems just and equitable and within the scope of any applicable agreement of the parties." Id. at 98(f)(1). Once a decision is reached, a final judgment or decree is automatically entered. Id. at 98(f)(3). Both parties have a right to appeal the resulting "order of the Court of Chancery" to the Delaware Supreme Court, but that court reviews the arbitration using the deferential standard outlined in the Federal Arbitration Act. Tit. 10, § 349(c). Arbitrations can therefore only be vacated in relatively rare circumstances, such as when a party can prove that the "award was procured by corruption, fraud, or undue means" or that the "arbitrator[] w[as] guilty of misconduct." 9 U.S.C. § 10; see also Metromedia Energy, Inc. v. Enserch Energy Servs., Inc., 409 F.3d 574, 578 (3d Cir. 2005).

Both the statute and rules governing Delaware's proceedings bar public access. Arbitration petitions are "considered confidential" and are not included "as part of the public docketing system." Tit. 10, § 349(b); Del. Ch. R. 97(4). Attendance at the proceeding is limited to "parties and their representatives, " and all "materials and communications" produced during the arbitration are protected from disclosure in judicial or administrative proceedings. Del. Ch. R. 98(b).

If one of the parties appeals to the Supreme Court of Delaware for enforcement, stay, or vacatur, the record of the proceedings must be filed "with the Supreme Court in accordance with its Rules." Id. at 97(a)(4). "The petition and any supporting documents are considered confidential and not of public record until such time, if any, as the proceedings are the subject of an appeal." Id. The Delaware Supreme Court has yet to adopt rules that would govern the confidentiality of appeals from Delaware's arbitration program, and there is no record of a public appeal from an arbitration award.

In the District Court, the Coalition moved for judgment on the pleadings, arguing that the confidentiality of Delaware's government-sponsored arbitration proceedings violated the First Amendment. The District Court granted the Coalition's motion. The judges of the Delaware Chancery Court appeal.

II.

The District Court had jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1343, and we have jurisdiction pursuant to 28 U.S.C. § 1291. We exercise de novo review over the District Court's grant of a motion for judgment on the pleadings. DiCarlo v. St. Mary Hosp., 530 F.3d 255, 259 (3d Cir. 2008).

"The First Amendment, in conjunction with the Fourteenth, prohibits governments from 'abridging the freedom of speech, or of the press . . . . '" Richmond Newspapers, Inc. v. Virginia, 448 U.S. 555, 575 (1980) (quoting U.S. Const. amend. I). This protection of speech includes a right of public access to trials, a right first elucidated by the Supreme Court in Richmond Newspapers. In that case the Court found that a Virginia trial court had violated the First Amendment by closing a criminal trial to the public. See id. at 580. Chief Justice Burger's opinion for the plurality emphasized the important role public access plays in the administration of justice and concluded that "[t]he explicit, guaranteed rights to speak and publish concerning what takes place at a trial would lose much meaning if access to observe the trial could . . . be foreclosed arbitrarily." Id. at 576-77.

The Court has since found that the public also has a right of access to voir dire of jurors in criminal trials, see Press-Enter. Co. v. Superior Court, 464 U.S. 501, 511 (1984) ("Press I"), and to certain preliminary criminal hearings. See El Vocero de P.R. v. Puerto Rico, 508 U.S. 147, 149-50 (1993) (per curiam) (preliminary criminal hearings as conducted in Puerto Rico); Press-Enter. Co. v. Superior Court, 478 U.S. 1, 10 (1986) ("Press II") (preliminary criminal hearings as conducted in California).

We have found a right of public access to civil trials, as has every other federal court of appeals to consider the issue. See Publicker Indus., Inc. v. Cohen, 733 F.2d 1059 (3d Cir. 1984); see also F.T.C. v. Standard Fin. Mgmt. Corp., 830 F.2d 404, 410 (1st Cir. 1987); Westmoreland v. Columbia Broad. Sys., Inc., 752 F.2d 16, 23 (2d Cir. 1984); Rushford v. New Yorker Magazine, Inc., 846 F.2d 249, 253 (4th Cir. 1988); Brown & Williamson Tobacco Corp. v. F.T.C., 710 F.2d 1165, 1179 (6th Cir. 1983); In re Cont'l Ill. Sec. Litig., 732 F.2d 1302, 1309 (7th Cir. 1984). In addition to finding a right of public access to civil trials, we have also found a First Amendment right of the public to attend meetings of Pennsylvania city planning commissions and post-trial juror examinations. See Whiteland Woods, L.P. v. Twp. of W. Whiteland, 193 F.3d 177, 180-81 (3d Cir. 1999) (planning commissions); United States v. Simone, 14 F.3d 833, 840 (3d Cir. 1994) (post-trial juror examinations). We have declined, however, to extend the right to the proceedings of judicial disciplinary boards, the records of state environmental agencies, deportation hearings, or the voting process. See First Amendment Coal. v. Judicial Inquiry & Review Bd., 784 F.2d 467, 477 (3d Cir. 1986) (en banc) (judicial disciplinary board); Capital Cities Media, Inc. v. Chester, 797 F.2d 1164, 1175-76 (3d Cir. 1986) (en banc) (records of state environmental agencies); N. Jersey Media Grp., Inc. v. Ashcroft, 308 F.3d 198, 209 (3d Cir. 2002) (deportation hearings); PG Publ'g Co. v. Aichele, 705 F.3d 91, 112 (3d Cir. 2013) (voting process).

The Experience and Logic Test

A proceeding qualifies for the First Amendment right of public access when "there has been a tradition of accessibility" to that kind of proceeding, and when "access plays a significant positive role in the functioning of the particular process in question." Press II, 478 U.S. at 10, 8. The examination of the history and functioning of a proceeding has come to be known as the "experience and logic" test. See, e.g., Simone, 14 F.3d at 838. In order to qualify for public access, both experience and logic must counsel in favor of opening the proceeding to the public. See N. Jersey Media Grp., 308 F.3d at 213-14. Once a presumption of public access is established it may only be overridden by a compelling government interest. Press II, 478 U.S. at 9.

The District Court did not apply the experience and logic test. Instead, it concluded that because Delaware's government-sponsored arbitration was "sufficiently like a trial, " and because a right of public access applies to civil trials, a right of public access must also apply to Delaware arbitrations. See Del. Coal. for Open Gov't v. Strine, 894 F.Supp.2d 493, 500 (2012) (quoting El Vocero, 508 U.S. at 149). We find the District Court's reliance on El Vocero misplaced and its decision to bypass the experience and logic test inappropriate. In El Vocero the Supreme Court held in a per curiam opinion that the First Amendment right of public access applies to preliminary criminal hearings in Puerto Rico. The Supreme Court did not engage in an experience and logic analysis in that case, but that was because it had already conducted such an inquiry in Press I, a case concerning nearly identical preliminary hearings in California. See El Vocero, 508 U.S. at 149 (citing Press I, 478 U.S. at 12).

Although Delaware's arbitration proceeding shares a number of features with a civil trial, the two are not so identical as to fit within the narrow exception articulated by the Supreme Court in El Vocero. We therefore must ...


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