Monday, May 28, 2007

One of my favorite jokes remembered from that universal payground of my generation, late 1970's and early 1980's era television, was an old MASH bit. Well, at least I think it was MASH. If it was MASH, the bit went something like this...

Radar takes a stack of papers to the Colonel (I dont remember if it was Blake or Potter. I guess it could have been one of the bizzaro shows when Hawkeye or one of the majors was interim boss, not relevant here), and, while signing the stack of papers asks Radar why there are so many copies. Radar responds non-commitaly that he needed a copy for his files, a copy for HQ, a replacement copy for the copy HQ loses, and a copy to destroy so the form doesn't wind up in the hands of the Russians (although, the joke makes a little more sense if he said North Koreans, which in hind sight, he may have).

Despite the poorly set-up delivery, recent bankruptcy proceedings addressing privacy, confidentiality and sealed documents almost make it feel like we are doing the same bit.

Last week it was reported that the court-appointed examiner in the Northwest Airlines Corp., tasked with determining whether or not NWA has been running a "fumblerooski" around shareholders by considering a merger without their knowledge, has filed a motion with the court asking that his report be filed under seal. In accordance with the relief apparently sought by Richard Nevins, examiner, the report would only be accessible by "a select group of stakeholders" such as the creditor's committee counsel, and the ad hoc equity committee. Also at issue, apparently, is whether or not NWA under-estimated the value of its assets. The request to seal the report reportedly originated with NWA.

Contrast this with our old friends in the Catholic Diocese of Spokane case. Following closely on the heels of the dislosure by the local newspaper that supposedly secure, confidential third party information was readily available through "redacted" court filings, the court heard arguments of the newspaper's counsel in objection to a proposed claims protocol. The newspaper wanted the names of all of the priests accused of inappropriate behavior, at least those so identified by the proof of claim forms of the victims. During the latest hearing, debtor's counsel (well, I think it was Debtor's counsel), argued essentially that the names of the priests who had been identified in accusations only through the proof of claim/bankruptcy process ought not be identified and risk having their careers ruined. Counsel cited a few compelling instances, such as claims arising when the particular priest was not a part of the Spokane diocese. Counsel for the paper argued, correctly as memory serves, that it is still fairly common in the US that defendants' identities in criminal proceedings are not made confidential. Something about individual right to a public trial, or well, something like that. (In the interest of fairness, I ride in support of BACA (Bikers Against Child Abuse) and one could fairly argue that I might be a bit biased in this particular instance... FREEBIE ALERT! In one of the very first postings on this blog, I offered a free Amberstick for the first person to identify the name and location of the BACA chapter nearest them... still waiting!!!!).

Undoubtedly everyone who reads this blog has been invovled in the filing of sealed pleadings in bankruptcy, and understands the litany of legitimate reasons for requesting that certain documents be filed under seal. Not the least of those reasons is to protect valuable commercial information from falling into the hands of competitors (destroying a copy so the Russians don't get it). Another valid reason is to protect the confidential information of non-debtor third parties, especially those that don't ask to have their life stories posted on PACER.

The traditional concerns about sealing documents under file are all still existant... shouldn't creditors be entitled to full and complete disclosure? Is this the type of information that might, or might not, be protected outside of bankruptcy? Where does public interest end and personal privacy begin? Should we keep an additional copy in case the Russians do want a copy, the dog eats a copy, of the court clerk loses one?

Beyond the traditional concerns of filing sealed documents, the near total absorption by commercial entities of technology presents another interesting little problem for future examiners, trustees and other assorted and sundry parties looking to file "documents" under seal. Whether the bankruptcy bar likes it or not, items such as documents or "books and records" are becoming more on the side of ESI and less in the nature of document.

There was a recent article that, I don't remember if I read the whole article yet or not, but the article questioned whether or not an examiner's report is admissable. Notwithstanding the final conclusion of that simmering debate, take the problem a step farther and consider "completeness" of evidence, when the examiner is tasked with conducting an investigation involving any degree of digital forensics. If an examiner's report happens to reveal rampant fraud by insiders or contains damning digital evidence that others are not aware of, how then should courts handle requests for sealed and confidential filings? Who will know to object if know one knows what they are objecting to?

Even in the instances where redacted copies of some filings are made available to some, or all , of the interested parties, the Spokane Diocese bankruptcy highlights the problems that arise when we learn only the strengths of the software tools we use, and not their weaknesses or quirks.

For those of us who may be counting on proposed rule of evidence 502 to save us when we cannot save ourselves, I would not get too comfortable with that concept just yet. Although it may be difficult to raise the hue and cry about federal rulemaking when Pirates of the Carribean are navigating to the Ends of the World, and Lynsey Lohan is crashing into, well, all of Bellaire, the fact is that Rule 502 has more bugs than Texas roadkill in August, and it needs someone to come in and spray the stink off of it. I feel the same way about proposed rule 502 as my teenage daughter feels about my wardrobe --- it is a 1.0 version in a version 6.2 world. The proposed rule is going to be the subject of the upcoming NYCLA presentation on June 4, I will be curious to see if anyone comes up with a better visual than the whole roadkill thing...

The miasmic pathes to compliance with the growing multitude of privacy laws and increasing potential to waive privilege through disclosure ought not mean that everything be filed under seal just because it is borderline, or because it might make one uncomfortable, or (using my Lewis Black impersonation here) because it's too hard. I say that, during this involuntary hiatus imposed by a riproaring economy, we take this time to learn our computers as ourselves, and find a better way to address keeping our secrets from the badguys.

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