67 F.3d 296 (4th Cir. 1995), 94-2254, Matter of Policy Management Systems Corp.

Docket Nº:94-2254, 94-2341.
Citation:67 F.3d 296
Party Name:In re: POLICY MANAGEMENT SYSTEMS CORPORATION, Appellant, Samuel SPEAR; Lee Foy Early; D.A. Early, III; Frederick R. Ennis; Jerry Rosenbaum; Barry Roseman, Trustee of Barry Roseman Profit Sharing Plan; Thomas Moore, on behalf of themselves and all others similarly situated, Plaintiffs-Appellees, KNIGHT RIDDER, Incorporated, Intervenor, v. ERNST & YO
Case Date:September 13, 1995
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit
 
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Page 296

67 F.3d 296 (4th Cir. 1995)

In re: POLICY MANAGEMENT SYSTEMS CORPORATION, Appellant,

Samuel SPEAR; Lee Foy Early; D.A. Early, III; Frederick R. Ennis; Jerry Rosenbaum; Barry Roseman, Trustee of Barry Roseman Profit Sharing Plan; Thomas Moore, on behalf of themselves and all others similarly situated, Plaintiffs-Appellees,

KNIGHT RIDDER, Incorporated, Intervenor,

v.

ERNST & YOUNG; Arthur Andersen & Company, Defendants.

Samuel SPEAR, on his own behalf and on behalf of all similarly situated; jerry Rosenbaum; Barry Roseman, Trustee of Barry Roseman Profit Sharing Plan; Frederick R. Ennis; D.A. Early, III; William Thomas Moore; Lee Foy Early, Plaintiffs-Appellees,

KNIGHT RIDDER, Incorporated, Intervenor,

v.

POLICY MANAGEMENT SYSTEMS CORPORATION, Defendant-Appellant,and

George L. Wilson; Robert L. Gresham; David T. Bailey; Charles E. Callahan; Bernard C. Mazon; Donald A. Coggiola; Sterling E. Beale; Lutz F. Hahne; John P. Seibels; Richard G. Trub; Donald W. Fedderson, Defendants.

Nos. 94-2254, 94-2341.

United States Court of Appeals, Fourth Circuit

September 13, 1995

Editorial Note:

This opinion appears in the Federal reporter in a table titled "Table of Decisions Without Reported Opinions". (See FI CTA4 Rule 36 regarding use of unpublished opinions)

Argued Dec. 7, 1994.

23 Media L. Rep. 2486

Appeals from the United States District Court for the District of South Carolina, at Columbia. Joseph F. Anderson, Jr., District Judge. (CA-93-807, CA-94-1150)

D.S.C.

REVERSED.

ARGUED: George Taylor Manning, JONES, DAY, REAVIS & POGUE, Washington, DC, for appellant. Terry E. Richardson, Jr., Barnwell, SC, for appellees. James M. Brailsford, III, ROBINSON, MCFADDEN & MOORE, P.C., Columbia, SC, for intervenor. ON BRIEF: R. Dal Burton, David J. Schenck, JONES, DAY, REAVIS & POGUE, Washington, DC, for appellant. Sherrie R. Savett, Catherine A. Sullivan, Genna C. Driscoll, BERGER & MONTAGUE, P.C., Philadelphia, PA; Robert P. Sugarman, Paul D. Young, MILBERG, WEISS, BERSHAD, HYNES & LERACH, New York, NY, for appellees. David W. Robinson, II, ROBINSON, MCFADDEN & MOORE, P.C., Columbia, SC, for intervenor.

Before RUSSELL and MICHAEL, Circuit Judges, and MESSITTE, United States District Judge for the District of Maryland, sitting by designation.

OPINION

PER CURIAM:

Appellant Policy Management Systems Corporation ("PMSC") appeals the district court's order to release sealed documents to the public. The documents had been filed as exhibits to a memorandum in opposition to a motion to dismiss in a related case, but the court did not consider them in ruling on the motion. Because we hold that such documents are not entitled to a presumption of public access under either the common law or the First Amendment, we reverse.

I.

PMSC shareholders (the "plaintiffs") filed two shareholder class actions in the United States District Court for the District of South Carolina. In April 1993, the plaintiffs sued PMSC for alleged violations of federal and state securities laws, and for negligent misrepresentation under South Carolina common law. In re Policy Management Sys. Corp., Civ. A. No. 3-93-0807-17 (D.S.C.) ("PMSC "). In April 1994, the plaintiffs filed a complaint alleging similar claims against PMSC's former auditors, Ernst & Young and Arthur Andersen & Co. Spear v. Ernst & Young, Civ. A. No. 3-94-1150-17 (D.S.C.) ("Ernst & Young ").

During the course of the PMSC action, the plaintiffs and PMSC reached an agreement to facilitate discovery. On August 26, 1993, the district court entered a confidentiality order consistent with that agreement. The order directed the parties to identify and mark confidential documents, which the clerk of the court would maintain under seal. On September 20, 1993, the court amended the order to comply with the notice and hearing procedures of In re Knight Publishing Co., 743 F.2d 231 (4th Cir.1984), and Rushford v. The New Yorker Magazine, Inc., 846 F.2d 249 (4th Cir.1988). When the plaintiffs filed their complaint against PMSC's auditors, the parties agreed to a similar confidentiality order. PMSC was not a defendant in the Ernst & Young action, but it also signed the order.

On June 8, 1994, Ernst & Young and Arthur Andersen & Co. filed motions to dismiss in Ernst & Young under Rules 9(b) and 12(b)(6) of the Federal Rules of Civil Procedure. On July 12, 1994, the plaintiffs filed under seal a memorandum of law in opposition to the motions to dismiss and attached to it an affidavit with exhibits. These exhibits included documents designated as confidential that were produced by Ernst & Young and PMSC's current accountants, Coopers & Lybrand, during discovery in PMSC. The plaintiffs provided notice of the filing to PMSC and to PMSC's auditors. On July 26, 1994, PMSC and Ernst & Young moved to maintain the confidentiality of the documents.

On August 15, 1994, the district court granted in part the auditors' motions to dismiss. The court also issued an order requesting the parties to inform the court of their positions on the sealed documents filed by the plaintiffs. In this order, the court stated that it "did not rely upon the documents filed and designated as confidential." After providing notice to the local press, the court conducted a hearing, heard all interested parties, and ordered the unsealing of the documents. On September 30, 1994, the court entered a written order requiring the clerk to release the documents, in redacted form, 1 to the public at 4:00 p.m. on October 3, 1994.

On October 3, 1994, PMSC filed in the district court a notice of appeal and a request for a stay of the order to unseal the documents in Ernst & Young. 2 The district court granted the stay pending this appeal. On November 16, 1994, this Court allowed Knight Ridder, Inc., the publisher of The State, a daily newspaper in Columbia, South Carolina, to intervene as an appellee and file a brief. On December 6, 1994, one day prior to oral argument before this Court, PMSC, Ernst & Young, Arthur Andersen & Co., and the plaintiffs notified the district court that they had reached a settlement agreement in both underlying actions. PMSC proceeded with this appeal, however, in order to reverse the district court's order to release the documents. 3 II.

As a preliminary matter, we note that this Court has jurisdiction over PMSC's appeal under the collateral order doctrine of Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 546 (1949). A collateral order is immediately appealable if it: (1) conclusively determines the disputed question; (2) resolves an important issue completely separate from the merits of the action; and (3) cannot be effectively reviewed on appeal from a final judgment. Johnson v. Jones, 115 S.Ct. 2151, 2155 (1995). As...

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