Arnold v. Pennsylvania, Dept. of Transp., 05-5037.

• Decision Date: 20 February 2007
• Docket Number: No. 05-5037.,No. 05-5227.,05-5037.,05-5227.
• Citation: 477 F.3d 105
• Parties: August W. ARNOLD v. Commonwealth of PENNSYLVANIA, DEPARTMENT OF TRANSPORTATION; John Ekiert Michael Baker Corporation, Appellant. August W. Arnold v. Commonwealth of Pennsylvania, Department of Transportation; John Ekiert Tribune Review Publishing Company, Intervenor/Appellant.
• Court: U.S. Court of Appeals — Third Circuit

477 F.3d 105

August W. ARNOLD v. Commonwealth of PENNSYLVANIA, DEPARTMENT OF TRANSPORTATION; John Ekiert Michael Baker Corporation, Appellant.

August W. Arnold v. Commonwealth of Pennsylvania, Department of Transportation; John Ekiert Tribune Review Publishing Company, Intervenor/Appellant.

No. 05-5037.

No. 05-5227.

United States Court of Appeals, Third Circuit.

Argued December 13, 2006.

Filed February 20, 2007.

Ronald D. Barber, (Argued), H. Yale Gutnick, Strassburger McKenna Gutnick & Potter, P.C., Pittsburgh, PA, Counsel for Appellee/Cross Appellant.

Kim M. Watterson, (Argued), Efrem M. Grail, Joseph F. Rodkey, Jr., Reed Smith LLP, Pittsburgh, PA, Counsel for Appellant/Cross Appellee.

Before SMITH and ROTH, Circuit Judges, and YOHN, District Judge.^*

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 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.

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, 114 S.Ct. 1992, 128 L.Ed.2d 842 (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, 163 L.Ed.2d 836 (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 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.1984): "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 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.

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 "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 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...