The Court of Chancery recently rejected a request by a non-party to seal certain trial exhibits so that they would not become part of the public trial record. The court also rejected a request to close the courtroom to the public during trial for any testimony or argument regarding those exhibits. ADT Holdings, Inc. v. Harris, C.A. No. 2017-03218-JTL (Del. Ch. Sept. 28, 2017).
Court’s Reasoning: The court explained that Court of Chancery Rule 5.1, which provides for designating certain filings with the court as confidential if various criteria are satisfied, reflects a commitment of the court to maintaining public access to its proceedings–with limited exceptions. The opinion provided copious citations to various authorities supporting the well-settled presumption that court proceedings are open to the public, based on multiple public policy reasons.
The court reviewed the documents that the movant requested confidential treatment for, and found that they were in large measure “form” documents, as opposed to customized documents, that did not contain any information that would disadvantage the moving party in its future negotiations. The court was not convinced that any of the documents contained information that would create a risk of economic disadvantage with respect to competitors and others in the industry.
In essence, the court found that the allegations of harm from public disclosure were conclusory and not sufficiently buttressed by details or convincing facts.
For example, the court reasoned that there was no credible basis to believe that the arm’s-length relationship between the persons seeking confidential treatment and the other parties to the agreement, were so “highly sensitive such that its disclosure would cause competitive harm.” Moreover, the court found that the relationship between the parties to the agreements at issue and the terms of those agreements were important facts necessary for a resolution of the case, and thus could not be withheld justifiably from the public.
Takeaway: A high threshold must be met, even by non-parties, in order to keep from the public the documents that become part of a lawsuit, either prior to trial or during trial.