Court Opinion

ID: 2995737
Source: CourtListenerOpinion
Date Created: 2015-09-24 19:22:04.131237+00
Date Added: 2024-06-11T12:17:25.053508
License: Public Domain

In the
 United States Court of Appeals
                 For the Seventh Circuit
                        ____________

No. 02-2039

BAXTER INTERNATIONAL, INCORPORATED,
                                          Plaintiff-Appellant,
                              v.

ABBOTT LABORATORIES,
                                          Defendant-Appellee.
                        ____________
       Appeal from the United States District Court for the
           Northern District of Illinois, Eastern Division.
     Nos. 01 C 4809 & 01 C 4839—Ronald A. Guzmán, Judge.
                        ____________
                   DECIDED JULY 16, 2002
                       ____________

 Before EASTERBROOK, KANNE, and WILLIAMS, Circuit
Judges.
  EASTERBROOK, Circuit Judge. A few weeks ago a single
judge of this court, serving as motions judge for the week,
received and denied a joint motion to maintain documents
under seal. The motion was generic: it related that the par-
ties had agreed on secrecy, that the documents contained
commercially sensitive information, and so on, but omitted
details. What is more, the motion did not attempt to sep-
arate genuinely secret documents from others in the same
box or folder that could be released without risk. The mo-
tion was patterned on the sort of broad secrecy agreement
2                                                No. 02-2039

that often accompanies discovery in order to expedite that
process by avoiding document-by-document analysis. Se-
crecy is fine at the discovery stage, before the material en-
ters the judicial record. See Seattle Times Co. v. Rhinehart,
467 U.S. 20 (1984). But those documents, usually a small
subset of all discovery, that influence or underpin the ju-
dicial decision are open to public inspection unless they
meet the definition of trade secrets or other categories of
bona fide long-term confidentiality. See, e.g., Grove Fresh
Distributors, Inc. v. Everfresh Juice Co., 24 F.3d 893 (7th
Cir. 1994); In re Continental Illinois Securities Litigation,
732 F.2d 1302 (7th Cir. 1984). Information transmitted to
the court of appeals is presumptively public because the ap-
pellate record normally is vital to the case’s outcome. Agree-
ments that were appropriate at the discovery stage are no
longer appropriate for the few documents that determine
the resolution of an appeal, so any claim of secrecy must
be reviewed independently in this court. See this circuit’s
Operating Procedure 10.
   Despite these principles, the parties’ joint motion made
no effort to justify the claim of secrecy. It was simply as-
serted, mostly on the basis of the agreement but partly on
the ground that these are commercial documents. That
won’t do. See Union Oil Co. v. Leavell, 220 F.3d 562 (7th
Cir. 2000). The motion did not analyze the applicable legal
criteria or contend that any document contains a protect-
able trade secret or otherwise legitimately may be kept
from public inspection despite its importance to the resolu-
tion of the litigation. See Composite Marine Propellers, Inc.
v. Van Der Woude, 962 F.2d 1263, 1266 (7th Cir. 1992) (a
litigant must do more than just identify a kind of informa-
tion and demand secrecy). So perfunctory was this motion
that it could have been summarily rejected. Instead, how-
ever, the motions judge denied the request without preju-
dice, explained to the parties some of its shortcomings, and
invited renewal.
No. 02-2039                                                 3

   A new joint motion was not long in coming, and it re-
vealed that the original had vastly overclaimed. Now the
parties agree that most of the documents transmitted to
this court may be revealed to the public without jeopardiz-
ing any legitimate interest. Still, they contend, some of the
documents—including the contracts that form the basis of
this suit—should remain confidential. The motions judge
referred this renewed motion to a panel for resolution in
light of the frequency with which such motions are filed and
litigants’ frequent inattention to the legal standards for
closure of records.
   The lead reason in the renewed motion is, once again, the
parties’ agreement. All that has changed since the first mo-
tion is the time of the agreement said to be controlling. The
first motion contended that the parties’ current agreement
justifies confidentiality. The second motion points to two
earlier agreements: one during discovery in the district
court and another during the arbitration that preceded the
litigation. The new contention, in other words, is that se-
crecy must be maintained today in order to give effect to the
parties’ agreements reached last year, or the year before.
  Yet the sort of agreement that governs discovery (or
arbitration) is even weaker as a reason for appellate secrecy
than is a contemporaneous agreement limited to the record
on appeal. Allowing such an agreement to hold sway would
be like saying that any document deemed provisionally con-
fidential to simplify discovery is confidential forever. That
would contradict Grove Fresh and its predecessors, which
hold that the dispositive documents in any litigation enter
the public record notwithstanding any earlier agreement.
How else are observers to know what the suit is about
or assess the judges’ disposition of it? Not only the legisla-
ture but also students of the judicial system are entitled to
know what the heavy financial subsidy of litigation is
producing. These are among the reasons why very few
categories of documents are kept confidential once their
4                                                 No. 02-2039

bearing on the merits of a suit has been revealed. In civil
litigation only trade secrets, information covered by a rec-
ognized privilege (such as the attorney-client privilege), and
information required by statute to be maintained in con-
fidence (such as the name of a minor victim of a sexual
assault), is entitled to be kept secret on appeal. See gener-
ally Nixon v. Warner Communications, Inc., 435 U.S. 589
(1978); Jessup v. Luther, 277 F.3d 926 (7th Cir. 2002);
United States v. Ladd, 218 F.3d 701 (7th Cir. 2000);
Citizens First National Bank v. Cincinnati Insurance Co.,
178 F.3d 943 (7th Cir. 1999); Ball Memorial Hospital, Inc.
v. Mutual Hospital Insurance, Inc., 784 F.2d 1325 (7th Cir.
1986). Cf. Herrnreiter v. Chicago Housing Authority, 281
F.3d 634 (7th Cir. 2002). As we remarked in Union Oil,
many litigants would like to keep confidential the salary
they make, the injuries they suffered, or the price they
agreed to pay under a contract, but when these things are
vital to claims made in litigation they must be revealed.
   So does any of these documents contain a trade secret or
something comparable whose economic value depends on its
secrecy? The parties’ joint motion does not make such an
argument. Instead the parties again serve up a bald as-
sertion that confidentiality promotes their business inter-
ests. Here is a representative sample; not one word of jus-
tification has been omitted:
    Five of the documents include a copy of a confi-
    dential licensing agreement between Abbott and
    Maruishi and/or certain references to that agree-
    ment. That licensing agreement is, by its terms,
    confidential. The terms of that agreement, if made
    public, could also harm Abbott’s competitive posi-
    tion.
Beyond asserting that the document must be kept confiden-
tial because we say so (the “agreement is, by its terms,
confidential”), this contends only that disclosure “could . . .
No. 02-2039                                                5

harm Abbott’s competitive position.” How? Not explained.
Why is this sort of harm (whatever it may be) a legal jus-
tification for secrecy in litigation? Not explained. Why is
the fact that some other document contains references to a
license sufficient to conceal the referring document? Not
explained. If it were, then the district court’s opinion, see
2002 U.S. Dist. LEXIS 5475 (N.D. Ill. Mar. 26, 2002), which
includes not only references to the licenses but also ex-
tended quotations from them, would have to be blotted from
the books. So all we have is ukase. Indeed, this joint mo-
tion—filed by two of the nation’s premier law firms (Sidley
Austin Brown & Wood for Baxter, Winston & Strawn for
Abbott)—does not cite a single statute, rule, or opinion,
although the prior motion’s denial stressed the need for
detailed analysis. The court’s Practitioner’s Handbook for
Appeals 96 (2002 ed.), given to all members of our bar (and
posted on the court’s web site) likewise advises counsel to
be specific in motions of this kind.
  Trade secret law does not exhaust legitimate interests
in confidentiality, see IDX Systems Corp. v. Epic Systems
Corp., 285 F.3d 581 (7th Cir. 2002), and businesses that
fear harm from disclosure required by the rules for the con-
duct of litigation often agree to arbitrate. Baxter and
Abbott had such an agreement, and their dispute was
arbitrated under terms that require secrecy. Baxter then
moved the dispute to court, asking the judge to set aside
the arbitrator’s decision. One of the grounds discussed
by the district judge—Baxter’s contention that “public pol-
icy” prevents enforcement of an exclusive patent license
that permits the original licensee to grant a sublicense that
will postpone market reentry by the original patent
holder—poses the question whether the suit may be
strategic. General appeals to “public policy” do not permit
a court to upset an arbitral award. See, e.g., Eastern
Associated Coal Corp. v. Mine Workers, 531 U.S. 57 (2000);
Paperworkers Union v. Misco, Inc., 484 U.S. 29 (1987). But
6                                                No. 02-2039

even a weak claim may create a strong settlement position,
if its prosecution will require the other side to reveal com-
mercially valuable documents. That Baxter has joined with
Abbott in an effort to preserve the documents’ confidential-
ity implies that this suit was not motivated by this consid-
eration, but it does not diminish whatever harm may be
caused by Baxter’s failure to keep its promise to resolve
this fight in private. We held in Union Oil and reiterated
in Herrnreiter, a decision reviewed by the full court under
Circuit Rule 40(e), that the right judicial response to the
initiation of litigation that reveals information subject to
contractual confidentiality is not specific performance of the
confidentiality agreement but damages for breach of con-
tract. Abbott therefore may have a claim against Baxter
if it can show injury. But it does not have any right to
keep third parties from learning what this litigation is
about. And Baxter, whose refusal to accept the result of
the arbitration is the cause of the current problem, has
no claim to keep a lid on its own documents (such as the
Baxter-Maruishi license that allowed Maruishi to sub-
license Abbott). It had, and spurned, a sure path to dispute
resolution with complete confidentiality: accept the result
of the closed arbitration.
   Another thing that the parties might have done is pare
down the appellate record. The strong presumption of pub-
lic disclosure applies only to the materials that formed
the basis of the parties’ dispute and the district court’s
resolution. If documents have reached this court unneces-
sarily, the parties could have asked us to send them back.
The court sometimes spontaneously orders documents re-
turned in order to prevent unwarranted disclosure of com-
mercially sensitive information. Keeping the documents in
the district court is an especially attractive option when
they contribute little to the resolution of the case yet are
too voluminous to justify detailed examination on appeal.
Nothing in the parties’ original or renewed submission sug-
No. 02-2039                                                  7

gests that any of the documents covered by their request
could be returned to the district court without loss to the
appellate process, nor have the parties contended that the
documents in question (seven envelopes’ worth) are so ex-
tensive that particular analysis is impractical.
  The renewed motion to place documents under seal is
denied. Because no prior published opinion has made clear
the need for specificity in motions of this kind, we will allow
these parties to amend their motion a second time. Having
explained the legal requirements, however, the court will in
the future deny outright any motion under Operating Pro-
cedure 10 that does not analyze in detail, document by doc-
ument, the propriety of secrecy, providing reasons and legal
citations. Motions that represent serious efforts to apply
the governing rules will be entertained favorably, and coun-
sel will be offered the opportunity to repair shortcomings.
Motions that simply assert a conclusion without the re-
quired reasoning, however, have no prospect of success.

A true Copy:
       Teste:

                         ________________________________
                         Clerk of the United States Court of
                           Appeals for the Seventh Circuit

                    USCA-97-C-006—7-16-02