Consumer Product Matters A product safety and consumer related regulation and litigation blog

4th Circuit Unmasks Company Doe & Unseals Entire Record in CPSC Database Case

Posted in Consumer Product Safety Commission (CPSC), Consumer Product Safety Improvement Act (CPSIA)

Yesterday, the U.S. Court of Appeals for the Fourth Circuit rather forcefully reversed one of the key rulings of Maryland District Court Judge Alexander Williams, Jr. in the recent litigation involving the CPSC’s Saferproducts.gov public database. The Fourth Circuit ruled in favor of several consumer advocacy organizations and media outlets who appealed Judge Williams’ decision to seal nearly the entire court record from the public and allow the company that brought the lawsuit to litigate the case under the pseudonym “Company Doe.” Judge Henry Floyd, writing for the panel, succinctly summarized the most important aspect of the 64 page opinion, stating:

“[W]e hold that the district court’s sealing order violated the public’s right of access under the First Amendment and that the court abused its discretion in allowing Company Doe to proceed under a pseudonym”

There is a more rhetorically moderate concurring opinion but to the same effect.

Although we would not be surprised if “Company Doe” attempts to appeal the decision, it may well be the Fourth Circuit’s opinion likely will stand. Once the record is unsealed, the public and CPSC stakeholders will for the first time learn the name of the company, the product, the report of harm the agency attempted to include in the database, and other facts of the case that prompted Judge Williams to find that the report did not meet the statutory criteria for inclusion in the database. Importantly, Judge Williams’ underlying ruling that the report of harm should not be included in the database was not appealed by the CPSC and is therefore unaffected by the Fourth Circuit’s decision.

The ruling is a double edged sword for industry stakeholders, who will now gain a clearer understanding of the precedent created by the district court opinion which deemed a report unfit for the database and the CPSC’s decision making process inadequate, but who will also (in the 4th Circuit at least) no longer be able to challenge the CPSC’s inclusion of a report in the database in court without the report itself becoming public (unless there are compellingly stronger facts about the harm of disclosure). Although only one company has mounted such a legal challenge, this is an important development for any company that is considering disputing the inclusion of a report in the database because the decision reframes the choice companies will face if their only remaining option is a legal challenge. An unlikely court challenge is made less likely and an agency wrong may be left with no effective remedy.

Now, an added component of that conversation must be whether to allow what a company believes to be a flawed report to quietly post to the database in hopes it does not attract significant public attention or to challenge it publicly in court, with the attendant publicity such a lawsuit would garner.

For our readers convenience, we’ve lifted some noteworthy quotes from the Fourth Circuit’s opinion and posted them below.

By sealing the entire docket sheet during the pendency of the litigation, as the district court permitted in this case, courts effectively shut out the public and the press from exercising their constitutional and common law right of access to civil proceedings.

A corporation very well may desire that the allegations lodged against it in the course of litigation be kept from public view to protect its corporate image, but the First Amendment right of access does not yield to such an interest.

Adjudicating claims that carry the potential for embarrassing or injurious revelations about a corporation’s image . . . are part of the day-to-day operations of federal courts.

We are unaware . . .of any case in which a court has found a company’s bare allegation of reputational harm to be a compelling interest sufficient to defeat the public’s First Amendment right of access.

[W]e find no credible evidence to support Company Doe’s fear that disclosure of the challenged report of harm and the facts of this case would subject it to reputational or economic injury, particularly in light of the fact that the district court’s entry of judgment in favor of Company Doe vindicated the company and its product.

The relief Company Doe secured by prevailing on its claims was the right to keep the challenged report of harm removed from the online database. That remedy is distinct from the right to litigate its claims in secret and to keep all meaningful facts about the litigation forever concealed from public view. Neither the CPSIA nor the Administrative Procedures Act confers upon district courts carte blanche to conduct secret proceedings, and, more importantly, the Constitution forbids it.

We are not blind to the fact that a corporation’s image or reputation may diminish by being embroiled in litigation against the government over the safety of one of its products. That is the nature of public litigation. When parties “call on the courts, they must accept the openness that goes with subsidized dispute resolution by public (and publicly accountable) officials.”

We have explained use of a pseudonym “merely to avoid the annoyance and criticism that may attend . . . litigation” is impermissible. Because Company Doe has failed to identify any exceptional circumstances that justify the use of a pseudonym in these proceedings, we hold that the district court abused its discretion in allowing Company Doe to litigate pseudonymously.

From Judge Clyde Hamilton’s concurrence:

The able and conscientious district judge in this case faced a difficult task: deciding whether Company Doe’s interest in sealing the bulk of the court record overcame the First Amendment interests of the Consumer Product Safety Commission, its then chairwoman Inez Tenenbaum in her official capacity, and three consumer advocacy groups.

First Amendment jurisprudence requires more than a common sense feeling about what harm may befall Company Doe. It requires concrete proof of a high likelihood of substantial and irreparable economic harm. Because Company Doe failed to present such concrete proof to the district court, we are left only with a common sense feeling of what may occur, which simply is not enough to support the sealing of the record.

 


Gavel image: courtesy of Flickr (Licensed) by steakpinball