Libel Case with the Alleged Libels Under Seal

This violates the First Amendment and common law rights of access to court records, I think; Paul Alan Levy (Public Citizen) has just filed a motion to intervene and unseal in the matter (Shelby Resorts Corp. v. Does, in New Jersey Superior Court).

From the motion in Shelby Resorts Corp. v. Does, No. C25-19 (N.J. Super. Ct.), which strikes me as exactly right (for some of the reasons discussed here):

When a company is criticized over its product or its sales practices and responds with a libel suit, consumers naturally have an interest in learning more about the dispute. Were the criticisms legitimate, or were they deliberately false? Are the criticisms matters of fact or do they represent only differences of opinion? If the criticisms were factual, is there evidence to support those criticisms, or were the criticisms purely the product of an overly active imagination (or, even worse, an exploit by a competitor to disable a rival in the marketplace)?

In this case, Shelby Resorts Corporation, a South Carolina company that markets vacation opportunities in timeshares, and its owner Luke Begonja, who lives in New Jersey, filed suit against Doe defendants who operated a web page, located at the Internet address shelbyresortscam.com, contending that the company does not own sufficient timeshare credits to enable consumers to rely on the company as a reliable seller of vacation rentals. The verified complaint alleged both defamation and trademark claims (the latter, on the theory that the use of the company's logo on the web page could infringe by creating confusion in the minds of consumers about whether a criticism site whose name included the word "scam" in its title was owned or sponsored by the trademark holder). Along with the complaint plaintiff requested a temporary injunction, sought ex parte; the papers were labeled "provisionally sealed." The clerk's office is maintaining the entire casefile under seal.

Paragraphs 19, 20 and 21 of the complaint contain blocked quotations from the web site at issue and allege, in fairly conclusory fashion, that they are "false, misleading and defamatory." The Court issued the requested temporary restraining order, which, among other things, ordered that the web site, as well as any "identical or substantially similar defamatory content" be taken off line and called for Google to delete the web site from its search engine's database. The court's order postponed until the next hearing the issue of whether to authorize the issuance of discovery seeking to identify the persons responsible for the web site. Finally, the order provided that Exhibit A to the complaint, which included screenshots of the web site in question, was to be maintained under seal. However, the entire case file, not just the Exhibit, has been kept under seal by the Clerk's office.

The existence of the TRO, and thus of this litigation, came to light when the order appeared posted to the Lumen Database. That database is an online archive of orders, demands and requests to remove material from the Internet. A subsequent request to the Clerk's office was unsuccessful. Counsel for proposed intervenor contacted plaintiffs' counsel, who was willing to send Public Citizen a copy of the verified complaint (with Exhibit A redacted).

During the course of these discussions, plaintiffs' counsel initially implied that, assuming that the temporary restraining order was converted into a preliminary injunction at the show cause hearing scheduled for April 1, 2019, plaintiffs might never take steps to identify the persons responsible for the allegedly defamatory web site, and thus seek to secure permanent injunctive relief as well as damages. After further discussion, however, plaintiffs' counsel indicated that such further steps might be pursued after consulting with plaintiffs.

Public Citizen now seeks leave to intervene for the purpose of seeking the unsealing of the entire record, subject to redaction of private information such as individuals' cell phone numbers and email addresses….

Both the common law and the First Amendment guarantee a right of access to all judicial records. Press-Enterprise Co. v. Superior Court, 464 U.S. 501 (1984); Nixon v. Warner Communications, 435 U.S. 589, 598 (1978); Publicker Industries v. Cohen, 733 F.2d 1059, 1067 (3d Cir. 1984); Verni ex rel. Burstein v. Lanzaro, 960 A.2d 405, 410 (N.J. Super. App. Div. 2008); Lederman v. Prudential Life Ins. Co. of Am., 897 A.2d 362, 367 (N.J. Super. App. Div. 2006). Although that right of access is not absolute, there is a strong presumption of access to all records, and the burden rests on the party seeking to conceal records to prove the need for confidentiality. Hammock by Hammock, 142 N.J. at 375, 662 A.2d at 556.

Granting the right of access to the complaint and the attached Exhibit A will allow members of the public to understand just what specifics the defendants offered as a reason to believe that plaintiffs' timeshare sales were fraudulent, and what the plaintiffs' showing of falsity was, so that consumers can assess whether they ought to entrust their vacation dollars to the plaintiffs. At the same time, the public will be able to monitor the performance of the courts, determining what showing was sufficient to cause the Court to grant a temporary restraining order despite the general rule that preliminary injunctions barring speech are impermissible prior restraints, forbidden when issued to protect the reputation of a business. Thus, in Organization for a Better Austin, 402 U.S. at 419 (1971), the Supreme Court vacated a temporary restraining order that forbade leafleting accusing a realtor of blockbusting, holding that "[n]o prior decisions support the claim that the interest of an individual in being free from public criticism of his business practices in pamphlets or leaflets warrants use of the injunctive power of a court." Id.

The states differ on the question whether a permanent injunction may issue to proscribe the repetition of a libel that has been found to be such following a trial on the merits. Compare Balboa Island Vill. Inn v. Lemen, 40 Cal.4th 1141, 156 P.3d 339, 343 (Cal. 2007) (permanent injunction allowed) with Willing v. Mazzocone, 482 Pa. 377, 393 A.2d 1155, 1158 (Pa. 1978) (permanent injunction not allowed). Intervenor has not found any reported New Jersey decisions on this issue, although an unreported Appellate Division followed Balboa Island to allow a permanent injunction to issue against a fully adjudicated defamation. Chambers v. Scutieri, 2013 WL 1337935 (App. Div. Apr. 4, 2013).

But even in states that allow injunctions against libel determined to be unprotected by the First Amendment in a final judgment, preliminary injunctions against libel, issued before there has been a final determination on the merits that particular statements are unprotected by the First Amendment, are held to be an impermissible prior restraint. Brummer v. Wey, 89 N.Y.S.3d 11, 14 (N.Y. App. Div. 1st Dept. 2018); Hill v. Petrotech Resources Corp., 325 S.W.3d 302, 309 (Ky. 2010); Evans v. Evans, 76 Cal. Rptr. 3d 859, 868 (Cal. App. 4th Dist. 2008) Cohen v. Adv. Med. Group of Georgia, 496 S.E.2d 710, 711 (Ga. 1998). Moreover, Organization for a Better Austin's ban on preliminary injunctions in libel cases extends to allegedly defamatory web sites as well as to allegedly defamatory leaflets. Brummer, 89 N.Y.S.3d at 14; Am. Univ. of Antigua College of Med. v. Woodward, 2010 WL 5185075, at *3 (E.D. Mich. Dec. 16, 2010); Mortgage Specialists v. Implode-Explode Heavy Industries, 999 A.2d 184, 196 (N.H. 2010); Bihari v. Gross, 119 F. Supp. 2d 309, 324 (S.D.N.Y. 2000). See also TM v. MZ, — N.W.2d —, 2018 WL 7377288, at *5 (Mich. App. Oct. 23, 2018) (applying Organization for a Better Austin to personal protection order against web site). Hence, the members of the public should be allowed to see the entire record in this case so that it can understand the basis for this Court's issuance of a prior restraint.

Plaintiffs apparently seek to have the court's records kept confidential because, they say, they are suing over a defamatory web site and the objective of their lawsuit is to seek injunctive relief against the publication of that web site. But the Appellate Division has held that adverse impact on a party's reputation is not a sufficient basis for sealing court records. Lederman, 897 A.2d at 370 (N.J. Super. App. Div. 2006). And other courts have held that a plaintiff suing over the publication of unflattering material may not conceal the details of the publication against which it is alleging claims. Company Doe, 749 F.3d at 269-270, 270-71 (4th Cir. 2014); S.C. v. Dirty World, LLC, 11-CV-392, 2011 WL 13334174, at *2 (W.D. Mo. June 1, 2011); Upshaw v. United States, 754 F. Supp. 2d 24, 30 (D.D.C. 2010). See also Mann v. Boatright, 477 F.3d 1140, 1149 (10th Cir. 2007) (embarrassment flowing to plaintiff based on allegations in her own complaint regarding ongoing feud with family and disclosure of Alzheimer's diagnosis did not outweigh strong presumption in favor of public access).

The court in Dirty World could have been discussing this case when it reasoned, "A plaintiff would likely want to seal any case alleging defamation, libel, false light, or similar claim. Consequently, granting the Motion here would be tantamount to sealing all future cases alleging any such claim. This result would be unquestionably contrary to our public judicial system." 2011 WL 13334174, at *2. Or, as the Appellate Division said in Lederman, "No more embarrassment would be suffered by the parties here than would a wrongfully accused defendant in a criminal case, or a professional in a malpractice action where the charges were ultimately found to be without merit. If embarrassment were the yardstick, sealing court records would be the rule, not the exception." 897 A.2d at 370.

Moreover, at this stage of the litigation, it has not been finally established that defendants' statements are false and defamatory; the Court has thus far had the opportunity to consider only the plaintiffs' verified complaint, with no service on or response from the defendants. Indeed, it is not clear that the Court will ever have the opportunity to receive the defendants' justification for their accusations—the TRO requires service of the order on a search engine (Google), the web hosting service for defendants' web site (GoDaddy), and the domain name registrar through which defendants obtained the domain name (Domains by Proxy), but it does not require plaintiffs to undertake any steps to identify the defendants and thereby to notify them of the relief that is being sought against them. [Footnote: Plaintiffs' counsel indicated, in the course of intervenor's effort to meet and confer before filing this motion, that plaintiffs had not yet decided whether to pursue efforts to identify the defendants. Levy Affidavit, Exhibit C. Yet, only once the defendants are notified will they have a fair opportunity to counter plaintiffs' defamation claims.]

With public access, members of the public who access the Court's files can see both defendants' online accusations against plaintiffs and plaintiffs' response. In this way, the members of the public will be able to make their own judgments about the facts. Indeed, after a final decision on the merits, members of the public who access the court file will be able to take the Court's decision into account in assessing the situation. Consequently, plaintiffs' argument that the allegedly defamatory nature of the web site that is at issue in this litigation warrants sealing either its complaint, or the attachment to the complaint that sets forth screenshots of the web site, do not override the public interest in seeing the complete record of this litigation….