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In re Avandia Marketing, Sales Practices and Products Liability Litigation

United States Court of Appeals, Third Circuit

May 15, 2019

IN RE: AVANDIA MARKETING, SALES PRACTICES AND PRODUCTS LIABILITY LITIGATION UNITED FOOD AND COMMERCIAL WORKERS LOCAL 1776 AND PARTICIPATING EMPLOYERS HEALTH AND WELFARE FUND; JB HUNT TRANSPORT SERVICES, INC., Appellants

          Argued March 6, 2019

          On Appeal from the United States District Court for the Eastern District of Pennsylvania District Court Nos. 2-07-md-01871, 2-10-cv-02475, 2-11-cv-04013 District Judge: The Honorable Cynthia M. Rufe

          Hannah W. Brennan [ARGUED] Edward Notargiacomo Thomas M. Sobol Hagens Berman Sobol Shapiro James R. Dugan Douglas R. Plymale The Dugan Law Firm Counsel for Appellant

          Kyle A. Dolinsky Sean P. Fahey [ARGUED] Nina M. Gussack Pepper Hamilton Counsel for Appellee

          Christopher Morten Counsel for Amicus Appellant

          Before: SMITH, Chief Judge, AMBRO, and RESTREPO, Circuit Judges

          OPINION

          SMITH, CHIEF JUDGE.

         Following a decision of the District Court granting summary judgment to GlaxoSmithKline LLC ("GSK"), the losing parties, two health benefit plans, appealed from that final order.[1] While briefing the appeal, the parties sought to include in their joint appendix certain documents filed in connection with the summary judgment proceedings. GSK had previously designated some of these documents as confidential and contended that they should remain so on appeal; the plans disagreed. That led GSK to ask the District Court, on two occasions and pursuant to the applicable protective order, to maintain the confidentiality of certain documents. The plans opposed these requests, arguing that the common law right of access and the First Amendment right of public access required the unsealing of the documents. The District Court largely sided with GSK, refusing to unseal most of the documents. The plans have appealed the District Court's two post-judgment sealing orders.

         We conclude that the District Court failed to apply the proper legal standard for the common law right of access, which requires as a starting point the application of a presumption of public access. See Bank of Am. Nat'l Tr. & Sav. Ass'n v. Hotel Rittenhouse Assocs., 800 F.2d 339, 344 (3d Cir. 1986). By applying, instead, our standard for a protective order under Federal Rule of Civil Procedure 26, the able District Judge incorrectly placed a burden on the plans to show an interest in disclosure-rather than on GSK to justify continued sealing. We will therefore vacate and remand to allow the District Court to consider GSK's motions for continued confidentiality under the appropriate standard.

         I.[2]

         A.

         GSK manufactures, markets, and sells Avandia, a drug indicated to treat Type II diabetes.[3] In re Avandia Mktg., Sales Prac. & Prod. Liab. Litig. (Avandia I), 804 F.3d 633, 635 (3d Cir. 2015). The plans contend that GSK concealed evidence of Avandia's cardiovascular risk and, instead, promoted Avandia as providing cardiovascular benefits. According to the plans, this marketing strategy was false and misleading because GSK's own studies showed that Avandia increased certain markers of cardiovascular risk. The plans assert that, for years, GSK buried bad study results, misrepresented the truth about Avandia's cardiovascular profile to doctors and pharmacy benefit managers, and reaped billions of dollars in profits. In 2007, an independent researcher published an article in the New England Journal of Medicine claiming that Avandia increased the risk of heart attack and cardiovascular disease. Id.; App. 1064. Lawsuits ensued, the United States Food and Drug Administration ("FDA") investigated, and even the United States Senate Finance Committee released a report revealing GSK's misdeeds.

         B.

         On May 21, 2010, in the midst of heightened regulatory and public scrutiny of Avandia, United Food and Commercial Workers Local 1776 and Participating Employers Health and Welfare Fund ("UFCW") filed suit against GSK in the United States District Court for the Eastern District of Pennsylvania. UFCW alleged violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), as well as various state consumer protection laws. J.B. Hunt Transport Services, Inc. ("J.B. Hunt") filed a complaint containing similar claims on June 20, 2011. Both UFCW and J.B. Hunt (collectively referred to as "the plans") filed suit on behalf of a proposed class of United States health benefit providers that had purchased Avandia. These third-party payor cases became part of a multi-district litigation ("MDL"), which also included consumer and personal injury cases.[4] As part of the MDL, the cases were governed by a protective order, PTO 10, which covered discovery of confidential materials.

         In November 2010, GSK moved to dismiss the plans' complaints, arguing that the plans lacked standing to bring RICO claims. In October 2013, the District Court denied that motion; it later certified its decision for interlocutory appeal. We granted permission to appeal and, in October 2015, affirmed the District Court's denial of GSK's motion to dismiss. Avandia I, 804 F.3d at 646.

         Less than a year later, GSK moved for summary judgment as to the plans' consumer protection claims on federal preemption grounds. GSK also contended that the plans' RICO claims should be dismissed for failing to identify a distinct RICO enterprise. In the course of briefing GSK's motion for summary judgment, the parties filed documents under seal pursuant to PTO 10. At that time, neither party raised any issue as to the confidentiality of the sealed exhibits. On December 7, 2017, the District Court granted GSK's motion for summary judgment.

         After the plans appealed the District Court's summary judgment ruling, GSK indicated that it wanted to maintain the confidentiality of certain sealed documents that had been filed in connection with the summary judgment motion. GSK therefore moved in the District Court to keep some of the summary judgment records under seal. On May 31, 2018, the District Court granted in part and denied in part GSK's motion (the "May Sealing Order"). App. 2459. The Court unsealed its own summary judgment opinion but maintained the confidentiality of the remainder of the documents. Id.

         A few weeks later, GSK again moved to maintain under seal additional summary judgment records. The District Court granted in part and denied in part the second sealing motion on July 24, 2018 (the "July Sealing Order"). Id. at 2460-61. The Court directed GSK to file a redacted statement of undisputed material facts but otherwise maintained the seal. Id.

         The plans timely appealed the May Sealing Order (No. 18-2259) and the July Sealing Order (No. 18-2656).

         II.

         We apply three distinct standards when considering various challenges to the confidentiality of documents. We apply the factors articulated in Pansy v. Borough of Stroudsburg, 23 F.3d 772, 783-92 (3d Cir. 1994), when we review orders preserving the confidentiality of discovery materials pursuant to Federal Rule of Civil Procedure 26. But we apply the more rigorous common law right of access when discovery materials are filed as court documents. In addition to recognizing fewer reasons to justify the sealing of court records, the public right of access-unlike a Rule 26 inquiry- begins with a presumption in favor of public access. Goldstein v. Forbes (In re Cendant Corp.), 260 F.3d 183, 192-93 (3d Cir. 2001). Finally, the First Amendment right of public access attaches to, inter alia, civil trials. Publicker Indus., Inc. v. Cohen, 733 F.2d 1059, 1061 (3d Cir. 1984). We will discuss each standard in turn.

         A.

         Federal Rule of Civil Procedure 26(c) permits the District Court to enter a protective order to shield a party "from annoyance, embarrassment, oppression, or undue burden or expense." Fed.R.Civ.P. 26(c)(1). A protective order is "intended to offer litigants a measure of privacy, while balancing against this privacy interest the public's right to obtain information concerning judicial proceedings." Pansy, 23 F.3d at 786. A protective order may apply to all litigation materials-not just those filed in court-because "[c]ourts have inherent power to grant orders of confidentiality over materials not in the court file." Id. at 785.

         The proponent of the protective order shoulders "[t]he burden of justifying the confidentiality of each and every document sought to be" sealed.[5] Id. at 786-87. The District Court "must balance the requesting party's need for information against the injury that might result if uncontrolled disclosure is compelled." Id. at 787. The party seeking a protective order "over discovery material must demonstrate that 'good cause' exists for the order." Id. at 786 (quoting Fed.R.Civ.P. 26(c)); see also Seattle Times Co. v. Rhinehart, 467 U.S. 20, 37 (1984) (holding that the good cause requirement for protective orders does not violate the First Amendment). Good cause means "that disclosure will work a clearly defined and serious injury to the party seeking closure. The injury must be shown with specificity." Pansy, 23 F.3d at 786 (quoting Publicker Indus., 733 F.2d at 1071). To that end, "[b]road allegations of harm, unsubstantiated by specific examples or articulated reasoning, do not support a good cause showing." Id. (internal quotation marks omitted).

         We have set forth various factors-"which are neither mandatory nor exhaustive"-that courts may consider when determining whether good cause exists and, by extension, whether a protective order should issue:

1. whether disclosure will violate any privacy interests;
2. whether the information is being sought for a legitimate purpose or for an improper purpose;
3. whether disclosure of the information will cause a party embarrassment;[6]
4. whether confidentiality is being sought over information important to public health and safety;
5. whether the sharing of information among litigants will promote fairness and efficiency;
6. whether a party benefitting from the order of confidentiality is a public entity or official; and
7. whether the case involves issues important to the public.

Glenmede Tr. Co. v. Thompson, 56 F.3d 476, 483 (3d Cir. 1995) (citing Pansy, 23 F.3d at 787-91). The District Court "is best situated to determine what factors are relevant to" any given dispute.[7]Id. The Court's analysis, however, "should always reflect a balancing of private versus public interests." Id. The District Court "should articulate on the record findings supporting its" ...


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