Federal Judge Allows Corporation To File Secret Lawsuit

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"Federal Judge Allows Corporation To File Secret Lawsuit"

In a remarkable blow to freedom of information, a federal trial judge ruled this summer that a company could sue a product safety agency anonymously for posting an improper report about the company, sealed the opinion entirely for several months and then released it in heavily redacted form. According to consumer groups now challenging the decision, this is the first known example of a court both allowing a corporation to sue anonymously, and agreeing to seal a case, all so the company could protect its reputation.

The lawsuit was also the first-ever legal challenge to the Consumer Product Safety Commission’s database, launched in 2011 to provide access to consumer safety complaints before potentially hazardous products are recalled. The redacted opinion removes any facts about the case, leaving visible only the court’s conclusion that the commission improperly posted a report about the company that it held was inaccurate and would damage the company’s reputation.

Weighing the fundamental First Amendment interest in transparency of government decisions against the economic interest of the corporation, U.S. District Judge Alexander Williams Jr. found that the corporation’s interest prevailed, writing that “although the law favors access to judicial records, the facts of this case overcome this presumption.” The “facts” include that the court deemed the information “materially inaccurate” (a determination which no one but the court can assess, since all relevant information has been redacted), “injurious to Plaintiff’s reputation, and risks harm to Plaintiff’s economic interests.”

The court went on to use similar reasoning to allow the company to remain entirely anonymous in the litigation, even though decision after decision has denied anonymity to individual litigants who faced reputation damage. The brief by Public Citizen, Consumer Federation of America and Consumers Union provides several examples:

[W]hen a doctor sued to enjoin state medical board disciplinary proceedings against him, the Tenth Circuit held that the risk to the doctor’s professional reputation did not justify the use of a pseudonym. The Fifth Circuit refused to allow a group of law students to litigate Title VII claims under pseudonyms despite their contention that revealing their identities would jeopardize their future employment prospects. Numerous district courts, including one in this circuit, have likewise rejected pleas for pseudonymity based on potential threats to professional reputation.

But Judge Williams declined to apply the same rigorous analysis to the corporation that is typically applied to individual people because several of the factors, aimed at protecting personal privacy, did not easily apply to corporations, and, “Like a square peg in a round hole, the … factors do not easily graft onto this case, and the Court refuses to force them to fit.” Incredibly, Williams added, “To do so would be to manufacture a miscarriage of justice.”

As the consumer groups point out in their filing, the court’s unredacted ruling, if made public, would in fact vindicate the corporation’s reputation, since the court entirely sides with the corporation and the inaccuracy of the report. What’s more, while the court ruled that the commission was enjoined from posting the report, its decision does not bar any other public discussion of the topic, and any attempt to censor public statements about a corporation’s product would be anathema to First Amendment free expression principles and encourage even more secret litigation:

The district court’s leap from enjoining publication of the report in the database to imposing a broad cloak of secrecy on the entire litigation seems to be rooted in a troubling assumption about the undesirability of public debate. The court envisioned that if the facts of the case were public, Company Doe would be powerless to protect itself against the report’s charge that its product caused harm: “although Plaintiff could publicly comment on the report’s inaccuracy, ordinary consumers would likely dismiss this measure as disingenuous damage control.”

The First Amendment rejects precisely this attitude of distrust toward the marketplace of ideas. As Justice Brandeis explained, the possibility of “falsehood and fallacies” in our discourse does not justify prior restraint; rather, our Constitution teaches that “the remedy to be applied is more speech, not enforced silence.”

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