Satyam Decision PDF

Case 15-374, Document 66-1, 02/24/2016, 1711688, Page1 of 27
15374cv
Bernsteinv.BernsteinLitowitzBerger&GrossmannLLP,etal.
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In the
United States Court of Appeals
For the Second Circuit
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________
AUGUSTTERM,2015
SUBMITTED:OCTOBER23,2015
DECIDED:FEBRUARY24,2016
No.150374cv
BRUCEBERNSTEIN,
Plaintiff,
v.
BERNSTEINLITOWITZBERGER&GROSSMANNLLP,MAXBERGER,
STEVENSINGER,SALVATOREGRAZIANO,EDWARDGROSSMANNAND
GERALDSILK,
DefendantsAppellants.*
________
AppealfromtheUnitedStatesDistrictCourt
fortheSouthernDistrictofNewYork.
No.14Civ.6867(VEC)ValerieE.Caproni,Judge.
________
Before:KEARSE,WALKER,andCABRANES,CircuitJudges.
________
The Clerk of Court is respectfully directed to amend the caption to
conformtotheabove.
*
No.15374cv
AttorneyBruceBernsteinsuedhisformerlawfirm,Bernstein
Litowitz Berger & Grossmann LLP (BLB&G), and five of its
partners,allegingthathehadbeenforcedtoresignafterblowingthe
whistle on what he considered to be the firms unethical litigation
conduct.Thefirmarguedthattherelevantfactswereconfidential
client information that could not be disclosed by Bernstein in a
complaintraisingclaimsof,interalia,retaliatorybreachofcontract.
Bernstein sought and obtained permission from the United States
District Court for the Southern District of New York (Kevin P.
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Castel, Judge) to file a complaint under seal, with the sealing to
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automatically expire fourteen days after service of process on
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defendants, unless extended by the court. Thirteen days after the
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complaint was filed, the parties settled the suit on confidential
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terms.Thepartiesthensoughtanorderdirectingtheclerkofcourt
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toclosethefilewhileleavingitpermanentlysealed.
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The United States District Court for the Southern District of
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New York (Valerie E. Caproni, Judge) denied the parties request.
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The district court concluded that the complaint is a judicial
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documentsubjecttoapresumptionofpublicaccessundertheFirst
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Amendmentandthecommonlaw.Thedistrictcourtalsoheldthat
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keeping the complaint secret was not necessary to protect
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confidential client communications. Finally, applying the
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balancing test for the commonlaw right of access, the court found
No.15374cv
that the weak private interests at stake did not rebut the
presumption of access, which is supported by substantial public
interests.WeagreewiththedistrictcourtandAFFIRM.
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________
Gregory P. Joseph, Pamela Jarvis, and Courtney

A. Solomon, on the brief, Joseph Hage Aaronson
LLC,NewYork,NY,forDefendantsAppellants.
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JOHNM.WALKER,JR.,CircuitJudge:
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AttorneyBruceBernsteinsuedhisformerlawfirm,Bernstein
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Litowitz Berger & Grossmann LLP (BLB&G), and five of its
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partners,allegingthathehadbeenforcedtoresignafterblowingthe
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whistle on what he considered to be the firms unethical litigation
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conduct.Thefirmarguedthattherelevantfactswereconfidential
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client information that could not be disclosed by Bernstein in a
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complaintraisingclaimsof,interalia,retaliatorybreachofcontract.
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Bernstein sought and obtained permission from the United States
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District Court for the Southern District of New York (Kevin P.
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Castel, Judge) to file a complaint under seal, with the sealing to
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automatically expire fourteen days after service of process on
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defendants, unless extended by the court. Thirteen days after the
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complaint was filed, the parties settled the suit on confidential
No.15374cv
terms.Thepartiesthensoughtanorderdirectingtheclerkofcourt
toclosethefilewhileleavingitpermanentlysealed.
The United States District Court for the Southern District of
New York (Valerie E. Caproni, Judge) denied the parties request.
The court concluded that the complaint is a judicial document
subject to a presumption of public access under the First
Amendmentandthecommonlaw.Thedistrictcourtalsoheldthat
keeping the complaint secret was not necessary to protect
confidential client communications. Finally, applying the
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balancing test for the commonlaw right of access, the court found
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that the weak private interests at stake did not rebut the
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presumption of access, which is supported by substantial public
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interests.WeagreewiththedistrictcourtandAFFIRM.
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BACKGROUND
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Werecitethefactsallegedinthecomplaintthatarenecessary
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to understand the substantial public interest in the complaints
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disclosure, as the complaint in a case discloses the nature of the
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proceeding. We emphasize, however, that at this point in the
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proceedingthefactsallegedareexactlythatsimplyallegations,the
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truthofwhichhasnotbeenproven.
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BernsteinbecameofcounselwithBLB&Gin2008.Atthefirm,
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he worked on In re Satyam Computer Services, Ltd., Securities
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Litigation, a class action which arose from a massive financial
No.15374cv
scandalinvolving...SatyamComputerServices,Ltd.(Satyam),one
of Indias largest information technology and outsourcing
companies. 609 F.Supp.2d 1375, 1375 (J.P.M.L. 2009). Suits
brought by various investors against Satyam and others were
consolidated in the Southern District of New York by the Judicial
Panel on Multidistrict Litigation. Id. In May 2009, the Mississippi
PublicEmployeesRetirementSystem(MPERS)wasappointedas
one of four lead plaintiffs in the case. In re Satyam Comput. Servs.,
Ltd.,Sec.Litig.,1:09md02027BSJ[Doc.No.8](May12,2009).The
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Office of the Mississippi Attorney General (AGs Office) was
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insidecounselforMPERS.BLB&Gwasoutsidecounsel.
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In September 2010, BLB&G partner Steven Singer informed
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Bernstein that a solo practitioner based in Jackson, Mississippi,
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Vaterria Martin, would act as local counsel and occasionally
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checkonthestatusofthecaseforMPERS,eventhoughBLB&Gwas
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already providing this information directly to the AGs Office. In
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December2010,theleadplaintiffsintheSatyamclassactionreached
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anagreementinprincipletosettlewithSatyamfor$125million.On
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February 16, 2011, Satyam and the lead plaintiffs executed a
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stipulationsettingforththetermsoftheagreement.1
On March 8, 2011, the lead plaintiffs reached an agreement in

principle
to
settle
with
Satyams
codefendantsvarious
PricewaterhouseCoopers entities that were Satyams auditorsfor $25.5
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No.15374cv
On March 1, 2011after the agreement in principle with
Satyam had been reached and the stipulation had been executed
another BLB&G partner, Max Berger, assigned two unnecessary
legal research projects to Martin. Bernstein protested the
assignment, but his concerns were dismissed, with Singer saying,
Do you ever want us to work with Mississippi again? Martin
ultimately produced an eighteenpage memorandum on April 26,
2011, several weeks after the case was settled in principle. Singer
andBergeragreedwithBernsteinthatthememorandumaddressed
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thewrongpleading,containednomeaningfulanalysis,andwas
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ridiculous.Martinreportedatotalof207hoursworkonthecase,
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primarilyspentproducingtheuselessmemorandum.
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After the settlement became final, Bernstein learned from
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BLB&Gs comptroller that the firm had paid Martin $112,500 from
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theproceedsoftheSatyamclasssettlement.BLB&Gdidnotdisclose
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the payment to the court in its August 1, 2011 fee petition.2
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,thelocal civilrules of theSouthern District of New York
required thatallfeeapplicants inderivative and classactions disclose to
the court any fee sharing agreements with anyone. By a rule
amendmenteffectiveJuly11,2011threeweeksbeforeBLB&Gsubmitted
its fee petitionthe automaticdisclosure provision was repealed as to
No.15374cv
Concerned with the ethical and legal implications of the
arrangement, Bernstein inquired further. He learned that Martin
hadbeenadmittedtothebaronlyfiveyearsbeforeSatyamwasfiled,
and was married to Deshun T. Martin, a special assistant attorney
generalintheAGsOffice.
Bernsteinallegedlyraisedhisethicalconcernsagaininseveral
contentiousmeetingswithpartners.ThefirmsleadershipBerger,
SalvatoreGraziano,andEdwardGrossmanndismissedBernsteins
misgivings.GrazianoandBergerinformedBernsteinthattherewas
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localpressureontheMississippiAGtouselocalfirms,toldhim
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you need to drop this, and made a veiled threat to blackball
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Bernsteinifhebecameawhistleblower.
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InDecember2011,BernsteinreportedhisconcernstotheU.S.
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Attorneys Office for the Southern District of New York. Soon
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afterward, Bernstein became concerned about BLB&Gs conduct in
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anotherclassaction,inwhichthefirmallocatedworktoMississippi
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firmsthatlackedrelevantexperience.
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). Federal Rule 23(h), in turn,
doesnotmandateautomaticdisclosureofallfeesharingarrangementsin
classactions.
No.15374cv
Bernsteinclaimsthattheissuetookitstollonhisrelationship
with the firms leadership. In October 2012, after realizing that his
termination was inevitable, he resigned from the firm. Bernstein
alleges that after his departure, BLB&G interfered with his
relationship with a lead plaintiff in one case, and BLB&G partners
made various threats toward him before attempting to buy [his]
silence by offering him compensation from a future settlement in
an unrelated case on the condition that he keep the Mississippi
counselarrangementsecret.Bernsteindeclined.
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At two mediation sessions held before Bernstein filed suit,
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BLB&G expressed its belief that Bernsteins claims were based on
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facts learned in the course of representation of a client and thus
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could not be disclosed under the New York Rules of Professional
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Conduct. Bernstein, by contrast, maintained that the facts
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underlyinghisclaimswereneitherprivilegednorconfidentialand
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thathewasfreetodisclosethemincourtfilings.
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Notwithstanding Bernsteins position that he was free to
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disclose the facts at issue, Bernstein filed amotion with the district
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courtpriortofilingthecomplaintrequestingoutofanabundance
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ofcautiontheentryofanordersealingallmaterialsfiledinthis
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caseuntiltheCourtresolvestheseissuesofconfidentiality.
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Judge Kevin Castel, sitting in Part I, granted the motion on
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July 24, 2014, before the suit was filed. Noting that it is doubtful
No.15374cv
thatsealingisappropriate,thedistrictcourtneverthelessoutofan
abundance of caution ordered that [t]he action may be filed
under seal and the sealing shall expire within 14 days of service of
process on defendants unless extended by order of the judge to
whomthecaseisassigned.
On August 22,2014, Bernstein filedthecomplaint under seal
againstBLB&GandfiveindividualBLB&Gpartners:Berger,Singer,
Graziano, Grossmann, and Gerald Silk. He alleged, in substance,
thatdefendants(1)engagedinakickbackschemeinviolationofthe
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Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C.
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1962(c),1964(c),and(2)breachedtheircontractwithBernsteinin
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retaliationforreportinganethicalbreach.
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After filing the sealed complaint, the parties returned to the
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negotiating table. As Judge Caproni, to whom the case had been
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assigned,wrote:Armednowwiththetickingtimebombprovided
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by the Courts order, Bernstein was able to accomplish what he
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could not without the assistance of a filing in this Court: he
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negotiated a mutually acceptable settlement. The settlement
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agreement includes a provision that voids the settlement if [the]
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actionisunsealedorotherwisebecomespublic.
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On September 4, 2014one day short of the automatic
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unsealingprovidedforbythecourtsJuly24orderBernsteinfiled
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anoticeofdismissalpursuanttothesettlement.Thefollowingday,
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No.15374cv
thepartiesjointlymovedforanorderdirectingtheclerkofcourtto
close the file without ordering the file unsealed. The parties
apparentlybelievedthatobtainingastipulateddismissalbeforethe
expiration of the sealing order would ensure that the [c]omplaint
wouldneverseethelightofday.
OnJanuary12,2015,followingahearingandmultiplerounds
of briefing, the district court issued its opinion and order. After
determining that it had jurisdiction, the district court held that the
complaintisajudicialdocumentsubjecttoapresumptionofpublic
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accessunderboththeFirstAmendmentandthecommonlaw.Next,
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the district court held that the complaint does not contain
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confidential client communications or information and therefore
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publicaccesstothecomplaintwouldnotplausiblyimplicatevalues
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higher than First Amendment values. Finally, the district court
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held that even if the First Amendment presumption did not apply,
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the commonlaw presumption of access to judicial documents
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wouldrequirethecomplainttobepublicbecausetheconsiderable
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publicinterestindisclosureoutweighstheweakprivateinterests
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favoring secrecy. accordingly, the district court denied the parties
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requesttocontinuethesealingorderanddirectedtheclerkofcourt
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tounsealthecasethirtydaysfromtheissuanceofitsorder,withthe
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thirtydayperiodtobetolledduringthependencyofanyappeal.
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No.15374cv
Defendants timely appealed. Bernstein has not filed a brief.
Although he continues to contest defendants claim that the
complaint contains confidential client information, he supports
BLB&Gs position that the case should remain sealed so as not to
riskunwindingthesettlement.
DISCUSSION
Thesoleissueiswhetherthedistrictcourtcorrectlydeniedthe
partiesrequesttocontinuethesealingorder.Inreviewingadistrict
courts order to seal or unseal, we examine the courts factual
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findings for clear error, its legal determinations de novo, and its
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ultimatedecisiontosealorunsealforabuseofdiscretion.SeeUnited
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Statesv.Doe,63F.3d121,125(2dCir.1995);UnitedStatesv.Amodeo,
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44F.3d141,146(2dCir.1995)(AmodeoI).
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I.
Pleadingsasjudicialrecords.
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Wefirstconsiderwhetheracomplaintisajudicialdocument
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subject to a presumption of access and easily conclude that a
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complaint is such a document. A judicial document or judicial
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record is a filed item that is relevant to the performance of the
19
judicial function and useful in the judicial process. Lugosch v.
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Pyramid Co. of Onondaga, 435 F.3d 110, 119 (2d Cir. 2006) (internal
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quotation marks omitted). Such documents are presumptively
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publicsothatthefederalcourtshaveameasureofaccountability
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andsothatthepublicmayhaveconfidenceintheadministrationof
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No.15374cv
justice. United States v. Amodeo, 71 F.3d 1044, 1048 (2d Cir. 1995)
(AmodeoII).Indeterminingwhetheradocumentisajudicialrecord,
weevaluatetherelevanceofthedocumentsspecificcontentstothe
nature of the proceeding and the degree to which access to the
[document]wouldmateriallyassistthepublicinunderstandingthe
issues before the ... court, and in evaluating the fairness and
integrityofthecourtsproceedings.NewsdayLLCv.Cty.ofNassau,
730F.3d156,16667(2dCir.2013).3
Pleadings plainly meet the Newsday test for reasons that are
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readily apparent. A complaint, which initiates judicial
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proceedings,isthecornerstoneofeverycase,theveryarchitectureof
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thelawsuit,andaccesstothecomplaintisalmostalwaysnecessary
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ifthepublicistounderstandacourtsdecision.Fed.TradeCommn
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v.AbbVieProds.LLC,713F.3d54,62(11thCir.2013).Moreover,in
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commencinganactionandthusinvokingthecourtsjurisdiction,the
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parties substantive legal rights and duties may be affected. For
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example, a large number of lawsuits ... are disposed of at the
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motiontodismiss stage, where a court determines solely on the

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 the judges
decision.Id.(internalquotationmarksomitted).
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No.15374cv
basis of the complaint whether the plaintiff has made sufficient
factual allegations to state a claim. Id. The filing of a complaint
triggers other legal consequences as well. E.g., Kronisch v. United
States, 150 F.3d 112, 126 (2d Cir. 1998) (obligation to preserve
evidence);Mattel,Inc.v.LouisMarx&Co.,353F.2d421,424(2dCir.
1965) (when duplicative actions are commenced, the firstfiled
complaint normally determines the district of adjudication). For
these reasons, the modern trend in federal cases is to classify
pleadings in civil litigation (other than discovery motions and
10
accompanying exhibits) as judicial records. IDT Corp. v. eBay, 709
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F.3d 1220, 1223 (8th Cir. 2013); accord AbbVie, 713 F.3d at 6263
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(collecting cases); United States v. Martin, 746 F.2d 964, 968 (3d Cir.
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1984).
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Thefactthatasuitisultimatelysettledwithoutajudgmenton
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themeritsdoesnotimpairthejudicialrecordstatusofpleadings.
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It is true that settlement of a case precludes the judicial
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determination of the pleadings veracity and legal sufficiency. But
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attorneys and others submitting pleadings are under an obligation
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toensure,whensubmittingpleadings,thatthefactualcontentions
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[made]haveevidentiarysupportor,ifspecificallysoidentified,will
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likely have evidentiary support after a reasonable opportunity for
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further investigation or discovery. Fed. R. Civ. P. 11(b)(3).
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Inanyevent,thefactoffilingacomplaint,whateveritsveracity,isa
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No.15374cv
significant matter of record. Even in the settlement context, the
inspection of pleadings allows the public [to] discern the
prevalence of certain types of cases, the nature of the parties to
particularkindsofactions,informationaboutthesettlementratesin
differentareasoflaw,andthetypesofmaterialsthatarelikelytobe
sealed. Hartford Courant Co. v. Pellegrino, 380 F.3d 83, 96 (2d Cir.
2004). Thus, pleadings are considered judicial records even when
thecaseispendingbeforejudgmentorresolvedbysettlement.IDT
Corp.,709F.3dat1223(citationsomitted);accordStonev.Univ.ofMd.
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Med. Sys. Corp., 855 F.2d 178, 180 n.* (4th Cir. 1988); Laurie Dor,
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SecrecybyConsent:TheUseandLimitsofConfidentialityinthePursuit
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ofSettlement,74NOTREDAMEL.REV.283,378(1999).
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We therefore hold that pleadingseven in settled casesare

judicialrecordssubjecttoapresumptionofpublicaccess.
II.
Presumptiverightofaccesstothecomplaint.
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A[f]indingthatadocumentisajudicialdocumenttriggers
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a presumption of public access, and requires a court to make
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specific,rigorousfindingsbeforesealingthedocumentorotherwise
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denying public access. Newsday, 730 F.3d at 167 n.15. The
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presumption of access to judicial records is secured by two
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independent sources: the First Amendment and the common law.
22
Lugosch, 435 F.3d at 121. The analysis with respect to each is
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somewhatdifferent.
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No.15374cv
A. TheFirstAmendmentpresumptiverightofaccess.
Defendants argue that the First Amendment presumption
doesnotapplyhere.Wedisagree.
We have articulated two different approaches for
determining whether the public and the press should receive First
Amendment protection in their attempts to access certain judicial
documents.Id.at120(internalquotationmarksomitted).Thefirst
approach considers experience and logic: that is, whether the
documents have historically been open to the press and general
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publicandwhetherpublicaccessplaysasignificantpositiverolein
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the functioning of the particular process in question. Id. (internal
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quotation marks omitted). The second approach considers the
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extent to which the judicial documents are derived from or are a
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necessary corollary of the capacity to attend the relevant
15
proceedings.Id.(alterationsandinternalquotationmarksomitted).
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A complaintespecially in a case that is ultimately settled
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is best evaluated under the experience and logic approach,
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because the alternative approach is relevant only after court
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proceedings have commenced. Experience and logic both support
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access here. Complaints have historically been publicly accessible
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by default, even when they contain arguably sensitive information.
22
Cf. Sealed Plaintiff v. Sealed Defendant, 537 F.3d 185, 18990 (2d Cir.
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2008). Defendants acknowledge that since the adoption of the
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FederalRulesofCivilProcedurein1938,federallawsuitshavebeen
commenced by the filing of the complaint. Fed. R. Civ. P. 3. But
they argue that since many federal courts did not require
complaints to be filed unless and until judicial intervention was
soughtbefore1938,thereisnostronghistoricaltraditionofpublic
accesstocomplaints.Thisargumentisunpersuasive.Itignoresthe
historyofthelasteightdecadesundertheFederalRules.Moreover,
the fact that pre1938 law may have allowed actions to commence
without the filing of a complaint says nothing about whether the
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public at that time had access to documents that were permitted or
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requiredtobefiled.
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Logical considerations also support a presumption of public
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access.Publicaccesstocomplaintsallowsthepublictounderstand
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the activity of the federal courts, enhances the court systems
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accountability and legitimacy, and informs the public of matters of
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public concern. Conversely, a sealed complaint leaves the public
17
unawarethataclaimhasbeenleveledandthatstatepowerhasbeen
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invokedand public resources spentin an effort to resolve the
19
dispute. These considerations indicate that public access to the
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complaint and other pleadings has a significant positive role,
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Lugosch, 435 F.3d at 120 (internal quotation marks omitted), in the
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functioningofthejudicialprocess.
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No.15374cv
B. Thecommonlawpresumptionofaccess.
The district court concluded that in addition to the First
Amendment presumption of access, the commonlaw presumption
of access attached. Defendants contend that the commonlaw
presumption lacks weight here and that unsealing the complaint
constitutedanabuseofdiscretion.
Thecourtshavelongrecognizedthegeneralrighttoinspect
and copy public records and documents, including judicial records
anddocuments.Nixonv.WarnerCommcns,Inc.,435U.S.589,597
10
(1978) (footnote omitted). This right is said to predate the
11
Constitution.AmodeoI,44F.3dat145.
12
The right to inspect and copy judicial records is not
13
absolute, however, and a court may exercise its supervisory
14
power over its own records and files to deny access where court
15
files might have become a vehicle for improper purposes. Nixon,
16
435U.S.at598(internalquotationmarksomitted).Oncethecourt
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hasdeterminedthatthedocumentsarejudicialdocumentsandthat
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therefore a common law presumption of access attaches, it must
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determinetheweightofthatpresumption.Lugosch,435F.3dat119.
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Theweightofthepresumptionisafunctionof(1)theroleof
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thematerialatissueintheexerciseofArticleIIIjudicialpowerand
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(2)theresultantvalueofsuchinformationtothosemonitoringthe
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federal courts, balanced against competing considerations such
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No.15374cv
astheprivacyinterestsofthoseresistingdisclosure.Lugosch,435
F.3dat11920(internalquotationmarksomitted);seealsoAmodeoII,
71F.3dat104951.Wetakeeachfactorinturn.
Where a documents role in the performance of Article III
duties is negligible ..., the weight of the presumption is low.
AmodeoII,71F.3dat1050.Conversely,wheredocumentsdirectly
affectanadjudication,id.at1049,orareusedtodeterminelitigants
substantive legal rights, the presumption of access is at its zenith,
Lugosch, 435 F.3d at 121, and thus can be overcome only by
10
extraordinary circumstances, Amodeo II, 71 F.3d at 1048 (internal
11
quotation marks omitted). The locus of the inquiry is, in essence,
12
whether the document is presented to the court to invoke its
13
powersoraffectitsdecisions.Id.at1050.
14
Applying this standard, we have determined that a report
15
submitted to a court in connection with a summaryjudgment
16
motion is entitled to a strong presumption of access. Joy v. North,
17
692F.2d880,894(2dCir.1982).Sincesuchadocumentisthebasis
18
for the adjudication, only the most compelling reasons can justify
19
sealing.Id.Bycontrast,documentssuchasthosepassedbetween
20
the parties in discovery often play no role in the performance of
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Article III functions and so the presumption of access to these
recordsislow.AmodeoII,71F.3dat1050.4
Under the twofactor Lugosch approach, we easily determine
that the weight of the presumption here is strong. Pleadings, such
as the complaint here, are highly relevant to the exercise of Article
IIIjudicialpower.Ofalltherecordsthatmaycomebeforeajudge,a
complaintisamongthemostlikelytoaffectjudicialproceedings.It
is the complaint that invokes the powers of the court, states the
causesofaction,andpraysforrelief.Wehavealreadydiscussedthe
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secondbasissupportingtheweightofthepresumption:theutilityof
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thecomplainttothosewhomonitortheworkofthefederalcourts.
12
We now move to the crux of the weightofthepresumption
13
analysis: balancing the value of public disclosure and
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countervailing factors such as (i)the danger of impairing law
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enforcement or judicial efficiency and (ii)the privacy interests of
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thoseresistingdisclosure.Id.;seealsoAmodeoI,44F.3dat14647.
17
In striking this balance, we agree with the district courts careful
18
opinion that the value of public disclosure is substantial and the
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privacyinterestsatstakeareminimal.
Cf. United States v. Glens Falls Newspapers, Inc., 160 F.3d 853, 857
(2dCir.1998)(settlementnegotiationsanddraftagreementsdonotcarry
a presumption of public access because [t]he judge cannot act upon
thesediscussionsordocumentsuntiltheyarefinal,andthejudgemaynot
beprivytoallofthem).
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No.15374cv
As the district court noted, the complaint alleges that
defendants,ascounselforastateemployeespensionfundthatwas
aleadplaintiffinamajorsecuritiesclassaction,regularlyengagein
akickbackschemewiththeMississippiAttorneyGeneralsOffice,a
public entity whose constituents might otherwise be in the dark
aboutthearrangement.Whethertrueornot,thisallegationwould
naturallybeoflegitimateinteresttothepublic(especiallythosewho
contribute to and receive payments from MPERS) and to federal
courtsinthefuture(e.g.,thoseconsideringwhethertonameBLB&G
10
as lead class counsel or find MPERS to be an adequate class
11
representativeinfutureclassactions).Moreover,thecomplaintalso
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did not come within [the] courts purview solely to [e]nsure [its]
13
irrelevance. Lugosch, 435 F.3d at 119 (internal quotation marks
14
omitted). Although the speedy settlement of the claim meant that
15
thecourtdidnotadjudicatethemeritsofthecase,thedistrictcourts
16
routinely engage in adjudicatory duties even in connection with
17
complaintsthataredismissedorsettled.
18
In the circumstances here presented, the interests favoring
19
secrecy,meanwhile,areweak.Thisisnotacaseinwhichdisclosure
20
would reveal details of an ongoing investigation, pose a risk to
21
witnesses, endanger national security, or reveal trade secrets. See
22
AmodeoI,44F.3dat147.Moreover,aswewillshow,thecasedoes
23
not implicate the duty to protect either privileged attorneyclient
21
No.15374cv
materialorconfidentialclientinformation.Oncetheserationalesfall
away,onlyinsubstantialargumentsremain.
Onappeal,defendantsspendmuchoftheirbriefarguingthat
thecomplaintisunreliableandcontestingthetruthoftheallegations
inthecomplaint.Theyarguethatunsealingthecomplaintassumes
the truth of the allegations within it. But unsealing does no such
thing.Asthedistrictcourtnoted:
8
9
10
11
12
13
14
15
16
17
Complaints canand frequently do

contain allegations that range from
exaggerated to wholly fabricated. That is
the nature of judicial proceedingsnot
everything alleged by one party can or
should be takenasground truth. Still, the
pleadings can and do properly frame the
proceeding and provide outer boundaries
ontheclaimsadvanced...andtheredress
sought.
19
(Internal citation omitted). Following defendants logic to its
20
conclusion,moreover,wouldcreateanuntenableresultthesealing
21
of all complaints in actions in which the plaintiff does not prevail,
22
andallindictmentsinacriminalprosecutioninwhichthedefendant
23
isacquitted.
18
24
In sum, the district court engaged in a thoughtful and
25
extended analysis of the competing interests at stake. The district
26
court concluded that (1)the weight of the presumption of public
22
No.15374cv
accessaccordedtothecomplaintwashighbecause(a)thedocument
washighlyrelevanttotheexerciseofArticleIIIjudicialpowerand
(b)thepublicinterestindisclosurewassubstantial,whiletheprivate
interests in secrecy are weak; and (2)BLB&G did not come forth
withasufficientrationaletorebutthisstrongpresumptionofaccess.
These conclusions were amply supported, and there is no basis to
disturbthem.
8
9
III.Sealingofthecomplaintisnotjustifiedinorderto
protectconfidentialclientinformation.
10
Onappeal,BLB&Grenewsitsargumentthataneedtoprotect
11
confidential client information justifies or requires continued
12
sealingofthecomplaint.Werejectthisclaim.
13
After Bernstein left BLB&G, George W. Nevillea special
14
assistantattorneygeneralinthecivillitigationdivisionoftheAGs
15
OfficeexchangedseveralletterswithBernsteinsattorney.Inthese
16
letters,NevilleorderedBernsteintokeeptheexistenceofthealleged
17
kickback scheme private, writing: As counsel for the State of
18
Mississippi ... and on behalf of the State of Mississippi and its
19
agency MPERS, I am directing [Bernstein] not to disclose any
20
confidentialinformationhelearnedascounseltoMississippiandits
21
agencyMPERS.
22
Relying in part on these letters, defendants argued to the
23
district court that all or virtually all of the facts alleged in the
23
No.15374cv
complaint are confidential under the New York Rules of
ProfessionalConductandthuspermanentsealingisrequired.5The
districtcourtrejectedthisclaim.Onappeal,defendantsrenewthis
confidentialityargument.Wereachthesameconclusionasdidthe
districtcourt.
As a threshold matter, we note that defendants rely in large
part on the conclusions of their legalethics expert made in a
declarationfiledinthedistrictcourt.Wedonotconsiderarguments
based on this declaration because of our longstanding rule that
10
experttestimonyonissuesofdomesticlawisnottobeconsidered.
11
SeeAmnestyIntlUSAv.Clapper,638F.3d118,128n.12(2dCir.2011)
12
(holdingthatthecourtwasnotcompelledtoacceptalegalethics
13
experts declaration regarding whether an ethical duty had been
14
triggered,becausethequestionwasforthecourttodecide),revdon
15
othergrounds,133S.Ct.1138(2013);seealsoHyghv.Jacobs,961F.2d
Rule 1.6 provides: A lawyer shall not knowingly reveal

confidentialinformation,...orusesuchinformationtothedisadvantage
ofaclientorfortheadvantageofthelawyerorathirdpersonunlessan
exceptionapplies.N.Y.R.ProflConduct1.6(a)(3).Onesuchexceptionis
when permitted or required under these Rules or to comply with other
law or court order. Id. at 1.6(b)(6). Confidential information is
information gained during or relating to the representation of a client,
whatever its source, that is (a) protected by the attorneyclient privilege,
(b)likelytobeembarrassingordetrimentaltotheclientifdisclosed,or(c)
informationthattheclienthasrequestedbekeptconfidential.Id.at1.6.
Rule 1.9(c) provides that a lawyer shall not use or reveal a former
clientsconfidentialinformation,exceptastheRulespermitorrequire.
5
24
No.15374cv
359,363(2dCir.1992);Marx&Co.v.TheDinersClub,Inc.,550F.2d
505,50911(2dCir.1977).6
We now turn to the merits. To overcome the First
Amendment right of access, the proponent of sealing must
demonstrat[e] that closure is essential to preserve higher values
andisnarrowlytailoredtoservethatinterest.InreN.Y.TimesCo.,
828 F.2d 110,116 (2d Cir.1987) (internal quotation marks omitted).
Broad and general findings and conclusory assertion[s] are
insufficient to justify deprivation of public access to the record, id.
10
(internal quotation marks omitted); specific, ontherecord
11
findingsarerequired.UnitedStatesv.ErieCnty.,763F.3d235,243
12
(2dCir.2014)(internalquotationmarksomitted).
13
Here, defendants argue thatprotection of confidential client
14
communicationisahighervalue.Thisassertionraisesthequestion
15
ofwhetheranyconfidentialclientinformationisactuallyimplicated
16
inthiscase.Puttingthatasideforamoment,however,theassertion
17
itselfisquestionable.Wehaveimpliedbutneverexpresslyheld
18
that protection of the attorneyclient privilege is a higher value
19
under the First Amendment that may rebut the presumption of
20
access. E.g., id.; Lugosch, 435 F.3d at 125. Defendants go further,
To the extent that expert interpretations of the ethical rules are

useful,theyarebetterpresentedinanamicusbrieforthepartiescitations
totreatises,ratherthanadeclarationoraffidavit.
6
25
No.15374cv
however, arguing that the protection of confidential client
informationisahighervaluesupersedingtheFirstAmendment
rightofaccessandshouldhaveequalstatustotheattorneyclient
privilege.
The attorneyclient privilege and the duty to preserve client
confidences and secrets are not coextensive, however. Doe v. A
Corp.,330F.Supp.1352,1355(S.D.N.Y.1971),adoptedsubnom.Hallv.
A. Corp., 453 F.2d 1375, 1376 (2d Cir. 1972) (per curiam). The
broaderethicaldutytopreserveaclientsconfidences...[,]unlike
10
the evidentiary privilege, exists without regard to the nature or
11
source of information or the fact that others share the knowledge.
12
Brennans, Inc. v. Brennans Restaurants, Inc., 590 F.2d 168, 172 (5th
13
Cir.1979)(internalquotationmarksomitted).Wesharethedistrict
14
courtsskepticismofBLB&Gsclaimthatthisbroaderethicalduty
15
shouldbetreatedidenticallyto...thenarrowerandmorevenerable
16
attorneyclientprivilege.
17
In any event, even if we were to accept defendants higher
18
valueargument,thecomplaintheredoesnotcontainconfidential
19
clientinformation.
20
First, the complaint does not include information that is
21
likelytobeembarrassingordetrimentaltotheclientifdisclosed.
22
N.Y. R. Profl Conduct 1.6. Of course, the information may be
23
seriouslyembarrassingtocounsel(BLB&GandtheAGsOffice),but
26
No.15374cv
not to the client, MPERS. Indeed, it is counterintuitive to suggest
thatMPERSwassomehowcomplicitinanallegedkickbackscheme
that caused it to pay legal fees for unnecessary work. If anything,
MPERSwouldappeartobenefitfromdisclosure;theworstthatcan
be said about it is that it was unlucky in its choice of counsel. In
sum, BLB&Gs claim about possible harm to MPERS is a mere
nakedconclusorystatementthatpublication...willinjureit.Joy,
692F.2dat894.Suchastatementfallswoefullyshortofthekindof
showingwhichraisesevenanarguableissueastowhetheritmaybe
10
keptunderseal.Id.
11
Moreover, the fact of representation is generally neither
12
privilegednorconfidential.SeeInreGrandJurySubpoenas,803F.2d
13
493, 496 (9th Cir. 1986). The complaints allegation that BLB&G
14
routinely assigns work to unqualified local counsel at the AGs
15
Offices direction relates to a business practice, not to a client
16
confidence.
17
Finally, as the district court noted, [t]he request to keep the
18
alleged kickback scheme confidential was made by the member of
19
the Attorney Generals Office whose conduct is discussed in the
20
Complaint.Insofarasthisrequest(andperhapseventheunderlying
21
scheme) was adverse to the interests of MPERS, for the purpose of
22
applying the ethical rule, the Court does not presume that the
27
No.15374cv
attorneys request for confidentiality signifies the clients desire
(citationomitted).
CONCLUSION
Forthereasonsstatedabove,weAFFIRMthejudgmentofthe
districtcourt.

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

United States Court of Appeals

For the Second Circuit

Case 15-374, Document 66-1, 02/24/2016, 1711688, Page2 of 27

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

whistle on what he considered to be the firms unethical litigation

client information that could not be disclosed by Bernstein in a

Bernstein sought and obtained permission from the United States

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

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

automatically expire fourteen days after service of process on

defendants, unless extended by the court. Thirteen days after the

complaint was filed, the parties settled the suit on confidential

The United States District Court for the Southern District of

New York (Valerie E. Caproni, Judge) denied the parties request.

The district court concluded that the complaint is a judicial

keeping the complaint secret was not necessary to protect

confidential client communications. Finally, applying the

Case 15-374, Document 66-1, 02/24/2016, 1711688, Page3 of 27

presumption of access, which is supported by substantial public

Gregory P. Joseph, Pamela Jarvis, and Courtney

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

whistle on what he considered to be the firms unethical litigation

client information that could not be disclosed by Bernstein in a

Bernstein sought and obtained permission from the United States

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

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

automatically expire fourteen days after service of process on

defendants, unless extended by the court. Thirteen days after the

complaint was filed, the parties settled the suit on confidential

Case 15-374, Document 66-1, 02/24/2016, 1711688, Page4 of 27

The United States District Court for the Southern District of

New York (Valerie E. Caproni, Judge) denied the parties request.

The court concluded that the complaint is a judicial document

subject to a presumption of public access under the First

keeping the complaint secret was not necessary to protect

confidential client communications. Finally, applying the

presumption of access, which is supported by substantial public

to understand the substantial public interest in the complaints

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

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

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

Litigation, a class action which arose from a massive financial

Case 15-374, Document 66-1, 02/24/2016, 1711688, Page5 of 27

of Indias largest information technology and outsourcing

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

brought by various investors against Satyam and others were

consolidated in the Southern District of New York by the Judicial

Panel on Multidistrict Litigation. Id. In May 2009, the Mississippi

one of four lead plaintiffs in the case. In re Satyam Comput. Servs.,

Office of the Mississippi Attorney General (AGs Office) was

In September 2010, BLB&G partner Steven Singer informed

Bernstein that a solo practitioner based in Jackson, Mississippi,

Vaterria Martin, would act as local counsel and occasionally

already providing this information directly to the AGs Office. In

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

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

Case 15-374, Document 66-1, 02/24/2016, 1711688, Page6 of 27

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

legal research projects to Martin. Bernstein protested the

assignment, but his concerns were dismissed, with Singer saying,

Do you ever want us to work with Mississippi again? Martin