In Re: National Prescription Opiate Litigation.
United States Department of Justice; Drug Enforcement Administration, Interested Parties-Appellees, HD Media Company, LLC (18-3839); The W.P. Company, LLC, dba The Washington Post (18-3860), Intervenors-Appellants, Distributor Defendants; Manufacturing Defendants; Chain Pharmacy Defendants, Defendants-Appellees.
Argued: May 2, 2019
from the United States District Court for the Northern
District of Ohio at Cleveland. No. 1:17-md-02804-Dan A.
Polster, District Judge.
Patrick C. McGinley, Morgantown, West Virginia, for Appellant
C. Lefton, THE LEFTON GROUP, LLC, Akron, Ohio, for Appellant
in 18-3860. Sarah Carroll, UNITED STATES DEPARTMENT OF
JUSTICE, Washington, D.C., for Federal Appellees.
W. Hardin, WILLIAMS & CONNOLLY, LLP, Washington, D.C.,
for Distributor, Manufacturer, and Chain Pharmacy Appellees.
Patrick C. McGinley, Morgantown, West Virginia, for Appellant
C. Lefton, THE LEFTON GROUP, LLC, Akron, Ohio, for Appellant
Carroll, Mark B. Stern, UNITED STATES DEPARTMENT OF JUSTICE,
Washington, D.C., for Federal Appellees.
Mainigi, WILLIAMS & CONNOLLY, LLP, Washington, D.C.,
Geoffrey Hobart, COVINGTON & BURLING LLP, Washington,
D.C., Mark S. Cheffo, DECHERT LLP, New York, New York, Kaspar
J. Stoffelmayr, BARTLIT BECK LLP, Chicago, Illinois, for
Distributor, Manufacturer, and Chain Pharmacy Appellees.
D. Brown, THE REPORTERS COMMITTEE FOR FREEDOM OF THE PRESS,
Washington, D.C., for Amici Curiae.
Before: GUY, CLAY, and GRIFFIN, Circuit Judges.
J., delivered the opinion of the court in which GRIFFIN, J.,
joined. GUY, J. (pp. 27-34), delivered a separate opinion
concurring in part and dissenting in part.
HD Media Company, LLC ("HDM") and The W.P. Company,
LLC, d/b/a the Washington Post ("Washington Post")
appeal the district court Opinion and Order holding that the
data in the Drug Enforcement Administration's Automation
of Reports and Consolidated Orders System ("ARCOS")
database cannot be disclosed by Plaintiffs pursuant to state
public records requests. Intervenors also argue on appeal
that the district court erred in permitting pleadings and
other documents to be filed under seal or with redactions.
reasons set forth below, we VACATE the
district court's Protective Order and its orders
permitting the filing of court records under seal or with
redactions, and we REMAND to permit the
district court to consider entering modified orders
consistent with this opinion.
interlocutory appeal arises out of a sweeping multidistrict
litigation ("MDL"). Plaintiffs in the MDL consist
of about 1, 300 public entities including cities, counties,
and Native American tribes. Defendants consist of
manufacturers, distributors, and retailers of prescription
opiate drugs. The United States Department of Justice
and Drug Enforcement Administration (collectively, "the
DEA") are not parties to the underlying MDL but are
involved in this appeal as Interested Parties-Appellees; HDM
and the Washington Post are not parties to the MDL but are
involved in this appeal as Intervenors-Appellants.
underlying MDL, Plaintiffs seek to recover from Defendants
the costs of life-threatening health issues caused by the
opioid crisis. The district court presiding over this
potentially momentous MDL has repeatedly expressed a desire
to settle the litigation before it proceeds to trial.
(See, e.g., R. 800, Opinion and Order, Page ID#
18971 (noting that the court's order will assist "in
litigating (and hopefully settling) these
cases").) President Trump has declared the opioid
epidemic a national emergency, and as the district court
noted, "the circumstances in this case, which affect the
health and safety of the entire country, are certainly
compelling." (R. 233, Order Regarding ARCOS Data, Page
crux of this appeal is the question of who should receive
access to the data in the DEA's ARCOS database, and the
related question of how disclosure of the ARCOS data would
further the public's interest in understanding the
causes, scope, and context of this epidemic. The ARCOS
database is "an automated, comprehensive drug reporting
system which monitors the flow of DEA controlled substances
from their point of manufacture through commercial
distribution channels to point of sale or distribution at the
dispensing/retail level - hospitals, retail pharmacies,
practitioners, mid-level practitioners, and teaching
institutions." (R. 717-1, Martin Decl., Page ID# 16517.)
The data in the database is provided by drug manufacturers
and distributors and includes "supplier name,
registration number, address and business activity; buyer
name, registration number and address; as well as drug code,
transaction date, total dosage units, and total grams."
(R. 717-1, Page ID# 16517.)
order, the district court aptly characterized the opioid
epidemic that provides the tragic backdrop of this case,
observing that "the vast oversupply of opioid drugs in
the United States has caused a plague on its citizens and
their local and State governments." (R. 233, Page ID#
1124.) Continuing its plague metaphor, the district court
Plaintiffs' request for [production of] the ARCOS data,
which will allow Plaintiffs to discover how and where the
virus grew, is a reasonable step toward defeating the
disease. See Buckley v. Valeo, 424 U.S. 1, 67
[(1976)] ("Sunlight is said to be the best of
disinfectants.") (quoting Justice Brandeis, Other
People's Money 62 (1933)).
(R. 233, Page ID# 1124-25.) Despite its confidence that
disclosing the ARCOS data to Plaintiffs constituted such a
reasonable step, the court later rejected the argument that a
further reasonable step would be to disclose the data to HDM
and the Washington Post (and by extension to the public at
large, who would learn about the contents of the ARCOS data
via reporting by those entities).
full quote from Justice Brandeis that the district court
cited is as follows: "Publicity is justly commended as a
remedy for social and industrial diseases. Sunlight is said
to be the best of disinfectants; electric light the most
efficient policeman." Buckley, 424 U.S. at 67
(quoting L. Brandeis, Other People's Money 62
(1933)). The question before us is whether it was reasonable
for the district court to permit only Plaintiffs to examine
the data in the otherwise complete darkness created by the
Protective Order, or whether the court abused its discretion
by denying Intervenors the opportunity to expose the data to
the broad daylight of public reporting. For the reasons
below, we hold that this denial was an abuse of the district
events leading up to this appeal were set into motion when,
in the course of the MDL, Plaintiffs subpoenaed the DEA to
produce transactional data for all 50 States and several
Territories from its ARCOS database. Plaintiffs and the DEA
stipulated to a protective order concerning the DEA's
disclosure of the ARCOS data. (R. 167, Protective Order, Page
ID# 937- 44.) The district court adopted a Protective
Order "determin[ing] that any  disclosure [of the
ARCOS data] shall remain confidential and shall be used only
for litigation purposes or in connection with state and local
law enforcement efforts." (R. 167, Page ID# 937.)
Protective Order by its terms covered "ARCOS data"
and defined this term to include "any data produced
directly from DEA's ARCOS database; any reports generated
from DEA's ARCOS database; any information collected and
maintained by DEA in its ARCOS database; and any derivative
documents that the parties or their employees, agents or
experts create using ARCOS data." (R. 167, Page ID#
938.) The Order pertained to documents, as well as
electronically stored information. The court restricted the
use of the ARCOS data to "mediat[ing], settl[ing],
prosecut[ing], or defend[ing] the above-captioned
litigation," and "law enforcement purposes,"
specifically precluding its use "for commercial
purposes, in furtherance of business objectives, or to gain a
competitive advantage." (R. 167, Page ID# 939.) The
Protective Order also authorized the parties to file
pleadings, motions, or other documents with the court that
would be redacted or sealed to the extent they contained
ARCOS data. However, the court noted that if the parties
could not agree to a settlement, "[t]he hearing,
argument, or trial w[ould] be public in all respects"
and there "w[ould] be no restrictions on the use of any
document that may be introduced by any party during the
trial" absent order of the court. (R. 167, Page ID#
941.) The Protective Order contemplated the return of the
ARCOS data to the DEA after dismissal or entry of final
judgment. Significantly for purposes of this appeal, the
Protective Order stated that if Plaintiffs received requests
for any ARCOS data under "applicable Public Records Laws
('Public Records Requests')," Plaintiffs would
"immediately notify the DEA and Defendants of the
request." (R. 167, Page ID# 942.) After notification,
the DEA and Defendants would be able to challenge the Public
Records Request by filing their opposition to production of
the records with the court.
entering this Protective Order and over the objections of the
DEA, the district court directed the DEA to comply with
Plaintiffs' subpoena by producing ARCOS data pertaining
to Ohio, West Virginia, Illinois, Alabama, Michigan, and
Florida for the period of 2006 through 2014. (R. 233, Order
Regarding ARCOS Data, Page ID# 1104.) Specifically, the DEA
was ordered to provide Plaintiffs with Excel spreadsheets
the top manufacturers and distributors who sold 95% of the
prescription opiates  to each State  during the time
period of January 1, 2006 through December 31, 2014  on a
year-by-year and State-by-State basis, along with  the
aggregate amount of pills sold and  the market shares of
each manufacturer and distributor.
(R. 233, Page ID# 1109.)
overruling the DEA's objections to disclosure, the
district court found that the DEA had not met its burden of
showing "good cause" for not disclosing the data.
(R. 233, Page ID# 1111 (citing Fed.R.Civ.P. 45).) The
court's reasoning is highly relevant to this appeal.
Regarding the interest in disclosure of the ARCOS data, the
court found that "the extent to which each
defendant and potential defendant engaged in the allegedly
fraudulent marketing of opioids, filling of suspicious
orders, and diversion of drugs . . . can be revealed only by
all of the data." (R. 233, Order, Page ID# 1118.)
Regarding the interests in nondisclosure of the data, the
court rejected the arguments that "disclosure would
reveal investigatory records compiled for law enforcement
purposes [and] interfere with enforcement proceedings"
and that "disclosure would violate DOJ's policy
which prohibits the release of information related to ongoing
matters." (R. 233, Page ID# 1119, 1120 (quoting
1:17-op-45041-DAP, R. 101, Page ID# 696, 698).) The court
rejected these arguments for three reasons:
First, Plaintiffs seek ARCOS data with an end-date of January
1, 2015. Given that the most recent data is over three years
old, it is untenable that exposure of the data will actually
or meaningfully interfere with any ongoing enforcement
proceeding. Second, the ARCOS data are not pure investigatory
records compiled for law enforcement purposes. Rather, the
data is simply business records of defendants; these
"[c]ompanies are legally required to submit the
information" to ARCOS, the database does not include any
additional DEA analysis or work-product, and the records are
used for numerous purposes besides law enforcement. Indeed,
Plaintiffs assert that part of the reason for the opioid
epidemic is lack of law enforcement. And third,
simply saying that disclosure of ARCOS records dating back to
2006 would detrimentally affect law enforcement does not make
(R. 233, Page ID# 1119 (citation omitted).)
court similarly rejected an argument that producing the data
would cause Defendants "substantial competitive
harm" by revealing "details regarding the scope and
breadth of [each manufacturer's and distributor's]
market share." (R. 233, Page ID# 1120 (alterations in
original) (quoting 1:17-op-45041-DAP, R. 101, Page ID# 697).)
The court rejected this objection to disclosure because
"the assertion was conclusory and . . . market data over
three years old carried no risk of competitive harm."
(R. 233, Page ID# 1120.)
complied with the court's order and produced the relevant
spreadsheets. Production of the ARCOS data allowed Plaintiffs
to identify and add as defendants previously-unknown entities
involved in the manufacturing and distribution of opioids and
to identify and remove as defendants improperly-named
entities. The court noted that other benefits of the ARCOS
data included "allowing [the litigation] to proceed
based on meaningful, objective data, not conjecture or
speculation" and "providing invaluable,
highly-specific information regarding historic patterns of
opioid sales." (R. 397, Secord Order Regarding ARCOS
Data, Page ID# 5323.) To expand upon these benefits, the
court ordered the DEA to produce further ARCOS data
pertaining to "all of the States and Territories"
for the same period of 2006 to 2014, with such disclosure
being subject to the Protective Order. (R. 397, Page ID#
the complete production of the ARCOS data occurred, HDM filed
a West Virginia Freedom of Information Act request with the
Cabell County Commission seeking the ARCOS data that the
county received as a Plaintiff in this litigation, and the
Washington Post filed similar public records requests with
Summit and Cuyahoga counties in Ohio (also Plaintiffs in this
litigation). Pursuant to the Protective Order, the three
counties notified the district court, Defendants, and the DEA
of the requests, and the DEA and Defendants objected to them.
district court granted HDM and the Washington Post limited
Intervenor status "for the limited purpose of addressing
their Public Records Requests." (R. 611, Briefing Order,
Page ID# 14995.) The arguments in the subsequent briefing as
to why the Protective Order should or should not be modified
to allow disclosure of the ARCOS data pursuant to
Intervenors' requests largely tracked the arguments that
had been made on the DEA's earlier objection to
disclosing the ARCOS data to Plaintiffs: Defendants argued
that the ARCOS data "is sensitive from the perspective
of both the pharmacies and distributors because it is
confidential business information, and it is sensitive from
the perspective of DEA because it is crucial to its
law-enforcement efforts." (R. 665, Defendants' Br.
Opposing Disclosure, Page ID# 16012.) Intervenors argued that
the risk of harm to Defendants and the DEA was speculative
and conclusory, and that the public had a compelling interest
in receiving "a more complete and accurate story"
of a national emergency, which the ARCOS data would allow
Intervenors to tell. (R. 718, Wash. Post Br. Supporting
Disclosure, Page ID# 16534; see also R. 725, HDM Br.
Supporting Disclosure, Page ID# 16601-16.) In an Opinion and
Order, the district court held that the public records
requests must be denied because the requests were barred by
the court's Protective Order and Defendants and the DEA
had demonstrated "good cause" for the Protective
Order's application to such requests, as required under
Rule 26(c)(1). (R. 800, Page ID# 18978.) The court specified
that its holding extended to all present or future public
records requests for the ARCOS data filed with any of the 1,
300 public entity Plaintiffs in the underlying litigation.
analysis, the district court adopted language from
Defendants' briefing, noting that the ARCOS data "is
sensitive to pharmacies and distributors because it is
confidential business information; and it is sensitive from
the DEA's perspective because it is crucial to law
enforcement efforts." (R. 800, Page ID# 18979-80.) The
court further noted that the Freedom of Information Act
("FOIA") "exempts from public disclosure any
confidential commercial information, the disclosure of which
is likely to cause substantial competitive harm." (R.
800, Page ID# 18980 (citing 5 U.S.C. § 552(b)(4) and
Canadian Commercial Corp. v. Dep't of Air Force,
514 F.2d 37, 39 (D.C. Cir. 2008)).) It also found relevant
that FOIA exempts "records or information compiled for
law enforcement purposes, but only to the extent that the
production of such law enforcement information could
reasonably be expected to interfere with enforcement
proceedings and criminal prosecutions." (R. 800, Page
ID# 18981 (citing 5 U.S.C. § 552(b)(7)).) Finally, the
court concluded that the ARCOS data "is not a record
generated by the Counties" that would be subject to
state public records requests. (R. 800, Page ID# 18981.)
appealed the Opinion and Order to this Court.
the DEA challenges this Court's jurisdiction to hear this
appeal, we begin with that issue. We will then address
whether the district court abused its discretion in finding
"good cause" to support its Protective Order
forbidding Plaintiffs to disclose the ARCOS data pursuant to
state public records requests. Finally, we will address
whether the district court erred in allowing court records to
be filed under seal or with redactions.
determine our own jurisdiction de novo. Abu-Khaliel v.
Gonzales, 436 ...