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IN RE BANK ONE SECURITIES LITIGATION

August 5, 2004.

In re BANK ONE SECURITIES LITIGATION, First Chicago Shareholder Claims.


The opinion of the court was delivered by: MORTON DENLOW, Magistrate Judge

MEMORANDUM OPINION AND ORDER

Throughout the history of this country, documents that at one point were classified because of their political significance and sensitivity have been disclosed because they have become politically stale yet remain historically significant. The same is true with regard to the documents in this case. At one point, the information contained in the documents that were sealed in this case was financially sensitive and proprietary. However, as a result of the significant events that have occurred during the years following the sealing of those documents, the reasons for keeping the documents under seal have disappeared, yet the documents remain historically significant for the purpose of this litigation. The time has come to unseal the documents in this case and to permit the public to enjoy the right of free access to which it is entitled.

This case comes before this Court on a motion by lead Plaintiff Naomi Bowell Trust on behalf of the First Chicago NBD Plaintiffs ("Plaintiffs") to unseal the district court record in this action against Bank One ("Defendant"), and other individual defendants. This motion presents the issue whether certain pleadings, motions, and attached exhibits that have been sealed by an agreed protective order should be unsealed to allow public access to materials filed with the district court and to give putative class members sufficient notice and information under Federal Rule of Civil Procedure 23(c)(2) to appraise class claims and defenses. Defendant proposes that putative class members receive access to the record only after they sign a protective order. Plaintiffs claim that Defendant has not presented evidence to show "good cause" to keep the record sealed and that Defendant's solution is inconsistent with Rule 23 and the public's interest in access to court documents. For the following reasons, Plaintiffs' motion to unseal the district court record is granted.

  I. BACKGROUND FACTS

  This case arises from the October 2, 1998 merger (the "Merger") between Defendant and First Chicago NBD. Plaintiffs allege Defendant violated federal securities laws by issuing a materially false and misleading Joint Proxy Statement and Prospectus in connection with the Merger. A previous opinion entered by this Court on July 31, 2002 details the background facts in this case. See In re Bank One Secs. Litig., First Chicago Shareholder Claims, 209 F.R.D. 418 (N.D. Ill. 2002). For the purpose of brevity, this opinion will discuss only the information relevant to the present issue.

  The issue currently before this Court stems from a protective order entered on December 12, 2001. The order was agreed upon by the parties, governs all discovery material produced during the pretrial discovery stage of this action, and permits the producing party to designate as "Confidential" any material that:
(a) is or contains non-public financial data, marketing and advertising data and plans, strategic or long-range plans, internal cost data, performance data, customer or vendor data, contracts and agreements with third parties, or technological data; and (b) is designated by a party in good faith as confidential because it contains or is information protected from disclosure by Fed.R. Civ. P. 26(c)(7). Material produced by third parties may, at the option of that party, be deemed "Confidential" under the terms of this Protective Order.
Protective Order of Dec. 12, 2001, at 2. Additionally, the order provides that confidential information could be disclosed to the Court and its staff, as well as to "Qualified Persons," including parties and class representatives, when necessary to "aid in the prosecution, defense, or settlement" of this action. Under the order, such information would be made part of the public record only when authorized by the Court. Until then, "any person may seek to unseal any pleading or other court paper at any time upon motion to the Court." The order further provides:
A party or other person objecting to the designation of Confidential Material shall provide written notice of the objection to the designating party, specifying the materials that are the subject of the objection. The parties and any other objecting person(s) shall confer in good faith. . . . If such conference does not resolve the objection, . . . the designating person(s) may apply to the Court, by motion or petition, for a ruling that material designated by a party as Confidential shall be treated as provided in this Order or the Confidential designation shall lapse. The party that opposes the designation of the material as Confidential shall be given notice of the application and an opportunity to respond. Pending determination by the Court, material designated by a party as Confidential shall be treated as provided in this Order.
Id. ΒΆ 12, at 6-7.

  Fact discovery in this case has ended, and the parties are proceeding on expert discovery. Plaintiffs' Amended Complaint, the Answers, several motions, briefs, and attached discovery currently remain sealed pursuant to the December 12, 2001 order. Plaintiffs have informed Defendant of their intent to disseminate notice to the class members, and they have filed a motion to unseal the district court record to give class members an adequate opportunity to evaluate the action, as well as to afford public access to materials filed with the Court.

  Defendant contends that no compelling reason exists to unseal the records, that the records contain trade secrets worthy of concealment, that Plaintiffs have violated the terms of the agreed protective order governing challenges to confidentiality, and that the matter should be resolved by permitting putative class members access to the court filings only if they first agree to abide by a protective order. Plaintiffs argue Defendant has not shown "good cause" to maintain the seal on the record pursuant to Federal Rule of Civil Procedure 26(c) and that Defendant's solution is inconsistent with Rule 23 and the public's interest in access to court documents.

  On July 14, 2004, oral arguments were held with regard to the issue of "good cause." Prior to this event, the parties met to try to resolve their disagreements. As a result of the meeting, Defendant agreed to unseal much of the record. However, at oral argument Defendant argued that the documents remaining under seal contained confidential information that could compromise Defendant's marketplace position. Additionally, Defendant alleges the existence of a confidentiality requirement with regard to documents related to the Office of the Comptroller of the Currency ("OCC") that were produced during discovery. At the close of the oral argument, this Court issued a ruling from the bench that unsealed all documents in the record except OCC-related documents, including those pleadings that reference the OCC or its involvement in the case, for which this Court reserved ruling.

  Later that same day, a telephone conference call between this Court, Defendant, and Plaintiffs determined the necessity of an additional appearance by the parties before this Court to address the alleged confidentiality of the OCC-related documents. That appearance occurred on July 21, 2004 and resulted in this Court taking the matter under advisement. This opinion serves to elaborate upon the Court's rulings from the bench and to declare its determination of the confidential nature of the OCC-related documents.

 
II. LEGAL STANDARD FOR ISSUING AND MAINTAINING A PROTECTIVE ORDER
  There is a strong presumption toward public disclosure of court files and documents, Globe Newspaper Co. v. Superior Court, 457 U.S. 596, 603 (1982), as the "public at large pays for the courts and therefore has an interest in what goes on at all stages of a judicial proceeding," Grove Fresh Distrib., Inc. v. Everfresh Juice Co., 24 F.3d 893, 897 (7th Cir. 1994). Public disclosure is justified further by the First Amendment. Globe Newspaper Co., 457 U.S. at 603. However, Federal Rule of Civil Procedure 26(c) governs protective orders and allows court material to be sealed under certain circumstances. Rule 26(c) states in relevant part that, upon motion by a party or person from whom discovery is sought,
 
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 . . . (7) that a trade secret or other confidential research, development, or commercial information not be revealed or be revealed only in a designated way.
Fed.R. Civ. P. 26(c).

  As concealment from the public is disfavored, any "step that withdraws an element of the judicial process . . . requires rigorous justification." In re Krynicki, 983 F.2d 74, 75 (7th Cir. 1992). The party seeking confidentiality has the burden of showing good cause for the protective order. Fed.R. Civ. P. 26(c); Seattle Times Co. v. Rhinehart, 467 U.S. 20, 37 (1984); In re Matter of Cont'l Ill. Secs. Litig., 732 F.2d 1302, 1310 (7th Cir. 1984). Establishing good cause requires a party to present "a particular and specific demonstration of fact, as distinguished from stereotyped and conclusory statements." Gulf Oil Co. v. Bernard, 452 U.S. 89, 102 (1984).

  If good cause is shown, a court then must balance the public's interest in access to the record against the interest of the party seeking confidentiality to determine whether to seal the record. In re Matter of Cont'l Ill. Secs. Litig., 732 F.2d at 1313. If there is any doubt as to whether the material should be sealed, it is resolved in favor of disclosure. Id.

  Once a protective order is entered, a party must continue to show good cause for confidentiality when challenged. Union Oil Co. of Cal. v. Leavell, 220 F.3d 562, 568 (7th Cir. 2000). If a party does not show good cause to justify the ongoing concealment of certain information, the protective order may be dissolved or modified to unseal that information. Id.; see also Jepson, Inc. v. Makita Elec. Works, 30 F.3d 854, 861 (7th Cir. 1994). If a party does identify specific genuine confidential material within documents concealed by the protective order, a court nevertheless may place the ...


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