In the Matter of Trust for Grandchildren of Wilbert L. and Genevieve W. Gore dated April 14, 1972, C.A. No. 1165-VCN (Del. Ch. Jan. 6, 2011), read letter ruling here.

Issue Addressed

This short letter decision, the latest iteration of an ongoing internecine battle of longstanding over the terms of a trust, involved the issue of whether or not a portion of the trial transcript that was sealed should be made public. The local newspaper requested that the order sealing a portion of the trial transcript be vacated and that the public be given access to the redacted information. This letter ruling would be helpful for anyone who seeks to have confidential information that would otherwise be disclosed during a trial, kept from public disclosure.

Brief Overview

The issues addressed in this case could be relevant to trials involving proprietary and sensitive confidential information about the value of privately-held companies in general. During the trial of a portion of this case, testimony was inadvertently given that revealed a per share value for the large, successful privately-held company called W.L. Gore & Associates, Inc. (“the Company”), known for widely-used consumer products such as GoreTex. Also disclosed inadvertently during the trial was the amount of stock of the Company held indirectly by the trust about which the litigation was focused. From that information, one might be able to extrapolate a valuation of the whole Company. The Company has consistently kept its value a closely-guarded confidential matter.

A confidentiality order was entered at the beginning of this case and the only persons present during the trial, even though it was open to the public, were court personnel and individuals already bound by the existing confidentiality order.

After the disclosure, trustees of the trust promptly moved to seal the portion of the trial transcript which included the inadvertently disclosed sensitive information. The Court granted that application. The trial transcript was otherwise available for the public.

The redaction that the Court allowed referred to the value of the interests held by the trust in Company stock (the “Valuation Information”) The other inadvertent disclosure involved the number of shares held in trust for certain grandchildren (the “Share Information”).

A local newspaper argued that when statements are made in “open court,” the information enters the public domain and may not be restored to confidential status. The newspaper also argued that Delaware’s Freedom of Information Act requires disclosure and that there was no trade secret otherwise entitled to confidential treatment.

The Court cited to several cases both at the federal level and in Delaware for the applicable authority and the applicable standard for deciding these issues. The Court quickly dispensed with and rejected the argument that the FOIA applied generally to non-public data filed with the Court system.

Interestingly, the Court noted “the debate, one with an almost metaphysical aura, about whether once something is said in open court it becomes part of the public domain.” See footnote 16. However, in this case by coincidence, no one was present in the courtroom other than court personnel or persons already bound by the terms of the confidentiality order. Thus, the metaphysical issue was not necessary for the Court to address.

Unlike the Share Information which did not involve valuation, and which the Court allowed to be released and about which the seal would be lifted, the valuation of the Company has been closely guarded in the past and the inadvertent disclosure should not undo those efforts, the Court reasoned.

Although the Court acknowledged the general interest in the public to have access to public proceedings, in this situation the partial sealing of the trial transcript to restrict access in a narrowly-tailored way to protect “confidential, personal, financial and proprietary business information,” outweighed any need for public access, especially when the public never had prior access to the Valuation Information.