Extortion and Super-Secret Prior Restraints

An Oklahoma case involving an employee's allegations of food plant contamination-litigated under seal.

I just learned the details of this story—it happened last spring, but it was sealed until several days ago. I'd love to hear what you folks think about it.

The alleged extortion: Our tale begins April 24, 2017, with some texts that one Armando Acosta sent to his manager at Packers Sanitation Services, Inc. (apparently "the nation's largest cleaning contractor to the food industry"). Acosta worked for PSSI as a cleaner, and was assigned to a food processing plant owned by AdvancePierre Foods. AdvancePierre's plants are predominantly in Garfield County, Oklahoma, and AdvancePierre is apparently "one of the largest employers in the area."

Acosta's texts "claim[ed] that swabs he took from PSSI's customer's equipment tested positive for Listeria, as well as other bacteria." In copies of the texts attached to PSSI's court filings, Acosta said that he was going to take this information that day and the next to various businesses (presumably AdvancePierre's customers), as well as to the U.S. Department of Agriculture. And, in those texts, Acosta apparently sought $650,000 from PSSI as payment for his silence. (For the specifics about Acosta and what he allegedly did, I will generally rely on PSSI's factual claims in their court papers; I could not find Acosta myself and Acosta didn't file any papers.)

The big business deal: The next day, April 25, three things happened. First, Tyson Foods—the nation's leading meat processor—announced that it was buying AdvancePierre for about $3 billion.

The injunction: Second, PSSI petitioned the Garfield County trial court for a temporary restraining order that would temporarily bar Acosta from "[d]isclosing or using, directly or indirectly, any of the illegally obtained confidential and/or propriety information obtained from PSSI and/or AdvancePierre to any person and/or entity." Judge Jason Seigars granted the request that morning, ordering that Acosta be:

restrained [for two days] from interfering, in any respect, [with] PSSI's business relationships with AdvancePierre, and … from contacting any governmental agency or media outlet regarding his allegations ….

Acosta didn't appear at the hearing, and indeed was only served with the petition on April 27 (though it may well be that the difficulty serving him was his own fault).

The legal theory behind the TRO was a bit complicated. The case was listed on the docket as involving libel, which is why I wrote about it in June as a libel case. Part of PSSI's argument was that Acosta "cannot be harmed if he is ordered to stop making false statements regarding PSSI and AdvancePierre." Another motion, filed the same day, stated that "Plaintiff and its customer avers, based on Plaintiff's customer's due diligence, as explained more fully in the Verified Petition, that the information Defendant seeks to disseminate is false." And PSSI said that, "AdvancePierre has mechanisms in place to test for the presence of bacteria and other contaminants—none of which have resulted in positive test results in the area where Employee illegally obtained his 'findings'"; in a further filing this year it added that "AdvancePierre likewise complied with its regular testing obligations after Defendant's threats and determined that no contamination existed within the facility."

But the main theory in the petition was not focused on falsity (unsurprising, since PSSI didn't have access to Acosta's claimed evidence). Indeed, according to PSSI's motion for the temporary restraining order,

As of the date of filing this Motion, PSSI is not aware of any basis in fact regarding Defendant's allegations regarding contamination of any equipment in AdvancePierre's Enid plant. However, in order to best protect its business interests and proprietary information, PSSI is assuming, for purposes of this Motion and its Petition only, Defendant's allegations concerning the contaminated equipment are true.

Rather, the focus of PSSI's claims was that Acosta's conduct constituted "breach of confidentiality" and "tortious interference with business contracts":

1. Acosta had "illegally obtained confidential and/or proprietary information belonging to PSSI and/or its customers," "in violation of his job description" (which did not "include the taking of and/or the testing of samples from the customers' equipment and/or plants") "and [of] PSSI's Employee Handbook" (which required employees to keep "client-related information" confidential),
2. Acosta's goal was extortion, and
3. if Acosta were to release this information, "whether true or false," the release "could lead to the termination of vital business contracts with PSSI, irreparable defamatory harm, exposure to unwarranted government investigation, and the release of confidential and proprietary business information."

This was the basis for the judge's order forbidding Acosta from conveying the information to the media or to the government.

The sealing of the case: Finally, still on April 25, PSSI also moved to seal the case, arguing that

sealing of the requested filings is necessary in the interest of justice where dissemination of the information stolen by Defendant would harm the business practices of Plaintiff and its customer as well as cause unwarranted fear and concern amongst the general public.

The judge granted the motion the same day, providing that the petition and the motion for the TRO were to be sealed.

Two days later: The initial TRO was set to expire on April 27, so on April 27 the court issued a longer-term temporary injunction; Acosta did not appear at the hearing. At the hearing, PSSI also asked that all the documents in the case be sealed, and they were:

The Court … finds that under the circumstances presented it is necessary in the interests of justice to keep the materials, filed in this case, from public record at this time, and that all documents should be filed under seal and the Court Clerk is thereby directed to seal all documents.

A month after that, on May 30, the court granted PSSI's motion for default judgment (because Acosta had not filed any papers contesting PSSI's case), and the injunction was made permanent. Tyson's acquisition of AdvancePierre was completed on June 7.

* * *

This seems to me an interesting test case for many recurring questions about the First Amendment and injunctions:

• Should courts be able to order people not to reveal certain information because they acquired it unlawfully, because revealing it would be a breach of a duty of confidentiality, or because it is allegedly false?
• Should it matter that the person's motives for threatening to reveal the information seem to be extortionate—and, if so, should the court try to enjoin just the extortion, or also enjoin the revelation of the information, period?
• Should the victims of this apparent attempted extortion be only able to proceed by calling on criminal prosecutors, or should courts be able to supplement this criminal process with fast-moving emergency injunctions? (Acosta was never prosecuted; PSSI's counsel tells me that this is because law enforcement couldn't locate him, and he wasn't heard of again after being served on April 27.)
• Was the injunction correct in barring Acosta "from contacting any governmental agency or media outlet regarding his allegations"? Or should any duty of confidentiality in such a case be rejected as against public policy, when it bars people from alerting the U.S. Department of Agriculture (or similar agencies) to possible health risks—however ill-intentioned the people were when they gathered the information, and however spurious those allegations may (or may not) prove to be when the government does investigate them?

These are all interesting questions, I think, and ones much worth debating. It's certainly possible (though I think not obvious) that the right answer to those questions is that PSSI should have prevailed under all of them.

But the problem is that it was impossible for anyone to debate them, because all the documents in the case (though, thankfully, not the docket) were sealed. I think this sealing violated the common-law and First Amendment rights of access to court records; those rights aren't absolute, but they are quite strong, especially when sealing of entire documents (including court orders) is involved. (See this post about a different case for more on that body of law.) Moreover, as I argued in this post from two months ago, an Oklahoma statute expressly requires that any sealing order itself be public, and expressly explains why the case was sealed; in this instance, this statute wasn't followed. (The statute was enacted in 2014, and might thus not have been on the judge's radar.)

Fortunately, after I moved in June of this year to unseal the sealing orders—a first step towards unsealing the rest of the case—the judge promptly did so (without objection by PSSI). And as I was preparing a motion to unseal the rest of the case, the judge, to his credit, himself issued an order to show cause why the case shouldn't be unsealed. PSSI responded that it didn't object to the unsealing at this point, "because Defendant's allegations regarding the presence of bacteria on equipment at the Enid Plant have been definitively proven to be false and the emergent concerns associated with the disclosure of the allegations have since subsided." The case was indeed unsealed several days ago.

So, to the questions I ask above, I should also add:

• Should such disputes be litigated under seal—on the theory that this is the only way to effectively prevent the harm caused by defendant's apparently tortious conduct—or should they be litigated in open court, on the theory that it is important for the public to be able to "monitor the functioning of our courts, thereby insuring quality, honesty and respect for our legal system"?
• Indeed, might such monitoring be especially important precisely when the courts are issuing orders restricting people from speaking—including through allegations (whether or not the courts view them as well-founded) of serious risks to public health?

Comments

[Martinned]

As with libel cases, my general view is that there isn't much point in having legal remedies if the plaintiff can only invoke them at the cost of making the case essentially moot. So if an injunction like this is going to be possible at all, the issue would have to be litigated under seal, otherwise you might as well not bother.

(There's a separate question whether the case should be unsealed at some point once the plaintiff's interest in confidentiality is gone. But that, again, is the same question as whether the injunction should be lifted. As before, the logic of the injunction and the logic of the sealing go hand in hand.)

[nonzenze]

One compromise here is to set an automatic expiration of the sealing. If the a party wants to argue that the interests of justice still weigh in favor of sealing, they can apply for renewal.

Even the plaintiff here, it seems, has readily acknowledged that after some point there is no further interest in keeping the record sealed.

[Martinned]

That's pretty much what I was thinking.

[Brett Bellmore]

If the description of Acosta's texts is accurate, (And it is apparently uncontested.) I'd say they're well past the point where you have to describe them as merely "allegedly" extortionate.

[Absaroka]

"Was the injunction correct in barring Acosta "from contacting any governmental agency or media outlet regarding his allegations"? Or should any duty of confidentiality in such a case be rejected as against public policy, when it bars people from alerting the U.S. Department of Agriculture (or similar agencies) to possible health risks"

The 'governmental agency' part of that seems pretty simple to me; people should always be able to notify the appropriate agencies about imminent potentially deadly threats. The agencies can/should handle those reports with sufficient discretion to avoid harm from false reports.

[nonzenze]

The harm here isn't in notifying the agencies, it's in extorting money by threatening to do so.

Whatever the merits of reporting to the USDA, the law has a pretty strong interest in suppression people who say "pay me or else I'll report it".

[ Blah blah blah, link to Eugene's posts about why blackmail is illegal and the conundrum of it. ]

[Absaroka]

Sure. But the order barred Acosta"from contacting any governmental agency ... regarding his allegations" at a time when the veracity of his allegations wasn't known. That seems wrong; if Acosta's swabs did in fact find listeria, that's a public health problem that should be addressed immediately. It's possible for example that the company's own testing (that wasn't finding contamination) was careless or fraudulent. In the interim when we don't know who is telling the truth, having the public health folks do their own swabs sounds like a good idea. Having a court forbid that kind of reporting seems like a bad idea.

Extorting money to not tell public health officials about contamination is indeed a crime, whether the contamination is factual or faked, but prosecuting Acosta for extortion can be addressed after the safety of the public is assured.

[FlameCCT]

I find it interesting that you comment about the company's own testing was careless or fraudulent however you appear to have no doubt that Acosta's unauthorized, unqualified testing was just fine. What lab did he use? What method/process did he use? Is there a chain of custody for his samples? Is there a report for his samples?

[Absaroka]

"you comment about the company's own testing was careless or fraudulent however you appear to have no doubt that Acosta's unauthorized, unqualified testing was just fine."

With all due respect, I said no such thing.

It's certainly possible that a company falsifies it's testing and a whistle blower accurately reports that. We know that's possible because companies have admitted to doing so (and, of course, people can make false allegations as well).

What I said was that people alleging an imminent threat to public health shouldn't be forbidden from contacting the relevant regulatory authorities with those allegations. I'm frankly astounded that this even slightly controversial.

[KenveeB]

I think the logic is that if it truly was a public health issue that needed to be addressed immediately, he could've addressed it, well, immediately instead of trying to extort money NOT to report it. The very fact that he took the time to extort money in exchange for silence shows that there was no concern of an immediate health emergency. This wasn't some valiant whistleblower being silenced.

[Absaroka]

I don't disagree. But the question is - should people be forbidden by court order from reporting possible hazards to the relevant authorities?

Anyone who knows of an actual hazard and tries to extort payment for silence is surely a sleaze. But what if he is both a sleaze and there is a hazard? What if the dam really is about to fail/the reactor really is leaking/the wing bolts really weren't properly heat treated? Let the regulators judge his veracity and investigate as they see fit.

On the one hand, the regulator either laughs it off, or goes and does his own swabs, or whatever. OTOH, if there is a hazard, you missed your last best chance to avoid people being harmed.

"The very fact that he took the time to extort money in exchange for silence shows that there was no concern of an immediate health emergency."

That seems to exclude the possibility that there could A)be an actual hazard and B)Mr. Sleaze is such a slimeball he would be willing to let people be harmed if he could profit by exclusion. If he's slimy enough to falsely extort, maybe he's slimy enough to keep quiet for profit even if there is an actual hazard.

[bernard11]

The very fact that he took the time to extort money in exchange for silence shows that there was no concern of an immediate health emergency.

So you think this guy is going to behave in an honorable and decent fashion?

Besides, if he did feel a pang of guilt he could rationalize the after the threat AdvancePierre would surely clean up the plant, so no need to get the government involved.

[D-Pizzle]

I think a deciding factor in this analysis hinges on whether it is reasonable to assume that the defendant is sufficiently positioned to ascertain the veracity of the allegation, which goes directly to Flame's point. However, I don't believe we are positioned to make this judgment given the limited factual account at hand, and is likely unascertainable in the face of an imminent threat to public health.

[MatthewSlyfield]

"The agencies can/should handle those reports with sufficient discretion to avoid harm from false reports."

Yes, the could and should do that, however, there is ample evidence that they don't and have no interest in doing it.

[Rossami]

Interesting questions. I would answer them as:
No, yes but, no but, obviously yes, maybe and probably.

The "but" for question 2 is that obviously motives should apply. Having an extortionate motive goes directly to credibility. But as is often said, the answer to bad speech is more speech. Rather than enjoin the revelation of the information, the court could have published the allegations of extortion parallel to the claims of contamination. The public, including institutional investors, are more than capable of sorting out these kinds of competing claims.

[silver.]

"the court could have published the allegations of extortion parallel to the claims of contamination. The public, including institutional investors, are more than capable of sorting out these kinds of competing claims."

I think this is a worthwhile idea.

[Greg J]

"But as is often said, the answer to bad speech is more speech "

Yes. For example, the proper response to CNN doxxing (or threatening to dox) someone is for every single CNN employee to be doxxed. Right?

Because I'm sure CNN, the local TV station, etc., none of them will hype the claims, or run with a teaser of "Factory X accused of poisoning the food" (which is true, it was accused of that. That the accusation is irrelevant to the TV people fighting to goose their ratings by hyping the story). That they wait until the last paragraph / last 15 seconds of the story, to give the company's disclaimers, shouldn't be of any concern, right?

Do I favor "the answer to bad speech is more speech"? Yes, I do.

But I don't favor letting people lie. Which is what you're pushing here

[Scarecrow Repair & Chippering]

It seems to me that if the $3B buyout could be so easily derailed by one employee's attempted blackmail, it wasn't such a serious deal in the first place. I imagine this kind of thing must be common enough. Compare it to the classic rom-com plot where a marriage falls apart at the altar over some trivial last-minute gossip, or even an election which comes down to a few disputed ballots which would swing the election one way or the other: if the deal is that fragile, then it's not going to make for long-term happy campers. I imagine all sorts of gossip must come out of the woodwork when disgruntled employees small a chance for revenge, and businesses have to allow for that.

Seems to me (IANAL) that there is very little justification for the sealing, even aside from the legal aspects.

[DjDiverDan]

What you are forgetting, or ignoring, is the potential costs of securities fraud litigation. Assume that Tyson Foods is very comfortable that the Acosta allegations are false, and goes forward with the buyout. Then it comes out later that Tyson did not fully disclose those allegations to its own shareholders before consummating the buyout, and Tyson shares fall - for whatever reason - or the revenues of the target company don't meet expectations. Maybe the allegations ARE false. That won't prevent a clever class action securities lawyer from suing Tyson for failure to disclose a material bit of information relative to the buyout.

[Scarecrow Repair & Chippering]

Sounds likely, but I still imagine all sorts of gossip must be handled without secret trials, or trials of any sort. What do they do, pay off the blackmailers and extortionists?

[QuantumBoxCat]

So Armando Acosta claims that he tested the equipment and it tested positive for Listeria and other bacteria. PSSI claims that its equipment is not contaminated and that it has tested the area tested by Acosta and there was no presence of bacteria. There is nothing that can be done in this situation. Acosta is providing his version of the truth and PSSI is providing their version of the truth. So, PSSI's equipment is both contaminated and not contaminated.

[FlameCCT]

LMAO. One version has no evidence, no qualification, no lab results, etc. while the other has mandatory testing and reporting procedures with documentary evidence.

[gormadoc]

You're not too good at QM, I see. The first measurement collapsed the wavefunction and forced it to take one state.

[David Nieporent]

Truth isn't truth.

[Purple Martin]

...ahhh yes, the philosophical quandary known as "Guliani's Cat."

[Soronel Haetir]

And I have lots of problems with extortion/blackmail law when the underlying conduct is otherwise legal. I just don't see that demanding payment to remain quiet about (a true) something should be any sort of offense.

The classic example of course is someone having pictures proving adultery.

Now, here, it appears the claimed information was not factual and in that case I would say the remedy is to make the claimant put up and then use a libel claim to shut it down. I would think there aren't that many cases where someone will go through with this sort of action where they know the claim is going to collapse.

[epeeist]

Isn't this the rare case in which Acosta has already indicated his willingness to keep silent, i.e. in a sense he's consented to that as a remedy? And if PSSI was in the wrong, he's already indicated the amount of damages sought - $650K. And the TRO was very limited in time.

I'd obviously be much, much more concerned if a non-extortionate situation was involved, e.g. someone tells their manager they're going to warn the public of a contaminated water supply, and a TRO is obtained.

I think I also recall - from many years ago, it involved film processing - a Georgia (?) case in which an employee of Wal-mart (I think) was fired, because they phoned the police to report suspected child abuse based on film left for processing. They were supposed to tell their manager, who would decide whether or not to call the police. But there my sympathy was with the former employee acting for the public benefit, not seeking to extort payment for silence (a victim seeking payment for silence is much less objectionable than a third party, morally speaking, though obviously there are concerns re e.g. sexual harassment or worse going unchecked).

[anorlunda]

"from contacting any governmental agency or media outlet regarding his allegations .."

Doesn't the court itself (or any higher court) count as a government agency? Can an injunction prohibit giving evidence to law enforcement or courts?

[Greg J]

* Should courts be able to order people not to reveal certain information because they acquired it unlawfully, because revealing it would be a breach of a duty of confidentiality, or because it is allegedly false?

Possibly

* Should it matter that the person's motives for threatening to reveal the information seem to be extortionate?and, if so, should the court try to enjoin just the extortion, or also enjoin the revelation of the information, period?

Yes, and it should block all release of the information.

A person who simply wishes to reveal "bad behavior" should start with the (rebuttable) presumption of honesty.

A person who tries to engage in extortion, however, is not entitled to such a presumption. In this particular case, the threat's effectively the same whether or not he's lying. So he should bear the burden of proof, and should be blocked from harming the others until he's proved that he's telling the truth.

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