Can't Seal Lawsuit to Protect the Marketability of Your House

Lawsuits are matters of public record -- and you generally can't hide them from prospective business partners, employers, house buyers, or others.

Here's the plaintiffs' argument from their motion to seal in Kurland v. ACE American Ins. Co., 2018 WL 9903324 (D. Md. Sept. 14, 2018):

[1.] Plaintiffs filed this first-party insurance action in September, 2015.

[2.] In the Complaint, Plaintiffs sought coverage from their homeowners' insurance carrier, ACE, for water and mold damage to their home.

[3.] After years of adjusting, litigation filing, motion practice and a mediation, the case settled in May, 2017.

[4.] Plaintiffs' attempts to sell their Owings Mills home have been unsuccessful. Plaintiffs, on information and belief, cannot find a realtor or buyer in light of postings on the Internet concerning the lawsuit, which describe water damage and mold and the health effects on their eleven-year-old daughter while in the home.

[5.] Even though Plaintiffs remediated the water damage and mold with documentation confirming same, Plaintiffs cannot get a realtor or buyer due to the postings on-line regarding this lawsuit.

[6.] Undersigned counsel provided a copy of this Motion to Defense Counsel, who has advised that Defendant does not oppose the relief requested.

[7.] Accordingly, Plaintiffs state that the financial harm they have endured from the said Internet postings outweighs the public right to the civil records on their insurance case being open. Plaintiffs respectfully request that the Court Seal the record in this case instantly. Plaintiffs would take this Court's Order to each search engine company and each site owner to have the posts concerning this suit removed….

No, says Judge James K. Bredar:

Although the Court sympathizes with Plaintiffs, the motion will be denied because it fails to meet the governing standard for sealing a case.

Whether a court document should be sealed requires consideration of the standard set forth in Va. Dep't of State Police v. Washington Post, 386 F.3d 567 (4th Cir. 2004). A party's mere desire to keep information confidential does not suffice. Documents submitted to a court to support or oppose a motion for summary judgment can only be sealed if they pass a First Amendment test. Thus, the proponent of sealing such documents must proffer a compelling governmental interest and must show that the proposed sealing is narrowly tailored to serve that interest. Further, the party requesting sealing must present specific reasons in support of its position. In considering a motion to seal, a district court must give the public both notice of the sealing request and a reasonable opportunity to challenge it. In addition, consideration must be given to alternatives less drastic than sealing.

Plaintiffs have failed to demonstrate a compelling governmental interest to justify sealing the Defendants' motion for summary judgment or any of its exhibits. Nor have they proposed a viable, less drastic alternative to sealing the entire case.

The Court notes that the rest of the documents filed were not in connection with a dispositive motion and, therefore, need not meet the higher bar of First Amendment sealing. Instead, the Fourth Circuit has differentiated between court documents that must be accessible to the press and public on First Amendment grounds and other court documents. Va. Dep't of State Police, 386 F.3d at 575 ("the common law 'does not afford as much substantive protection to the interests of the press and the public as does the First Amendment' "). Thus,

"The common law presumes a right of the public to inspect and copy all judicial records and documents. This presumption of access, however, can be rebutted if countervailing interests heavily outweigh the public interests in access, and [t]he party seeking to overcome the presumption bears the burden of showing some significant interest that outweighs the presumption. Some of the factors to be weighed in the common law balancing test include whether the records are sought for improper purposes, such as promoting public scandals or unfairly gaining a business advantage; whether release would enhance the public's understanding of an important historical event; and whether the public has already had access to the information contained in the records. Ultimately, under the common law the decision whether to grant or restrict access to judicial records or documents is a matter of a district court's supervisory power, and it is one best left to the sound discretion of the [district] court, a discretion to be exercised in light of the relevant facts and circumstances of the particular case."

But even this less stringent standard has not been met by Plaintiffs. They chose to air their grievance in a public forum, the records of which are public records and presumed to be transparent to the public. And those records stayed accessible to the public for three years before Plaintiffs sought to have the case sealed. That the injurious allegations have been of public interest is borne out by their presence on the Internet.

The unfortunate consequence of Plaintiffs' decision to seek justice for the damage done to their house is that the allegations have been reported but not Plaintiffs' apparently successful efforts at remediation. Even so, the public interest still outweighs Plaintiffs' interest in selling their house, and for that reason, their motion is DENIED.