Re: Salem Suede Inc, 00-1375

• Citation: 268 F.3d 42
• Decision Date: 04 October 2000
• Docket Number: No. 00-1375,00-1375
• Parties: (1st Cir. 2001) IN RE SALEM SUEDE, INC., Debtor, STEFANO PICCIOTTO, JUDITH PICCIOTTO, MELITA PICCIOTTO, ATHENA PICCIOTTO, FOREIGN CAR CENTER AND JUAN NUNEZ, Appellants, v. SALEM SUEDE, INC. AND TRAVELERS INDEMNITY COMPANY, Appellees. Heard
• Court: U.S. Court of Appeals — First Circuit

Page 42

268 F.3d 42 (1st Cir. 2001)

IN RE SALEM SUEDE, INC., Debtor,

STEFANO PICCIOTTO, JUDITH PICCIOTTO, MELITA PICCIOTTO, ATHENA PICCIOTTO, FOREIGN CAR CENTER AND JUAN NUNEZ, Appellants, v. SALEM SUEDE, INC. AND TRAVELERS INDEMNITY COMPANY, Appellees.

No. 00-1375

United States Court of Appeals For the First Circuit

Heard Oct. 4, 2000

Decided October 18, 2001

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS

[Hon. Robert E. Keeton, U.S. District Judge] Dana E. Casher, with whom Krulewich, Casher was on brief for appellants.

Eric B. Hermanson, with whom John A. Nadas, Robert A. Kole, and Choate, Hall & Stewart were on brief for appellees.

Before Boudin, Chief Judge, Cyr, Senior Circuit Judge, and Lipez, Circuit Judge.

CYR, Senior Circuit Judge.

After disallowing appellants' motion to release the sealed transcript of a hearing during which references were made to a confidential settlement agreement, the bankruptcy court denied their motion for reconsideration as well. The district court affirmed on intermediate review. See In re Salem Suede, Inc. (Foreign Car Ctr., Inc. v. The Travelers Indem. Co.), 241 B.R. 780 (D. Mass. 1999).

Prior to oral argument, we were informed by counsel to The Travelers Indemnity Company ("Travelers" or "appellee") that the sealed transcript recently had been released by the bankruptcy court, notwithstanding the sealing order, in response to a Freedom of Information Act ("FOIA") request by appellants' counsel. Accordingly, we directed that counsel address at oral argument whether the intervening release of the sealed transcript effectively mooted the instant appeal, see U.S. Bancorp Mortgage Co. v. Bonner Mall P'ship, 513 U.S. 18, 21-22 (1994), and, if so, whether the judgments entered below should be set aside. We now remand to the bankruptcy court for further proceedings consistent with this opinion.

I BACKGROUND

These chapter 11 reorganization proceedings were commenced by Salem Suede on April 30, 1996, in the aftermath of the regulatory and financial difficulties brought about by environmental contamination at its leather processing plant and tannery in Peabody, Massachusetts. After the chapter 11 proceedings, Travelers commenced an action for interpleader in Massachusetts Superior Court to determine the rightful recipients of the Travelers insurance proceeds payable in connection with the aforementioned environmental contamination. Its complaint joined not only the judgment creditors (viz., appellants), but their respective counsel who had filed attorney liens against the Travelers insurance proceeds. These attorney-lien claims thus posed a barrier to disbursement of the Travelers insurance proceeds.

At oral argument, counsel expressed agreement that the present appeal has not been rendered moot by the release of the sealed transcript in response to the FOIA request.¹ For its part, Travelers urged that we affirm the denial of the motion to release the transcript, particularly since appellants' counsel had already submitted the sealed transcript in the related state-court interpleader action in apparent disregard of the sealing order. For their part, appellants correctly contended, as they had below, that the subject transcript was excluded from the scope of their motion to seal by the following language in the Confidentiality Agreement:

10. Confidentiality. Except as required by law or to effectuate the necessary judicial approvals, to gain releases of attorneys' liens, for submission by Travelers to its insurers, reinsurers or auditors, or to enforce the terms of this Agreement, the Parties will use best efforts to maintain the confidentiality of the settlement amount, the settlement agreement, this term sheet and the settlement amount, including but not limited to, jointly seeking approval of [sic] Bankruptcy Court to place under seal all settlement agreements and materials involving the parties who are signatories below.

(Emphasis added.) Thus, the consistent thrust of appellants' position from the outset has been that the Confidentiality Agreement expressly provides that the sealed transcript was to remain available for their use in securing "the necessary judicial approvals[] [and] to gain releases of attorneys' liens, for submission by Travelers to its insurers, reinsurers or auditors, or to enforce the terms of the[ir] [Security] Agreement."

II DISCUSSION

Notwithstanding the intermediate appeal to the district court, we directly review the bankruptcy court rulings which disallowed appellants' motions to define the scope of the sealing order as it pertains to the subject transcript. See Stoehr v. Mohamed, 244 F.3d 206, 208 (1st Cir. 2001). Absent either a mistake of law or an abuse of discretion, the bankruptcy court ruling must stand. See Siedle v. Putnam Invs., Inc., 147 F.3d 7, 10 (1st Cir. 1998). A bankruptcy court "may abuse its discretion by ignoring a material factor that deserves significant weight, relying on an improper factor, or, even if it [considered] only the proper mix of factors, by making a serious mistake in judgment." Id.

As the sealing order was granted by endorsement, without elaboration, its intent and scope must be gleaned from the motion to seal, in which appellants requested that the bankruptcy court seal --

[a]ll documents referring either directly or indirectly to any of the terms and conditions of the settlement agreement entered into by the parties on January 6, 1999 (the "Settlement Agreement")[,] including but not limited to the settlement amount, in accordance with the Confidentiality Provision . . . of the Settlement Agreement.

(Emphasis added).² The Confidentiality Provision in the Settlement Agreement stated:

Except as required by law or to effectuate the necessary judicial approvals, to gain releases of attorneys' liens, for submission by Travelers to its insurers, reinsurers or auditors, or to enforce the terms of this Agreement, the Parties will use best efforts to maintain the confidentiality of the settlement amount, the settlement agreement, . . . the settlement terms, including but not limited to, jointly seeking approval of [the] Bankruptcy Court to...