Both Parties Tell Court of Appeal It’s OK to Unseal Its Opinion

Friday, July 20, 2001

Page 9

PERSPECTIVES (Column)

Both Parties Tell Court of Appeal It’s OK to Unseal Its Opinion

By ROGER M. GRACE

The appellant and the respondent in a case decided July 3 by Div. Seven of this district’s Court of Appeal in a sealed opinion each told the court yesterday it has no objection to the opinion being made public.

The respondent, The Walt Disney Company, had one proviso: it asked the appeals court to refile the opinion after redacting a few bits of sensitive information. It also asked that the record in the case remain sealed.

Attorney John S. Schuster, a partner in the Los Angeles office of Howrey Simon Arnold & White, LLP, said in a letter brief filed by fax late yesterday on behalf of Disney:

“Although the appellate court records are replete with proprietary and private information produced pursuant to the protective orders entered below, the Court’s opinion of July 3, 2001 contains only a handful of such references, most of which pertain to license fees. Accordingly, while we strongly oppose any request to unseal the appellate court records..., we would not oppose ‘unsealing’ the opinion so long as such confidential and proprietary license fee and other information are redacted.”

Schuster attached to his letter brief a copy of the July 3 opinion, with proposed redactions indicated.

Los Angeles sole practitioner Diana Greene Gordon, in a letter brief filed on behalf of plaintiff/appellant Agency for the Performing Arts, Inc. (“APC”), argued:

“[T]his court’s opinion should be unsealed because it does not contain any trade secret or other privileged information and the public’s legitimate interest in the outcome of the appeal and the basis for the Court’s opinion far outweigh any right Disney has to conduct its business in private.”

With respect to the sealed record on appeal, Gordon cited the presumption “that documents which are used as a basis for adjudication are to be public absent a strong showing that there is an overriding interest supporting sealing.” She urged that the record be unsealed “unless Disney meets the...criteria” for sealing established by the California Supreme Court in NBC Subsidiary, Inc. v. Superior Court (1999) 20 Cal.4th 1178.

There, Chief Justice Ronald George wrote:

“[B]efore substantive courtroom proceedings are closed or transcripts are ordered sealed, a trial court must hold a hearing and expressly find that (i) there exists an overriding interest supporting closure and/or sealing; (ii) there is a substantial probability that the interest will be prejudiced absent closure and/or sealing; (iii) the proposed closure and/or sealing is narrowly tailored to serve the overriding interest; and (iv) there is no less restrictive means of achieving the overriding interest.”

Letter briefs from the parties in Agency for the Performing Arts v. The Walt Disney Company et al., B138373, had been requested by Div. Seven on July 12, the day after this newspaper had made a written request for an unsealing of the opinion, as well as the record.

APA brought its action in Los Angeles Superior Court on Aug. 25, 1997 against The Walt Disney Company, as well as its subsidiary, Walt Disney Pictures and Television, which does business as Walt Disney Television. Its assertions mirrored those in another action, brought by a different plaintiff, Wind Dancer Production Group, on Feb. 24, 1997.

The cases both involved allegations that Walt Disney Television, which owned a sitcom known as “Home Improvement,” licensed the series for airing on ABC for an amount less than the fair market price. This was said to adversely impact the show’s creative personnel whose recompense was tied to profits.

Why would Walt Disney Television have entered into a deal with ABC on disadvantageous terms? The plaintiffs pointed out that the parent, The Walt Disney Company, owns ABC. The less money being shifted to Walt Disney Television’s pocket—money that would have to be shared with others having an interest in the sitcom’s profits—the more would remain in ABC’s pockets. Given that The Walt Disney Company owns both pockets, it would be to its advantage to keep as much lucre as possible in the pocket into which third parties would not be dipping, the plaintiffs reasoned.

The allegations in the Wind Dancer case were widely reported in the press at the outset of that litigation. Suing in that action were creators and executive producers of the series.

APA’s suit was a copycat action. APA is the talent agency that represents some of the plaintiffs in the Wind Dancer case; its recompense, like theirs, is based on the net profits.

The complaint in the APA case made note of the Wind Dancer action and set forth: “This action involves the same television series, the same defendants, the same property, transactions, or events, and the same or substantially the same facts and questions of law.”

The lack of secrecy as to the allegations in the Wind Dancer case would point to the senselessness of the Court of Appeal imposing a blackout on what facts are alleged in the APA case. This is especially so since a copy of the complaint in APA can be viewed or purchased at the Superior Court Clerk’s Office. Nonetheless, the complaint and all other papers in the record on appeal are sealed in the Court of Appeal. Not even so much as the facts and contentions as set forth in that court’s July 3 opinion in the case are publicly available.

Among APA’s causes of action were those alleging breach of contract, breach of fiduciary duty, tortious interference with contract, tortious interference with prospective economic advantage, and unfair business practices. It sought damages, including punitive damages, imposition of a constructive trust, and an accounting.

The parties filed most of their papers in the trial court under seal in light of two broad protective orders issued by Los Angeles Superior Court Judge Dzintra Janavs. The order was, on its face, violative of Los Angeles Rules of Court, rule 7.19 which declares protective orders to be “disfavored” and requires a “document-by-document” review to determine if “[s]ecrecy is in the public interest.”

Gordon’s letter brief, supplied to me late yesterday (it isn’t clear if it arrived at the Court of Appeal before closing time), noted that Janavs allowed either party to render “confidential”—or “highly confidential” meaning the attorneys’ clients couldn’t see the papers—whatever they wished to so stamp. She wrote:

“Consequently, Disney designated every single document it produced in this case (or the related Wind Dancer case) as ‘confidential’ or ‘highly confidential,’ and it similarly designated all depositions in both cases of all witnesses with no oversight or determination by the trial court that the designations were appropriate.”

The Wind Dancer action was settled, but the APA case continued on. Janavs granted summary judgment in favor of The Walt Disney Company and summary adjudication against Walt Disney Television on its key causes of action. She was replaced in Department 15 by Judge Richard Fruin, who awarded $112,516 plus interest to APA based on an accounting, and awarded it costs.

APA appealed Janavs’ actions and there was no cross-appeal based on Fruin’s action.

The parties proceeded to designate everything they filed in the Court of Appeal as being subject to sealing and the Court of Appeal obligingly sealed—with no independent determination of the propriety of denying the public access.

In other words, there was no compliance with NBC Subsidiary which recognized the public’s First Amendment right of access to court records, absent findings of a party’s overriding interest in secrecy.

The sealing of the opinion in its entirety by Justice Fred Woods (the author), Acting Presiding Justice Earl Johnson Jr. and Acting Justice Paul Boland was an extraordinary action. The fact that it was done in the absence of a motion by a party seeking such an action and showing legal authority for it reflected rashness. At the least, the parties’ input should have been sought at the stage where the court was contemplating a deciding of the case in secrecy. The fact that both parties, upon belated inquiry, yesterday indicated no support for the sealing of the opinion shows the sealing to have been misguided, indeed.

With no statutory or case support for a sealing of an opinion in its entirety, and no support for such an action being expressed by the parties, it follows that the opinion should be unsealed (as well as being published, if it meets the criteria). If there is truly sensitive information in it, Div. Seven could stick that information in an unpublished portion of the opinion which is sealed, as it did in a couple of cases last year.

As to the record: Schuster told the appeals court that “there is an overriding interest that overcomes the right of public access and which supports the sealing of the records in this case.” However, the type of trade secret he points to that would be disclosed if there were an unsealing is the amount of the licensing fees for “Home Improvement” and other shows. That is ordinary business information, and in all probability it came out in public session of the trial court during the two-day hearing on the motions for summary judgment/summary adjudication, and possibly during oral argument before Div. Seven. If so, the information is in public domain.

Schuster calls for the entire record to remain sealed, asserting:

“The bulk of the appellate record consists of...sensitive and confidential information. Indeed, the competitive and proprietary information is interspersed throughout the record and could not be readily removed or redacted.”

When he says the information could not be “easily” removed, it means that going through each paper and examining it sentence-by-sentence would be a burden. Yet, that burden must be borne if Disney seeks the continued denial of public access. The Supreme Court, in dealing with sealing records and closing proceedings in the trial court, said in NBC Subsidiary: “The need to comply with the requirements of the First Amendment right of access may impose some burdens on trial courts.” It found that the creation of “burdens” is no excuse for First Amendment abridgements. The same would necessarily apply to the sealing of records in appellate courts.

Too, there is material under lock and key in the Court of Appeal to which confidentiality could not rationally apply. Sealed records in that court include 1.) papers that are publicly available in the Superior Court Clerk’s Office, such as the pleadings; 2.) reporters’ transcripts of proceedings conducted below in open session; 3.) the appellate briefs.

California Rules of Court, rule 12.5, requiring that certain findings be made by reviewing courts before sealing papers has been ignored.

The Court of Appeal should not permit the improperly sealed records to remain hidden from public view in the absence of a showing by Disney of an overriding need for secrecy. If the burden inherent in the making of such a showing is too onerous for it, it can simply drop its opposition to total unsealing.