Libel Case Can't Be Litigated with Alleged Libel Sealed—and the Alleged Libel Is Now Unsealed

I wrote about this in November:

In Manhattan Telecommunications Corp. [MetTel] v. Granite Telecommunications, LLC, MetTel sued its competitor Granite for allegedly libeling MetTel in statements to customers; but the allegedly libelous statements were redacted from the publicly available Complaint.

Not allowed, says Delaware Court of Chancery Vice Chancellor Joseph R. Slights III, dealing with my notice opposing such sealing. (Many thanks to my local counsel Garrett Rice of Ross Aronstam & Moritz LLP for all his invaluable help, and to UCLA law student Jenna Battaglia, who worked on the case with me.) Here is an excerpt from the Vice Chancellor's opinion; for similar federal cases, see Parson v. Farley (which I had also filed) and Holmes v. Grambling:

Court of Chancery Rule 5.1 … codifies the "powerful presumption of public access" to court proceedings and records…. [Confidential treatment is allowed only if a party] can demonstrate that "the public interest in access to Court proceedings is outweighed by the harm that public disclosure of sensitive, non-public information would cause."

By design, the burden of demonstrating [this] is exacting, recognizing that "[t]hose who decide to litigate in a public forum … must do so in a manner consistent with the right of the public to follow and monitor the proceedings and the result of [the] dispute." In this regard, our courts appreciate that public access to the courts and their business is "fundamental to a democratic state and necessary in the long run so that the public can judge the product of the courts in a given case." And the public cannot "judge the product of the courts in a given case" if the information being withheld is necessary for understanding "the nature of the dispute" or the court's bases for a decision….

There's more, which you can see at the original post. Today, the Court of Chancery actually unsealed the documents (I presume because the time for appeal has lapsed), and we now know what the allegations were; I underline the material that had been redacted:

[3.] MetTel discovered that Granite has undertaken a coordinated effort, which appears to stretch from entry level sales personnel all the way to the CEO, to contact current and potential MetTel clients and tell them that MetTel is in dire financial straits and not likely to survive the COVID-19 crisis. These statements are completely false without any basis in fact, and Granite either knows they are false or is recklessly indifferent to whether they are true or false. Granite is making these false statements to sow doubt with MetTel's existing and potential clients about MetTel's near term viability, and generate fear of losing essential telecommunications services in the near future.

[4.] Granite's conduct is even more despicable because many of MetTel's clients are in healthcare, public service, public safety, and federal, state and local governments. MetTel provides essential services for its clients—a service all the more essential under the current circumstances, when the majority of employees in the U.S. who are able to do so are working solely by telecommuting, and telecommunications is the only practical way to remain connected to patients, customers and the public. Even more so during these times, clients need to know they are partnered with a financially secure company who can ensure continuation of their telecommunications services, which they are with MetTel. False word of MetTel's supposedly impending financial ruin is the kind of rumor that will spread throughout the market and poison MetTel's prospects, particularly among those for whom an interruption in telecommunications services would be the most devastating at this time: healthcare and government operations on the front lines of the pandemic….

[17.] Granite has begun telling MetTel's current and potential clients—falsely—that MetTel is in bad financial shape and probably will not survive the COVID-19 crisis. The purpose of these lies is to convince MetTel's clients and potential clients that MetTel is an unreliable telecom provider that will likely leave them without essential services when they are needed most….

There are a few other such items throughout the Complaint, and some supporting exhibits, but this seems to be the heart of the matter. I pass it along so readers can see for themselves how it bears on the sealing question on which I intervened, and which I had blogged about. (Naturally, I have no opinion on whether the allegations about MetTel were indeed libelous; that is left to be determined, though in a normal, publicly accessible proceeding.)