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Estate of Frankl v. Goodyear Tire and Rubber Co.

SUPREME COURT OF NEW JERSEY


July 28, 2004

ESTATE OF ROBERT FRANKL, DECEASED, BY ADMINISTRATRIX OF THE ESTATE, LORI FRANKL, AND LORI FRANKL, ERIC FRANKL, ASHLEY FRANKL AND BRIAN FRANKL, INDIVIDUALLY, AND ESTATE OF KAREN BUDIAN, DECEASED, BY ADMINISTRATOR OF THE ESTATE, GEROLF O. BUDIAN, AND GEROLF O. BUDIAN AND BENJAMIN BUDIAN, INDIVIDUALLY, GARRY E. SITZE AND TOMMYE SITZE, HIS WIFE, PLAINTIFFS,
v.
GOODYEAR TIRE AND RUBBER COMPANY, DEFENDANT-RESPONDENT, AND JOHN DOE (A FICTITIOUS NAME REPRESENTING A CLASS OF FICTITIOUS DEFENDANTS), ABC CORP. (A FICTITIOUS NAME REPRESENTING A CLASS OF FICTITIOUS DEFENDANTS), HUTCHINSON INDUSTRIES, INC., HUTCHINSON CORPORATION, HUTCHINSON, S.A., ROBERT ROE (A FICTITIOUS NAME REPRESENTING A CLASS OF FICTITIOUS DEFENDANTS), XYZ CORP. (A FICTITIOUS NAME REPRESENTING A CLASS OF FICTITIOUS DEFENDANTS), GENERAL MOTORS CORPORATION, ROBERT DOE (A FICTITIOUS NAME REPRESENTING A CLASS OF FICTITIOUS DEFENDANTS), DEF CORP. (A FICTITIOUS NAME REPRESENTING A CLASS OF FICTITIOUS DEFENDANTS), HAYES LEMMERZ INTERNATIONAL, INC., JOHN ROE (A FICTITIOUS NAME REPRESENTING A CLASS OF FICTITIOUS DEFENDANTS) AND GHI CORP. (A FICTITIOUS NAME REPRESENTING A CLASS OF FICTITIOUS DEFENDANTS), DEFENDANTS, AND CONSUMERS FOR AUTO RELIABILITY AND SAFETY, INTERVENOR-APPELLANT.

On certification to the Superior Court, Appellate Division.

SYLLABUS BY THE COURT

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).

This appeal concerns public access to unfiled documents produced during discovery. In July 1997, a General Motors Suburban carrying members of the United States Air Force rolled over while traveling on a highway in Saudi Arabia. Three of the occupants were killed and another passenger was severely injured. The injured passenger and the estates of two of the deceased occupants (collectively, plaintiffs) filed a products-liability lawsuit against Goodyear Tire & Rubber Co. (Goodyear) and other parties, alleging that the accident was caused by tread separation on the vehicle's Light Truck Load E (LRE) tires manufactured by Goodyear.

In March 2000, plaintiffs and Goodyear, by consent, entered into a "Proposed Stipulation and Protective Order Regarding Pre-Trial Documents to be Produced by Goodyear Tire & Rubber Co." Without making any findings, a trial court signed the Protective Order in July 2000. Under the terms of the Protective Order, Goodyear was permitted to earmark as confidential certain information it produced during discovery. The parties were prohibited from disclosing any items so designated to any persons other than their "employees, experts or consultants employed and retained in connection with this specific action." In addition, plaintiffs could disseminate confidential materials to "other attorneys with similar cases against Goodyear" provided that Goodyear received proper notice of the disclosure and the recipients of the information agreed to the terms of the Protective Order.

Plaintiffs were entitled to challenge Goodyear's designation of any item as confidential, but were required to treat the disputed items as confidential until they either obtained Goodyear's written permission to do otherwise or allowed Goodyear reasonable time to obtain a court order finding the items protected. Paragraph 5 of the Protective Order contained a sealing provision that effectively "maintain[ed] protection for confidential information divulged in pre-trial motions or other submissions, subject to the court's ultimate power to find that such materials may be publicly disclosed." The Protective Order also contained a provision requiring plaintiffs to return all confidential materials to Goodyear "upon completion of the trial and any appeals in this case, or upon conclusion of any settlement."

By way of motion and cross-motion, plaintiffs challenged and Goodyear defended the designation of a number of discovery documents as confidential. While these motions were pending, Consumers for Auto Reliability and Safety (CARS), a national non-profit automobile and consumer safety organization, filed a motion to intervene in order to obtain access to the contested documents based on allegations that the tread separation problem had caused a series of accidents and that public safety required access to the discovery in this litigation.

In the fall of 2001, after briefs had been filed on the CARS motion, plaintiffs settled their claims with the defendants. Thereafter, plaintiffs withdrew their opposition to Goodyear's motion to enforce the Protective Order sometime prior to the oral argument on CARS' intervention motion in October 2001. On December 18, 2001, the trial court granted CARS's motion to intervene for the purpose of obtaining access to documents produced in discovery in the underlying litigation and denied Goodyear's motion to enforce the Protective Order "without prejudice, subject to final determination of the validity of the consent order." The court rejected Goodyear's argument that unfiled discovery materials are insulated from access. The court also noted that trial judges should not "rubber-stamp" consent orders that contain blanket confidentiality provisions that are not accompanied by outside support demonstrating good cause for their approval. On December 19, 2001, pursuant to the settlement agreement, plaintiffs formally dismissed their claims against Goodyear.

The trial court offered a "preferable model of practice" for obtaining protective orders suggesting that, as occurred in Hammock by Hammock v. Hoffman-LaRoche, Inc., applications for confidentiality orders should be supported by affidavits detailing the need for confidentiality, citing relevant legal authority if governing law is in doubt. If found to be necessary, the parties seeking a protective order should be prepared to prove their entitlement in a limited evidentiary hearing. The trial court indicated that it would refer its suggestions to the Civil Practice Committee.

Based on its interpretation of Hammock, the trial court concluded that the Protective Order had to be reexamined. The court noted that Goodyear's affidavit filed in support of its motion for confidentiality suggested the presence of trade secrets and self-critical assessment and, therefore, may have been sufficient to justify entry of the Order. After reviewing additional briefs and affidavits submitted by CARS and Goodyear and conducting an in camera review, the court presented a document-by-document summary of the results of its review, unsealing several documents. Those individual determinations are not at issue here.

Although recognizing that the unsealed documents remained subject to the private stipulation of confidentiality between plaintiffs and Goodyear, the court determined that the private agreement was unenforceable as against an application for public access. In respect of Goodyear's claim for justifiable reliance on confidentiality, the court found that absolute reliance was not justifiable or reasonable in light of the provision enabling plaintiffs to challenge a designation of a document as confidential.

The Appellate Division reversed, finding that neither Rule 4:10-3 nor Hammock creates a right of public access to unfiled documents exchanged during discovery in civil litigation. Accordingly, the panel held that CARS lacked a legal basis for access to the unfilled documents regardless of whether of not a protective order was in place. The Supreme Court granted certification.

HELD: Neither Rule 4:10-3 nor Hammock creates a right of public access to unfiled documents exchanged during discovery in civil litigation. The matter is referred to the Civil Practice Committee to address whether or not, going forward, that position should be maintained.

1. Rule 4:10-3 is not an independent source of entitlement to public access to discovery documents; rather, it is only a procedural device by which documents, otherwise accessible, can be protected. Moreover, the holding in Hammock does not encompass both filed and unfiled documents. (P. 13)

2. The universal understanding in the legal community is that unfiled documents in discovery are not subject to public access. There are compelling arguments both for and against revisiting that notion. Despite the academic debate and the national efforts of the Association of Trial Lawyers to obliterate the distinction between filed and unfiled documents in discovery, the distinction remains intact across the country. Furthermore, the 2000 Amendment to Fed. R. Civ. P. 5(d), setting forth that discovery must not be filed, unless it is "used in the proceeding," bolsters the distinction between filed and unfiled documents and supports the conclusion that unfiled discovery is not meant to be accessible to non-parties. (Pp. 14-16)

3. Because New Jersey's Court Rules do not address unfiled discovery, and because Hammock has been overread, the matter is referred to the Civil Practice Committee to address whether, going forward, we should maintain the position that unfiled discovery is insulated from forced public access or whether changes should entail. (P. 17) Judgment of the Appellate Division is AFFIRMED. The issues to which the Court has adverted are referred to the Civil Practice Committee for consideration.

CHIEF JUSTICE PORITZ and JUSTICES LONG, VERNIERO, LaVECCHIA, ZAZZALI and WALLACE join in this PER CURIAM opinion. JUSTICE ALBIN did not participate.

Per curiam.

Argued April 27, 2004

The full history of this case is set forth in detail in the decision of the Appellate Division. Estate of Frankl v. Goodyear Tire and Rubber Company, __ N.J. Super. __ (App. Div. 2003). We recount only those facts and procedures necessary to our disposition.

In July 1997, a General Motors Suburban carrying members of the United States Air Force rolled over while traveling on a highway in Saudi Arabia. Three of the occupants were killed and another passenger was severely injured. The injured passenger and the estates of two of the deceased occupants (collectively plaintiffs) filed a lawsuit against Goodyear Tire & Rubber Co. (Goodyear) and other parties. The suit alleged that the accident was caused by tread separation on the vehicle's Light Truck Load Range E (LRE) tires, manufactured by Goodyear.

In March 2000, plaintiffs and Goodyear, by consent, entered into a"Proposed Stipulation and Protective Order Regarding Pre-Trial Documents to be Produced by Goodyear Tire & Rubber Co." Without making any findings, a trial court signed the Protective Order in July 2000.

Under the terms of the Protective Order, Goodyear was permitted to earmark as confidential certain information it produced during discovery. The parties were prohibited from disclosing any items so designated to any persons other than their"employees, experts or consultants employed and retained in connection with this specific action." In addition, plaintiffs could disseminate confidential materials to"other attorneys with similar cases against Goodyear" provided that Goodyear received proper notice of such disclosure and the recipients of the information agreed to the terms of the Protective Order.

Plaintiffs were entitled to challenge Goodyear's designation of any item as confidential, but were required to treat the disputed items as protected until plaintiffs either obtained Goodyear's written permission to do otherwise or allowed Goodyear reasonable time to obtain a court order finding that the disputed items were protected. Goodyear had the burden of establishing the confidentiality of the disputed items on any such motion to the court. Paragraph 5 of the Protective Order contained a sealing provision that effectively"maintain[ed] protection for confidential information divulged in pre-trial motions or other submissions, subject to the court's ultimate power to find that such materials may be publicly disclosed." The Protective Order also contained a provision requiring plaintiffs to return all confidential materials to Goodyear"upon completion of the trial and any appeals in this case, or upon conclusion of any settlement."

Subsequently, by way of motion and cross-motion, plaintiffs challenged and Goodyear defended the designation of a number of discovery documents as confidential. The materials filed with the court relating to the motion to enforce the confidentiality agreement remained under seal. Although the record is not crystal clear on the subject, apparently thirty-one documents were at issue.

While the motions were pending, Consumers for Auto Reliability and Safety (CARS), a national non-profit automobile and consumer safety organization, filed a motion to intervene in order to obtain access to the contested documents based on allegations that the tread separation problem had caused a series of accidents and that public safety required access to the discovery in this case.

In the fall of 2001, after briefs had been filed in respect of CARS' motion, a settlement between plaintiffs and defendants was reached. As a result, plaintiffs withdrew their opposition to Goodyear's motion to enforce the Protective Order. That withdrawal occurred sometime prior to the oral argument on CARS' intervention motion in October 2001. On December 18, 2001, the trial court granted CARS's motion to intervene for the purpose of obtaining access to documents produced in discovery in the underlying litigation and denied Goodyear's motion to enforce the Protective Order"without prejudice, subject to a final determination of the validity of the consent order." In so doing, the court specifically rejected Goodyear's argument that unfiled discovery materials are insulated from access. The court also stated that trial judges should not"rubber-stamp Consent Orders containing blanket confidentiality provisions that are not accompanied by extrinsic support demonstrating good cause for their approval." On December 19, 2001, pursuant to the settlement agreement, plaintiffs formally dismissed their claims against Goodyear.

The trial court then offered a"preferable model of practice" for obtaining protective orders suggesting that, as occurred in Hammock by Hammock v. Hoffman-LaRoche, Inc., 142 N.J. 356 (1995), applications for confidentiality orders should be supported by affidavits detailing the need for confidentiality. In addition, citations to relevant legal authority should be provided if"governing law is in doubt.""In exceptional instances where a prima facie showing of good cause is not clear from the moving papers, or where there are substantial countervailing reasons for denying the order, the parties seeking its entry should be prepared to prove their entitlement in a limited evidentiary hearing[.]" The trial court indicated that it would refer those suggestions to the Civil Practice Committee. The court noted, however, that litigants could bypass those procedures by"entering into a stipulation of confidentiality, inter sese, rather than seeking the Court's imprimatur of their arrangement," and relying on contract law principles for enforcement.

Based on its interpretation of Hammock, supra, the trial court concluded that the Protective Order had to be reexamined.

In so doing, the court recognized that the affidavit Goodyear filed in support of its motion for confidentiality,"suggests the presence of both trade secrets and self-critical assessment in the Goodyear documents sought by the intervenors" and, therefore,"may have been sufficient to justify entry of the Order" if it had been presented contemporaneously with the order. After reviewing additional briefs and affidavits submitted by CARS and Goodyear and conducting an in camera review of the disputed documents, the trial court presented a document-by-document summary of the results of its review.*fn1

Those individual determinations are not at issue here. Although recognizing that the unsealed documents remained"subject to the private Stipulation of Confidentiality between Goodyear and the original plaintiffs," the court determined that the private agreement was unenforceable as against an application for public access.

In respect of Goodyear's claim of justifiable reliance on confidentiality, the court found that although Goodyear may have relied on the Protective Order when it produced certain materials during discovery, absolute reliance was not justifiable or reasonable because of the provision allowing plaintiffs to challenge Goodyear's designation of a document as confidential. In addition, the court noted that reliance on a protective order "should not be outcome determinative and should only be one factor that a court considers when determining whether to modify an order of confidentiality."

Goodyear appealed and the Appellate Division reversed. The panel differed from the trial court on only one specific point. It concluded that neither Rule 4:10-3 nor Hammock, supra, creates a right of public access to unfiled documents exchanged during discovery in civil litigation. Accordingly, the panel held that CARS lacked a legal basis for access to the unfiled documents regardless of whether or not a protective order was in place.

We granted CARS' petition for certification. 178 N.J. 452 (2004). We also accorded amici status to Public Citizen, Inc., the Center for Auto Safety, the Product Liability Advisory Council, the New Jersey Defense Association, The New York Times,*fn2 Pharmaceutical Research and Manufacturers of America, and the New Jersey Press Association.*fn3

I.

CARS does not advance a common law or a constitutional argument in support of access, but argues only that the good cause requirement of Rule 4:10-3 gives the public the right to seek access to discovery with regard to both filed and unfiled materials. It further argues that important public safety considerations require such access.

Goodyear counters that New Jersey does not recognize a right of access to unfiled documents; that CARS, as an intervenor, has no substantive rights; and that access to unfiled discovery is not needed to protect the public from defective products because there are governmental agencies charged with that task.*fn4

Amici Public Citizen Inc. and the Center for Auto Safety argue, essentially, that "if non-parties are not permitted to question the validity of blanket protective orders, such orders can be routinely used to prevent scrutiny of corporate misconduct, or thwart disclosure of valuable health and safety information."

Amici New York Times and the New Jersey Press Association similarly assert that this Court should extend the presumption of public access to unfiled discovery documents in cases involving public hazards or misconduct by government officials. Citing Hammock, supra, amici argue that New Jersey common-law supports such an extension. They also argue that stipulated protective orders are not based on individualized findings of good cause as required by Rule 4:10-3 and, hence, should not be afforded the same level of protection as a protective order based on good cause findings. Specifically, amici argue that Hammock, supra, merely acknowledges no presumption of public access to unfiled discovery, but leaves access to such discovery to the "good cause" test in Rule 4:10-3.

Amici Product Liability Advisory Council and the New Jersey Defense Association argue that the trial court's decision would eviscerate the protective order as a discovery tool because a detailed document-by-document analysis would be prohibitively expensive, and the ability of a third party to intervene would limit parties' willingness to rely on protective orders.

Amicus curiae Pharmaceutical Research and Manufacturers of America argues that allowing public access to unfiled discovery in litigation involving the industry would create disincentives for research and development of new drugs because of the inability of the industry to guard its trade secrets.

Furthermore, this amicus argues the pharmaceutical industry has consistently relied on New Jersey practice, allegedly reinforced by this Court's decision in Hammock, supra, that documents produced in discovery will not be placed in the public domain if they are subject to a protective order and are not filed with the court.

II.

Rule 4:10-3 provides:

Upon motion by a party or by the person from whom discovery is sought, and for good cause shown, the court may make any order which justice requires to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense, including, but not limited to, one or more of the following:

(a) That the discovery not be had;

(b) That the discovery may be had only on specified terms and conditions, including a designation of the time or place;

(c) That the discovery may be had only by a method of discovery other than that selected by the party seeking discovery;

(d) That certain matters not be inquired into, or that the scope of the discovery be limited to certain matters;

(e) That discovery be conducted with no one present except persons designated by the court;

(f) That a deposition after being sealed be opened only by order of the court;

(g) That a trade secret or other confidential research, development, or commercial information not be disclosed or be disclosed only in a designated way;

(h) That the parties simultaneously file specified documents or information enclosed in sealed envelopes to be opened as directed by the court.

If the motion for a protective order is denied in whole or in part, the court may, on such terms and conditions as are just, order that any party or person provide or permit discovery. The provisions of R. 4:23-1(c) apply to the award of expenses incurred in relation to the motion.

Because we agree with the Appellate Division that that rule is not an independent source of entitlement to public access to discovery documents, but only a procedural device by which documents, otherwise accessible, can be protected, and because Hammock's holding does not encompass both filed and unfiled documents, we now affirm.

The universal understanding in the legal community is that unfiled documents in discovery are not subject to public access.*fn5 Seattle Times, supra, 467 U.S. at 33; see also In re Alexander Grant & Co. Litig., 820 F.2d 352, 355 (11th Cir. 1987) (finding appellants' common law right of public access does not extend to discovery not part of public record); Leucadia, Inc. v. Applied Extrusion Tech. Inc., 998 F.2d 157, 164 (3d Cir. 1993) (holding discovery motions and supporting materials are not subject to presumptive right of access because that would render "raw discovery, ordinarily inaccessible to the public," effectively accessible); Oklahoma Hosp. Ass'n, supra, 748 F.2d at 1425 (holding parties to stipulated protective order cannot be compelled to distribute unfiled discovery to public); Laurie Kratky Doré, Secrecy by Consent: The Use and Limits of Confidentiality in the Pursuit of Settlement, 74 Notre Dame L. Rev. 283, 346-48 (1999).

Some legal scholars suggest a need to revisit the notion that unfiled discovery documents are insulated from public access. Professor Arthur Miller details the arguments for and against creating a presumption of public access to all discovery materials in Confidentiality, Protective Orders, and Public Access to the Courts, 105 Harv. L. Rev. 427 (1991). Some of the arguments for the presumption of public access are as follows: 1) it would advance important societal interests, primarily those of public health, safety, and the administration of public office, interests that often are not represented by parties in the litigation; 2) it would improve the judicial system's overall efficiency by avoiding duplication of discovery efforts; and 3) it would eliminate the conflicts created by the current system whereby an attorney must agree to confidentiality for the current client's benefit despite the result that potentially harmful information that would benefit the public will be withheld. Miller, supra, at 477-82.

The arguments against a presumption of public access include the notions that such access would 1) invade the privacy of litigants and non parties; 2) jeopardize a litigant's right to the exclusive use of private property, including trade secrets and other competitive commercial information; 3) unjustly harm reputation, profitability, and even the viability of socially beneficial ventures; 4) undermine the confidentiality and hence the investment value of important research and development; and 5) limit judicial discretion necessary to advance discovery and litigation generally. Id. at 464-74.

Despite the academic debate and state-by-state efforts by the Association of Trial Lawyers of America to obliterate the distinction between filed and unfiled documents in discovery,*fn6 the distinction remains intact across the nation.*fn7 Furthermore, the 2000 Amendment to Fed. R. Civ. P. 5(d), setting forth that discovery must not be filed unless it is "used in the proceeding," bolsters the distinction between filed and unfiled documents and supports the conclusion that unfiled discovery is not meant to be accessible to non-parties. Fed. R. Civ. P. 5(d)); and see S.E.C. v. TheStreet.com, 273 F.3d 222, 233 n.11 (2d Cir. 2001) (expressing doubt that In Re Agent Orange Prod. Liabil. Litig., 821 F.2d 139, 146 (2d Cir.) (finding presumption of public access to all discovery relying on Fed. R. Civ. P. 5(d), which then required that all discovery be filed), cert. denied 484 U.S. 953, 108 S.Ct. 344, 98 L.Ed.2d 370 (1987), would survive the new Fed. R. Civ. P. 5(d)).*fn8

Because New Jersey's Court Rules do not address unfiled discovery explicitly, and because Hammock has been overread as clearly weighing in on the issue, we refer this matter to the Civil Practice Committee to address whether, going forward, we should maintain the position that unfiled discovery is insulated from forced public access or whether changes are warranted in that approach, and if so, what those changes should entail. Among the questions the Committee should address are the following: Whether unfiled discovery should be immune from public access, presumptively immune, or accessible on the same terms as filed discovery; if accessible, how the burden of going forward and the burden of proof should be allocated; whether some refinement of the good cause standard is in order; and whether there should be some limitation on the public's right of access after the settlement of a case. Those questions are posed by way of example and not limitation.

III.

The judgment of the Appellate Division is affirmed. The issues to which we have adverted are referred to the Civil Practice Committee for consideration.

Chief Justice Poritz PRESIDING


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