In re Motions Seeking Access to 2019 Statements
In re Motions Seeking Access to 2019 Statements
Opinion of the Court
This appeal relates to nine Delaware bankruptcy cases, each commenced in connection with the respective debtors' asbestos-related liabilities ("Consolidated *738Cases"). The appeal arises from the most recent attempt to access thousands of exhibits ("2019 Exhibits") that were submitted to the Bankruptcy Court pursuant to Federal Rule of Bankruptcy Procedure 2019 in connection with administering the nine asbestos bankruptcies. Consistent with a series of orders entered by the Bankruptcy Court in implementing Rule 2019 (the "2019 Orders"), the 2019 Exhibits are in the possession of the Clerk of the Bankruptcy Court, but are not available on the public docket.
Appellant Honeywell, joined by Ford (together, "Appellants") filed a request (A1-154)
*739On November 8, 2016, the Bankruptcy Court entered its opinion and order in each of the Consolidated Cases, granting Appellants limited access to the 2019 Exhibits for the purpose of investigating potential fraud in the claims process; the Bankruptcy Court imposed additional limitations on access as well. In re Owens Corning ,
For the reasons stated below, the Court will affirm the Bankruptcy Court's Access Decision.
I. BACKGROUND
A. The Parties and the 2019 Orders
Appellant Honeywell is a diversified technology and manufacturing company which has been a global supplier of automotive brake friction materials and aftermarket brake products. Honeywell is obligated to fund all distributions which the North American Refractory Company ("NARCO") Trust
Appellants filed a motion seeking access to all 2019 Exhibits submitted in the nine Consolidated Cases. All nine of the Consolidated Cases began in the 2000s. Under the version of Bankruptcy Rule 2019 in effect at that time, a 2019 Statement (when required) needed to contain certain identifying information (e.g., name and address, nature and amount of claim or interest, etc.) about the creditors and equity holders being represented by the entity preparing the 2019 Statement (e.g., a law firm). See Fed. R. Bankr. P. 2019 (amended 2011). Specifically, Rule 2019 provided:
every entity or committee representing more than one creditor ... shall file a verified statement setting forth (1) the name and address of the creditor ...; (2) the nature and amount of the claim or interest and the time of acquisition thereof unless it is alleged to have been acquired more than one year prior to the filing of the petition; (3) a recital of the pertinent facts and circumstances in connection with the employment of the entity ..., and (4) with reference to the time of the employment of the entity,... the amounts of claims or interests owned by the entity, ... the times when acquired, the amounts paid therefor, and any sales or other disposition thereof. The statement shall include a copy of the instrument, if any, whereby the entity ...is empowered to act on behalf of creditors ...
Compliance with Rule 2019 in mass tort cases presents significant logistical challenges, *740particularly for law firms that represent large rosters of clients. These firms were required to prepare statements (" Rule 2019 Statements") and Exhibits with the information listed in the Rule.
In 2004 and 2005, Bankruptcy Judge Judith K. Fitzgerald was assigned to nearly all of the asbestos bankruptcies filed within the Third Circuit, including the Consolidated Cases. In the course of administering these cases, Judge Fitzgerald determined that because the 2019 Exhibits contain personal-identifying information of potential asbestos claimants, disclosure of that information on the electronic docket posed a risk to privacy interests and presented the potential for identity theft. On August 25, 2004, Judge Fitzgerald entered the first in a series of the 2019 Orders,
Pursuant to the 2019 Orders, lawyers representing multiple claimants were required to file 2019 Statements, which included the name and address of the law firm but excluded any substantive information. The 2019 Statements were electronically filed and available on the public docket. These lawyers were also required to submit exhibits to the 2019 Statements, which contained substantive information about their clients (and potential clients) and their clients' claims (and potential claims). The 2019 Exhibits-which might include full social security numbers and names and extent of disease conditions-were submitted to the Clerk of the Bankruptcy Court on compact disc (CD). Unlike the 2019 Statements, the 2019 Exhibits were not electronically docketed.
The 2019 Orders did not, however, seal the 2019 Exhibits. Rather, the 2019 Orders regulated access to the 2019 Exhibits, in light of privacy concerns, and established a procedure by which a party seeking access to the 2019 Exhibits may request it. (See Flintkote D.I. 402, 10/6/04 Hr'g. Tr. at 55)
B. Appeals of the 2019 Orders
The procedures established by Judge Fitzgerald in her 2019 Orders have been reviewed and approved by several courts within the Third Circuit. See In re Kaiser Aluminum Corp. ,
Insurers similarly appealed the 2019 Orders entered in the Pittsburgh Corning bankruptcy. The District Court for the Western District of Pennsylvania dismissed that appeal for lack of standing. See Pittsburgh Corning ,
C. Garlock's Motion for Access
Litigation over access to the 2019 Exhibits from the Consolidated Cases arose again in 2009, when an asbestos defendant, Garlock Sealing Technologies, LLC ("Garlock"), filed a motion for access in the Pittsburgh Corning bankruptcy, in connection with its objections to confirmation of the Pittsburgh Corning bankruptcy plan. The Bankruptcy Court denied Garlock's motion for access in 2010.
A year later, Garlock, by then itself a debtor in an asbestos bankruptcy-pending in the Western District of North Carolina, No. 10-31607 (Bankr. W.D.N.C.)-filed a new series of motions seeking access to the 2019 Exhibits submitted in each of the Consolidated Cases (and also in three Pennsylvania bankruptcy cases, which, like the Consolidated Cases, were all before Judge Fitzgerald at the time).
In doing so, Judge Fitzgerald explained:
In the context of bankruptcy asbestos personal injury cases, when a 2019 is filed, a lawyer typically has a number of clients who have been, or assert that they have been, exposed to asbestos and who often may have sustained those exposures in multiple contexts. For example, an employee of one company may have worked with products of multiple asbestos manufacturers, producers, or distributors or may have worked for more than one asbestos company. In addition, individuals will often seek legal advice notwithstanding the absence of disease or symptoms, simply because of the possibility of exposure and because the latency period for certain asbestos diseases can be decades. Thus, notwithstanding the use of the word "creditor" in Rule 2019, individuals seeking legal counsel with respect to asbestos exposure may or may not have current claims and may or may not ever qualify as a claimant under § 524(g). Nonetheless, they are represented by an attorney *742who is required to file a 2019 statement listing all those he represents who are or may be claimants, even if the claims are never allowable or allowed.
Statements under 2019 are attorney statements of authority to represent multiple clients as listed thereon. They are not claims and are not affirmative statements by the clients themselves. Counsel are in a predicament. If they fail to file the statements (or exclude a client who has not yet but eventually does assert a claim against the debtor, or neglect to amend a 2019 when taking on a new client or losing a client), counsel may face substantial penalties that could prejudice their clients. For example, Rule 2019 provides that if the court finds a failure to comply with Rule 2019(a)"or with any other applicable law regulating the activities and personnel of any entity ... the court may refuse to permit that entity ... to be heard further ..." The court may also "hold invalid any authority, acceptance, rejection, or objection given, procured, or received by an entity" that has not complied. Even from the enumerated penalties, it is clear that the Rule applies to regulate conduct in the specific bankruptcy case and no other.
Rule 2019 is not a discovery tool but is to ensure that plans are negotiated and voted on by those authorized to act on behalf of real parties in interest in a case . The 2019 statements are not, and do not substitute for, proofs of claim or ballots of creditors who vote on a plan of reorganization.
ACandS , 462 B.R. at 96 (emphasis in original; internal citations and footnotes omitted); see also id. at 93 n.6 ("We note that the mere inclusion of a client on a 2019 in an asbestos case does not necessarily mean that the client filed or will file a claim or that any claim will be allowed once presented to the trust."); id. at 94 ("2019 statements are representations by counsel to a court as to who their clients are. The statements are not claims.").
On appeal, this Court reversed, concluding that "access should be provided" but "subject to certain limitations." In re Motions for Access of Garlock Sealing Technologies LLC ,
To the extent Retention Agreements are inadvertently provided to Garlock, Garlock shall not review such Retention Agreements, shall promptly destroy such Retention Agreements, and shall not provide them to any other person or entity or use them for any purpose whatsoever.
This Order authorizes Garlock to use such 2019 Exhibits solely in connection with the estimation proceedings in Garlock's chapter 11 bankruptcy cases ... and neither the 2019 Exhibits nor the information contained therein may be used for any other purpose.
Garlock shall not disclose publicly the information contained in any 2019 Exhibit except in an aggregate format that *743does not identify any individual represented person.
Recognizing that Garlock has requested the North Carolina Bankruptcy Court to enter a proposed protective order pursuant to the Protective Order Motion, public disclosure of the information in any 2019 Exhibit shall be subject to the terms of a protective order entered by the North Carolina Bankruptcy Court that is consistent with this Court's Opinion and Order and the terms of this Order.
(Civ. No. 11-1130-LPS, D.I. 67 at ¶¶ 1-4) On March 19, 2013, the WDPA District Court issued an order adopting this Court's opinion in Garlock and granting Garlock access to the 2019 Exhibits filed in the three WDPA bankruptcy cases, subject to certain restrictions. See In re Pittsburgh Corning Corp. , Civ. No. 11-1406-NBF, D.I. 33 (W.D.P.A. Mar. 19, 2013); In re Mid-Valley , Civ. No. 11-1439-NBF, D.I. 25 (W.D.P.A. Mar. 19, 2013); In re North American Refractories Co. , Civ. No. 11-1452, D.I. 30 (W.D.P.A. Mar. 19, 2013) (together, "Garlock II ").
Following entry of the orders by the Delaware and WDPA District Courts, in the Garlock and Garlock II cases, respectively, on remand Judge Fitzgerald established a protocol for the production of 2019 Exhibits ("Protocol Order"). (WRG D.I. 30490) The Protocol Order made clear that (1) "Garlock may not access retention agreements, exemplars or their equivalents;" (2) "Garlock may not use the 2019 Exhibits or their contents for any purpose other than the Liability Estimation in the NCWB Proceedings;" and (3) "Garlock may not disclose the identity of any individual listed in any of the 2019 Exhibits." (Id. at 4-5) The Protocol Order also designated a special master, who was instructed (among other things) to "review the file [going to Garlock] to ensure that the document does not list more than the last four digits of an individual's social security number."
D. The Access Decision
Honeywell and Ford filed their motions for access in the Consolidated Cases on *744June 30, 2016. (A1-A154) Honeywell and Ford seek use of the 2019 Exhibits by "any entity," not just themselves. (See A18) Honeywell stated that it intended to use the information "to review and analyze all aspects of the NARCO Trust's operations, including, without limitation, its claims processing procedures and the claims submitted to the NARCO Trust under the individual review and expedited review processes. The valuable information contained in the 2019 Exhibits will help to ensure that the purpose of the NARCO Trust, which is to promptly pay holders of 'valid' claims, is fulfilled ...." (A4-A5) Both Honeywell and Ford also seek to use the 2019 Exhibits for unspecified lobbying efforts. (A336, 10/14/16 Hr'g Tr. at 35; D.I. 52 at 31)
The NARCO TAC filed an objection to Honeywell and Ford's motion for access, which the other TACs, the FCRs, and various other parties joined. On October 14, 2016, the Bankruptcy Court heard oral argument on the motion for access. (A332-481)
On December 1, 2016, the Bankruptcy Court entered the Access Decision. Recognizing this Court's ruling in Garlock , the Bankruptcy Court looked to whether Appellants had articulated a proper purpose for access. See
On November 22, 2016, Honeywell and Ford filed notices appealing the Access Decision to the District Court (the "Notices of Appeal"). In addition, on November 23, 2016, Honeywell moved to stay the Access Decision pending resolution of this appeal (otherwise the three months of access would have expired), which the Bankruptcy Court granted on December 1, 2016. (ACandS D.I. 3835; see also D.I. 46 (denying as moot stay motion filed in this Court) ) On December 6, 2016, the TACs and FCRs filed notices of cross-appeal of the Access Decision (the "Notices of Cross Appeals" and, together with the Notices of Appeal, the "Appeals").
Collectively, the Appeals of the Access Decision have generated 45 separate cases before the District Court. By order entered May 24, 2017 (D.I. 15), the Appeals are consolidated for procedural purposes under Civ. No. 16-1078-LPS.
Because Appellants want unlimited access to the 2019 Exhibits, they have appealed the Bankruptcy Court's decision "to the extent that the Opinion and Order [i.e., the Access Decision] restrict Appellants' ability to access and use the 2019 Exhibits." (D.I. 16 at 1) In turn, the FCR and TAC Appellees' have cross-appealed based on their contention that the Bankruptcy *745Court should not have provided Appellants any access to the 2019 Exhibits. (See D.I. 22) Appellee Owens Corning, a former debtor whose bankruptcy is now closed, takes no position on the merits of the issues that are the subject of the Appeals. But it has appeared solely for the purpose of arguing that if access is granted, and if costs are incurred in connection with providing Appellants such access, none of the debtors in the Consolidated Cases (including Owens Corning) should be required to bear any of those expenses. (D.I. 21 at 6) Two amici-Washington Legal Foundation and American Association for Justice-have filed competing amicus briefs. (See D.I. 27, 31)
The Appeals are fully briefed. (See D.I. 16, 17, 21, 22, 23, 34, 35, 37, 39) On March 7, 2018, the Court held oral argument. (D.I. 52)
II. LEGAL STANDARDS
Appeals from the Bankruptcy Court to this Court are governed by
In conducting its review of the issues on appeal, this Court reviews the Bankruptcy Court's findings of fact for clear error and exercises plenary review over questions of law. See Am. Flint Glass Workers Union v. Anchor Resolution Corp. ,
The Court reviews de novo the Bankruptcy Court's interpretation of a statute and reviews for clear error whether the matter at issue falls within the statute. See Robbins v. Tripp ,
III. DISCUSSION
A. Presumption of Public Access: Common Law and Statutory Bases
Under the common law, there is a long-standing presumption of public access *746to judicial records. See Nixon v. Warner Comm'cns, Inc. ,
The common law presumption of access to judicial records is codified in § 107 of the Bankruptcy Code. As originally enacted by Congress in 1978, § 107(a) established a broad right of public access to all papers filed in a bankruptcy case, subject only to certain limited exceptions:
Except as provided in subsection (b) of this section, a paper filed in a case under [the Bankruptcy Code] and the dockets of a bankruptcy court are public records and open to examination by an entity at reasonable times without charge.
H.R. Rep. No. 595, 95th Cong., 1st Sess. 317-18 (1977); S. Rep. No. 989, 95th Cong. 2d Sess. 30 (1978). Section 107(b) provided-and still provides-that, on request of a party in interest, the Bankruptcy Court shall (and, on its own motion, may) protect an entity with respect to "a trade secret or confidential research, development, or commercial information" or matter that is "scandalous or defamatory." 11 U.S.C § 107(b).
In 2005, Congress enacted the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 ("BAPCPA"), adding subsection (c), which provides, in relevant part:
(c)(1) The bankruptcy court, for cause, may protect an individual, with respect to the following types of information to the extent the court finds that disclosure of such information would create undue risk of identity theft or other unlawful injury to the individual or the individual's property:
(A) Any means of identification (as defined in section 1028(d) of title 18)13 contained in a paper filed, or to be filed, in a case under this title.
(B) Other information contained in a paper described in subparagraph (A).
Commentators have observed that BAPCPA amended § 107 to address privacy concerns and that the addition of *747§ 107(c)"broadened the situations in which the court could protect individuals from disclosure of sensitive information in light of the emerging problem of identity theft and also the possible need to protect individuals from domestic violence or other injury." 2 COLLIER ON BANKRUPTCY ¶ 107.LH[2] (Alan N. Resnick & Henry J. Sommer eds., 16th ed.). The legislative history giving rise to § 107(c) includes this statement:
Privacy Protections. Under current law, nearly every item of information filed in a bankruptcy case is made available to the public. S. 256 restricts public access to certain personal information pertaining to an individual contained in a bankruptcy case file to the extent the court finds that disclosure of such information would create undue risk of identity theft or other unlawful injury to the individual or the individual's property. In addition, the bill prohibits the disclosure of the names of the debtor's minor children and requires such information to be kept in a nonpublic record, which can be made available for inspection only by the court and certain other designated entities. Further, S. 256 prohibits the sale of customers' personally identifiable information by a business debtor unless certain conditions are satisfied.
H.R. Rep. 109-31(I), Pub. L. 109-8 (Apr. 8, 2005), 2005 U.S. Code Cong. & Admin. News 88. Thus, the addition of § 107(c) in 2005 provided explicit statutory authority for what the Bankruptcy Court was already doing in the Consolidated Cases through the 2019 Orders: "restrict[ing] public access to certain personal information pertaining to an individual contained in a bankruptcy case file."
In Garlock , this Court held:
[T]he 2019 Statements, including the Exhibits, were "filed with" the Bankruptcy Court. They are, therefore, "judicial records." ...
As the 2019 Exhibits are judicial records that were filed with the Bankruptcy Court, there is a presumptive right of public access to them.
B. Appellants Cannot Appeal the 2019 Orders
The Bankruptcy Court first entered the 2019 Orders in 2004 and amended them in 2005, after Congress adopted
*748
As the Bankruptcy Court has since explained (as noted above), the 2019 Orders were entered, at least in part, under the authorization provided by § 107(c). See ACandS , 462 B.R. at 99-100 (holding "it is subsection (c) that is operative in the cases before us" and noting that 2019 Exhibits "are not placed on the public dockets based in part on § 107(c) which permits the court to protect an individual with respect to '[a]ny means of identification' "). Following the enactment of § 107(c), the Bankruptcy Court has consistently applied § 107 to each request for access to the 2019 Exhibits. See ACandS , 462 B.R. at 99-100 ; Access Decision,
As is also clear from precedent, Honeywell and Ford cannot now appeal the entry of the 2019 Orders. Even assuming that Appellants would have standing to press such a challenge, it lacks merit. The propriety of the 2019 Orders, in place (in one form or another) for 14 years now, has been established by prior appellate review, and is not subject to collateral attack, as this Court has previously determined. See Garlock ,
C. Section 107 Is Applicable to Appellants' Motion
The parties devote a great deal of attention to disputing whether Honeywell and Ford's motion for access to the 2019 Exhibits is governed by common law standards or, instead, by § 107. Relatedly, they are not in agreement as to whether the Bankruptcy Court applied common law or the statute. Considering these legal questions de novo , as the Court is required to do, this Court holds that Appellants' motion must be resolved pursuant to the standards of § 107. Less importantly, but equally clear to the Court, the Court concludes that the Bankruptcy Court did apply § 107 to the motion.
*749Appellants contend that § 107 is applicable. Appellees disagree, arguing that § 107 is applicable only to papers that are both "filed in a case" and on "the dockets of a bankruptcy court." (D.I. 22 at 26-27) Here, the 2019 Orders provide that the 2019 Exhibits were submitted to the Clerk but not filed on the public docket. It follows, in Appellees' view, that § 107 is inapplicable. (Id. at 27) (stating 2019 Exhibits are "unavailable on the public docket, except upon motion by a party and order of the Bankruptcy Court") (citing Kaiser ,
The Court rejected this argument in Garlock ,
Therefore, § 107(a)'s public right to access applies to the 2019 Exhibits, and access must be granted unless one of the statutory exceptions applies.
D. The 2019 Exhibits Come Within § 107(c)
Appellants argue that Appellees presented no evidence that the information contained in the 2019 Exhibits came within the scope of § 107(b) or (c) -and, further, that no such evidence could be presented. (D.I. 16 at 40-44) Appellants relatedly contend that the Access Decision contains no language indicating that the Bankruptcy Court, in granting limited access, determined whether the exceptions in § 107(b) or (c) were satisfied or engaged in the appropriate analysis. (Id. at 34) Appellees counter that it is unclear that § 107 imposes any evidentiary burden and that, to the extent it does, ample evidence supports the Bankruptcy Court's conclusion that the 2019 Exhibits contain information falling within § 107(c). (D.I. 22 at 42-44)
Having found that § 107(a) applies to the 2019 Exhibits, it is next appropriate to consider whether the exceptions to access codified in § 107 also apply. No party now argues that § 107(b) applies. In the Bankruptcy Court, the NARCO TAC had argued that § 107(b)'s "confidential commercial information" exception applied *750to portions of the 2019 Exhibits, as they contained client lists for each particular law firm and retainer agreements (or exemplars). But Appellants made clear to the Bankruptcy Court that they are not seeking access to retainer agreements or exemplars (see A191; A357, 10/14/16 Hr'g. Tr. at 26) ), a commitment they reiterated before this Court (see Tr. at 26). As no other "confidential commercial information" has been identified, § 107(b) is inapplicable.
By contrast, the record establishes that § 107(c) does apply to the Rule 2019 Exhibits. Pursuant to § 107(c), a bankruptcy court "may protect an individual with respect to [certain] types of information to the extent the court finds that disclosure ... would create undue risk of identity theft or other unlawful injury to the individual or the individual's property." The "types of information" include "any name or number that may be used, alone or in conjunction with any other information, to identify a specific individual."
As Appellees point out, and as is indisputable, such protectable information, e.g., names, addresses, social security numbers, and other identifiers, is ubiquitous in the 2019 Exhibits. Judge Fitzgerald expressly found that the 2019 Exhibits include at least some full social security numbers. (See Protocol Order, WRG D.I. 30490 at 5, ¶¶ 18-19 (stating: "[t]he PAWB Clerk's Office reviewed a sample of the CDs filed in the PAWB cases" and "confirmed that some of the 2019 Exhibits to which Garlock is granted access list the complete social security numbers of individuals, the disclosure of which is prohibited by Fed. R. Bankr. P. 9037(a)") ) Moreover, all of the courts that have considered issues relating to these very same 2019 Exhibits have determined that privacy interests are implicated by the personal-identifying information found within the vast amount of materials. See 10/6/04 Hr'g. Tr. at 8 (noting "[t]he privacy issue is an important issue" as "[m]ost of these claimants are, frankly, elderly. They don't want to be harassed by third parties. They don't want to be harassed by insurance companies who aren't paying. They don't want to be harassed by so-called investment advisers. They signed up, not to have their social security numbers and their disease spread around the country or to their neighbors or anyone else.");
Section 107(c)(1) provides that bankruptcy courts also "may protect" any "[o]ther information" in a paper that contains any "means of identification." Again, it cannot reasonably be disputed that such information *751is contained in the 2019 Exhibits. The 2019 Orders required attorneys to include in the 2019 Exhibits the "names and addresses" of claimants and potential claimants, and "for personal injury claimants, the type of disease giving rise to the claim." The Bankruptcy Court specifically found that the 2019 Exhibits contain the following:
(1) the names and addresses of the clients of the submitting attorney; (2) exemplars or actual copies of the relevant retention agreements; (3) identification of disease; (4) claim amounts, if liquidated; (5) sometimes full or partial social security numbers; (6) sometimes medical records, with information including full or partial social security numbers; family histories (including causes of death of family members), results of physical examinations, chest x-rays, and lung function tests, and other similarly sensitive medical information; and (7) sometimes other records that the law firm maintained in connection with or commingled with the required information.
Access Decision,
The Bankruptcy Court's findings are not clearly erroneous. Given the history of the Consolidated Cases, prior findings of fact with respect to the contents of the 2019 Exhibits, and the disclosures required by the 2019 Orders themselves, Appellees were not required to submit, and the Bankruptcy Court was not required to cite, specific examples of personal-identifying and confidential medical information contained in the 2019 Exhibits. Under the appropriate standard of review, this Court is bound by the Bankruptcy Court's finding as to the "types of information" contained in the 2019 Exhibits.
With respect to the risk of identity theft, Appellants argue that "the only information contained in the 2019 Exhibits that could potentially be used by an identity thief is the full social security numbers of personal injury asbestos claimants." (D.I. 16 at 40) Appellants contend that the records will be redacted in accordance with Bankruptcy Rule 9037, which requires, among other things, redaction of social security numbers, and "[t]hese redactions eliminate any risk of identity theft that could result from Appellants' unrestricted use access." (D.I. 16 at 40-41) Appellants argue Appellees failed to present any evidence to the contrary, including evidence of past identity theft resulting from 2019 materials that have already been made public in these and other cases.
Assuming (without deciding) that § 107(c) imposes an evidentiary burden on Appellees, the record contains ample evidence supporting the Bankruptcy Court's conclusion. Section 107(c) references "risk," and assessment of risk is forward-looking. (See A440, 10/14/16 Hr'g. Tr. at 109;
*752With respect to other unlawful injury, Appellees identified the risk to privacy interests, and specifically the disclosure of private medical information. As the 2019 documents identify clients and contain personal-identifying information about hundreds of thousands of sick, elderly, and vulnerable victims of asbestos, Appellees argue that numerous courts, including this one, have held that this information is protectable because of privacy interests. The Bankruptcy Court's finding as to the risk of disclosure of private medical information was not clearly erroneous. (See also A372, 10/14/16 Hr'g. Tr. at 41) (Bankruptcy Court stating: "What about privacy concerns and the medical records? This goes beyond the names and social security numbers or the four digits of the social security numbers, this goes to, for example, family history.") Instead, it is supported by the record, and is consistent with how other courts have treated similar information.
Individuals have privacy interests in their medical records. Congress has enacted laws making it unlawful to disclose an individual's medical information.
This Court has previously recognized, and acted to protect, the privacy interests of individuals identified in the 2019 Exhibits with respect to medical information.
Appellants state that they are not seeking medical records at this time (to the extent that any medical records are even included in the 2019 Exhibits). (D.I. 16 at 43; see also Tr. at 26) They have now clarified that they are only seeking access to the same set of already-redacted materials that have already been provided to Garlock. (See Tr. at 117) While this refinement of their request for access certainly reduces the risks of improper disclosure of personally-identifying information, and likewise reduces the risk of identity theft or other injury, it does not eliminate these risks, for reasons including that the redaction process (i.e., obscuring the first five digits of a social security number, removing medical records) is not perfect. Also, Appellees still seek access to each individual claimants' (and potential claimants') medical conditions and sufficient information to associate a particular condition with a specific individual. (See Tr. at 108-10) Thus, again, the record establishes that the 2019 Exhibits are within the scope of § 107(c).
E. The Bankruptcy Court Properly Considered Appellants' Purpose
Appellants argue that the Bankruptcy Court erred in considering whether they have a proper purpose to access the 2019 Exhibits, characterizing the Bankruptcy Court's analysis as improperly grounded in common law principles. (D.I. 16 at 13, 60) In the Court's view, however, § 107(c) authorizes Bankruptcy Courts to consider the purposes of a party requesting access to 2019 materials, as part of its evaluation of whether -and, if so, how-to provide access while also "protect[ing] an individual."
Section 107 provides the Bankruptcy Courts with authority and discretion to fashion orders that appropriately balance the interests of a party seeking access to 2019 materials with the interests of those whose information is contained therein. See In re Anthracite ,
Beginning in 2004 with the first of the 2019 Orders, the Bankruptcy Court has *754consistently acted to protect individuals by putting procedural protections in place to regulate access. First, the 2019 Exhibits were not publicly filed, in order to eliminate widespread public access on the electronic docket. Second, a party seeking access is required to file a motion for access with the Bankruptcy Court, "show[ing] how the information is necessary, relevant, whatever term you wish to choose." (10/6/04 Hr'g. Tr. at 55) Part of the contemplated, necessary showing, going back to the 2019 Orders themselves, is articulation (and evaluation) of the intended use or purpose for the materials being accessed.
The Bankruptcy Court did not err in considering Appellants' purpose or need for access. Rather, the Bankruptcy Court was properly following the procedure put in place by the 2019 Orders. Since the right of access is not unfettered, but must account for the risk of identity theft and other potential injury to individuals' personal-identifying information, the required balancing of interests necessarily calls on the Bankruptcy Court to consider in its analysis what Appellants want to do with the 2019 Exhibits. Thus, the Bankruptcy Court's actions were consistent with the authority and discretion provided to it under § 107(c).
F. Appellants Articulated One Proper Purpose
With respect to Appellants' purposes, the Bankruptcy Court observed that while Appellants' motion relied on investigation of potential fraud in the claims process as a purpose, Appellants elaborated at oral argument that they also intended to use the information for lobbying. (A366, 10/14/16 Hr'g. Tr. at 35) Appellants added that they may have "50 other purposes for using these statements" (id. at A354), expressing the view that their purposes are irrelevant because § 107 grants them presumptive and unlimited access (see A352-53). See also Access Decision,
This Court confronted a similar issue in Garlock . There Garlock articulated several purposes for the access it was seeking to the 2019 Exhibits: use in its ongoing bankruptcy, and particular estimation proceedings; lobbying; and pursuit of potential RICO actions against asbestos plaintiffs' counsel. See
*755Although the Court did not expressly state it, implicit in its ruling in Garlock was its conclusion that only one of Garlock's articulated purposes was a proper purpose. See generally Access Decision,
Here, too, the only proper purpose identified by Appellants is the use of the 2019 Exhibits in connection with ongoing proceedings, specifically to aid efforts to ferret out fraud in administration of the NARCO Trust. While the nature of the 2019 Exhibits may make them of limited probative value in identifying any fraudulent claims that may be pending before the NARCO Trust, the weight-if any-to be given to them in connection with fraud-fighting efforts is not a matter for this Court to evaluate. All that this Court needs to decide, as it did in Garlock and reiterates here, is that rooting out fraud in an ongoing Court-supervised litigation or Court-created claims process, and helping enhance public confidence in such Court-related proceedings, is a proper purpose. Taking massive quantities of information about asbestos claimants and potential claimants-submitted under sensitive, time-constrained circumstances, in the midst of evolving versions of the 2019 Orders, none of which stated what personal-identifying information lawyers could not submit (e.g., full social security numbers), and all of which was designed to aid the Bankruptcy Court in the challenging task of managing complex, large-scale bankruptcy proceedings-and allowing it to be used outside of an ongoing, carefully-managed litigation or trust proceeding, would not be proper, as the risks of misuse and harm to individuals would greatly outweigh any value the 2019 Exhibits could possibly have (e.g., for lobbying or legislative efforts).
G. It Is Proper to Balance Competing Interests Under § 107(c)
Appellants argue that the Bankruptcy Court is not authorized to "balance the interests of the public and private parties," since § 107 has "eliminated the balancing of public and private interests required by common law." (D.I. 16 at 34) They cite Gitto Global , in which the First Circuit stated: "Once the presumption of public access attaches under § 107(a), the next step in the inquiry is not to engage in a balancing of the equities, as required by the common law, but rather to determine whether the material at issue falls within a specific exception to the presumption-namely, into one of the § 107(b) categories." In re Gitto Global Corp. ,
The Court perceives no error in the Bankruptcy Court's approach.
The statute provides: "The bankruptcy court, for cause, may protect an individual ... to the extent the court finds that disclosure of such information would create undue risk of identity theft or other unlawful injury ."
Appellants cite many cases for the purported proposition that " Bankruptcy Code sections 107(b) and (c) dispense with the Court's discretion under the common law." (D.I. 16 at 31-32, 34) However, not one of these cases applied § 107(c). See In re Blake ,
With one exception, Appellants' cases all recognize that § 107 codified common law. See FiberMark ,
The 2019 Orders required the Bankruptcy Court to evaluate Appellants' purpose, and § 107(c) authorized the Bankruptcy Court to exercise its discretion to impose appropriate protections. The Bankruptcy Court's reference to Third Circuit cases that balanced public and private interests under the common law is not inconsistent with its § 107(c) analysis.
*758H. Restrictions Imposed by the Bankruptcy Court
Having found Appellants had a presumptive right to access the 2019 Exhibits, that such Exhibits include personally-identifying information the disclosure of which poses a risk of identity theft or other injury, and that Appellants had a proper purpose for seeking access, the Bankruptcy Court appropriately next considered whether and what additional protections were required before granting Appellants access under § 107(c). These restrictions are: (i) Appellants may only share the information in the 2019 Exhibits with the NARCO Trust in an aggregate format and may not share the identity of individuals by name or other identifying means; (ii) Appellants' access will be limited to a three-month period, and they must destroy the 2019 Exhibits at the conclusion of their work, consistent with the Protocol Order; (iii) Appellants' efforts will be at their own expense; and (iv) the Bankruptcy Court will appoint someone to oversee production of the 2019 Exhibits, whose costs will be borne by Appellants. See Access Decision,
Appellants argue that restrictions imposed by the Bankruptcy Court pursuant to § 107(c)"must (i) bear a causal relationship to the undue risk of identity theft or other unlawful injury created by the potential disclosure and (ii) be tailored to the extent necessary to mitigate such risks." (Id. at 44-45 (citing In re Creighton ,
The Court agrees with Appellees. The Bankruptcy Court did not abuse its discretion in adopting the additional protections it imposed as conditions of Appellants' access to the 2019 Exhibits. The restrictions were consistent with what this Court imposed in Garlock .
Appellants are not well-positioned to meet their burden to show that any of the restrictions on access are the result of an abuse of discretion because they did nothing to help inform the Bankruptcy Court's exercise of its discretion. As Appellants' position was that everyone should be given unlimited, unrestricted access, they did not advocate any restrictions. Under these circumstances, the Bankruptcy Court did not abuse its discretion.
In particular, the Bankruptcy Court did not abuse its discretion in limiting access to Honeywell and Ford, the only entities that have moved for access, which is entirely consistent with the 2019 Orders and is the process that has been followed for all access requests. (See A384, 10/14/16 Hr'g. Tr. at 53) Nor was there any abuse of discretion in limiting Appellants' use of the 2019 Exhibits to sharing with the NARCO Trust, as this was the only proper purpose Appellants identified for having access to these materials. With respect to the three-month time limit on Appellants' access to the 2019 Exhibits, there was also no abuse of discretion. While the Bankruptcy Court did not expressly state the basis for imposing this limitation, there is also no basis in the record to make any finding as to what amount of time (presumably longer than three months) Appellants would need to accomplish the purpose for which the Bankruptcy Court provided access. (See Tr. at 26-29)
*759(Appellants agreeing they proposed no alternative time limit)
Finally, there was also no abuse of discretion in imposing on Appellants, as the parties seeking access, any costs that may arise with implementing the limited access approved by the Bankruptcy Court, particularly any costs related to review and redaction of the 2019 Exhibits. See Access Decision,
The Bankruptcy Court did not abuse its discretion.
I. First Amendment
In this Court, Appellants argue that the Bankruptcy Court erred by failing to analyze whether they have a First Amendment right of access to the 2019 Exhibits. (See D.I. 16 at 61-69; see also Tr. at 17-18 (citing bases for having raised First Amendment below) ) In its motion for access, Honeywell included a footnote stating: "[t]he First Amendment is another legal basis in support of the right to access public records, and may provide even more robust protection." (A13 at n.5) It also asserted that the Third Circuit "has not yet defined the scope of the First Amendment protection of access to civil proceedings."
The Court agrees with Appellees that Appellants waived their First Amendment argument by limiting their discussion of it in the Bankruptcy Court to a one-sentence statement buried in a footnote. "Generally, the Court will not consider arguments that were not presented to the Bankruptcy Court, as the Bankruptcy Court has not had a chance to consider them." Garlock ,
J. Cross-Appeal
Cross-Appellants argue that the Bankruptcy Court should not have granted any access to to Appellants because their admitted purposes are improper. (See D.I. 22 at 58-64) For the reasons stated above, the Court disagrees. Appellants articulated a proper purpose. Therefore, again, the Court will affirm the Bankruptcy Court's Order.
IV. CONCLUSION
The Bankruptcy Court entered the 2019 Orders in 2004, based on its supervisory power over its own records, its ability to tailor the requirements of Bankruptcy Rule 2019, its equitable powers under § 105(a), and, later, the discretion granted by Congress in § 107(c). The 2019 Orders are not, at this point, appealable. The 2019 Orders implemented certain procedures to protect the privacy of individuals involved in the Consolidated Cases. Those protections included filing the 2019 Exhibits with the Clerk and requiring a party seeking access to file a motion and explain why access was sought. In determining that Appellants should be granted access to the 2019 Exhibits, the Bankruptcy Court properly looked to the Appellants' asserted purpose, as required by the 2019 Orders. The Bankruptcy Court committed no error of law.
In determining that the 2019 Exhibits contain information coming within § 107(c), the Bankruptcy Court found that the 2019 materials included identifying information-including full social security numbers and private medical information. These findings were not clearly erroneous. In determining that unlimited disclosure of the 2019 Exhibits presented an undue risk of unlawful injury, as contemplated by § 107(c), the Bankruptcy Court identified the disclosure of personal identifiers and private medical information as posing such a risk. Again, this finding was not clearly erroneous.
In imposing restrictions on Appellants' access to the 2019 Exhibits, the Bankruptcy Court acted consistent with its authority. It did not abuse its discretion.
*761Accordingly, the Court will affirm the Bankruptcy Court's Access Decision.
ORDER
At Wilmington, this 27th day of March, 2018; for the reasons set forth in the accompanying Opinion issued this date,
IT IS HEREBY ORDERED that:
1. The Bankruptcy Court's Opinion and Order, In re Owens Corning ,560 B.R. 229 (Bankr. D. Del. 2016), is AFFIRMED.
2. The Court's Opinion and Order shall be filed in all appeals that have been consolidated with the instant action.
3. The Clerk of Court is directed to CLOSE Civ. No. 16-1078-LPS as well as all separate actions that have been consolidated with the instant action.
The appendix in support of Appellants' opening brief (D.I. 17) is cited herein as "A___." The appendix in support of Appellees'/Cross-Appellants' Opening Brief (D.I. 23) is cited herein as "AP___." References to documents filed in the Consolidated Cases will be cited herein as follows: for In re ACandS, Inc. , Case No. 02-12687, as "ACandS D.I. ___;" for In re Armstrong World Indus., Inc. , Case No. 00-04471, as "AWI D.I. ___;" for In re Combustion Eng'g, Inc. , Case No. 03-10495, as "CE D.I. ___;" for In re The Flintkote Co. , Case No. 04-11300, as "Flintkote D.I. ___;" for In re Kaiser Aluminum Corp. , Case No. 02-10429, as "KA D.I. ___;" for In re Owens Corning , Case No. 00-03837, as "OC D.I. ___;" for In re U.S. Mineral Prods. Co. , Case No. 01-02471, as USMP D.I. ___;" for In re USG Corp. , Case No. 01-02094, as "USGC D.I. ___;" and for In re W.R. Grace & Co. , Case No. 01-01139, as WRG D.I. ___."
Of the nine Consolidated Cases, the dockets reflect that only the jointly administered Chapter 11 cases of In re W.R. Grace & Co. remain open. As of March 6, 2018, there were five remaining unresolved non-asbestos claims to be administered by the sole remaining debtor in those cases. (See WRG D.I. 33007 at 3)
The Trust Advisory Committees include: The North American Refractories Company Asbestos Personal Injury Settlement Trust Advisory Committee, ACandS, Inc. Asbestos Settlement Trust Advisory Committee, Armstrong World Industries, Inc. Asbestos Personal Injury Trust Advisory Committee, the Combustion Engineering 524(g) Asbestos PI Trust Advisory Committee, the Flintkote Company Asbestos Personal Injury Trust Advisory Committee, Kaiser Aluminum & Chemical Corporation Asbestos Personal Injury Trust Advisory Committee, Owens Corning/Fibreboard Asbestos Personal Injury Trust Advisory Committee, United States Gypsum Asbestos Personal Injury Trust Advisory, and WRG Asbestos Personal Injury Trust Advisory Committee.
The Future Claimants Representatives include: James J. McMonagle, the Future Claimants' Representative for the Flintkote Asbestos Trust, and Lawrence Fitzpatrick, the Future Claimants' Representative for the North American Refractories Company Asbestos Personal Injury Settlement Trust.
Appellants moved for an order authorizing "any entity ... including [Appellants] ... [to] access, inspect, copy and receive copies of ... any and all of the 2019 Exhibits ..." (A18, ¶ 2) Appellants sought access for any purpose, including "to ferret out invalid or fraudulent asbestos claims." (A5, ¶ 10) Appellants argue that their purposes are irrelevant and no limitations on use of the information may be imposed. (See A429, 10/14/16 Hr'g. Tr. at 98)
NARCO, a Honeywell related company, filed for bankruptcy in 2002 to resolve its asbestos-related liabilities related to refractory and other asbestos-containing products. NARCO's plan of reorganization was confirmed in 2007. The plan established a § 524(g) asbestos trust, the "NARCO Trust." All present and future asbestos claims against NARCO are channeled to the NARCO Trust, which is responsible for processing these claims subject to terms and conditions set forth in the Trust Distribution Procedures.
See Order Requiring Filing of Statements Pursuant to Fed. R. Bankr. P. 2019, dated Aug. 25, 2004 Flintkote D.I. 201 (A524); Amendatory Order Requiring Filing of Statement Pursuant to Fed. R. Bankr. P. 2019, dated Aug. 27, 2004, Flintkote D.I. 219 (A528); Revised Order Requiring Filing of Statements Pursuant to Fed. R. Bankr. P. 2019, dated Oct. 22, 2004, Flintkote D.I. 337 (AP001); Administrative Order with Respect to 2019 Statements and/or Exhibits Submitted in Certain Asbestos Cases that do not Comply with the Order, as Amended, Governing the Filing Thereof, dated Dec. 23, 2004, Flintkote DI 511, WRG D.I. 7349 (AP007); Supplement to Revised Order Requiring Filing of Statements Pursuant to Fed. R. Bankr. P. 2019, dated July 15, 2005, Flintkote D.I. 957 (AP010).
Order Denying Expedited Motion of Garlock Sealing Technologies, LLC for Order Authorizing Access to Certain 2019 Statements Filed in Case, In re Pittsburgh Corning Corp. , No. 00-22876 (Bankr. W.D. Pa. Mar. 25, 2010) (D.I. 7579).
See, e.g. , Motion of Garlock Sealing Technologies LLC for Orders Authorizing Access to 2019 Statements Filed in This Court and for Related Relief, In re Pittsburgh Corning Corp. , No. 00-22876 (Bankr. W.D. Pa. Jan. 10, 2011) (D.I. 8096).
See In re ACandS, Inc. ,
The Protocol Order further stated: "[t]he NCWB Protective Order identifies restrictions on the Receiving Estimation Parties' use of the 2019 Exhibit Production. The restrictions imposed by this Protocol shall be construed as complementary to the restrictions imposed by the NCWB Protective Order. Where there is a perceived conflict between the restrictions and/or limitations imposed by the NCWB Protective Order and this Protocol, the more restrictive and/or limiting provision shall govern." (WRG D.I. 30490 at 9)
In addition, the Protocol Order provided that "[p]rior to providing any copy of the 2019 Exhibit to a Receiving Estimation Party or any other person or entity authorized by NCWB, Garlock shall obtain and file in each of the above-captioned cases, an affidavit setting forth that the recipient understands and agrees to be bound by the NCWB Protective Order and this Protocol, including the return and destruction requirements ...." (Id. ) Further, within 30 days after final confirmation or substantial consummation of the Garlock plan of reorganization, whichever is earlier, Garlock and each recipient authorized to receive copies must file a sworn affidavit in each of the cases attesting that the recipient and its employees, agents, experts and any other person or related entity (1) "[u]sed the 2019 Exhibits solely for the purpose of the NCWB Proceeding;" (2) "[d]id not share or distribute any of the 2019 Exhibits (in whole or in part) with any person or entity other than what was expressly authorized by an Order of the NCWB, DEB, or PAWB;" (3) "[d]id not and will not publicly disclose the identity of any individual ... other than what was ... authorized"; and (4) "[r]etrieved, collected and permanently destroyed all copies of the 2019 Exhibit Production, including any and all subparts or subsets, regardless of whether any or all of the 2019 Exhibit data was merged with any other data." (Id. at 10)
These various orders pertaining to Garlock's limited access to the Rule 2019 Exhibits all remain in effect.
"Federal courts in this circuit, as well as other circuits, consistently have held that where a decision of the bankruptcy court was made pursuant to a 'flexible' code provision, such as one providing that the court 'may' take certain action under appropriate circumstances, the proper standard of review to be applied on appeal is whether the court's decision constituted an abuse of discretion." In re Cont'l Airlines ,
(A) name, social security number, date of birth, official State or government issued driver's license or identification number, alien registration number, government passport number, employer or taxpayer identification number;
(B) unique biometric data, such as fingerprint, voice print, retina or iris image, or other unique physical representation;
(C) unique electronic identification number, address, or routing code; or
(D) telecommunication identifying information or access device (as defined in section 1029(e) ).
On July 15, 2005, following the enactment of § 107(c), the Bankruptcy Court further supplemented the 2019 Orders. See Supplement to Revised Order Requiring Filing of Statements Pursuant to Fed. R. Bankr. P. 2019, dated July 15, 2005, Flintkote D.I. 957 (AP010).
See Revised Order Requiring Filing of Statements Pursuant to Fed. R. Bankr. P. 2019, dated Oct. 22, 2004, Flintkote D.I. 337 (AP001); Supplement to Revised Order Requiring Filing of Statements Pursuant to Fed. R. Bankr. P. 2019, dated July 15, 2005, Flintkote D.I. 957 (AP010).
See Nixon ,
See 10/6/04 Hr'g. Tr. at 30-32.
See 10/6/04 Hr'g. Tr. at 31.
See 10/6/04 Hr'g. Tr. at 20 & 32.
Appellants assert they are "left to speculate" as to whether the Bankruptcy Court intended to provide restricted access under § 107 or the common law. (D.I. 16 at 33 n.13) This is a curious argument. Before the Bankruptcy Court, Appellants insisted they had a right to access the 2019 Exhibits under both § 107 and the common law. (See A11 ¶ 26 (Appellants arguing for common law right of access); see also A222 (Honeywell arguing that common law right of access rendered any right to access under § 107 gratuitous) ) Understanding this, the Bankruptcy Court concluded that § 107 governs Appellants' request for access. The Bankruptcy Court stated precisely this during oral argument. When Appellees' counsel said, "I don't know how much time Your Honor wants to spend on kind of discussing whether 107 applies or not," the Court responded, "Well, I think it does apply." (A392, 10/14/16 Hr'g. Tr. at 61) Subsequently, at the outset of its Opinion, the Bankruptcy Court wrote: "Honeywell's and Ford's argument in favor of access rests on Bankruptcy Code Section 107...."
Honeywell and Ford also argue that they have a common law right of access to the Rule 2019 Exhibits. They cite, among other cases, Publicker Indus., Inc. v. Cohen ,733 F.2d 1059 , 1068-70 (3d Cir. 1984) ; and In reCendant Corp. ,260 F.3d 183 , 192 (3d Cir. 2001). However, the District Court has already established that the Rule 2019 Exhibits are the kind entitled to protection and therefore the common law does not affect the Court's ruling.
See e.g. , Health Insurance Portability and Accountability Act of 1996 ("HIPAA") (federal law setting out rules and limits on who can access and receive individual's health information).
See Garlock ,
The Bankruptcy Court cited the Third Circuit's decisions in Cendant and LEAP for the principle that access may be denied where court files could potentially become a vehicle for improper purposes-a statement that is consistent with § 107(c). The Bankruptcy Court merely mentions the balancing test set forth in Pansy , in which the Third Circuit considered a request to modify a protective order, and determined that such a request (like the 2019 Orders) required the movant to come forward with a reason to modify the order.
See, e.g., In re Alterra Healthcare ,
While § 107(a) provides that, "except as provided in subsections (b) and (c)," papers filed in a bankruptcy case "are open to examination by an entity at reasonable times without charge ,"
In finding no abuse of discretion, the Court is also not restricting the Bankruptcy Court's discretion, including as these cases move forward. That is, it would be within the Bankruptcy Court's discretion to modify the restrictions it imposed should it believe circumstances warrant doing so or should the Court decide it wishes to provide Appellants another opportunity to propose alternative restrictions. These are matters left to the Bankruptcy Court.
The prior restraint argument was arguably not waived. (See D.I. 16 at 47-53) Even assuming this argument was adequately preserved, it lacks merit, for reasons including that the 2019 Exhibits are not and have never been public, Appellants do not possess the materials, and they do not have an unfettered constitutional right to access them. A prior restraint exists only "when information ... [a person] possesses is subjected to 'restraints on the way in which the information might be used' or disseminated." Sorrell v. IMS Health Inc. ,
Reference
- Full Case Name
- IN RE: MOTIONS SEEKING ACCESS TO 2019 STATEMENTS.
- Cited By
- 10 cases
- Status
- Published