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Summaries and analysis of recent Delaware court decisions concerning business-related litigation.
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Delaware Court of Chancery Orders Full Public Access to Confidential Filings Months After Settlement
Universal public access to court filings is the default and confidentiality is the exception. Rule 5.1 of the Court of Chancery provides for the filing of confidential information by litigants. In this decision, the Court makes clear that a violation of Rule 5.1 may result in the loss of confidential treatment.
This was an appraisal action that the parties ultimately settled. There had been pre-settlement filings that included redacted motion papers, as well as confidential exhibits filed under seal. Months after the settlement, a non-party former stockholder who suspected fraud in the merger challenged the continued confidentiality of the sealed exhibits. Rather than seek continued confidentiality, the appraisal respondents filed a “parody of public versions of the exhibits” with the contents entirely blacked out, and admitted that their wholesale redactions were not related only to sensitive, non-public information. The respondents claimed this was justified because the non-party seeking the documents did so to help it bring new litigation, rather than due to a general interest in public access to court filings. The Court reasoned that, in the event of a challenge, Rule 5.1 requires a party seeking continued confidential treatment to file public versions that omit only material properly viewed as “confidential” under the Rule, which is a relatively narrow category of information. Respondents’ submission of wholesale redactions was a “fundamental flaw” and “presumptively not in good faith compliance with Rule 5.1.” The Court also explained that the non-party’s own motivation to seek the exhibits was immaterial to respondents’ duty to comply with Rule 5.1.
Given that respondents had failed to timely file public versions of the sealed exhibits, the Court ordered that the exhibits be made public in their entirety, in the form in which they were provided to the Court confidentially (retaining any redactions to preserve privilege), and that the related motion papers also should be made available in their confidentially-filed forms.