Court To Hear Arguments In Case That Could Allow Companies To Litigate In Secret

This is just one of many pages in the 2012 district court ruling that has more black bars than text on it.

This is just one of many pages in the 2012 district court ruling that has more black bars than text on it.

Companies don’t ever want the public to know they’re involved in lawsuits. This is one of the many reasons that a growing number of businesses now force consumers to agree to mandatory arbitration for resolving disputes; it keeps the fight out of the public eye and often doesn’t allow for multiple consumers to join their complaints. Tomorrow, a federal appeals court will hear arguments regarding a case that ultimately could give companies the ability to litigate cases under a veil of secrecy.

We first told you about this situation a year ago. It involves a challenge to the Congressionally mandated database maintained by the Consumer Product Safety Commission.

The database not only gathers product-related incident reports from various public sources around the country, but also gives consumers the ability to file safety concerns. Much like the long-running auto-related database operated by the National Highway Traffic Safety Administration, manufacturers are then given the chance to respond and dispute the claims if they believe them to be untrue.

At some point in the last few years (it’s impossible to know since all the particulars about this case have been redacted), some company took issue with a report (and possibly multiple reports; again, it’s all redacted) filed on the database, claiming the statements posted to were “materially inaccurate.”

After some discussions with the CPSC about this issue, the agency redacted some of what had been posted to the database. That wasn’t enough to satisfy “Company Doe,” which then filed suit against the CPSC and its chair, Inez Tenenbaum.

But, at the request of this mysterious plaintiff, everything about the lawsuit is hidden from public view. That means no one knows the company’s name (or even what type of product it makes), the nature of the initial complaint(s), or the company’s issue with the complaints.

In 2012, Consumers Union, Public Citizen, and the Consumer Federation of America, filed a request to have the details of this case unsealed, believing that businesses should not be able to litigate safety-related complaints behind a shield of anonymity. A U.S. District Court judge shot down that request in a 73-page ruling [PDF] that is so blacked-out that it looks more like the world’s longest barcode than it does a legal document.

The advocacy groups subsequently appealed this ruling to the U.S. Court of Appeals for the Fourth Circuit in Richmond, VA, arguing that the lawsuit “proceeded from filing to judgment with a secret plaintiff, secret arguments, and secret facts,” and the district court “The seal imposed in this case is incompatible with our law and national tradition of public access to court proceedings.”

That was last December. Tomorrow, the appeals panel will finally hear arguments from the advocates as to why it’s vital that this case be unsealed and that the public should be able to know all the relevant facts.

The results of this case, which may get all the way to the Supreme Court, could have a huge impact on public safety, as a ruling for “Company Doe” would allow any manufacturer, distributor, or even retailer of a consumer good to file a lawsuit about consumer complaints without ever having to go on the public record as having sued and permanently erasing the initial complaint that led to the suit.

“If companies can challenge reports in the database in secret, Congress’s goal of informing the public will be undermined by years’ worth of secret litigation during which the public will be oblivious to potential hazards,” writes Public Citizen in a statement about tomorrow’s hearing.

In the larger picture, this case is a test of the First Amendment right of access to court proceedings. People and businesses are defamed, slandered, and libeled all the time, and they frequently sue to have their names cleared. But they have not been able to file suits under fictitious names while also having all relevant facts hidden from public record. Even attempts to have something as minor as a whiny Yelp review removed before a trial or settlement has been held as a violation of the rule against prior restraints.

“If a corporate reputational interest justifies secret litigation or the use of a pseudonym, one can a imagine a lot of companies stepping forward to seek secrecy,” explains Public Citizen. “Companies sued for fraud, pollution, discrimination, and (of course) making dangerous products could all claim they ought to be allowed to litigate in secret under this view.”

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