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Courts allow order requiring journalists to sign secrecy agreement

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From the Winter 2000 issue of The News Media & The Law, page 22.

From the Winter 2000 issue of The News Media & The Law, page 22.

A federal judge in Dallas refused on Jan. 10 to stop a trial judge from forcing spectators to a civil trial between two corporations to choose between leaving the courtroom during certain portions of the trial or agreeing not to disclose information that they hear or see.

Federal District Court Judge A. Joe Fish denied a request from Bloomberg News Service to temporarily restrain the enforcement of the orders of state trial Judge David Evans, which had been allowed to stand by the Texas Supreme Court. Evans’ Nov. 15 orders state that members of the public who want to stay in the courtroom when certain exhibits, or the contents and subject matter of those exhibits, are discussed must sign a “Courtroom Spectator Confidentiality Order and Undertaking.”

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DSC Communications sued Samsung Electronics in a state trial court in Dallas in 1996 after Samsung hired nine engineers away from DSC. DSC alleged in its lawsuit that Samsung was hiring the engineers as a way to steal DSC’s digital-switching technology. While the lawsuit was pending, DSC was purchased by Alcatel, which pressed forward with the legal action. Alcatel demanded $425 million in compensatory damages and an unspecified amount in punitive damages from Samsung.

Alcatel alleged that trade secrets might be introduced during trial and requested that the trial court take measures to protect those trade secrets. The Dallas Morning News intervened and argued against closing the courtroom, but trial Judge David Evans signed three orders on Nov. 15 that limited court access in the case.

The orders sealed a portion of the record; closed the courtroom to members of the public during certain portions of the trial if they refused to sign a nondisclosure agreement; and required certain parties or party representatives to sign a nondisclosure agreement before being allowed to see certain documents produced under prior confidentiality orders. The orders also stated that certain exhibits constituted “probable trade secrets.” Any spectator who signed and then violated the confidentiality order faced contempt of court charges and a possible civil suit for misappropriation of trade secrets.

Samsung appealed these orders to the Texas Court of Appeals in Dallas, a state intermediate appellate court. The Dallas Morning News also appealed Evans’ orders, and Bloomberg News Service filed a friend-of-the-court brief with the appellate court. The media entities argued that the orders violated the U.S. and Texas constitutions and that they did not abide by federal or state standards for closing a courtroom or imposing a prior restraint.

On Dec. 2, a two-justice panel ruled in favor of Evans and left the orders in place. The court found that the trial judge conducted adequate hearings about the trade secrets and the sealing of the listed exhibits and trial transcript. It held that the final order on those issues passed constitutional muster because the trial judge had included a provision for issuance of notice and a final hearing and permitted any party to argue that the order should be changed at any time.

Samsung immediately appealed to the Texas Supreme Court in Austin. But the state’s highest court, without issuing an opinion, affirmed the appellate decision Dec. 3. Samsung then asked the state Supreme Court to reconsider its decision, and Bloomberg news service and The Reporters Committee for Freedom of the Press filed friend-of-the-court briefs supporting Samsung’s position. The Texas Supreme Court refused to reconsider.

The Bloomberg News Service subsequently filed a lawsuit in federal District Court in Dallas. The action requested that the state trial court orders not be enforced based on the alleged deprivation of the media’s First Amendment rights.

Federal District Judge A. Joe Fish held a hearing on the case Jan. 10. Bloomberg argued that Evans’ orders violated the First Amendment by placing unreasonable and unconstitutional restrictions on access to trial proceedings and content-based prior restraints on the media’s freedom to report. Bloomberg also argued that the orders created the possibility that the author of a news article might be subject to sanctions if testimony made in open court and discussed in an article were later placed under seal and declared subject to the confidentiality orders.

At the conclusion of the hearing, Fish refused to enjoin the continued enforcement of Evans’ orders. The week following Fish’s decision, Alcatel and Samsung settled the underlying lawsuit. (In re Dallas Morning News; Samsung v. Alcatel)