Arnold v. Comm of PA Transp , 477 F.3d 105 ( 2007 )

Opinions of the United
2007 Decisions States Court of Appeals
for the Third Circuit
2-20-2007
Arnold v. Comm of PA Transp
Precedential or Non-Precedential: Precedential
Docket No. 05-5037
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PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Case No: 05-5037
AUGUST W. ARNOLD
v.
COMMONWEALTH OF PENNSYLVANIA,
DEPARTMENT OF TRANSPORTATION;
JOHN EKIERT
MICHAEL BAKER CORPORATION,
Appellant
Case No: 05-5227
AUGUST W. ARNOLD
v.
COMMONWEALTH OF PENNSYLVANIA,
DEPARTMENT OF TRANSPORTATION;
JOHN EKIERT
TRIBUNE REVIEW PUBLISHING COMPANY,
Intervenor/Appellant
______________________
On Appeal from the United States District Court
for the Western District of Pennsylvania
District Court No.: 03-cv-638
District Judge: The Honorable Joy F. Conti
_______________________
Argued December 13, 2006
Before: SMITH and ROTH, Circuit Judges, and
YOHN, District Judge *
(Filed:February 20, 2007)
_______________________
Counsel:
Ronald D. Barber (Argued)
H. Yale Gutnick
Strassburger McKenna Gutnick & Potter, P.C.
Four Gateway Center, Suite 2200
444 Liberty Avenue
Pittsburgh, PA 15222
Counsel for Appellant/Cross Appellee
*
The Honorable William H. Yohn, Senior District Judge for
the Eastern District of Pennsylvania, sitting by designation.
2
Kim M. Watterson (Argued)
Efrem M. Grail
Joseph F. Rodkey, Jr.
Reed Smith LLP
435 Sixth Avenue
Pittsburgh, PA 15219
Counsel for Appellee/Cross Appellant
_______________________
OPINION OF THE COURT
SMITH, Circuit Judge.
This appeal is an offshoot of litigation initiated by August
W. Arnold against his former employer, the Pennsylvania
Department of Transportation (“PennDOT”), for violations of
the Pennsylvania Whistleblower Law and 42 U.S.C. § 1983.
Arnold served a discovery subpoena under Federal Rule of Civil
Procedure 45 on appellant and cross appellee, non-party Michael
Baker Corporation (“Baker”), seeking information regarding
entertainment of PennDOT personnel by Baker. Baker resisted
the subpoena and Arnold moved to enforce it.
On August 3, 2005, the District Court entered a
confidentiality order which designated all information contained
in Baker’s response to the discovery subpoena as confidential
information to be shared only with designated individuals during
the course of the litigation. Baker produced the requested
3
information without further opposition. The parties settled the
case on September 16, 2005.
On September 27, 2005, appellee and cross appellant,
Tribune-Review Publishing, Inc. (“Tribune-Review”), filed a
motion to intervene in which it requested that the Court vacate
the confidentiality order on the grounds that analysis of the
factors enunciated in Pansy v. Borough of Stroudsburg, 23 F.3d
772 (3d Cir. 1994) no longer favored protection of Baker’s
response to the subpoena. The District Court held a hearing on
the motion on November 2, 2005, and ruled that the
confidentiality order would be lifted as to the names of the
public employees whose attendance was confirmed and the
locations and costs of the entertainment. The Court ordered that
the names of the individual Baker employees involved were not
to be disclosed, nor were the names of invited, but unconfirmed,
PennDOT employees.
Baker contests the District Court’s partial lifting of the
confidentiality order. The Tribune-Review asserts that the
District Court was correct to the extent that it lifted the
confidentiality order, but erred in failing to lift the order with
respect to the names of the government contractors and
individual PennDOT employees as well. The issue before this
Court is whether the District Court’s application of the multi-
factor balancing test laid out in Pansy was correct. We hold that
the Court correctly applied the Pansy test.
4
I.
We exercise jurisdiction pursuant to 28 U.S.C. § 1291
and the collateral order doctrine. See, e.g., In re Pressman-
Gutman Co., Inc., 459 F.3d 383, 395-96 (3d Cir. 2006); see also
Digital Equip. Corp. v. Desktop Direct, Inc., 511 U.S. 863, 868
(1994). There are three elements to a collateral order: “the order
in question must: ‘(1) conclusively determine the disputed
question, (2) resolve an important issue completely separate
from the merits of the action, and (3) be effectively
unreviewable on appeal from a final judgment.’” In re
Pressman-Gutman Co., Inc., 459 F.3d at 395-96 (quoting Will
v. Hallock, 546 U.S. 345, 126 S. Ct. 952, 956 (2006)). All are
satisfied here. See Shingara v. Skiles, 420 F.3d 301, 304-05 (3d
Cir. 2005); Republic of Philippines v. Westinghouse Elec. Corp.,
949 F.2d 653, 658 n.4 (3d Cir. 1991) (“[O]rders releasing sealed
material and denying a motion to unseal are collateral orders
within the meaning of 28 U.S.C. § 1291.”).
The standard of review of a grant or modification of a
confidentiality order is abuse of discretion. Pansy v. Borough of
Stroudsburg, 23 F.3d 772, 783 (3d Cir. 1994). “An abuse of
discretion occurs when a district court’s decision ‘rests upon a
clearly erroneous finding of fact, an errant conclusion of law or
an improper application of law to fact.’” P.N. v. Clementon Bd.
of Educ., 442 F.3d 848, 852 (3d Cir. 2006) (quoting Hanover
Potato Prods., Inc. v. Shalala, 989 F.2d 123, 127 (3d Cir.1993)).
“However, we exercise plenary review over the district court’s
5
interpretation and application of the legal standard for granting
or modifying a confidentiality order.” Id. at 783-84. Upon a
challenge to a protective order by a party who did not have the
opportunity to oppose the motion for the order, the Third Circuit
requires “good cause to maintain the order in the face of a
motion to vacate it.” Shingara, 420 F.3d at 306.
II.
In Pansy v. Borough of Stroudsburg, 23 F.3d 772 (3d Cir.
1994), this Court held that good cause in support of a protective
order could be determined by balancing a number of
considerations. Id. at 787. We had previously adopted a
definition of “good cause” in Publicker Indus., Inc. v. Cohen,
733 F.2d 1059 (3d Cir. 1986): “a showing that disclosure will
work a clearly defined and serious injury to the party seeking
closure.” Id. at 786 (quoting Publicker Indus., 733 F.2d at
1071). The Pansy Court identified the following factors of the
good cause balancing test: (1) the interest in privacy of the party
seeking protection; (2) whether the information is being sought
for a legitimate purpose or an improper purpose; (3) the
prevention of embarrassment, and whether that embarrassment
would be particularly serious; (4) whether the information
sought is important to public health and safety; (5) whether
sharing of the information among litigants would promote
fairness and efficiency; (6) whether the party benefitting from
the order of confidentiality is a public entity or official; and (7)
whether the case involves issues important to the public. Id. at
6
787-88. The District Court reviewed each of these factors in
modifying the existing confidentiality order. Because we review
the District Court’s application of the Pansy factors, our review
of Baker’s appeal and the Tribune-Review’s cross appeal is for
abuse of discretion. See id. at 783.1
III.
On appeal, Baker argues that the District Court’s initial
protective order was appropriate under Federal Rule of Civil
Procedure 26(c) because it was fully supported by good cause.
Baker points to the District Court’s acknowledgment that Baker
is a private non-party that could suffer harm from the general
release of its information as support for the Court’s prior finding
of good cause in a manner consistent with the guidance in
Pansy. The Court indicated that the disclosure of Baker’s
materials would be harmful because “sometimes a spin can be
put on things, if things become public, that has some unintended
consequences, whether there is any wrong or not.” However, the
District Court never explicitly engaged in the balancing process
prescribed in Pansy. Instead, the District Court sua sponte
suggested that the disclosure of records relating to entertainment
of PennDOT officials at Pittsburgh Pirates baseball games and
on golf outings “can be solved by a confidentiality agreement,”
to which both parties agreed.
1
We have plenary review over the District Court’s
interpretation of the Pansy factors, but find no error. See id.
7
When a party seeks modification of a confidentiality
order, they must “come forward with a reason to modify the
order.” Pansy, 23 F.3d at 790. This Court has acknowledged that
“[i]mprovidence in the granting of a protective order is [a]
justification for lifting or modifying the order.” Id. (quotation
omitted). The Tribune-Review asserts that one of the reasons it
is entitled to seek modification of the protective order is that the
District Court improvidently failed to engage in the Pansy
balancing test in making its determination of good cause. The
Pansy opinion instructs that “a district court should articulate on
the record findings supporting its judgment” as to a protective
order, and explained that “[i]t would be improper and unfair to
afford an order presumptive correctness if it is apparent that the
court did not engage in the proper balancing to initially
determine whether the order should have been granted.” Id. at
789-90.
Although the District Court gave at least cursory
consideration to the good cause standard, the Court did not
initially engage in the balancing required by Pansy.
Consequently, the District Court’s order enjoyed no presumption
of correctness. Because the Tribune-Review came forward with
this reason to modify the order,2 the Court properly elected to
2
An alternative reason for modification is that circumstances
have changed such that “the secrecy interests deserve less
protection than they did when the order was granted.” Id. at 791
(quoting Note, Non-Party Access to Discovery in Federal
8
“balance the interests, including the reliance by the original
parties to the order, to determine whether good cause still exists
for the order.” Pansy, 23 F.3d at 790.
With respect to the first factor, the District Court
preliminarily determined that the individual PennDOT
employees and Baker had no privacy interests worthy of
protection under a confidentiality order. As to the individual
Baker employees, however, the Court determined that, with the
exception of those employees who had already been disclosed,
[T]he embarrassment may be particularly serious,
particularly because of the statements made by the
Secretary of Transportation [condemning the
attendance of PennDOT employees at events
funded by contractors] with respect to
dishonesty.... And since those people are not
parties to this litigation, they’re not the subject of
any criminal inquiry or any other matter that
would give rise to this, and without any
information that those individuals have signed a
Courts, 94 H ARV. L. R EV. 1085, 1092 (1981)). The District
Court treated the introduction of an intervenor arguing the
public interest as a “changed circumstance,” because the “issue
of public interest and public concern ... was not really raised to
a great extent in the prior hearings.” The presence of an
intervenor is not a changed circumstance of the sort that would
demonstrate that the secrecy interests involved are lessened.
9
contract with PennDOT, I would find that this
privacy interest weighs in favor of the individual
Michael Baker employees....
The Court also ruled that it would not disclose the names of
individual PennDOT employees that were included on invitee
lists, but not confirmed as attendees. This ruling accorded with
Pansy, in which the Court explained that “[i]t is appropriate for
courts to order confidentiality to prevent the infliction of
unnecessary or serious pain on parties who the court reasonably
finds are entitled to such protection.” 23 F.3d at 787.
The District Court found the second factor, the legitimacy
or illegitimacy of the purpose for which the information is being
sought, to weigh in favor of the Tribune-Review. The Court
explained that the newspaper’s objective was “to continue its
coverage of a matter of public concern, [and] I believe that this
does rise to the level of public concern in terms of the conduct
of public employees with respect to contractors and whether or
not this has increased the costs of services and use of taxpayer
money in making payments for projects throughout the
Commonwealth.” However, the Court did not find this
“purpose” factor to weigh in favor of disclosure of the Baker
employees, “because they are not public employees whose
activities should be necessarily scrutinized.”
Third, the District Court addressed the question of
whether disclosure would cause a party embarrassment. Citing
10
its discussion of the privacy interests involved, the Court
initially stated that the prevention of embarrassment weighed in
favor of the individual Baker employees. The Court later denied
disclosure of the individual PennDOT employees whose names
appeared only on invitee lists, but whose attendance was not
verifiable via some other non-interrogatory source. In Glenmede
Trust Co. v. Thompson, 56 F.3d 476 (3d Cir. 1995), this Court
noted that when parties “do not describe their harm other than
in generalized allegations of injury to reputation and to
relationships with clients,” they have not satisfied the
embarrassment factor in the good cause analysis. Id. at 484. The
District Court identified the potential embarrassment of being
associated with dishonest and unethical activities, as
“embarrassment [that] may be particularly serious.”
The fourth factor is whether confidentiality is being
sought over information important to public health and safety.
The District Court determined that, although there was clearly
a matter of public interest here, the public health and safety was
not implicated because the issue was, at root, one of government
expenditure. Accordingly, the Court ruled that the fourth factor
was essentially neutral.
With respect to the fifth factor, the District Court ruled
that the sharing of information among litigants would not
promote fairness and efficiency in this case because the
underlying dispute had been settled.
11
The District Court analyzed the sixth and seventh factors
together, i.e., whether the beneficiary of the order is a public
entity or official and whether the case involves issues important
to the public. The Court determined that the sixth factor weighed
against the PennDOT employees, and the seventh factor
weighed in favor of the motion for relief. It is undisputed that
PennDOT is a public entity, its employees are public officials,
and the awarding of government contracts is a matter of public
interest.
Baker claims that the District Court erred in its
assessment of the “public person” element when it stated that “if
we didn’t have a public entity involved, it would be a very
different case.” Baker alleges that the District Court improperly
treated it as if it were a public entity, but discounts the multiple
times in the record that the Court acknowledged the private
nature of Baker’s business and the privacy interests of its
employees. In fact, the District Court’s statement regarding the
involvement of a public entity is entirely consistent with Pansy.
23 F.3d at 788 (distinguishing between cases where a public
entity is involved and those where the parties are all private
entities). Moreover, the District Court explained that its
emphasis on the public interest in the hearing on the motion for
modification was at least in part a remedial measure: “While
there was some assessment of these factors in the prior stages,
the Court did not weigh the [public] interest as greatly in those
proceedings and, therefore, the Court will not uphold the
confidentiality agreement in this matter.” The Pansy Court
12
explained that the public interest was an important consideration
in the good cause balancing test, Pansy, 23 F.3d at 788, and the
District Court’s consideration of that interest upon the motion
for relief was an appropriate correction of its earlier omission.
The District Court properly gave significant weight to the
public interests involved. In Shingara v. Skiles, we overturned
a district court decision that “ultimately agreed with the
defendants that the analysis should not turn on the fact that the
[Pennsylvania State Police] is a public entity and the fact that
this case involves issues of public concern.” 420 F.3d at 306
(quotation omitted). Shingara emphasized the importance of the
public interest factor and held that “the district court
unacceptably downplayed the fact that this case involves public
officials and issues important to the public.” Id. at 307. Thus,
the District Court’s emphasis on the public interests at stake was
appropriate in ruling on the motion for relief.
Baker’s claim that the District Court contorted the
privacy factor by equating Baker with a public entity as a result
of its government business is not supported by the record. The
District Court’s explanation of its reasoning revealed that it
considered Baker to be a private entity and its employees to be
private individuals with respect to the privacy and public entity
factors. Likewise, the District Court’s determination that the
public interest factor weighed in favor of disclosure was proper
and was not premised on the misconception that Baker was a
public entity, or the functional equivalent of one.
13
As to the privacy factor, the District Court acknowledged
that the privacy interests of Baker’s employees, but not Baker,
were potentially implicated in the order. In explaining the
privacy interest factor, our Pansy opinion noted that “[i]t is
appropriate for courts to order confidentiality to prevent the
infliction of unnecessary or serious pain on parties who the court
reasonably finds are entitled to such protection.” 23 F.3d at 787
(emphasis added). The District Court correctly found that, as an
entity, Baker “clearly ha[d] no privacy interest” capable of
protection at stake here. See United States v. Morton Salt Co.,
338 U.S. 632, 652 (1950) (“[C]orporations can claim no equality
with individuals in the enjoyment of a right to privacy.”);
R ESTATEMENT (S ECOND) OF T ORTS § 652I Comment c. (1977).
The District Court’s interpretation of the privacy interest
factor with respect to the Baker employees was appropriate.
Although the Tribune-Review challenges the District Court’s
assessment that disclosure of Baker employees’ names would
result in a defined and serious injury to them, the District Court
reasonably held that the Baker employees would be subject to
unnecessary injury in the form of embarrassment, and that this
embarrassment and damage to their reputations would be
particularly serious.
In balancing the “requesting party’s need for information
against the injury that might result if uncontrolled disclosure is
compelled,” the District Court properly exercised its discretion.
See Arthur R. Miller, Confidentiality, Protective Orders, and
14
Public Access to the Courts, 105 H ARV. L. R EV. 427, 433-34
(1991). Furthermore, as the Pansy Court noted, “[t]he factors ...
are unavoidably vague and are of course not exhaustive.” Pansy,
23 F.3d at 789. The District Court correctly considered and
applied these factors to the facts presented.
Baker also asserts that, in modifying the order, the
District Court failed to recognize and properly account for its
reliance upon the protective order, as required by Pansy. Id. at
789-90 (“In determining whether to modify an already-existing
confidentiality order, the parties’ reliance on the order is a
relevant factor.”). In Pansy, the Court made it clear that, in
considering motions to modify protective orders, the district
courts were to follow the same balancing test used in deciding
whether to grant them, “with one difference: one of the factors
the court should consider ... is the reliance by the original parties
on the confidentiality order.” Id. at 790. The Court further
explained that “[t]he parties’ reliance on an order, however,
should not be outcome determinative, and should only be one
factor that a court considers when determining whether to
modify an order of confidentiality.” Id. The District Court
properly considered Baker’s reliance as one of the factors in the
balancing test.
In considering Baker’s reliance, the District Court noted
that “the reliance is that you’ve done the work [of answering the
interrogatory], as you’ve argued, to prepare it in a fashion that’s
easily discernable and that someone doesn’t have to go through
15
multiple documents or do a deposition, so you made it easier for
access to the information....” The Court ruled that this factor
weighed in favor of Baker. Although Baker’s reliance was not
necessarily limited to its work in compiling the information as
an interrogatory answer, the District Court did not abuse its
discretion in so ruling because it examined all of the factors and
determined that the balance weighed in favor of partial
disclosure.
On balance, the District Court concluded that the factors
weighed in favor of disclosure of items relating to Baker, public
employees whose attendance at the events was confirmed, and
the places and costs of the entertainment provided. However, the
Court ordered the redaction of information relating to individual
Baker employees and PennDOT employees who were not
confirmed attendees at the events. As instructed in Pansy and its
progeny, the District Court carefully considered the public
interest. See Shingara, 420 F.3d at 308 (“Pansy emphasized that
a court always must consider the public interest when deciding
whether to impose a protective order.”). The Court did not abuse
its discretion in entering this order. Thus, Baker’s challenge to
the partial lifting of the confidentiality order will be denied and
the District Court’s judgment will be affirmed.
IV.
The Tribune-Review cross appeals from the District
Court’s order, claiming that the Court should have ordered
16
disclosure of all of the information contained in the
interrogatory, and should not have withheld the names of the
individual Baker employees or the names of PennDOT officials
that appeared on unconfirmed invitee lists. In support of its
cross appeal, the Tribune-Review argues that the Court’s ruling
was too speculative as to whether the names appeared in the
discovery materials. Pansy requires a clearly defined and serious
injury, shown with specificity. Pansy v. Borough of
Stroudsburg, 23 F.3d 772, 786 (3d Cir. 1994).3 Although we
recognize that “‘[b]road allegations of harm, unsubstantiated by
specific examples or articulated reasoning,’ do not support a
good cause showing,” we find no such broad allegations here.
Id. (quoting Cipollone v. Liggett Group, Inc., 785 F.2d 1108,
1121 (3d Cir.1986)). As explained, the District Court articulated
its reasons for granting closure as to the individual Baker
employees and unconfirmed PennDOT invitees.
The Tribune-Review argues that Baker’s participation in
government contracting “exposes to public scrutiny any
transaction in which value flows back from Baker to the
government offices with which it contracts.” The Tribune-
3
The District Court had not seen the interrogatory answer in
question at the time of the hearing, and therefore could only
assume that its contents included the names of individual Baker
employees and individuals at PennDOT who were invited to
attend events but whose attendance had not been confirmed. The
interrogatory answer was not submitted to this Court.
17
Review asserts that this exposure should correlate to a lesser
degree of privacy interests, and argues that the privacy interests
of private contractors who entertain public employees are nearly
identical to the privacy interests of public employees. The Pansy
Court noted that “privacy interests are diminished when the
party seeking protection is a public person subject to legitimate
public scrutiny.” 23 F.3d at 787.
The District Court reasonably applied the Pansy factors
by ruling that the individual PennDOT employees whose names
appeared only on invitee lists, but not on confirmed attendance
lists, should be excluded from disclosure. The Tribune-Review
challenges this application, arguing that the names should be
released on the ground that they show how far into the
PennDOT hierarchy the invitations were intended to reach.
However, our review is for abuse of discretion, and we cannot
say that the District Court improperly exercised its discretion.
In evaluating the Pansy factors with respect to the
individuals, the District Court noted its concern for the
individuals who may have been “there because they [were]
directed by their bosses to be there and may have [had] no
reason to believe that there was anything wrong.” The Court
also noted the difficulty in protecting the privacy of those
individuals who received invitations but did not attend, because
those individuals’ interests were not represented. The Court’s
demonstrated concern for the individuals and their exposure to
potentially unjustified embarrassment, when considered in
18
conjunction with the Court’s discussion of the other Pansy
factors, shows that the Court appropriately balanced the
competing considerations. Although the case involved issues of
public importance and the actions of public officials, the Court
properly exercised its discretion in rendering its ruling.
V.
The District Court’s modification of the confidentiality
order will be affirmed on the grounds that it constituted an
appropriate exercise of discretion. In evaluating the claim that
good cause existed for a confidentiality order, the Court properly
considered the factors outlined in Pansy v. Borough of
Stroudsburg, 23 F.3d 772 (3d Cir. 1994).
19