In Manhattan Telecommunications Corp. [MetTel] v. Granite Telecommunications, LLC, MetTel sued competitor Granite for allegedly defamating MetTel in statements made to customers; However, the allegedly defamatory statements were cut out of the publicly available complaint.
Not allowed, says Delaware Court of Chancery Vice Chancellor Joseph R. Slights III, addressing my notice against such a seal. (Many thanks to my attorney Garrett Rice of Ross Aronstam & Moritz LLP for all of his invaluable help and to UCLA law student Jenna Battaglia who worked with me on the case.) Here is an extract from the Vice Chancellor’s statement; for similar federal cases see Parson v. Farley (which I also submitted) and Holmes v. Grieving:
Chancellery Rule 5.1… codifies the “strong presumption of public access” to judicial proceedings and records…. [Confidential treatment is allowed only if a party] can demonstrate that “the public interest in having access to legal proceedings is outweighed by the harm that public disclosure of sensitive, non-public information would cause”.
The burden of demonstration on purpose [this] is demanding and recognizes that “[t]Hose that elects to litigate on a public forum must do so in a manner that is consistent with the public’s right to prosecute and monitor the process and outcome of [the] Dispute. “In this regard, our courts recognize that public access to the courts and their affairs” is fundamental to a democratic state and, in the long run, necessary for the public to judge the product of the courts in a given case. “The public cannot” judge the product of the courts in a particular case “when the information withheld is necessary to understand” the nature of the dispute “or the court’s basis for a decision.
[A.] MetTel’s interest in confidentiality
The harm that MetTel claims to be inflicted without protection of confidentiality is too broad to meet the requirements of Rule 5.1. [T]To show an interest in confidentiality that outweighs the public’s right of access, MetTel has to do more than just “[g]energetic declarations of damage. “The representation needs to be specified, in other words, MetTel” needs to refer to certain information such as “trade secrets or competitive pricing information”, “which is not included in the public mix and which is clearly identified when disclosed harm.
MetTel claims to address this burden by bringing “damages beyond its reputation, including, but not limited to, direct damage to its relationships with current and prospective customers.”[:] … “[o]nce this seed [of the defamatory statement] has been planted, the customer will take a critical look at a provider with whom he was completely satisfied “and” can “terminate the contract on a pretext”; ” there is a real risk that MetTel will be asked to offer fewer and fewer future contracts “; and”[o]trust [in] The financial stability of a provider is called into question. Customers … can simply choose the non-confrontational option of choosing another provider. “…
[But] It is difficult to imagine a defamation case, at least in a commercial setting where the same concerns would not always be present. [And] A comparison with the examples in Rule 5.1 shows that potentially defamatory statements per se are not the type of information that the authors of Rule 5.1 wanted to protect. The five examples in Rule 5.1 include: “Trade secrets, confidential proprietary information, confidential financial, business or personal information, confidential personal information such as medical records, and personally identifying information such as social security numbers, financial account numbers, and names of minor children.” Each of these categories listed is discreet and reflects information that is of no interest, or at least should not be of interest, to the general public in order to understand the dispute before the court or the basis for the court’s decisions.
Although I do not deny there is some risk of economic damage to MetTel if the edited information is made public. If this information were to remain in the form “just because disclosure could cause economic harm to the parties”, it would turn the presumption of public access on its head and defeat the purpose of rule 5.1.
[B.] The public’s interest in understanding the fundamentals of the dispute
The public continues to have a keen interest in access to the content of the alleged defamatory statements. If the information currently edited remains as it is, there will be no way for the public to understand the dispute MetTel has asked the Court to resolve. This is in conflict with the public’s right to “monitor the process and the outcome”[s]”- again a right that” has been characterized as fundamental to a democratic state. In other words, “if” the allegedly confidential information is the nature of the dispute itself – the public’s interest in accessing that information outweighs the economic damage to the parties that disclosure may cause. “This is the case here.
While MetTel and Professor Volokh discuss the legality of Professor Volokh’s proposed use of this information, our law does not oblige Professor Volokh to prove why he is seeking access to information filed in a Delaware court, let alone its purpose is somehow “right”. Instead, MetTel must demonstrate that there is an important reason for denying Professor Volokh access to the information he is seeking as a member of the public. That information – the gravity of the case – cannot be gleaned from the edited complaint, which at best informs the public that Granite has made some unknown defamatory statements that MetTel now claims are defamatory for unknown reasons. [Footnote:]
This is hardly sufficient to allow the public to “follow and monitor the process and outcome of.” [the] Dispute.”
Not only would it be impossible for a member of the public to understand what was going on in this case on the basis of the pleadings, “it is difficult to imagine a judicial opinion on this matter that could protect the confidentiality of all designated material and yet for the.” be understandable by the reading public. “In its complaint, MetTel asks the court to determine whether Granite has committed defamation, unlawful impairment of expected economic benefit, unlawful impairment of contractual relationships, commercial defamation and misleading commercial practices. If this court is asked to determine the merits of these claims in litigation or application practice, the court cannot and cannot make a comprehensible decision without reference to the currently edited information.
[C.] MetTel’s trust in CapStack is out of place
Finally, MetTel claims that [under] the decision of this court in CapStack [a prior Court of Chancery case involving a request for an anti-libel injunction] …, MetTel “on the one hand cannot claim that the defamatory and agonizing statements made by Granite cause irreparable damage, while these defamatory and agonizing statements are repeated in the public record.” …
[I]It is correct that CapStack took the view that the plaintiffs had “failed to demonstrate that irreparable harm is likely to occur” and relied in part on the fact that the information in the pleadings was already public[.] … [But u]After reading CapStack by MetTel, the actual gravamen of a libel complaint could never be made available to the public in a court document if that information were not disclosed beforehand, regardless of whether access to the statements in question would cause certain harm, as the disclosure possibly foreclosure would mean evidence of irreparable damage.
This reading would invalidate the presumption of public access, ignore our Rule 5.1 case law, which requires evidence of good cause to rebut the presumption, and conflict with the general rule that the mere factual information was “not disclosed beforehand” , not enough to justify confidential treatment ….
Looks all right to me. Note that the underlying document has not yet been unsealed as MetTel still has time to appeal.