Reporters Committee asks appeals court to uphold ban on secret corporate arbitration in Delaware

Press Release | January 15, 2013

The Reporters Committee for Freedom of the Press and 12 media organizations have filed a friend-of-the-court brief in the U.S. Court of Appeals (3rd Cir.) seeking to ensure an end to a Delaware plan that would allow secret arbitration to replace public Chancery Court civil actions to resolve million-dollar corporate disputes.

The federal district court earlier agreed with the Delaware Coalition for Open Government, which challenged the law, ruling that these secret arbitrations, which would be overseen by a sitting judge, are actually civil cases that are subject to the First Amendment right of public access. The Reporters Committee also filed a friend-of-the-court brief with the district court.

Now before the appeals court, the media coalition's amicus brief argued that, “A state may not use word choice and linguistic scheming to write its way around the Constitution. If a type of proceeding is ‘sufficiently like a trial,’ despite a different name, it is still subject to the same First Amendment right of access.”

“To simply rename a court proceeding as arbitration and call it secret is an untenable end-run around the Constitution,” said Reporters Committee Executive Director Bruce D. Brown. “The district court rightly found that the state’s scheme to hide these proceedings behind a veil of secrecy cannot stand, and we are asking the appeals court to uphold that decision on the same grounds. The public has a right to know what happens in its courts, and company shareholders have a particular interest in knowing what these businesses are engaged in.”

The Reporters Committee brief noted that “nearly 1 million business entities have their legal home in Delaware, including more than half of all publicly traded companies in the United States and 63 percent of all Fortune 500 companies…. Rules that apply to govern the disputes of small claimants and motor vehicle regulation violators in other states are plainly inadequate to uphold the constitutional adequacy of a scheme that would allow billion-dollar corporations to prosecute million-dollar claims behind closed doors.”

Joining the Reporters Committee on the brief in Delaware Coalition for Open Government Inc. v. Strine are the American Society of News Editors, The Associated Press, Atlantic Media, Bloomberg, Dow Jones, E.W. Scripps, Gannett Co., The Md.-Del.-D.C. Broadcasters Association, The New York Times Co, NPR, Reuters America and The Washington Post Co.

About the Reporters Committee:

Founded in 1970, the Reporters Committee for Freedom of the Press offers free legal support to thousands of working journalists and media lawyers each year. It is a leader in the fight against persistent efforts by government officials to impede the release of public information, whether by withholding documents or threatening reporters with jail. In addition to its 24/7 Legal Defense Hotline, the Reporters Committee conducts cutting-edge legal research, publishes handbooks and guides on media law issues, files frequent friend-of-the-court legal briefs and offers challenging fellowships and internships for young lawyers and journalists. For more information, go to www.rcfp.org, or follow us on Twitter @rcfp.

Related Reporters Committee resources:

· Brief: Delaware Coalition for Open Government, Inc. v. The Delaware Court of Chancery et al.