MEMORANDUM OF DECISION and ORDER
MAX O. COGBURN, District Judge.
FINDINGS and CONCLUSIONS
I. Group I: Appeals Related to Access to Court Proceedings and Filings
For a number of years, Judge Hodges has presided over the bankruptcy of Garlock Sealing Technologies LLC ("Garlock") and last year, in performance of those duties, conducted an estimation trial or hearing The purpose of that hearing was to make a reasonable and reliable aggregate estimate of Garlock's liability for present and future mesothelioma claims. A central issue in the trial was whether consideration of Garlock's past mesothelioma settlements constituted a reliable method for estimating Garlock's present and future liability.
In the run up to making such determination, allegations surfaced that national counsel for mesothelioma victims had engaged in fraud, deceit, and other activities prohibited by the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1961-1968, in settling their clients' claims with Garlock. While claims of fraud and violations of RICO are common in federal civil litigation and seldom garner any attention from the public, the allegations in Garlock were of interest to the public, the press, and other still solvent enterprises that were subject to asbestos related claims and had dealings with these attorneys.
As a corollary to its appeal, Legal Newsline asks this court to determine the source of the right of access, be it the common-law presumption which favors access to all judicial proceedings and filings or the First Amendment guarantee of access. The public right of access has two components: first, the right of access protects the public's ability to oversee and monitor the workings of the federal courts, Columbus-Am. Discovery Grp. v. Atl. Mut. Ins. Co., 203 F.3d 291, 303 (4th Cir. 2000) (finding that "[p]ublicity of such records, of course, is necessary in the long run so that the public can judge the product of the courts in a given case."); and second, public access promotes the institutional integrity of the judiciary. United States v. Cianfrani, 573 F.2d 835, 851 (3d Cir.1978) (holding that "[p]ublic confidence [in the judiciary] cannot long be maintained where important judicial decisions are made behind closed doors...."). The Court of Appeals for the Fourth Circuit has long held that "the rights of the news media ... are coextensive with and do not exceed those rights of members of the public in general." In re Greensboro News Co., 727 F.2d 1320, 1322 (4th Cir. 1984). Indeed, anyone, be they a reporter or a member of the general public, who "seek[s] and is denied access to judicial records sustains an injury." Doe v. Public Citizen, 749 F.3d 246, 263 (4th Cir.2014). However, Legal Newsline's request that this court make such determination as to the source of the right of access in the first instance would require fact finding that is not appropriate and perhaps not possible on appellate review. Indeed, it appears that the Fourth Circuit routinely remands that issue to the trial court for determination. Stone v. University of Maryland Medical System Corp., 855 F.2d 178, 181 (4th Cir.1988) (holding that "[o]n remand, it [the district court] must determine the source of the right of access with respect to each document sealed. Only then can it accurately weigh the competing interests at stake.").
Prior to the estimation trial, Legal Newsline filed its Emergency motion to keep the Estimation Trial open to the public, which Judge Hodges denied July 31,
The issue raised in the second appeal is whether Legal Newsline's First Amendment and common law interests in access to judicial documents requires disclosure of the evidence upon which the bankruptcy court relied in reaching its decision. After the estimation trial was conducted in the summer of 2013, the estimation Order entered in January 2014; thereafter, Legal Newsline filed its second motion with the bankruptcy court, this time asking Judge Hodges to unseal the trial transcript and exhibits on which his estimation Order was based. For cause, Legal Newsline argued that the public and the press had a right to review for itself the evidence that supported the court's conclusion. On April 11, 2014, Judge Hodges denied that motion as well as motions filed by other interested parties seeking to unseal that evidence and a second round of appeals followed not just from Legal Newsline, but from other interested parties, in particular, solvent corporations facing similar asbestos related claims.
As to both challenged determinations, the court finds that, although done with the best judicial intentions of providing for the efficient administration of justice, Judge Hodges decision to seal the estimation hearing and maintain the seal as to judicial filings and the transcript of those proceedings after his estimation Order was contrary to the requirements of prevailing case law. When a document or a hearing is sealed, a court is required to "state the reasons for its decision to seal supported by specific findings, and the reasons for rejecting alternatives to sealing to provide this court with sufficient information for meaningful appellate review." Media General Operations, Inc. v. Buchanan, 417 F.3d 424, 431 (4th Cir.2005) (internal quotation marks omitted and corresponding citations). In Nixon v. Warner Communications, Inc., 435 U.S. 589, 98 S.Ct. 1306, 55 L.Ed.2d 570 (1978) the United States Supreme Court held, as follows:
Nixon, 435 U.S. at 597-98, 98 S.Ct. 1306 (citations and footnote omitted).
Clearly, the only basis relied on by the bankruptcy court other than judicial efficiency in its sealing determinations was the existence of protective orders and the
Put another way, an order providing that materials submitted to the court would be initially entered under seal and the courtroom closed to the public, subject to a challenge from the public or press, does not satisfy the requirements of Media General and its progeny. The Fourth Circuit has held, as follows:
Va. Dep't of State Police v. Wash. Post, 386 F.3d 567, 576 (4th Cir.2004) (quotation marks and citations omitted).
This court is both familiar and complicit in the practice of entering lengthy protective orders in advance of parties engaging in Rule 26 discovery. Such orders typically give the producing party carte blanche in designating documents "confidential," "highly confidential," and "highly confidential — attorney's eyes only." While this court routinely allows such protective orders, it has in place a Local Civil Rule which makes clearly that an attorney's designation of confidentiality does not result in automatic sealing. Protective orders serve legitimate purposes in both expediting discovery and protecting trade secrets, proprietary information, privileged communications, and personally sensitive data from inadvertent disclosure during the process of discovery; however, the confidentiality afforded under a Protective Order to discovery materials does not automatically extend to documents submitted to the court. At best, a Protective Order can require a party who desires to file a document marked confidential to seek an Order sealing or redacting that document before such filing.
As mentioned above, the judges of this court, in conjunction with the public, attorneys, and members of Bar representing the press, developed Local Civil Rule 6. 1, "Sealed Filings and Public Access," to dispose of requests for sealing in an orderly manner. That rule provides, as follows:
L.Civ.R. 6.1. As provided above, the rule contemplates that attorneys will designate materials as confidential, but makes it clear that such designation does not necessarily extend to materials "filed with the court." L.Civ.R. 6.1(I).
The parties appear to be in agreement that remand is appropriate and the parties have submitted various well-reasoned proposals to remedy the sealing issue. Garlock has provided the court with a two-page proposal for very specific instructions as to what procedure should be employed by the bankruptcy court on remand in determining what to unseal as well as the time frames for the parties to file objections. Legal Newsline has argued that the court should remand and direct the bankruptcy court to immediately lift the seal as the press and public have compelling First Amendment and common law interests in reviewing those materials. These are reasonable solutions, but the court finds the appropriate instructions on remand fall somewhere between the two proposals.
In ordering remand, this court is guided by the reasoning of the Court of Appeals for the Fourth Circuit in Stone v. Univ. of Md. Med. Sys. Corp., supra. In accordance with that decision, the court will reverse the Orders appealed from, remand those Orders and the motions underlying them for further consideration in light of this decision, restore subject matter jurisdiction over these proceedings to the bankruptcy court, and instruct the bankruptcy court to determine in the first instance the source of the right of access with respect to each document or the testimony of any witness as to which any party proposes or has proposed be sealed, give the public notice of any such request to seal and a reasonable opportunity to challenge it, onsider any reasonable alternatives to sealing, all in accordance with In re Knight Publishing Co., 743 F.2d 231 (4th Cir.1984) and then, if such materials are sealed, provide sufficient information supporting that decision for meaningful appellate review, all in accordance with Media General, supra.
II. Group II: Withdrawal of the Reference
While understanding that the Group I cases concerning the sealing orders had little to do with the cases in Group II, which seeks withdrawal of the reference as to non-core proceedings, the court consolidated all the cases for hearing as understanding the issues presented by Group I informed decision in Group II. The court believes it was correct in that conclusion as the courtroom, packed with attorneys, did
As mentioned, Group II seeks withdrawal of the reference to the bankruptcy court of non-core claims asserted by Garlock for common law and statutory tort claims against the lawyers who allegedly engaged in fraud and violations of RICO in settling their clients' mesothelioma claims. On January 10, 2014, Judge Hodges entered his estimation Order. In re Garlock Sealing Techs., LLC, 504 B.R. 71 (Bankr.W.D.N.C.2014). After hearing evidence from fifteen settled cases, Judge Hodges found that Garlock's settlements were not a reliable predictor of liability because misrepresentation had infected them:
Id. at 85 (emphasis in the original). Judge Hodges went on to describe the plaintiffs' lawyers' conduct in these cases as forming a "startling pattern of misrepresentation." Id. at 86.
The finding has apparently lead the bankruptcy estate, eo nominee Garlock, to pursue civil claims against those lawyers to recoup funds they believe are due and owing to the bankruptcy estate based on tort. The parties are in agreement that such claims are non-core proceedings and that they could not be tried in the bankruptcy court without consent of all the parties, which is not forthcoming. While Garlock warns that the attorney defendants who are eager for this court to withdraw the reference will promptly move to transfer venue to their home districts, such possibility is of no moment as this court is at home not only with fraud and RICO claims, but with preliminary motions concerning appropriate fora. The court will, therefore, in accordance with 28 U.S.C. § 157(d), withdraw the reference as to each of the non-core actions and reference those proceedings to one United States Magistrate Judge for full pretrial case management consistent with this court's Order of Referral and the Local Civil Rules of this court.