Jackson New Media and the effort to unseal records from State Farm v Attorney General Hood

In April 2009, Jackson New Media,  publisher of the Mississippi blog Y’all Politics, filed a Motion to Intervene in State Farm’s suit against  Jim Hood, in his official capacity as Attorney General of the State of Mississippi.  Three television stations joined Jackson New Media as plaintiffs in the case:  WLBT (Jackson), WLOX (Biloxi)  and WDAM (Hattiesburg), now collectively “New Media”.

According to the Motion, New Media had “no forum within which it may seek to protect its free press and free access rights…under the Constitution of the United States and Mississippi Constitution of 1890, and free access rights under the Mississippi Public Records Act of 1983”.

SLABBED responded in a post supporting the removal of seals from all documents filed in Katrina-related litigation:

The public’s First Amendment right to access relevant court materials does not begin and end with State Farm v Hood. In fact, in the context of Katrina litigation, the case pales by comparison to the relevant court materials that have been sealed since the 29th of August, 2005, when Katrina blew apart homes and families, neighborhoods and communities…

Later in the post, SLABBED added, “Asking to unseal a single document will cause some to question the motives of this worthy effort…” and followed with a reference to State Farm’s use of sealed documents in a case current at the time the post was written.

This past March, Federal District Judge David Bramlette issued a17-page Order and Reasons granting the Motion and giving Jackson New Media 30-days to file a motion and memorandum to unseal “certain court materials”.  On April 20, 2010 the New Media plaintiffs filed a Motion of Intervenors for Partial Relief from Judgment, or in the Alternative, for an Order to Appear and Show Cause Why Settlement Agreement Should Not Be Unsealed. The Motion defined “certain court materials” as follows:

the settlement agreement between the State Farm plaintiffs and Attorney General Jim Hood… release of the transcript/and or video of the deposition of Richard F. “Dickie” Scruggs that was apparently placed under seal… Any such in camera testimony and all sealed testimony, records and settlement agreements in this case…

Attorney General Hood filed a telling Response :

In making its decision to seal the in camera testimony, this Court inherently made a determination that the Plaintiffs lacked sufficient interest to pierce the privileges and immunities applicable to the information in question. It stands to reason, then, that the Intervenors, as non-interested third parties, lack sufficient interest to challenge those same judicial determinations underlying the order sealing that same in camera testimony.

In other words, State Farm’s lack of opposition is self-serving (surprise!).  New Media has Judge Bramlette on the hot seat – but it was Judge Starett who put him there:

This cause is before the Court on the Motion for Recusal [# 16] filed by Jim Hood in his official capacity as Attorney General of the State of Mississippi (“General Hood”). The Court, having considered the Motion for Recusal, the Response by the Plaintiffs State Farm Fire and Casualty Company and State Farm Mutual Insurance Company (“State Farm”), and the applicable authorities, being fully advised in the premises, finds that the Motion for Recusal is well-taken and should be granted.

The exceptional circumstances of this litigation caution the Court to tread carefully in weighing the recusal issue. The parties dedicated their briefing primarily to the mandatory disqualification provision of § 455(b), which requires the judge to disqualify himself when he has a financial interest in the subject matter of the controversy. 28 U.S.C. § 455(b)(4) (2000). This Court was, and is, a policyholder with State Farm. General Hood made some effort to distinguish State Farm Mutual Automobile Company, a mutual insurance company, from State Farm Fire and Casualty Company, a stock insurance company.

The Court believes this to be a distinction without a difference, since all of the stock in the stock company is in fact owned by the mutual company. General Hood’s recusal argument under § 455(b) boils down to the financial interests of  the Court in State Farm, which are based exclusively on being a policyholder. The exception under § 455(d)(4)(iii) states that the proprietary interest of a policyholder in a mutual insurance company is a “financial interest” in the organization only if the outcome of the proceeding could substantially affect the value of the interest. 28 U.S.C. § 455(d)(4)(iii) (2000). State Farm has furnished an affidavit indicating that it has a policyholder surplus in excess of $61 billion. The size of the company is not challenged. While both sides dispute the amount that is potentially in controversy in any litigation or criminal charges that would flow from a decision by the Court, an adverse effect on State Farm of $60 million would only affect one-tenth of one percent of the reserves. Premiums paid by the Court to State Farm might necessarily be raised. Assuming total premium payments of $10,000 per year, the resulting increase would, in theory, amount to onetenth of one percent, or approximately $10—hardly a substantial effect on the value of the Court’s interest…

Federal circuit courts have consistently affirmed a trial judge’s decision not to recuse in similar situations. Robinson v. State Farm Fire & Cas. Co., 13 F.3d 160, 163 (5th Cir. 1994) (finding the claim that the district judge “should have recused himself because he was a State Farm policyholder borders on the trivial.”); see also Delta Airlines, Inc. v. Sasser, 127 F.3d 1296, 1297 (11th Cir. 1997) (finding insufficient grounds for recusal for a frequent flyer account because it was analogous to a policyholder in a mutual insurance company, and hence not a “financial interest” under § 455(d)(4)(iii)). The Court therefore finds that its interest in State Farm as a policyholder does not qualify as a “financial interest” that requires mandatory recusal pursuant to 28 U.S.C. § 455(b)…

However, the choice of the Hattiesburg Division by State Farm gives the Court some concern. Under 28 U.S.C. § 1391(b)(1), venue is properly laid in “a judicial district where any defendant resides, if all defendants reside in the same state.” Because General Hood is the only Defendant, the fact that he resides in the Southern District of Mississippi makes the selection of the Southern District proper under the venue statute But the choice of Hattiesburg, among the remaining divisions, piques the Court’s interest…

While venue is proper in any division of the Southern District, the Defendant General Hood resides in and maintains his office in Jackson. The case has no known factual relationship to Hattiesburg. Although venue is still procedurally permissible in the Hattiesburg Division, the case is a better fit in the Southern Division or the Jackson Division of the Southern District.

The Court does not imply any improper motives or attempts at forum shopping on behalf of either party. Indeed, both State Farm and General Hood are frequently before this Court and are well-familiar with this Court’s efforts to uphold its oath of impartiality. Also, this Court is well aware of its obligation not to recuse if not necessary, as well as its obligation to recuse if indicated.  But with no obvious ties to the case, the decision to lay venue in Hattiesburg, while jurisdictionally proper, colors the appearance of partiality in a unique way with this Court.

The standard set forth by all circuits is whether a reasonable person informed of the circumstances might reasonably question the judge’s impartiality. The Fifth Circuit’s requirement, that in a close question recusal is appropriate, is applicable to the exceptional circumstances of this case. Therefore, the Court finds that in order to avoid even the appearance of partiality, that it should recuse itself and, pursuant to the standing order in this district, transfer the case to the docket of Judge David Bramlette.

How impartial was Judge Bramlette? Take a look at Bramlette’s financial disclosure forms – and Starett’s, too.

Nonetheless, the still-on-sabbatical Bam Bam wrote SLABBED’s official position on the sealed settlement agreements that have colored Katrina litigation:

Perhaps the single most destructive practice in the US civil justice system is the prevalence of so-called “confidential settlements.” Legislatures and courts have the power to declare this pernicious practice illegal on grounds that it violates public policy, and undermines a cornerstone principle (deterrence) of the civil justice system. However, nothing has ever been done because both sides, plaintiffs’ attorneys and corporate defendants alike, want the system to stay as it is. Plaintiffs get their case settled without delay or risk of adverse result, and defendants get to buy bad facts out of the court record, insuring they can never be held accountable for serial wrongdoing. It turns the justice system into blackmail process: money for silence. Every time a confidential settlement is allowed, the deterrent effect of the civil justice system is thwarted and severely undermined.

If corporations are able to commit the same civil wrongs over and over, only to have this history locked away in a sealed record, there is no deterrence value in having a public court record system. The court itself is negatively impacted by litigating similar facts over and over, and re-hashing the same disingenuous motions and defenses. In the end, by using confidential settlements and sealed records, corporate defendants are free to pretend each case presents a new and wholly defensible set of facts, knowing they will never be held accountable for repetitive punitive conduct because their past actions are sealed away. Civil litigation is a triangular relationship, composed of plaintiff, defendant and the public’s interest in preserving an open and public court system. Confidential settlements ruin the public’s interest, and destroy its trust.

Sop is certain to have follow-up comments that weave all of this together with the BP litigation and new of State Farm’s withdrawal from the WYO program of the NFIP.