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Chrysler Must Show a Compelling Interest for Sealing Corporate Docs

By Jonathan R. Tung, Esq. | Last updated on

The Ninth Circuit Court of Appeals quite possibly made it easier for the public to access what some litigants had thought were court sealed documents.

Writing for the majority, Ninth Circuit Judge John Owens declared that a lower court erred in applying a strict "good cause" test for keeping documents instead of a stricter "compelling reasons" test.

The Controversy

The nexus of all the controversy began in 2013 during the Jeep Grand Cherokee and Dodge lawsuits involving allegations of defective Integrated Power Modules that caused the Chrysler vehicles either to fail starting or stall while driving.

The lead plaintiff in that case demanded injunctive relief requiring Chrysler to open up about known risks associated with the affected vehicles. Both sides submitted documents for and against the injunction. Normally such documents are kept confidential and sealed except for "good cause."

The Center for Auto Safety, a Washington lobbying group intervened and moved the court to unseal the documents Chrysler submitted -- petitioning, in effect, that the "good cause" test that the lower district court was in error, and that Chrysler should be forced to show "compelling reasons" to keep the documents under wraps.

Carve Outs

Generally, the "compelling reasons" test is the default standard for sealing a judicial record. But the Ninth Circuit has allowed for exceptions to this general rule: documents sealed in relation to discovery motions that are unrelated to the case merits. Thus, for non-dispositive motions, the standard for unsealing is "good cause."

Circuit Decision

In the opinion of the circuit court, the lower district court erred in applying the less stringent "good cause" standard because other motions, not-necessarily final and dispositive of the case, should be read as being dispositive for the purposes of applying the "compelling reasons" test. Dispositive motions do not only include summary judgment and dismissals. Therefore, in this case, Chrysler was required to show compelling reasons to keep the documents sealed.

In a dissenting opinion, Judge Sandra Ikuta characterized the majority's opinion as creating a new law that would allow even tangential motions to be uprooted by the compelling reasons test. Since the test is so strict, pretty much any document, she reasoned, stood in danger of being unsealed.

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