Court Rejects Sealed Documents in Pollution Case

September 30, 2003

The Daily Journal

LOS ANGELES - In a potentially significant ruling, an appellate court last week barred an Ohio-based bicycle maker from submitting evidence under seal, including admissions that it may have violated pollution laws.

The 2d District Court of Appeal rejected Huffy Corp.'s claims that the documents should be sealed because of privilege issues and because disclosure could harm its business.

"No overriding public interest warrants secreting from the public documents filed in its courts that there may have been violations of federal and state pollution laws," Presiding Justice Paul A. Turner said in the published decision.

Andrew Yamamoto, an attorney not involved in the case who represents water agencies on pollution and water rights issues, said the decision could transform the way environmental cases are fought.

"I think the court wanted to make it clear that you shouldn't presume that you can seal documents for convenience," Yamamoto said.

At issue was contamination of groundwater near a former manufacturing site in Azusa. Huffy, along with 18 other entities, has been deluged by claims from "thousands of plaintiffs" over the pollution, according to the ruling. The Environmental Protection Agency allegedly ordered Huffy and its co-defendants to develop a cleanup plan for a portion of the San Gabriel superfund site.

Los Angeles Superior Court Judge Owen Lee Kwong ruled that Huffy had not exhausted its primary insurance coverage, and therefore could not force Winterthur Swiss Insurance Company to defend the case.

The ruling sends the sealed documents back to Huffy, which has 10 days to appeal without the documents or to resubmit them openly. Huffy Corporation v. Superior Court of Los Angeles 2003 DJDAR 10827 (Cal. 4th. App. Sept. 22, 2003).

Steven Crane of Berkes Crane Robinson & Seal in Los Angeles, who represented Huffy's excess-coverage insurers, said he thought Huffy may abandon its appeal. Terry Avchen of Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro in Los Angeles, Huffy's counsel, could not be reached for comment on Crane's assessment.

But Avchen said earlier that the court, inundated by a steady stream of documents submitted under seal, "wanted to lay down the rules.

"If Judge Turner feels he wants these documents to be made public, that's fine with us," Avchen said. "There is nothing to hide."

The appellate panel said Huffy did not demonstrate that it would be harmed substantially by making the documents public.

The opinion cited Universal Studios v. Superior Court (2003) 110 Cal. App. 4th and NBC Subsidiary (KNBC-TV) Inc. v. Superior Court (1999) 20 Cal. 4th. The NBC case established "constitutional requirements applicable to a request to seal court records," the appellate court said.

The trial court failed to follow the requirement to hold a hearing and make express findings that a party will be harmed if documents are not sealed, the appellate court noted.

Among the documents Huffy wanted to protect was a confidential settlement agreement with one of its primary insurers. The documents "contain admissions that [Huffy] may have violated federal and state pollution laws" and identify witnesses to possible violations, the appellate decision said.

But the blanket protective order also shielded copies of notices of motion and proofs of service along with non-California opinions "readily available on the Internet and in law libraries," the appellate decision noted.

Huffy cited attorney-client privilege, confidentiality agreements "with numerous third parties" and harm to its business interests as reasons for keeping the documents sealed.

Scott Hengesbach of Muchison & Cumming in Los Angeles, a toxic-torts attorney who typically represents defendants in environmental lawsuits, said the opinion left him "wanting more" because it did not present a sufficient analysis of Huffy's arguments for keeping the documents sealed.

"If I were to try and apply this decision to future disputes of this nature," Hengesbach said, "I'd have to go look at the briefs. It's not very illuminating as it's written here."

Hengesbach did agree with Yamamoto that the court was trying to send "a clear message" in this case.

"It clearly suggests a strong leaning toward keeping documents in the public domain," he said.

Justices Orville A. Armstrong and Richard M. Mosk concurred in the 3-0 decision.