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Media Alerts - Delaware Coalition for Open Go v. Leo Strine, Jr. - Third Circuit
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November 1, 2013
  Delaware Coalition for Open Go v. Leo Strine, Jr. - Third Circuit
Headline: Third Circuit Extends First Amendment Right of Public Access to Delaware's Government-Sponsored Arbitration Proceedings

Area of Law: First Amendment

Issue(s) Presented: Whether the public has a First Amendment right of access to Delaware's government-sponsored arbitration proceedings?

Brief Summary: Chancellor Strine and the judges of the Delaware Chancery Court appealed a District Court judgment on the pleadings entered in favor of the Delaware Coalition for Open Government. In the United States District Court for the District of Delaware, the Coalition argued that the public has a right of access under the First Amendment to Delaware's state-sponsored arbitration program. The District Court found that Delaware's proceedings were essentially civil trials that must be open to the public. Chancellor Strine, and the judges of the Delaware Chancery Court, who oversee arbitrations, appealed to the Third Circuit. Appellants disputed the similarities between the arbitration proceedings and civil trials, and argued that the First Amendment does not mandate a right of public access to Delaware's proceedings. The Third Circuit affirmed the District Court's order granting a First Amendment right of access to Delaware's arbitration proceedings.

Extended Summary: This case arose after the Delaware Court of Chancery created an arbitration process as an alternative to trial for certain types of disputes. In 2009, Delaware amended its code to grant the Court of Chancery the power to arbitrate business disputes as a cost-effective option for resolving disputes involving commercial, corporate, and technology matters. The proceeding, which is governed both by statute and the Rules of the Delaware Court of Chancery, is not open to all Delaware citizens. In order to qualify for arbitration, at least one party must be a business entity formed or organized under Delaware law and neither party can be a consumer. Arbitration is also limited to monetary disputes that involve an amount-in-controversy of at least one million dollars. Once the parties file a petition, arbitration begins approximately ninety days after the petition is filed and is conducted in a Delaware courthouse by a Chancery Court judge selected by the Chancellor. After a final judgment or decree is entered, both parties have a right to appeal the order to the Delaware Supreme Court, who reviews the arbitration under the standard outline in the Federal Arbitration Act. Therefore, arbitrations can only be vacated in rare circumstances.

Under the statute and rules governing Delaware's arbitration proceedings, the arbitration petitions are considered confidential and public access is barred. Attendance at the proceeding is limited to parties and their representatives. In the District Court, the Delaware Coalition for Open Government argued that the confidentiality of Delaware's arbitration proceedings violate the First Amendment right of public access to trials, and moved for judgment on the pleadings. The District Court granted the Coalition's motion, and the judges appealed. The Third Circuit affirmed, holding that the public has a right of access to Delaware's government-sponsored arbitration proceedings.

A proceeding will qualify for the First Amendment right of public access when "there has been a tradition of accessibility" to that kind of proceeding, and when "access plays a significant positive role in the functioning of the particular process in question." The examination of the history and functioning of a proceeding, also known as the "experience and logic" test, requires that both experience and logic counsel in favor of opening the proceeding to the public. Once a presumption of public access is established, it may only be overridden by a compelling government interest.

A right of public access has been found for criminal trials, civil trials, city planning commission meetings, and post-trial juror examinations. The right has been declined for the proceedings of judicial disciplinary boards, records of state environmental agencies, deportation hearings, and the voting process.

The District Court did not apply the experience and logic test, instead concluding that the right of public access applies because the government-sponsored arbitration is sufficiently like a civil trial. The District Court relied on the Supreme Court's decision in El Vocero, which held that the First Amendment right of public access applies to preliminary criminal hearings in Puerto Rico. The Third Circuit held that the District Court's reliance on El Vocero was misplaced and that the decision to bypass the experience and logic test was inappropriate.

The Third Circuit held that while the Delaware arbitration proceedings share some features with a civil trial, the two are not identical, and therefore the experience and logic test should be applied. Under the experience prong, the Court examined the history of both civil trials and arbitrations. While civil trials are traditionally open to the public, arbitrations have sometimes been accessible to the public, but are often closed. However, the Court reasoned that proceedings in front of judges in courthouses have been presumptively open to the public for centuries. Although private arbitrations occur in private venues and tend to be closed to the public, Delaware's government-sponsored arbitrations are conducted before active judges in a courthouse and result in a binding order of the Chancery Court with only a limited right of appeal. Therefore, the Court held that the experience inquiry counseled in favor of granting public access to Delaware's proceedings.

Under the logic prong of the experience and logic test, the Court considered the positive role that access to the arbitration process would play. Traditionally public access to judicial proceedings provides the public with a more complete understanding of judicial proceedings, promotes the public perception of fairness, provides a significant outlet for community concern, hostility, and emotion, and serves as a check on corrupt practices by exposing the proceeding to public scrutiny. The Court reasoned that allowing public access to Delaware's government-sponsored arbitration proceedings would expose litigants, lawyers, and the Chancery Court judge to scrutiny from peers and the press, discourage perjury, and ensure that companies could not misrepresent their activities to competitors and the public. The Court reasoned that the drawbacks of openness, such as the confidentiality of closely held information, could not be outweighed by the benefits of public access. Additionally, public access would not disrupt the flexibility of arbitration, as parties will still have procedural flexibility and the arbitrator's award will still be subjected to more limited review.

Judge Roth dissented, concluding that historically arbitration has been private and confidential. Judge Roth argued that the resolution of complex business disputes, involving sensitive financial information, trade secrets, and technological developments, needs to be confidential so that the parties do not suffer the ill effects of this information being set out for the public. Judge Roth also pointed to Delaware's intent to create a confidential arbitration program separate from civil trials, as additional evidence that there should be no right of public access to the arbitration proceedings.
The full opinion is available at http://www2.ca3.uscourts.gov/opinarch/123859p.pdf

Panel: Circuit Judges Sloviter, Fuentes, and Roth

Argument Date: 5/16/2013

Argument Location: Philadelphia

Date of Issued Opinion: 10/23/2013

Docket Number: No. 12-3859

Decided: Affirmed

Case Alert Author: Larissa Staszkiw

Counsel: Andre G. Bouchard, Joel E. Friedlander, and Jeffrey M. Gorris, Bouchard, Margules & Friedlander, Lawrence A. Hamermesh, Widener University School of Law, and Andrew J. Pincus, Mayer Brown, Attorneys for Appellant; David L. Finger, Finger & Slanina, Attorney for Appellee; S. Mark Hurd, Morris, Nichols, Arsht & Tunnell, Attorney for Amicus Curiae The Corporation Law Section of the Delaware State Bar Association; Roy T. Englert, Jr., Robbins, Russell, Englert, Orseck & Untereiner, Attorney for Amici Curiae The Chamber of Commerce of the United States of America and Business Roundtable; Scott L. Nelson, Public Citizen Litigation Group, Attorney for Amicus Curiae Public Citizen, Inc.; Bruce D. Brown, The Reporters Committee for Freedom of the Press, Attorney for Amici Curiae The Reporters Committee for Freedom of the Press and Twelve New Organizations

Author of Opinion: Judge Sloviter

Circuit: 3rd Circuit

Case Alert Circuit Supervisor: Professor Mary E. Levy

    Posted By: Susan DeJarnatt @ 11/01/2013 10:20 AM     3rd Circuit  

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