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Document log may help media uncover Enron demise

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From the Spring 2003 issue of The News Media & The Law, page 29.

From the Spring 2003 issue of The News Media & The Law, page 29.

By Sara Thacker

Enron’s court-ordered document depository in Houston contains thousands of boxes of documents that may help explain how the wholesale energy giant self-destructed, taking its shareholders and employees down with it. Not only do these documents detail one of the country’s largest bankruptcies, they are the same documents Enron produced to government agencies investigating claims of securities fraud, wire fraud, money laundering, conspiracy and making false statements.

Enron has fought to keep journalists’ hands off these documents. But seven media organizations intervened to challenge the company’s request for an order that would prevent anyone but the parties to the litigation from viewing categories of documents labeled “confidential.”

After successfully winning the right to challenge Enron’s claims of confidentiality, the media may eventually gain access to the wealth of information inside the document depository.

Last year, U.S. District Court Judge Melinda Harmon rejected Enron’s request for a blanket protective order preventing parties from disclosing all discovery documents to the public in the consolidated class-action securities fraud lawsuit against the company.

But Enron returned to the court in January with a new request to prevent access to four categories of documents, including personnel files, internal documents containing analysis of litigation or settlement matters, documents pertaining to the sale or attempted sale of its assets, and “competitively sensitive” information.

At the hearing, counsel for Enron estimated that of the 19 million documents inside the document depository, 44,000 could potentially fall within the four categories of “confidential” documents.

But Harmon again rejected Enron’s attempt to keep discovery documents confidential, reasoning that the four categories were so broad and vague that they resulted in an impermissible blanket protective order.

Harmon also ordered Enron to submit a document log and designate nonconfidential documents as they are produced. Harmon’s order does not provide the media direct access to nonconfidential documents. However, if discovery documents are deemed nonconfidential, the parties are free to disclose these documents to the public.

In addition, the document log is to be presented to counsel for the media intervenors, which include Dow Jones & Co., Inc., The New York Times Co., The Washington Post, USA Today, The Houston Chronicle, ABC and The Reporters Committee for Freedom of the Press, who may directly challenge any documents designated as confidential.

While the document log enables journalists to identify nonconfidential documents they wish to view and directly challenge documents labeled confidential, it does not give the media the key to Enron’s document depository door. If the media successfully challenge the confidential nature of a document, a party to the litigation may disclose the nonconfidential document.

This makes it easier for journalists to obtain information because there aren’t any repercussions for parties who disclose or talk about nonconfidential documents, said Peter D. Kennedy, counsel for the media intervenors.

The class-action plaintiffs, who also objected to Enron’s motion for a confidentiality order, propose to make many of these documents available on their Web site.

“I am extremely pleased with Judge Harmon’s decision,” Kennedy said. “I think that the order requiring a ‘rolling production’ of a privilege log to the media represents a nearly unprecedented level of court-ordered access to the internal workings of the discovery process in civil litigation.”

What makes Enron unique

Unlike in most cases, media organizations in the Enron case intervened before the parties had agreed to, or the court had issued, a confidentiality order. David Donaldson, who also represents the media intervenors, said he believes that this proactive approach benefitted the media.

“The many times we get involved after the parties agree to a protective order . . . puts us at a significant disadvantage,” he said. “The Supreme Court has recognized that some protective orders are appropriate and that the discovery process is not necessarily one that has to be open to the public. It just depends on the circumstances.”

The media argued that the circumstances in Enron’s case warrant disclosure. The documents inside Enron’s depository already have been provided to several government agencies and the court ordered Enron to produce them to the class-action plaintiffs without any protective order addressing confidentiality. As a result, Enron waived its right to claim confidentiality, the media organizations argued.

The public has an independent interest in these documents because “they are the ingredients the government selected to develop its understanding of Enron and its conduct,” the media intervenors wrote in their brief objecting to Enron’s motion for confidentiality. “While many of the hearings by congressional committees have been the subject of news coverage, seeing what those committees had before them provides an opportunity to evaluate whether they asked the right questions, obtained the right materials, or came to the correct conclusions.”

While the media organizations recognized that the First Amendment and common law right of access do not mandate disclosure of discovery documents, they urged the court to consider these principles in determining whether “good cause” exists to justify Enron’s confidentiality order.

The First Amendment and common law right of access to the judicial process inform public opinion and allow the public to act as a check on our court system and government, the media argued in their brief.

But the media’s argument for access to discovery documents did not hinge on the First Amendment right of access alone.

Under old federal court rules, all discovery materials were public and filed with the court. As Kennedy explained, retaining massive amounts of discovery documents in the court files was impractical, so the court changed its rules to prohibit filing of discovery documents with the court.

“This rule change is not to cloak the process in secrecy, but to protect the court from massive filings,” Kennedy said. “Under federal rules, there is still a presumption that discovery documents are open.”

But ultimately, the judge has discretion to determine whether “good cause” exists to justify a protective order.

At least in Enron’s case, the extraordinary public interest in having access to documents that expose what happened should outweigh Enron’s general interest in confidentiality, Donaldson said.