Huffy Corp. v. Superior Court

Opinion

I. INTRODUCTION

On May 1, 2003, petitioner and defendant, Huffy Corporation, filed a mandate petition which seeks to set aside an order denying its cross-summary-adjudication motion in an insurance coverage dispute in two related

H. PROCEDURAL HISTORY

On December 19, 2001, plaintiffs, Winterthur Swiss Insurance Company, St. Paul International (UK) Limited, Turegum Insurance Company Ltd., Stronghold Insurance Company Limited, Excess Insurance Company Limited, Compagnie Beige D’Assurrance Generale, CNA Reinsurance of London, and Underwriters at Lloyd’s, London Severally Subscribing Liability Insurance Policy Numbers 020029005, 188730100, and 1837355, filed a declaratory relief complaint against defendant and codefendants, Yasuda Fire & Marine Insurance Company, and The Dominion Insurance Company Limited. Plaintiffs alleged defendant had demanded they: provide insurance coverage for claims arising from chemicals in the groundwater near a former manufacturing site located at 1120 West Foothill Boulevard in Azusa, California; defend certain toxic tort actions pending in the respondent court; represent it in negotiations with the Environmental Protection Agency as well as state and local authorities concerning “remediation of the Baldwin Park Operable Unit ... of the San Gabriel Superfund Site”; defend it in connection with a federal superfund lawsuit; and indemnify it for costs and expenses associated with the San Gabriel Superfund Site. Further, it was alleged defendant was involved in negotiations with the Environmental Protection Agency over cleanup at the San Gabriel Superfund Site. In June 2000, the Environmental Protection Agency was alleged to have issued an administrative order to defendant and 18 other entities to develop a cleanup plan. Defendant was alleged to have made payments of $500,000 in connection with the superfund site negotiations.

Defendant purchased primary and excess third party insurance policies. Plaintiffs acknowledged that they had issued excess third party insurance policies naming defendant as an insured. In June 2001, defendant demanded that plaintiffs provide a defense and indemnification in connection with

The October 23, 2002 stipulation further imposed nondisclosure duties on the parties to the present lawsuit and the related case. The stipulation stated in part, “Protected information shall disclosed or made available only to the Court (including its employees and the jury), to counsel for a Party (including the paralegal, clerical, and secretarial staff employed by such counsel), and to . . . ‘Qualified Persons’ . . . .” The stipulation identified in some detail those persons who could be given access to the documents and they included employees, consultants, mediators, court reporters, videographers, and witnesses. There were other aspects of the October 23, 2002, stipulation which are not directly pertinent to the issue before us.

In terms of the issue before us, the crucial provisions of the October 23, 2002, stipulation relate to the filing of law and motion documents in the respondent court. At one point, the stipulation states, “[I]t is the intent of the Parties that this Protective Order apply to this action and to the Related Cases and cover any exchanges of material resulting from discovery request served in this Action and the Related Case, and related law and motion proceedings in this Action and/or the Related Case.” (Italics added.) At another point, the October 23, 2002, stipulation describes how law and motion papers are to be filed under seal: “Filing Under Seal. Protected Information may be submitted to the Court only in connection with this Action or the Related Action, and only as follows: FJQ (a) A Party who lodges or files any document containing Protected Information shall do so in a sealed envelope, or otherwise in accordance with local or State rules, including but not limited to Rule of Court section 243.1 et seq., governing the filing of materials under seal, [f] (b) The envelope shall bear the caption of this case on a legend as follows: ‘CONFIDENTIAL - FILED SUBJECT TO COURT ORDER. THE PAPERS CONTAINED IN THIS ENVELOPE HAVE BEEN DESIGNATED PROTECTED INFORMATION, ARE SUBJECT TO A PROTECTIVE ORDER ISSUED BY THE COURT, AND MAY NOT BE EXAMINED, DISPLAYED, REVEALED, OR COPIED EXCEPT BY THE COURT, OR PURSUANT TO COURT ORDER.’ [f] (c) No such sealed material shall be

The grounds asserted for sealing the foregoing documents is as follows: “The . . . documents that [defendant] requests remain under seal contain information that may harm [defendant’s] business interests, privacy rights, and, if disclosed, would violate confidentiality agreements with numerous third parties and impinge upon the attorney-client and attorney work product privileges. [][] [] Specifically, [defendant] is a party to two confidentiality agreements in a separate matter relating to the settlement of four environmental lawsuits. [Defendant] is also a member of a Joint Defense Group in the fourteen pending toxic tort lawsuits. These lawsuits are discussed at length in the [mandate petition], H] [] The importance of the confidentiality agreements and the Joint Defense Group cannot be understated. The two separate confidentiality agreements relating to the settlement of the four environmental lawsuits were necessary in order for parties to agree to fund the joint groundwater clean-up/water supply project [benefiting] the entire San Gabriel Valley. The confidential Joint Defense Agreement in the toxic tort lawsuits has financially enabled [defendant], and many other parties, to adequately defend against claims brought by thousands of plaintiffs while some of those defendants, including [defendant], fund the groundwater clean-up and up in that area. The . . . [e]xhibits that [defendant] seeks to have remain under seal contain information that is subject to the confidentiality agreements and/or Joint Defense Agreement in the underlying lawsuits.” (The “Joint Defense Agreement” is not one of the documents plaintiff seeks to have sealed. Nor is the “Joint Defense Agreement” an exhibit in this case.) Additionally, plaintiff argued that certain portions of the documents contained “confidential attorney

IH. DISCUSSION

A. Disclosure Principles

The present case involves the question of whether to allow documents filed in support of the mandate petition to remain sealed. We addressed this issue in related circumstances in Universal City Studios, Inc. v. Superior Court (2003) 110 Cal.App.4th 1273 , 1279-1287 [ 2 Cal.Rptr.3d 484 ], where the trial court had refused to seal documents and the defendant sought to compel their sealing. In Universal City Studios, we concluded none of the documents the defendant sought to seal could be sealed given controlling California law. We described the controlling legal authority as follows: “In NBC Subsidiary (KNBC-TV), Inc. v. Superior Court (1999) 20 Cal.4th 1178 , 1217-1218 [ 86 Cal.Rptr.2d 778 , 980 P.2d 337 ], the California Supreme Court identified the constitutional requirements applicable to a request to seal court records as follows: ‘[B]efore substantive courtroom proceedings are closed or transcripts are ordered sealed, a trial court must hold a hearing and expressly find that (i) there exists an overriding interest supporting closure and/or sealing; (ii) there is a substantial probability that the interest will be prejudiced absent closure and/or sealing; (iii) the proposed closure and/or sealing is narrowly tailored to serve the overriding interest; and (iv) there is no less restrictive means of achieving the overriding interest.’ (Original italics & fns. omitted.) In terms of trial courts, the Judicial Council promulgated rules 243.1 and 243.2 which govern sealing requests in the trial courts in order to comply with the constitutional standards set forth in the NBC Subsidiary decision. (In re Providian Credit Card Cases (2002) 96 Cal.App.4th 292 , 298, fn. 3 [ 116 Cal.Rptr.2d 833 ] []; Jud. Council of Cal., Advisory Com. com., reprinted at 23 pt. 1 West’s Ann. Codes, Rules (2003 supp.) foll. rule 243.1, pp. 285-286.) For reviewing courts, the Judicial Council promulgated rule 12.5. As in the case of rules 243.1 and 243.2, rule 12.5 was adopted in response to the NBC Subsidiary decision. (Jud. Council of Cal., Advisory Com. com., reprinted at 23 pt. 1 West’s Ann. Codes, Rules (2003 supp.) foll. rule 12.5, p. 61.)” (Universal City Studios, Inc. v. Superior Court, supra, 110 Cal.App.4th at p. 1279, fn. omitted.)

B. The Respondent Court’s Sealing Order

Before proceeding to analysis of the merits of defendant’s modified sealing request, we address the effect of the respondent court’s order that any law and

The respondent court’s order is entitled to no weight on this issue. The respondent court’s order seals the entirety of any law and motion papers which refer to a document deemed confidential by the parties which is disclosed as part of the discovery process. No findings were made by the respondent court. The sealing order therefore fails to comply with the findings requirements set identified in NBC Subsidiary (KNBC-TV), Inc. v. Superior Court, supra, 20 Cal.4th at pages 1217-1218 and rule 243.1(d) and (e). (See footnote 2, ante; cf. In re Providian Credit Card Cases, supra, 96 Cal.App.4th at p. 302 [express findings by the trial court are only required when the decision is made to seal documents not to unseal parts of the record already under seal].) Additionally, the effect of the respondent court’s order is to seal thousands of pages of routine legal argument concerning insurance coverage, notices of motion, lengthy separate statements of undisputed and disputed facts, proofs of service, and lodged documents including appellate court decisions. Accordingly, the respondent court’s order has no effect on our assessment as to whether the documents at issue should remain under seal with the clerk of this court.

C. The Matters Defendant Requests Remains Sealed

1. Overview

The documents defendant seeks to have remain sealed involve five different subjects. Because the documents are presently sealed as required by rule 12.5(c)(1), we will describe them genetically and circumspectly. (Universal Studios, Inc. v. Superior Court, supra, 110 Cal.App.4th at p. 1277; In re Providian Credit Card Cases, supra, 96 Cal.App.4th at p. 303.) Defendant seeks to have sealed: a settlement agreement with a confidentiality clause which contains an express exception when disclosure is ordered by a court; papers which reveal the sources of payments to settle pollution claims;

2. The settlement agreement

First, defendant seeks to have a settlement agreement with an insurer, who is not a party to this litigation, sealed. Defendant relies on Publicker Industries, Inc. v. Cohen (3d Cir.1984) 733 F.2d 1059 , 1073 and NBC Subsidiary (KNBC-TV), Inc. v. Superior Court, supra, 20 Cal.4th at page 1222, footnote 46 for the proposition that an overriding public interest may be present when there is a contractual obligation not to disclose the contents of documents. First, we address the Third Circuit rule articulated in Publicker which is specifically referred to in NBC Subsidiary. In Universal Studios, Inc. v. Superior Court, supra, 110 Cal.App.4th at pages 1283-1284, we described when a contractual obligation not to disclose may give rise to a right to seal a settlement agreement containing a confidentiality clause. Citing the Third Circuit analysis relied upon by the California Supreme Court in footnote 46 of the NBC Subsidiary opinion, we held: “Other courts applying Publicker have emphasized that closure or sealing can only occur under the Third Circuit rule when there has been a specific showing of serious injury. [Citations.] Citing Publicker, a Third Circuit panel later held: ‘In delineating the injury to be prevented, specificity is essential. [Citation.] Broad allegations of harm, bereft of specific examples or articulated reasoning, are insufficient.’ (In re Cendant Corp. [(3d Cir. 2001)] 260 F.3d [183,] 194.) We have been unable to find any appellate court decision which construes Publicker to permit sealing of court documents merely upon the agreement of the parties without a specific showing of serious injury.” (Universal Studios, Inc. v. Superior Court, supra, 110 Cal.App.4th at pp. 1281-1282.) In Universal City Studios, citing Publicker and NBC Subsidiary, we held that a settlement agreement which had a confidentiality provision could not be sealed unless there was a showing of serious injury which would result from public disclosure.

Second, NBC Subsidiary requires that before papers can be sealed, there must be substantial prejudice to an overriding interest if the documents are made available to the public. (NBC Subsidiary (KNBC-TV), Inc. v. Superior Court, supra, 20 Cal.4th at p. 1218.) In Universal City Studios, we explained: “In terms of the overriding interest requirement of a closure or sealing order, NBC Subsidiary identifies two separate elements. The first element requires the identification of an overriding interest. (NBC Subsidiary (KNBC-TV), Inc. v. Superior Court, supra, 20 Cal.4th at pp. 1217-1218; see

Defendant argues that documents which list witnesses to possible violations of federal and state and federal pollution laws must be sealed. As noted in connection with defendant’s argument that documents containing admissions of possible violations of federal and state pollution laws must be sealed, no overriding public interest warrants sealing the identities of witnesses to such events. Further, there is no merit to defendant’s work product and attorney-client privilege arguments. Defendant argues that the identities of the witnesses to violations of federal and state environmental laws are protected from disclosure by the attorney-client and work product privileges. The identities of witnesses are not subject to the attorney-client and work product privileges. (Aerojet-General Corp. v. Transport Indemnity Insurance (1993) 18 Cal.App.4th 996 , 1004 [ 22 Cal.Rptr.2d 862 ]; City of Long Beach v. Superior Court (1976) 64 Cal.App.3d 65 , 73 [ 134 Cal.Rptr. 468 ]; Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group 2003) ¶ 8:237, p. 8C-64 (rev. # 1, 2003).) Additionally, even if the identities of the witnesses were subject to the attorney-client and work product privileges, they have been waived. Defendant has voluntarily supplied to plaintiffs, its adversaries in this litigation, the identities of the witnesses thereby waiving the attorney-client and work product privileges. (Evid. Code, § 912, subd. (a); Metro-Goldwyn-Mayer Inc. v. Superior Court (1994) 25 Cal.App.4th 242 , 247-250 [ 30 Cal.Rptr.2d 371 ]; see United States v. Nobles (1975) 422 U.S. 225 , 239-240 [ 45 L.Ed.2d 141 , 95 S.Ct. 2160 ].)

6. Other parties identified by a government agency that may have violated federal and state environmental laws

Defendant argues that the identities of other parties which have been identified by a government agency of violating federal and state and environmental laws must be sealed. As in the case of its own admitted possible violations of federal and state pollution laws, no overriding public interest requires this information be sealed.

D. The Proper Disposition of the Sealed Documents

None of the documents lodged with us under seal in this ordinary coverage dispute may be sealed. The question remains as to what order we should be enter. There are two ways that sealing disputes come before an appellate court which warrant discussion. A first scenario occurs when the trial court refuses to seal documents and then they are lodged conditionally under seal pursuant to rule 12.5(e)(2). (See fn. 5, ante.) If the appellate court concludes the documents may not be sealed, then they are returned to the party lodging