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NEW HAVEN SHOULD wealthy litigants be able to rent state judges and courthouses to decide cases in private and keep the results secret?
The answer should be an easy no, but if the judges of Delawares Chancery Court persuade the United States Supreme Court to take their case and reverse lower federal court rulings outlawing that practice, corporations will, in Delaware, be able to do just that.
The state has long been a magnet for corporate litigation because of its welcoming tax structures and the courts business expertise. Yet the State Legislature became concerned that Delaware was losing its pre-eminence in corporate litigation to a growing market in private dispute resolution.
To compete, Delaware passed a law in 2009 offering new privileges to well-heeled businesses. If litigants had at least $1 million at stake and were willing to pay $12,000 in filing fees and $6,000 a day thereafter, they could use Delawares chancery judges and courtrooms for what was called an arbitration that produced enforceable legal judgments.
Instead of open proceedings, filings would not be docketed, the courtroom would be closed to the public and the outcome would be secret. The Delaware Supreme Court could review judgments, but that court has not indicated whether appeals would also be confidential.
A group called the Coalition for Open Government, including news and civic organizations, objected that Delawares legislation was unconstitutional. In 2012, a federal judge agreed that the law violated the publics right of access to civil proceedings under the First Amendment. A divided appellate court concurred. Delaware judges are now asking the Supreme Court to reinstate Delawares system.
Proponents argue that keeping sensitive business information secret and avoiding uncomfortable publicity is what makes arbitration attractive. To defend their rent-a-court system’s “conciliatory atmosphere,” conducive to “business relations,” Delaware’s chancery judges invoked the history of privacy in arbitration. This translates into giving control to litigants to make their own rules, use state judges and prevent the public from knowing anything.
Can judges in courts preside over trial-like proceedings in private? Many state constitutions (including Delaware’s) insist that all “courts shall be open.” The United States Constitution does not have those words, but the Sixth Amendment guarantees criminal defendants the right to a “speedy and public trial,” and civil and criminal litigants have rights to jury trials. Those provisions — with First Amendment rights to petition for redress and free speech, due process and English open court traditions — have produced a body of law mandating openness. Before a proceeding can be closed, judges need to make a record of what exceptional circumstances, such as trade secrets or national security, justify secrecy.
