Open government lawyer: Delaware court's disclosure of arbitration judgments does not satisfy access right

A Delaware court that oversees arbitration between private companies has begun making its judgments public, after a court order in a lawsuit that challenges the constitutionality of the court’s secrecy.

In a letter to U.S. District Judge Mary A. McLaughlin, the attorney for the state of Delaware said yesterday that a Dec. 30 arbitration judgment entered by the Court of Chancery has been publicly available since then through the regular search function of the LexisNexis File & Serve system. In addition, the court has established a public registry that collects all Chancery Court arbitration judgments in one database that also can be searched through the LexisNexis system, which allows paid subscribers to electronically file and view court documents online.

The LexisNexis system also can be searched “free of charge by anyone via monitors located at the offices” of the Chancery’s Court’s register in the courthouse in Wilmington, Del., according to the letter from the attorney, Andre G. Bouchard.

Yet, although the court has heard about six arbitrations, this judgment is currently the only one publicly available through the LexisNexis search system, Bouchard told the judge. That is perhaps because court rules require that the documents remain confidential unless the case is appealed to the state Supreme Court or the parties voluntarily agree to public disclosure.

The letter was submitted two days after McLaughlin ordered the defendants to provide more information about a statement Bouchard made last month during oral arguments in Delaware Coalition for Open Government, Inc. v. Strine et al. That lawsuit challenges the constitutionality of Chancery Court rules that allow blanket confidentiality in private arbitration proceedings and records, including court-supervised settlement agreements.

Whether the terms of settlement agreements reached by private parties are available to the public depends on a number of factors, including, in large part, whether the agreement was submitted to a court. Although parties to arbitration authorize a neutral third party (or panel) to decide the outcome of their dispute, they often submit the ensuing agreement to a court for approval, enforcement or, in some cases, interpretation of its terms. In these cases, many courts consider such settlement agreements to be judicial records and thus presumptively open for public review. Conversely, settlement agreements that are not submitted to a court are generally not judicial records subject to a right of public access.

What is unusual about the Delaware Chancery Court’s arbitration program — a two-year-old procedure designed to generate revenue for the state by providing its thousands of registered corporations with private dispute resolution before what the court calls the nation’s preeminent forum for private disputes — is that it is presided over entirely by a publicly funded court. That is, state judges, rather than private parties or panels, decide the outcomes of disputes between private parties and, in many cases, assist them in reaching and approving settlement agreements.

But doing so in private violates the common-law and First Amendment-based right of public access to judicial proceedings and records, according to the Delaware Coalition for Open Government’s lawsuit against the court, its judges and the state of Delaware. The Reporters Committee for Freedom of the Press filed a friend-of-the-court brief in support of the coalition.

And the Chancery Court’s public disclosure of arbitration judgments does not nearly satisfy this access right, the coalition’s attorney, David L. Finger, said in an interview.

“The point of the right of access is not simply to know what the judge decided, but to evaluate how the decision was made,” he said. In the judgment Bouchard cited in his letter to McLaughlin, "nobody got to see the presentation of evidence. This [procedure] does not comport with the intention of the right of access."

The judgment Bouchard provided the court is a two-page document that states only that the respondents in the arbitration, Mobile Armor, Inc. et al., were “awarded complete and final relief by the Arbitrator,” and because the petitioners, Chrysalis Ventures III, L.P. and others, did not oppose the entry of the award, “final judgment is entered for Respondents and against Petitioners on all claims asserted in the Arbitration and the prior filed Civil Action.”

There is no information about the nature of the dispute between the parties or how and by whom it was resolved. The judgment is signed by Chancery Court Vice Chancellor J. Travis Laster.

McLaughlin is expected to rule on the Delaware Coalition for Open Government’s lawsuit in the next couple of months.

Related Reporters Committee resources:

· Secret Justice: Alternative Dispute Resolution: What is ADR?

· NM&L: Asked & Answered

· The First Amendment Handbook: Civil courts — Cameras and recording equipment

· News: Va. court refuses to seal employment settlement agreement