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April 16, 2014

Fourth Circuit: Injury to Corporate Reputation Not Enough to Justify Sealing Court Case

‘Company Doe’ Sued to Keep Complaint Out of Federal Database Designed to Warn Consumers of Faulty Products

WASHINGTON, D.C. – Holding that injury to corporate reputation doesn’t justify sealing a court case, an appellate court today in Company Doe v. Public Citizen handed a key victory to consumers. It also solidified the integrity of a federal database designed to warn consumers about faulty products and confirmed the importance of public access to courts, Public Citizen said today.

In the case, a company sued to keep a complaint about one of its products out of a database created by the Consumer Product Safety Commission (CPSC) and persuaded a district court judge to adjudicate the matter in secret, sealing most documents pertaining to the case and permitting the company to use the pseudonym “Company Doe.” Public Citizen, along with Consumer Federation of America and Consumers Union (the publisher of Consumer Reports), objected to the seal. The U.S. Circuit Court of Appeals for the Fourth Circuit ruled today that the record must be unsealed.

“The Fourth Circuit sent a strong message today that corporations that turn to the courts must accept that public access to the proceedings is part of going to court in an open and democratic society,” said Scott Michelman, the Public Citizen attorney handling the case.

The public will learn the name of the company as soon as the case is sent back to the district court, Michelman said.

The court ruled that:

• Injury to corporate reputation is not enough to justify sealing court records under the First Amendment;
• The right to exclude a report from the CPSC database doesn’t include the right to litigate the entire matter in secret;
• Judicial opinions, summary judgment materials and docket sheets are protected by First Amendment right of access to courts;
• Permitting a company to use a pseudonym to challenge the inclusion of a report in the CPSC database was an abuse of discretion in light of the public interest in the database; and
• District courts must act expeditiously on sealing requests.

The underlying case was the first legal challenge to the CPSC product safety database, which was set up in 2011 as required by the Consumer Product Safety Improvement Act of 2008. Allowing public access to the court record allows the public to assess both the functioning of the court and the effect of this case on the CPSC and its database going forward.

“The ruling is a complete victory for consumers and a strong vindication of the First Amendment imperative to conduct litigation in the open,” Michelman added. “This decision will stand as a bulwark against the conduct of secret litigation such as occurred in this case.”

Learn more about the case.


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