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August 22, 2018

Will Fourth Circuit Decision To Unseal A CPSC Case Be A Boon To Asbestos Defendants?

The U.S. Court of Appeals for the Fourth Circuit issued a decision on April 16 in a case called Company Doe v. Public Citizen that signals hope for asbestos defendants who are seeking to combat fraudulent claims in North Carolina. Those claims were brought in connection with a bankruptcy proceeding styled as In re: Garlock Sealing Technologies, LLC et al. (“Garlock”). How could an anonymous CPSC case from Maryland affect a gasket company’s asbestos bankruptcy from North Carolina? In a word: transparency. Both cases involve the ability of third parties to gain access to documents enmeshed in public litigation.

In issuing its ruling in Company Doe, the Fourth Circuit surely had no inkling that its words might cheer long-suffering asbestos defendants. However, that court’s insistence on transparency and public access to the judicial process bodes well for an asbestos case in which similar issues have been percolating. When the district court (and perhaps eventually the Fourth Circuit) hears motions from asbestos defendants and others about divulging sealed documents from the Garlock asbestos bankruptcy docket, the recent decision in Company Doe will surely loom large. There is no guaranty as to where the Fourth Circuit ultimately will come down on the sealing issues in Garlock. But it does appear that a new day is dawning, and—if the Court of Appeals acts consistently with its stated policy favoring public access in Company Doe—it just might prove to be the Day of Reckoning for fraudulent asbestos plaintiffs and their trial lawyer accomplices.

Company Doe Takes Two Steps Forward in District Court

Company Doe v. Public Citizen, No. 12-2209 (“Company Doe”), started when the U.S. Consumer Product Safety Commission received a “report of harm” and sought to post it on its new government-run product safety database website. [Full disclosure: I worked as legal counsel to CPSC Commissioner Anne Northup from 2009 through 2010, but left before this report of harm was received.] The report alleged that a company’s product was related to the death of an infant, but the company strongly objected that the report of harm was not accurate. When the company could not obtain satisfaction through direct negotiations with the Commission, it was forced to file suit against the CPSC in federal district court in Maryland (where the CPSC is located) to enjoin the Commission from posting the erroneous report of harm.

Seal of the Consumer Product Safety Commission. Seal of the Consumer Product Safety Commission. (Photo credit: Wikipedia)

In an unusual twist, the company asked the district court to proceed under two special conditions. First, the company sought to remain anonymous (hence, the “Company Doe” title of the case). Second, the company asked to seal most or all of the proceedings. Because the entire point of the company’s case was to prevent its being falsely associated with an infant’s death, the company argued that allowing its identity to be disclosed in court—and then immediately in the newspapers and across the internet—would defeat the very relief that it sought. Furthermore, the company contended that the court should seal any documents in the case that could be used to deduce its identity. The agency and several self-appointed consumer groups objected to both conditions. Nevertheless, the district court granted the company’s request for anonymity, sealed many records, and kept most filings off the court’s public docket.

Not only did the court rule in Company Doe’s favor on anonymity-related issues, but it ultimately sided with the company on the merits too. The court significantly redacted its opinion in Company Doe v. Inez Tenenbaum et al., as well as portions of other documents that became public. But Judge Alexander Williams Jr.’s decision made it abundantly clear that, by trying to post a report of harm that was not related to the company’s product, the CPSC’s actions were arbitrary and capricious, an abuse of agency discretion, and in violation of the Administrative Procedure Act:

The Commission’s position that the report should be published is untenable. In violation of statutory and regulatory mandates, the report is misleading and fails to relate to Plaintiff’s product in any sensible way … In short, the Commission’s decision is unmoored to the CPSIA’s public safety purposes and runs afoul of bedrock principles of administrative law and the sound policies that buoy them. (pp. 53-4)

Original article:

Will Fourth Circuit Decision To Unseal A CPSC Case Be A Boon To Asbestos Defendants?