Free Speech

Judge Denies Mega-Law-Firm's Request to Litigate Arbitration Confirmation Under Seal

Dentons US LLP sought to “initiate a civil case under seal by filing a petition to confirm an emergency arbitration award.”


From Dentons US LLP v. Zhang, decided Friday by Judge Paul G. Gardephe (S.D.N.Y.):

Petitioner Dentons US LLP … moves pursuant to Federal Rule of Civil Procedure 5.2(d) for leave to initiate a civil case under seal by filing a petition to confirm an emergency arbitration award ….

In support of its application, Petitioner states that, pursuant to a confidentiality provision in an agreement between the parties, the Petition and supporting documents must be filed under seal. In relevant part, the agreement provides that "[a]ll proceedings, correspondence, documents, and communications concerning any arbitration pursuant to this Agreement shall be deemed to be 'Confidential Information' subject to the provisions of this agreement. All complaints, petitions, actions, motions or other documents filed in any federal or state court in connection with … any provision of this Agreement shall be filed under seal…."

Petitioner asserts that good cause for sealing exists, because "the issues underlying enforcement of the Emergency Award include highly confidential and sensitive matters relating to attorney-client communications, firm operations and financial information, and partner compensation, among other things."

A presumption of public access applies to "judicial documents," which are documents  "'relevant to the performance of the judicial function and useful in the judicial process.'" "Petitions to confirm arbitration awards, and their attendant memoranda of law and supporting documents, are 'judicial documents that directly affect[ ] the Court's adjudication' of the confirmation petition…."

"[D]ocuments may be sealed if specific, on the record findings are made demonstrating that closure is essential to preserve higher values and is narrowly tailored to preserve that interest. Broad and general findings by the trial court, however, are not sufficient to justify closure."

Here, Petitioner contends that sealing is appropriate because the parties agreed to file under seal any papers associated with an arbitration proceeding. Confidentiality agreements alone are not an adequate basis for sealing, however. See, e.g., Bernsten v. O'Reilly (S.D.N.Y. 2018) ("Courts in this district have long held that bargained-for confidentiality does not overcome the presumption of access to judicial documents.") (collecting cases); First State Ins. Co. v. Nat'l Cas. Co. (S.D.N.Y. 2013) (denying motion to seal documents submitted in connection with a petition to confirm an arbitration award, because "[t]he assertion that disclosure violates a separate confidentiality order is insufficient"); Aioi Nissay Dowa Ins. Co. Ltd. v. ProSight Specialty Mmgt. Co., Inc. (S.D.N.Y. 2012) ("Respondents do not point to any specific information contained in the Final Award the disclosure of which would be harmful to any party. They simply argue that disclosure of the Final Award—which constitutes 'Arbitration Information' under the parties' confidentiality agreement—is inconsistent with the parties' agreement. However, while enforcement of contracts is undeniably an important role for a court, it does not constitute a 'higher value' that would outweigh the presumption of public access to judicial documents. Courts in this District have held that 'the mere existence of a confidentiality agreement covering judicial documents is insufficient to overcome the First Amendment presumption of access,' and have consistently refused to seal the record of a petition to confirm an arbitration award, notwithstanding the existence of such an agreement.").

Petitioner's conclusory assertion that "the issues underlying enforcement of the Emergency Award include highly confidential and sensitive matters relating to attorney-client communications, firm operations and financial information, and partner compensation, among other things" is insufficient under Lugosch [the relevant Second Circuit precedent].

Petitioner has also made no effort to present a "narrowly tailored" sealing request, as Lugosch requires. Petitioner instead seeks to seal the action in its entirety.

Absent a showing that sealing is "essential to preserve higher values" and that such sealing is "narrowly tailored to preserve that interest," a motion to seal cannot be granted. Accordingly, Petitioner's motion to initiate a civil case under seal is denied….

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  1. This series of posts inspired a business idea. Provide the entire file on the person when providing a dating servlce, or a caretaker, or nanny, or employee or employer, or a ride, or delivery, a product on a website.

    The liability should then go to any misuse. If I do not get a job because of a picture of drunken revelry from 10 years ago, sue the employer not the publisher. If my church expels me for that reason, sue the church.

    1. That picture is relevant to a job driving a tractor trailer. It should be discussed. If my driving record is good, it cannot be used in the hiring decision.

      1. You’re talking to yourself again.

        1. There is no editing of comments.

          1. If lawyer misconduct is revealed in a document or in a news article, are all lawyers failing to report it to the Disciplinary Counsel violating Rule 8.3? Should the 100,000 lawyers subscribing to the NY Times, who read an article containing lawyer misconduct lose their license for the failure to report? You betcha. I see no statute of limitations nor any jurisdictional restriction in that rule.

          2. But, thanks for being the only one stupid enough to actually comment.

  2. “Petitioner has also made no effort to present a “narrowly tailored” sealing request, as Lugosch requires. Petitioner instead seeks to seal the action in its entirety.”

    This seems to be the real issue in these sealing cases.

    Blanket requests are an automatic no.

    But narrow the request to the portions that really deserve protection, then that should be OK.

    1. I think the problem is that they don’t want the plaintiff’s allegations publicized; their supposed dirty laundry aired. But court opinions on sealing typically protect only serious trade secrets and the like (I’m over simplifying), not embarrassing allegations.

      There certainly is tension between one of the touted benefits of arbitration (confidentiality; non-public hearings; etc.) and the need to confirm or enforce an award in a public court hearing. I wonder if Congress could provide a non-court and private way to enforce awards (if it were so inclined).

      1. Why couldn’t the arbitator just issue a short-form award, which might then reference a separate opinion?

        1. They can.

          Also, often arbitration awards are just paid and never go to court.

          But if there’s a fight over the validity of the award, you are going to lose some confidentiality.

          1. True, but I would think that at that point it would be easier to get things sealed. The petitioner only put in the final, short-form award. If the respondent wants to start challenging the arbitration (which is an uphill battle anyway), then why should the petitioner suffer?

            1. Because the courts belong to the public and the public has an interest in proceedings adjudicating arbitration agreements.

    2. apedad…I have an entirely different question. I bet you’d know, have an estimate, or know where to find out. Is there a measurement somewhere that tracks what percent of cases get sealed in some way? Is something sealed in every case, 50% of cases, 1% of cases?

      My perception is this is a widespread issue….but is it, really?

  3. Didn’t Dentons pretty much have to try for a sealing order, even if it knew the merits were weak?

  4. When I learned that Trump had sex with a porn star and paid nothing for it, my esteem for him went up. Wow. He gets things done that no one can. Instead of an NDA, he should have demanded she go on TV about it.

  5. If I’m reading this correctly the arbitration agreement says everything is to be sealed even the award, so to get a court to enforce the award even the decision and award would need to be filed under seal.

    It seems to be a situation wher4e the award can’t be enforced without violating the arbitration agreement. Whoever signed it should have known better.

    What if the agreement makes the award void if it is disclosed?

    1. It will be given a saving construction by a court- in a public proceeding.

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