Appeals Court Says Judge Should Not Have Barred BusinessWeek Story

In a major victory for the press, a federal appeals court panel ruled Tuesday that a lower court judge erred in sealing documents in a corporate lawsuit and then barring BusinessWeek magazine from publishing details from the materials.

The ruling, which BusinessWeek attorney Kenneth Vedder said includes language of “landmark stature and significance,” could slow the efforts of judges and corporations to seal documents in civil cases such as this one.

The opinion also reaffirms that “prior restraint” of publication is barred by the Constitution except in very rare cases.

“What the court has done today is to reaffirm in the most powerful fashion the deeply rooted legal principle that prior restraint on news reporting is virtually unthinkable,” said Floyd Abrams, a prominent 1st Amendment lawyer.

“This is an important victory not just for BusinessWeek but for the news media in general,” said BusinessWeek Editor in Chief Stephen B. Shepard.

“If this had been allowed to stand, it would have been against the law for a journalist to even ask for a document if it happened to be under seal, much less publish it,” he said.

The 2-1 decision by a panel of the 6th Circuit Court of Appeals in Cincinnati involved about 300 pages of court filings that were part of Procter & Gamble Co.’s lawsuit against Bankers Trust New York Corp. over losses P&G; sustained on risky investments that Bankers Trust had arranged.

In September, a BusinessWeek reporter received copies of telephone transcripts and other court filings in P&G;’s lawsuit. U.S. District Judge John Feikens in Cincinnati, shortly before the magazine’s deadline, ordered the magazine to halt publication of an article based on the filings because the documents had been sealed.

An attorney for the law firm representing Bankers Trust later acknowledged that he had given a copy of the documents to a BusinessWeek reporter, but said that neither the reporter nor the lawyer knew the documents were under seal.

Feikens ultimately allowed BusinessWeek to publish the story based on the confidential documents because of a companion ruling that said P&G; and Bankers Trust could not justify continuing to keep the documents secret.

In unusually firm language, the appeals panel Tuesday chastised the lower court judge, saying his rulings had caused “protracted damage to the 1st Amendment.” The appeals court said the documents did not contain information that might have justified prior restraint of publication to protect national interests.

The opinion had a mild dissent from one judge who said the matter was moot because BusinessWeek had already been allowed to publish the documents.

Because the disputed story has already been published, Bankers Trust considers the matter closed and will not appeal further, said Tom Parisi, a spokesman for the New York-based bank.

P&G; spokeswoman Linda Ulrey declined to comment, saying it was an issue between BusinessWeek and Bankers Trust.

Many journalists and others have become concerned in recent years about the number of documents in court cases--especially those involving businesses--that are sealed from public scrutiny. The courts, in an effort to speed up the process of hearing civil cases, have begun allowing corporate attorneys to determine whether documents should be public. As a result, many of these cases have been kept secret, leading some critics to argue that some corporations are using the public courts to conduct private business.

Although the sealing of documents is a growing trend, what alarmed many media organizations about the BusinessWeek case was how a judge in a civil suit could censor an article so easily.

The restrictions on prior restraint have long been the key elements of the 1st Amendment guarantees of a free press.

“It sounds like the prior restraint doctrine is alive and well,” 1st Amendment attorney Richard J. Ovelmen in Miami said. “This will be a very important tool to try to keep powerful corporations from expropriating the public judicial system for their own private purposes.”

Reuters and Associated Press contributed to this report.