Satyam Decision.pdf

7/26/2019 Satyam Decision.pdf

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15374cv

Bernsteinv.BernsteinLitowitzBerger&GrossmannLLP,etal.

1

In the2

United States Court of Appeals3

For the Second Circuit4________5

6

AUGUSTTERM,20157

8

SUBMITTED:OCTOBER23,20159

DECIDED:FEBRUARY24,201610

11

No.150374cv12

13

BRUCEBERNSTEIN,14

Plaintiff,15

16

v.17

18

BERNSTEINLITOWITZBERGER&GROSSMANNLLP,MAXBERGER,19

STEVEN

SINGER,

SALVATORE

GRAZIANO,

EDWARD

GROSSMANN

AND20

GERALDSILK,21

DefendantsAppellants.*22

________23

24

AppealfromtheUnitedStatesDistrictCourt25

fortheSouthernDistrictofNewYork.26

No.14Civ.6867(VEC)ValerieE.Caproni,Judge.27

________28

29

Before: KEARSE,WALKER,andCABRANES,CircuitJudges.30

________31

* TheClerkofCourt isrespectfullydirected toamend thecaption to

conformtotheabove.

Case 15-374, Document 66-1, 02/24/2016, 1711688, Page1 of 27


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2 No.15374cv

AttorneyBruceBernsteinsuedhisformerlawfirm,Bernstein1

Litowitz Berger & Grossmann LLP (BLB&G), and five of its2

partners,allegingthathehadbeenforcedtoresignafterblowingthe3

whistleonwhathe considered tobe the firmsunethical litigation4

conduct. Thefirmarguedthattherelevantfactswereconfidential5

client information that could notbe disclosedby Bernstein in a6

complaintraisingclaimsof, interalia,retaliatorybreachofcontract.7

Bernstein sought and obtained permission from theUnited States8

District Court for the Southern District of New York (Kevin P.9

Castel, Judge) to file a complaint under seal, with the sealing to10

automatically expire fourteen days after service of process on11

defendants,unless extendedby the court. Thirteendays after the12

complaint was filed, the parties settled the suit on confidential13

terms. Thepartiesthensoughtanorderdirectingtheclerkofcourt14

toclosethefilewhileleavingitpermanentlysealed.15

TheUnitedStatesDistrictCourt for theSouthernDistrictof16

NewYork (Valerie E.Caproni,Judge) denied the parties request.17

The district court concluded that the complaint is a judicial18

documentsubjecttoapresumptionofpublicaccessundertheFirst19

Amendmentandthecommonlaw. Thedistrictcourtalsoheldthat20

keeping the complaint secret was not necessary to protect21

confidential client communications. Finally, applying the22

balancing test for thecommonlaw rightofaccess, thecourt found23



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3 No.15374cv

that the weak private interests at stake did not rebut the1

presumption of access, which is supportedby substantial public2

interests. WeagreewiththedistrictcourtandAFFIRM.3

________4

5

GregoryP.Joseph,PamelaJarvis, andCourtney6

A. Solomon, on the brief,JosephHageAaronson7

LLC,NewYork,NY,forDefendantsAppellants.8

________9

10

JOHN

M.

WALKER,

JR.,

Circuit

Judge:11

AttorneyBruceBernsteinsuedhisformerlawfirm,Bernstein12

Litowitz Berger & Grossmann LLP (BLB&G), and five of its13

partners,allegingthathehadbeenforcedtoresignafterblowingthe14

whistleonwhathe considered tobe the firmsunethical litigation15

conduct. Thefirmarguedthattherelevantfactswereconfidential16

client information that could notbe disclosedby Bernstein in a17

complaintraisingclaimsof, interalia,retaliatorybreachofcontract.18

Bernstein sought and obtained permission from theUnited States19

District Court for the Southern District of New York (Kevin P.20

Castel, Judge) to file a complaint under seal, with the sealing to21

automaticallyexpire

fourteen

days

after

service

of

process

on

22

defendants,unless extendedby the court. Thirteendays after the23

complaint was filed, the parties settled the suit on confidential24



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4 No.15374cv

terms. Thepartiesthensoughtanorderdirectingtheclerkofcourt1

toclosethefilewhileleavingitpermanentlysealed.2

TheUnitedStatesDistrictCourt for theSouthernDistrictof3

NewYork (Valerie E.Caproni,Judge) denied the parties request.4

The court concluded that the complaint is a judicial document5

subject to a presumption of public access under the First6

Amendmentandthecommonlaw. Thedistrictcourtalsoheldthat7

keeping the complaint secret was not necessary to protect8

confidential client communications. Finally, applying the9

balancing test for thecommonlaw rightofaccess, thecourt found10

that the weak private interests at stake did not rebut the11

presumption of access, which is supportedby substantial public12

interests. WeagreewiththedistrictcourtandAFFIRM.13

BACKGROUND14

Werecitethefactsallegedinthecomplaintthatarenecessary15

to understand the substantial public interest in the complaints16

disclosure, as the complaint in a case discloses the nature of the17

proceeding. We emphasize, however, that at this point in the18

proceedingthefactsallegedareexactlythatsimplyallegations,the19

truthofwhichhasnotbeenproven.20

BernsteinbecameofcounselwithBLB&Gin2008. Atthefirm,21

he worked on In re Satyam Computer Services, Ltd., Securities22

Litigation, a class action which arose from a massive financial23



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5 No.15374cv

scandalinvolving...SatyamComputerServices,Ltd.(Satyam),one1

of Indias largest information technology and outsourcing2

companies. 609 F.Supp.2d 1375, 1375 (J.P.M.L. 2009). Suits3

brought by various investors against Satyam and others were4

consolidated in the SouthernDistrict ofNewYorkby theJudicial5

PanelonMultidistrictLitigation. Id. InMay2009, theMississippi6

PublicEmployeesRetirementSystem(MPERS)wasappointedas7

oneof four leadplaintiffs in thecase. In reSatyamComput.Servs.,8

Ltd.,Sec.

Litig.,1:09md02027BSJ[Doc.No.8](May12,2009). The9

Office of the Mississippi Attorney General (AGs Office) was10

insidecounselforMPERS. BLB&Gwasoutsidecounsel.11

In September 2010, BLB&G partner Steven Singer informed12

Bernstein that a solo practitioner based in Jackson, Mississippi,13

Vaterria Martin, would act as local counsel and occasionally14

checkonthestatusofthecaseforMPERS,eventhoughBLB&Gwas15

alreadyproviding this informationdirectly to theAGsOffice. In16

December2010,theleadplaintiffsintheSatyamclassactionreached17

anagreementinprincipletosettlewithSatyamfor$125million. On18

February 16, 2011, Satyam and the lead plaintiffs executed a19

stipulationsettingforththetermsoftheagreement.120

1 On March 8, 2011, the lead plaintiffs reached an agreement in

principle to settle with Satyams codefendantsvarious

PricewaterhouseCoopers entities thatwere Satyams auditorsfor $25.5



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6 No.15374cv

On March 1, 2011after the agreement in principle with1

Satyamhadbeenreachedand thestipulationhadbeenexecuted2

another BLB&G partner, Max Berger, assigned two unnecessary3

legal research projects to Martin. Bernstein protested the4

assignment,but his concernswere dismissed,with Singer saying,5

Do you everwant us toworkwithMississippi again? Martin6

ultimately produced an eighteenpagememorandum onApril 26,7

2011, severalweeksafter the casewas settled inprinciple. Singer8

andBergeragreedwithBernsteinthatthememorandumaddressed9

thewrongpleading,containednomeaningfulanalysis,andwas10

ridiculous. Martinreportedatotalof207hoursworkonthecase,11

primarilyspentproducingtheuselessmemorandum.12

After the settlement became final, Bernstein learned from13

BLB&Gs comptroller that the firmhadpaidMartin$112,500 from14

theproceedsoftheSatyamclasssettlement. BLB&Gdidnotdisclose15

the payment to the court in its August 1, 2011 fee petition.216

million. The district court entered amended preliminary settlement

approval orders on March 21, 2011 and May 12, 2011. In re Satyam

Comput.Servs.,Ltd.,Sec.Litig.,1:09md02027BSJ [Docs.No.259&319].

ThefinaljudgmentandorderastoSatyamissuedonSeptember13,2011.

Id.[Doc.No.363].2 Formerly,the localcivilrulesoftheSouthernDistrictofNewYork

requiredthatallfeeapplicants inderivativeandclassactionsdiscloseto

the court any fee sharing agreements with anyone. By a rule

amendmenteffectiveJuly11,2011threeweeksbeforeBLB&Gsubmitted

its fee petitionthe automaticdisclosure provision was repealed as to



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7 No.15374cv

Concerned with the ethical and legal implications of the1

arrangement, Bernstein inquired further. He learned thatMartin2

hadbeenadmittedtothebaronlyfiveyearsbeforeSatyamwasfiled,3

andwasmarried toDeshunT.Martin,a specialassistantattorney4

generalintheAGsOffice.5

Bernsteinallegedlyraisedhisethicalconcernsagaininseveral6

contentiousmeetingswithpartners. ThefirmsleadershipBerger,7

SalvatoreGraziano,andEdwardGrossmanndismissedBernsteins8

misgivings. GrazianoandBergerinformedBernsteinthattherewas9

localpressureontheMississippiAGtouselocalfirms,toldhim10

you need to drop this, andmade a veiled threat to blackball11

Bernsteinifhebecameawhistleblower.12

InDecember2011,BernsteinreportedhisconcernstotheU.S.13

Attorneys Office for the Southern District of New York. Soon14

afterward,Bernsteinbecame concernedaboutBLB&Gs conduct in15

anotherclassaction,inwhichthefirmallocatedworktoMississippi16

firmsthatlackedrelevantexperience.17

classactions. SeeS.D.N.Y.LocalCivilRule23.1(repealedeffectiveJuly11,

2011);S.D.N.Y.LocalCivilRule23.1.1. AccordingtotheJointCommittee

on Local Rules note, the committee recommended that the automatic

disclosure rule as applied to class actions be deleted because it is

redundant [with] ... Fed.R.Civ.P.23(h). FederalRule23(h), inturn,

doesnotmandateautomaticdisclosureofallfeesharingarrangementsin

classactions.



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8 No.15374cv

Bernsteinclaimsthattheissuetookitstollonhisrelationship1

with the firms leadership. InOctober2012,afterrealizingthathis2

terminationwas inevitable, he resigned from the firm. Bernstein3

alleges that after his departure, BLB&G interfered with his4

relationshipwitha leadplaintiff inone case,andBLB&Gpartners5

made various threats toward himbefore attempting to buy [his]6

silencebyofferinghim compensation froma future settlement in7

an unrelated case on the condition that he keep the Mississippi8

counselarrangementsecret. Bernsteindeclined.9

At two mediation sessions heldbefore Bernstein filed suit,10

BLB&G expressed itsbelief thatBernsteins claimswerebased on11

facts learned in the course of representation of a client and thus12

couldnotbedisclosedunder theNewYorkRules ofProfessional13

Conduct. Bernstein, by contrast, maintained that the facts14

underlyinghisclaimswereneitherprivilegednorconfidentialand15

thathewasfreetodisclosethemincourtfilings.16

Notwithstanding Bernsteins position that he was free to17

disclosethe factsat issue,Bernstein filedamotionwith thedistrict18

courtpriortofilingthecomplaintrequestingoutofanabundance19

ofcautiontheentryofanordersealingallmaterialsfiledinthis20

caseuntiltheCourtresolvestheseissuesofconfidentiality.21

JudgeKevinCastel, sitting inPart I,granted themotion on22

July24,2014,before thesuitwas filed. Noting thatit isdoubtful23



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9 No.15374cv

thatsealingisappropriate,thedistrictcourtneverthelessoutofan1

abundance of caution ordered that [t]he action may be filed2

under sealand thesealingshall expirewithin14daysofserviceof3

process on defendants unless extendedby order of thejudge to4

whomthecaseisassigned.5

OnAugust22,2014,Bernstein filedthecomplaintunderseal6

againstBLB&GandfiveindividualBLB&Gpartners:Berger,Singer,7

Graziano,Grossmann, andGerald Silk. He alleged, in substance,8

thatdefendants(1)engagedinakickbackschemeinviolationofthe9

Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C.10

1962(c),1964(c),and(2)breachedtheircontractwithBernsteinin11

retaliationforreportinganethicalbreach.12

After filing the sealed complaint, theparties returned to the13

negotiating table. AsJudgeCaproni, towhom the casehadbeen14

assigned,wrote:Armednowwiththetickingtimebombprovided15

by the Courts order, Bernstein was able to accomplish what he16

could not without the assistance of a filing in this Court: he17

negotiated a mutually acceptable settlement. The settlement18

agreement includes a provision that voids the settlement if [the]19

actionisunsealedorotherwisebecomespublic.20

On September 4, 2014one day short of the automatic21

unsealingprovidedforbythecourtsJuly24orderBernsteinfiled22

anoticeofdismissalpursuanttothesettlement. Thefollowingday,23



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10 No.15374cv

thepartiesjointlymovedforanorderdirectingtheclerkofcourtto1

close the file without ordering the file unsealed. The parties2

apparentlybelievedthatobtainingastipulateddismissalbeforethe3

expirationof the sealingorderwouldensure that the [c]omplaint4

wouldneverseethelightofday.5

OnJanuary12,2015,followingahearingandmultiplerounds6

ofbriefing, the district court issued its opinion and order. After7

determining that ithadjurisdiction, thedistrictcourtheld that the8

complaintisajudicialdocumentsubjecttoapresumptionofpublic9

accessunderboththeFirstAmendmentandthecommonlaw. Next,10

the district court held that the complaint does not contain11

confidential client communications or information and therefore12

publicaccesstothecomplaintwouldnotplausiblyimplicatevalues13

higher thanFirstAmendmentvalues. Finally, thedistrict court14

held thateven if theFirstAmendmentpresumptiondidnotapply,15

the commonlaw presumption of access to judicial documents16

wouldrequirethecomplainttobepublicbecausetheconsiderable17

public interest indisclosureoutweighstheweakprivate interests18

favoringsecrecy. accordingly, thedistrictcourtdenied theparties19

requesttocontinuethesealingorderanddirectedtheclerkofcourt20

tounsealthecasethirtydaysfromtheissuanceofitsorder,withthe21

thirtydayperiodtobetolledduringthependencyofanyappeal.22



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11 No.15374cv

Defendants timelyappealed. Bernsteinhasnot filedabrief.1

Although he continues to contest defendants claim that the2

complaint contains confidential client information, he supports3

BLB&Gsposition that the case should remain sealed so as not to4

riskunwindingthesettlement.5

DISCUSSION6

Thesoleissueiswhetherthedistrictcourtcorrectlydeniedthe7

partiesrequesttocontinuethesealingorder. Inreviewingadistrict8

courts order to seal or unseal, we examine the courts factual9

findings for clear error, its legal determinations de novo, and its10

ultimatedecisiontosealorunsealforabuseofdiscretion. SeeUnited11

Statesv.Doe,63F.3d121,125(2dCir.1995);UnitedStatesv.Amodeo,12

44F.3d141,146(2dCir.1995)(AmodeoI).13

I. Pleadingsasjudicialrecords.14

Wefirstconsiderwhetheracomplaint isajudicialdocument15

subject to a presumption of access and easily conclude that a16

complaint issuchadocument. Ajudicialdocumentorjudicial17

record is a filed item that is relevant to the performance of the18

judicial function and useful in the judicial process. Lugosch v.19

PyramidCo.

of

Onondaga, 435F.3d 110, 119 (2dCir. 2006) (internal20

quotation marks omitted). Such documents are presumptively21

publicsothatthefederalcourtshaveameasureofaccountability22

andsothatthepublicmayhaveconfidenceintheadministrationof23



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12 No.15374cv

justice. UnitedStatesv.Amodeo,71F.3d1044,1048 (2dCir.1995)1

(AmodeoII). Indeterminingwhetheradocumentisajudicialrecord,2

weevaluatetherelevanceofthedocumentsspecificcontentstothe3

nature of theproceeding and thedegree towhich access to the4

[document]wouldmateriallyassistthepublicinunderstandingthe5

issues before the ... court, and in evaluating the fairness and6

integrityofthecourtsproceedings. NewsdayLLCv.Cty.ofNassau,7

730F.3d156,16667(2dCir.2013).38

Pleadingsplainlymeet theNewsday test for reasons that are9

readily apparent. A complaint, which initiates judicial10

proceedings,isthecornerstoneofeverycase,theveryarchitectureof11

the lawsuit,andaccesstothecomplaintisalmostalwaysnecessary12

ifthepublicistounderstandacourtsdecision. Fed.TradeCommn13

v.AbbVieProds.LLC,713F.3d54,62(11thCir.2013). Moreover, in14

commencinganactionandthusinvokingthecourtsjurisdiction,the15

parties substantive legal rights and duties maybe affected. For16

example, a large number of lawsuits ... are disposed of at the17

motiontodismiss stage, where a court determines solely on the18

3 Whilethemerefilingofapaperordocumentwiththecourtis

insufficienttorenderthatpaperajudicialdocumentsubjecttotherightof

publicaccess,Lugosch,435F.3dat119(internalquotationmarksomitted),

adocumentisjudicialnotonlyifthejudgeactuallyrelieduponit,butalso

ifthejudgeshouldhaveconsideredorreliedupon[it],butdidnot. Id.at

123 (internal quotation marks omitted). Such documents are just as

deserving of disclosure as those that actually entered into thejudges

decision. Id.(internalquotationmarksomitted).



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13 No.15374cv

basis of the complaint whether the plaintiff has made sufficient1

factualallegations to statea claim. Id. The filingofa complaint2

triggers other legal consequences aswell. E.g.,Kronisch v.United3

States, 150 F.3d 112, 126 (2d Cir. 1998) (obligation to preserve4

evidence);Mattel,Inc.v.LouisMarx&Co.,353F.2d421,424(2dCir.5

1965) (when duplicative actions are commenced, the firstfiled6

complaint normally determines the district of adjudication). For7

these reasons, the modern trend in federal cases is to classify8

pleadings in civil litigation (other than discovery motions and9

accompanyingexhibits)asjudicialrecords. IDTCorp.v.eBay,70910

F.3d 1220, 1223 (8th Cir. 2013); accord AbbVie, 713 F.3d at 626311

(collectingcases);UnitedStatesv.Martin,746F.2d964,968 (3dCir.12

1984).13

Thefactthatasuitisultimatelysettledwithoutajudgmenton14

themeritsdoesnotimpairthejudicialrecordstatusofpleadings.15

It is true that settlement of a case precludes the judicial16

determinationof thepleadingsveracityand legalsufficiency. But17

attorneysandothers submittingpleadingsareunderanobligation18

toensure,whensubmittingpleadings,thatthefactualcontentions19

[made]haveevidentiarysupportor,ifspecificallysoidentified,will20

likelyhave evidentiary support after a reasonable opportunity for21

further investigation or discovery. Fed. R. Civ. P. 11(b)(3).22

Inanyevent,thefactoffilingacomplaint,whateveritsveracity,isa23



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14 No.15374cv

significant matter of record. Even in the settlement context, the1

inspection of pleadings allows the public [to] discern the2

prevalence of certain types of cases, the nature of the parties to3

particularkindsofactions,informationaboutthesettlementratesin4

differentareasoflaw,andthetypesofmaterialsthatarelikelytobe5

sealed. HartfordCourantCo.v.Pellegrino,380F.3d83,96 (2dCir.6

2004). Thus,pleadingsareconsideredjudicialrecordsevenwhen7

thecaseispendingbeforejudgmentorresolvedbysettlement. IDT8

Corp.,709F.3dat1223(citationsomitted);accordStonev.

Univ.

of

Md.

9

Med.Sys.Corp., 855F.2d 178, 180n.* (4thCir. 1988);LaurieDor,10

SecrecybyConsent:TheUseandLimitsofConfidentialityinthePursuit11

ofSettlement,74NOTREDAMEL.REV.283,378(1999).12

We thereforehold thatpleadingseven insettledcasesare13

judicialrecordssubjecttoapresumptionofpublicaccess.14

II. Presumptiverightofaccesstothecomplaint.15

A[f]indingthatadocumentisajudicialdocumenttriggers16

a presumption of public access, and requires a court to make17

specific,rigorousfindingsbeforesealingthedocumentorotherwise18

denying public access. Newsday, 730 F.3d at 167 n.15. The19

presumption of access to judicial records is secured by two20

independent sources: the FirstAmendment and the common law.21

Lugosch, 435 F.3d at 121. The analysis with respect to each is22

somewhatdifferent.23



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15 No.15374cv

A.

TheFirstAmendmentpresumptiverightofaccess.1

Defendants argue that the First Amendment presumption2

doesnotapplyhere. Wedisagree.3

We have articulated two different approaches for4

determiningwhether thepublicand thepressshouldreceiveFirst5

Amendment protection in their attempts to access certainjudicial6

documents. Id.at120(internalquotationmarksomitted). Thefirst7

approach considers experience and logic: that is, whether the8

documents have historicallybeen open to the press and general9

publicandwhetherpublicaccessplaysasignificantpositiverolein10

the functioningof theparticularprocess inquestion. Id. (internal11

quotation marks omitted). The second approach considers the12

extent towhich thejudicial documents are derived from or are a13

necessary corollary of the capacity to attend the relevant14

proceedings. Id.(alterationsandinternalquotationmarksomitted).15

Acomplaintespecially inacase that isultimatelysettled16

is best evaluated under the experience and logic approach,17

because the alternative approach is relevant only after court18

proceedingshave commenced. Experienceand logicboth support19

accesshere. Complaintshavehistoricallybeenpublicly accessible20

bydefault,evenwhen theycontainarguablysensitive information.21

Cf.SealedPlaintiff v.SealedDefendant, 537F.3d 185, 18990 (2dCir.22

2008). Defendants acknowledge that since the adoption of the23



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16 No.15374cv

FederalRulesofCivilProcedurein1938,federallawsuitshavebeen1

commencedby the filingof the complaint. Fed.R.Civ.P.3. But2

they argue that since many federal courts did not require3

complaints tobe filed unless and untiljudicial intervention was4

soughtbefore1938,thereisnostronghistoricaltraditionofpublic5

accesstocomplaints. Thisargumentisunpersuasive. Itignoresthe6

historyofthelasteightdecadesundertheFederalRules. Moreover,7

the fact thatpre1938 lawmayhaveallowedactions to commence8

without the filing of a complaint says nothing aboutwhether the9

publicat that timehadaccess todocuments thatwerepermittedor10

requiredtobefiled.11

Logical considerations also support apresumption ofpublic12

access. Publicaccesstocomplaintsallowsthepublictounderstand13

the activity of the federal courts, enhances the court systems14

accountabilityand legitimacy,and informs thepublicofmattersof15

public concern. Conversely, a sealed complaint leaves the public16

unawarethataclaimhasbeenleveledandthatstatepowerhasbeen17

invokedand public resources spentin an effort to resolve the18

dispute. These considerations indicate that public access to the19

complaint and other pleadings has a significant positive role,20

Lugosch,435F.3dat120 (internalquotationmarksomitted), in the21

functioningofthejudicialprocess.22

23



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17 No.15374cv

B.

Thecommonlawpresumptionofaccess.1

The district court concluded that in addition to the First2

Amendmentpresumptionofaccess, the commonlawpresumption3

of access attached. Defendants contend that the commonlaw4

presumptionlacksweighthereand thatunsealing thecomplaint5

constitutedanabuseofdiscretion.6

Thecourtshavelongrecognizedthegeneralrighttoinspect7

andcopypublicrecordsanddocuments, includingjudicialrecords8

anddocuments. Nixonv.

Warner

Commcns,

Inc.,435U.S.589,5979

(1978) (footnote omitted). This right is said to predate the10

Constitution.AmodeoI,44F.3dat145.11

The right to inspect and copy judicial records is not12

absolute, however, and a court may exercise its supervisory13

powerover itsownrecordsand files todenyaccesswherecourt14

filesmighthavebecomeavehicle for improperpurposes. Nixon,15

435U.S.at598(internalquotationmarksomitted). Oncethecourt16

hasdeterminedthatthedocumentsarejudicialdocumentsandthat17

therefore a common law presumption of access attaches, it must18

determinetheweightofthatpresumption. Lugosch,435F.3dat119.19

Theweightofthepresumptionisafunctionof(1)theroleof20

thematerialatissueintheexerciseofArticleIIIjudicialpowerand21

(2)theresultantvalueofsuchinformationtothosemonitoringthe22

federal courts,balanced against competing considerations such23



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18 No.15374cv

astheprivacyinterestsofthoseresistingdisclosure. Lugosch,4351

F.3dat11920(internalquotationmarksomitted);seealsoAmodeoII,2

71F.3dat104951. Wetakeeachfactorinturn.3

Where a documents role in the performance ofArticle III4

duties is negligible ..., theweight of thepresumption is low.5

AmodeoII,71F.3dat1050. Conversely,wheredocumentsdirectly6

affectanadjudication,id.at1049,orareusedtodeterminelitigants7

substantive legal rights, thepresumption of access is at its zenith,8

Lugosch, 435 F.3d at 121, and thus can be overcome only by9

extraordinary circumstances,Amodeo II,71F.3dat1048 (internal10

quotationmarksomitted). The locusof the inquiry is, in essence,11

whether the document is presented to the court to invoke its12

powersoraffectitsdecisions. Id.at1050.13

Applying this standard, we have determined that a report14

submitted to a court in connection with a summaryjudgment15

motion isentitled toa strongpresumptionofaccess. Joyv.North,16

692F.2d880,894(2dCir.1982). Sincesuchadocumentisthebasis17

for theadjudication,only themostcompelling reasonscanjustify18

sealing. Id. Bycontrast,documentssuchasthosepassedbetween19

theparties indiscoveryoftenplaynorole in theperformanceof20



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19 No.15374cv

Article III functions and so the presumption of access to these1

recordsislow.AmodeoII,71F.3dat1050.42

Under the twofactorLugoschapproach,weeasilydetermine3

that theweightof thepresumptionhere isstrong. Pleadings,such4

as thecomplainthere,arehighlyrelevant to theexerciseofArticle5

IIIjudicialpower. Ofalltherecordsthatmaycomebeforeajudge,a6

complaintisamongthemostlikelytoaffectjudicialproceedings. It7

is the complaint that invokes the powers of the court, states the8

causesofaction,andpraysforrelief. Wehavealreadydiscussedthe9

secondbasissupportingtheweightofthepresumption:theutilityof10

thecomplainttothosewhomonitortheworkofthefederalcourts.11

Wenowmove to the cruxof theweightofthepresumption12

analysis: balancing the value of public disclosure and13

countervailing factors such as (i)the danger of impairing law14

enforcement orjudicial efficiency and (ii)the privacy interests of15

thoseresistingdisclosure. Id.;seealsoAmodeoI,44F.3dat14647.16

In striking thisbalance,we agreewith the district courts careful17

opinion that the value of public disclosure is substantial and the18

privacyinterestsatstakeareminimal.19

4 Cf.UnitedStatesv.GlensFallsNewspapers, Inc.,160F.3d853,857

(2dCir.1998)(settlementnegotiationsanddraftagreementsdonotcarry

a presumption of public accessbecause [t]hejudge cannot act upon

thesediscussionsordocumentsuntiltheyarefinal,andthejudgemaynot

beprivytoallofthem).



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20 No.15374cv

As the district court noted, the complaint alleges that1

defendants,ascounselforastateemployeespensionfundthatwas2

aleadplaintiffinamajorsecuritiesclassaction,regularlyengagein3

akickbackschemewiththeMississippiAttorneyGeneralsOffice,a4

public entity whose constituents might otherwisebe in the dark5

aboutthearrangement. Whethertrueornot,thisallegationwould6

naturallybeoflegitimateinteresttothepublic(especiallythosewho7

contribute to and receive payments from MPERS) and to federal8

courtsinthefuture(e.g.,thoseconsideringwhethertonameBLB&G9

as lead class counsel or find MPERS to be an adequate class10

representativeinfutureclassactions). Moreover,thecomplaintalso11

didnot come within [the] courtspurview solely to [e]nsure [its]12

irrelevance. Lugosch, 435 F.3d at 119 (internal quotation marks13

omitted). Although the speedy settlementof the claimmeant that14

thecourtdidnotadjudicatethemeritsofthecase,thedistrictcourts15

routinely engage in adjudicatory duties even in connection with16

complaintsthataredismissedorsettled.17

In the circumstances here presented, the interests favoring18

secrecy,meanwhile,areweak. Thisisnotacaseinwhichdisclosure19

would reveal details of an ongoing investigation, pose a risk to20

witnesses, endanger national security, or reveal trade secrets. See21

AmodeoI,44F.3dat147. Moreover,aswewillshow,thecasedoes22

not implicate the duty to protect either privileged attorneyclient23



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21 No.15374cv

materialorconfidentialclientinformation. Oncetheserationalesfall1

away,onlyinsubstantialargumentsremain.2

Onappeal,defendantsspendmuchoftheirbriefarguingthat3

thecomplaintisunreliableandcontestingthetruthoftheallegations4

inthecomplaint. Theyarguethatunsealingthecomplaintassumes5

the truthof theallegationswithin it. Butunsealingdoesnosuch6

thing. Asthedistrictcourtnoted:7

Complaints canand frequently do8

contain allegations that range from9

exaggerated towholly fabricated. That is10

the nature of judicial proceedingsnot11

everything alleged by one party can or12

shouldbetakenasground truth. Still, the13

pleadings can and do properly frame the14

proceeding and provide outerboundaries15

ontheclaimsadvanced...andtheredress16

sought.17

18

(Internal citation omitted). Following defendants logic to its19

conclusion,moreover,wouldcreateanuntenableresultthesealing20

ofall complaints inactions inwhich theplaintiffdoesnotprevail,21

andallindictmentsinacriminalprosecutioninwhichthedefendant22

isacquitted.23

In sum, the district court engaged in a thoughtful and24

extendedanalysisof the competing interestsat stake. Thedistrict25

court concluded that (1)theweight of the presumption of public26



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22 No.15374cv

accessaccordedtothecomplaintwashighbecause(a)thedocument1

washighlyrelevanttotheexerciseofArticleIIIjudicialpowerand2

(b)thepublicinterestindisclosurewassubstantial,whiletheprivate3

interests in secrecy areweak; and (2)BLB&G did not come forth4

withasufficientrationaletorebutthisstrongpresumptionofaccess.5

These conclusionswereamply supported,and there isnobasis to6

disturbthem.7

III. Sealingofthecomplaintisnotjustifiedinorderto8

protectconfidential

client

information.9

Onappeal,BLB&Grenewsitsargumentthataneedtoprotect10

confidential client information justifies or requires continued11

sealingofthecomplaint. Werejectthisclaim.12

After Bernstein left BLB&G, George W. Nevillea special13

assistantattorneygeneral inthecivil litigationdivisionoftheAGs14

OfficeexchangedseveralletterswithBernsteinsattorney. Inthese15

letters,NevilleorderedBernsteintokeeptheexistenceofthealleged16

kickback scheme private, writing: As counsel for the State of17

Mississippi ... and onbehalf of the State of Mississippi and its18

agency MPERS, I am directing [Bernstein] not to disclose any19

confidentialinformationhelearnedascounseltoMississippiandits20

agencyMPERS.21

Relying in part on these letters, defendants argued to the22

district court that all or virtually all of the facts alleged in the23



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23 No.15374cv

complaint are confidential under the New York Rules of1

ProfessionalConductandthuspermanentsealingisrequired.5 The2

districtcourtrejectedthisclaim. Onappeal,defendantsrenewthis3

confidentialityargument. Wereachthesameconclusionasdidthe4

districtcourt.5

Asa thresholdmatter,wenote thatdefendants rely in large6

part on the conclusions of their legalethics expert made in a7

declarationfiledinthedistrictcourt. Wedonotconsiderarguments8

based on this declaration because of our longstanding rule that9

experttestimonyon issuesofdomestic law isnottobeconsidered.10

SeeAmnestyIntlUSAv.Clapper,638F.3d118,128n.12(2dCir.2011)11

(holdingthatthecourtwasnotcompelledtoacceptalegalethics12

experts declaration regarding whether an ethical duty hadbeen13

triggered,becausethequestionwasforthecourttodecide),revdon14

othergrounds,133S.Ct.1138(2013);seealsoHyghv.Jacobs,961F.2d15

5 Rule 1.6 provides: A lawyer shall not knowingly reveal

confidentialinformation,...orusesuchinformationtothedisadvantage

ofaclientorfortheadvantageofthelawyerorathirdpersonunlessan

exceptionapplies.N.Y.R.ProflConduct1.6(a)(3). Onesuchexceptionis

whenpermittedorrequiredundertheseRulesor tocomplywithother

law or court order. Id. at 1.6(b)(6). Confidential information is

informationgainedduringor relating to the representationof a client,

whatever itssource, that is (a)protectedby theattorneyclientprivilege,

(b)likelytobeembarrassingordetrimentaltotheclientifdisclosed,or(c)

informationthattheclienthasrequestedbekeptconfidential. Id.at1.6.

Rule 1.9(c)provides that a lawyer shallnot use or reveal a former

clientsconfidentialinformation,exceptastheRulespermitorrequire.



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24 No.15374cv

359,363(2dCir.1992);Marx&Co.v.TheDinersClub,Inc.,550F.2d1

505,50911(2dCir.1977).62

We now turn to the merits. To overcome the First3

Amendment right of access, the proponent of sealing must4

demonstrat[e] that closure is essential to preserve higher values5

andisnarrowlytailoredtoservethatinterest. InreN.Y.TimesCo.,6

828F.2d110,116(2dCir.1987) (internalquotationmarksomitted).7

Broad and general findings and conclusory assertion[s] are8

insufficient tojustifydeprivationofpublicaccess to the record, id.9

(internal quotation marks omitted); specific, ontherecord10

findingsarerequired. UnitedStatesv.ErieCnty.,763F.3d235,24311

(2dCir.2014)(internalquotationmarksomitted).12

Here,defendantsargue thatprotectionofconfidentialclient13

communicationisahighervalue. Thisassertionraisesthequestion14

ofwhetheranyconfidentialclientinformationisactuallyimplicated15

inthiscase. Puttingthatasideforamoment,however,theassertion16

itselfisquestionable. Wehaveimpliedbutneverexpresslyheld17

that protection of the attorneyclient privilege is a higher value18

under the First Amendment that may rebut the presumption of19

access. E.g., id.; Lugosch, 435 F.3d at 125. Defendants go further,20

6 To the extent that expert interpretations of the ethical rules are

useful,theyarebetterpresentedinanamicusbrieforthepartiescitations

totreatises,ratherthanadeclarationoraffidavit.



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25 No.15374cv

however, arguing that the protection of confidential client1

information isahighervaluesupersedingtheFirstAmendment2

rightofaccessandshouldhaveequalstatustotheattorneyclient3

privilege.4

The attorneyclientprivilege and theduty topreserve client5

confidencesand secretsarenot coextensive,however. Doev.A6

Corp.,330F.Supp.1352,1355(S.D.N.Y.1971),adoptedsubnom.Hallv.7

A. Corp., 453 F.2d 1375, 1376 (2d Cir. 1972) (per curiam). The8

broaderethicaldutytopreserveaclientsconfidences ...[,]unlike9

the evidentiary privilege, exists without regard to the nature or10

sourceof informationor the fact thatothersshare theknowledge.11

Brennans, Inc. v.BrennansRestaurants, Inc., 590 F.2d 168, 172 (5th12

Cir.1979)(internalquotationmarksomitted). Wesharethedistrict13

courtsskepticismofBLB&Gsclaimthatthisbroaderethicalduty14

shouldbetreatedidenticallyto...thenarrowerandmorevenerable15

attorneyclientprivilege.16

Inany event, even ifwewere toacceptdefendantshigher17

valueargument,thecomplaintheredoesnotcontainconfidential18

clientinformation.19

First, the complaint does not include information that is20

likelytobeembarrassingordetrimentaltotheclientifdisclosed.21

N.Y. R. Profl Conduct 1.6. Of course, the information may be22

seriouslyembarrassingtocounsel(BLB&GandtheAGsOffice),but23



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26 No.15374cv

not to the client,MPERS. Indeed, it is counterintuitive to suggest1

thatMPERSwassomehowcomplicitinanallegedkickbackscheme2

thatcaused it topay legal fees forunnecessarywork. Ifanything,3

MPERSwouldappeartobenefitfromdisclosure;theworstthatcan4

be saidabout it is that itwasunlucky in its choiceof counsel. In5

sum, BLB&Gs claim about possible harm to MPERS is a mere6

nakedconclusorystatementthatpublication...willinjureit. Joy,7

692F.2dat894. Suchastatementfallswoefullyshortofthekindof8

showingwhichraisesevenanarguableissueastowhetheritmaybe9

keptunderseal. Id.10

Moreover, the fact of representation is generally neither11

privilegednorconfidential. SeeInreGrandJurySubpoenas,803F.2d12

493, 496 (9th Cir. 1986). The complaints allegation that BLB&G13

routinely assigns work to unqualified local counsel at the AGs14

Offices direction relates to a business practice, not to a client15

confidence.16

Finally,as thedistrictcourtnoted,[t]herequest tokeep the17

allegedkickback scheme confidentialwasmadeby thememberof18

the Attorney Generals Office whose conduct is discussed in the19

Complaint. Insofarasthisrequest(andperhapseventheunderlying20

scheme)wasadverse to the interestsofMPERS, for thepurposeof21

applying the ethical rule, the Court does not presume that the22



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27 No.15374cv

attorneys request for confidentiality signifies the clients desire1

(citationomitted).2

CONCLUSION3

Forthereasonsstatedabove,weAFFIRMthejudgmentofthe4

districtcourt.5


Documents

Satyam Decision.pdf