Your Court Documents Filed Under Seal: Will They Stay Confidential?

The United States District Court for the Northern District of Illinois recently adopted a policy that could cause public disclosure of documents filed under seal as recently as three months or as far back as 20 years ago. Other state and federal courts could follow suit. This article explains the northern district's policy and the local rule that makes it possible, identifies the risks of such policies, and offers concrete practice-management steps to lower those risks.

I. The Danger of Disclosure

Preserving the confidentiality of your client's sensitive documents is a serious issue, whether the client is an individual concerned about personal disclosures or a large corporation protecting valuable proprietary information.

Consider a common scenario: in response to your client's concerns, you acquired a protective order and filed documents under seal in recent litigation. You just obtained a favorable result, and the case is closed. You might feel comfortable that the information in the sealed documents will remain protected as long as you have a blanket protective order that remains in effect after the case's final disposition. Or you may not think much about those documents at all after the final order is entered.

Unfortunately, this is no time for complacency. If those documents were filed in the northern district of Illinois, they may already be opened and in the public court file for all to see. Although it may come as a shock, the northern district is busy right now opening hundreds of sealed court documents and exposing them in the public record. And other state and federal courts in Illinois and around the country could adopt rules that could produce similar results.

Consider the exposure to malpractice claims and impact on client relations - in addition to considerable potential embarrassment to both you and your client - of leaving sensitive documents in the custody of a court that has both a local rule and stated policy of opening documents filed under seal, just weeks after the case ends. Documents containing your client's privileged information, trade secrets, juvenile records, medical and psychiatric records, tax, financial and investment information and even grand jury testimony could be released to the public - to your client's potential employers, competitors, and opponents in litigation.

Consider further that the future is likely to bring increased access to public documents, including those in court files. As courts begin to accept electronic filings or digitally scan filed documents, Internet publication and access to any of your client's documents contained in public court files may not be far in the future.

Finally, consider the permanence of disclosure. Once a document has been found in a public court file, it is probably too late to restore its confidentiality. This is illustrated by the recent New York federal district court decision in Salomon Smith Barney, Inc. v HBO & Co.1

In Salomon Smith Barney, the court entered a consensual protective order, under which documents to be treated as confidential could be designated as such. The plaintiff submitted a letter to the court with a binder of exhibits, both stamped "highly confidential subject to protective order."2 The binder documents had been produced by Bear, Stearns & Co., Inc. pursuant to subpoena, and related to Bear, Stearns' representation of the defendants as a financial advisor for their proposed merger. The court opinion acknowledges that "the letter and the exhibits both found their way into the Court's public file."3

After settlement of the case, a plaintiff in another case against the defendants' successor-in-interest found the exhibit binder in the public file and intervened, seeking removal of the documents' confidential designation. Bear, Stearns also intervened, seeking to remove the documents from the public file and preserve their confidentiality.4 In the end, the court found that Bear, Stearns failed to establish sufficient cause for the documents' continued confidential treatment, and opined that Bear, Stearns' "real concern is the possibility of public embarrassment."5 The court ruled that the documents should remain in the public record.6

The documents at issue in the Salomon Smith Barney case apparently were not filed according to special procedures designed to protect restricted documents. However, the case illustrates the danger of entrusting confidentiality entirely to the courts, and the need to carefully consider at every step of litigation the risks of court-file disclosure of confidential documents.

It also illustrates that just as there are important reasons for keeping your client's confidential information out of the public domain, the potential consequences of public disclosure are severe. Disclosure of information that your client entrusted to you for purposes of litigation, with the understanding that it remain confidential, can easily find its way into enemy hands. It could provide evidence to a litigation opponent (as in Salomon Smith Barney), expose your client to additional litigation or prosecution, destroy your client's business and employment opportunities or even your client's personal life - all of which could come with possibly disastrous results to your legal practice.

Disclosure in the northern district, and possibly other courts, cannot be avoided solely by taking the usual precautions of acquiring a...