UPDATE - Supreme Court Denies Cert in Delaware Chancery Arbitration Program Case

March 24, 2014

U.S. Supreme Court today denied certiorari in Strine v. Delaware Coalition For Open Government, Inc. The Third Circuit’s 2013 ruling that Delaware’s novel arbitration program – which allowed Chancery judges to hold confidential arbitrations – blocks the public’s constitutional right of access to trials therefore remains in effect.

March 20, 2014

Supreme Court to Consider Cert Petition Friday Regarding Delaware Business Arbitration Program (courtesy of Mark Kantor)

The certiorari petition in Strine v. Delaware Coalition For Open Government, Inc. (seeking review of the U.S. 3rd Circuit Court of Appeals decision holding that confidential Delaware Business Arbitration Program proceedings would be contrary to “a First Amendment right of access to Delaware’s government-sponsored arbitrations”) has been distributed to the justices of the US Supreme Court for review at their regular conference this coming Friday (March 21, 2014). It is therefore likely that the fate of the certiorari petition will be announced next week (perhaps Monday at 9:30 a.m. EDT), unless the Supreme Court decides to hold over ruling on whether to grant or deny the petition. Links to the 3rd Circuit opinion, the cert petition, the opposition, the reply and amicus briefs can be found here. (CPR summarized the 3rd Circuit decision here in October 2013).

Two of the amicus submissions are particularly interesting. The New York Stock Exchange (NYSE Euronext) and NASDAQ OMX joined in an amicus submission urging the Supreme Court to accept review of the case and reverse the 3rd Circuit ruling, arguing that the 3rd Circuit decision employed an overbroad definition of a “trial”

Like FINRA arbitration, Delaware’s statutory procedure meets all criteria of arbitration, and Delaware’s arbitrators derive their authority in this context from the consent of the parties, and not the coercive power of the state. Thus, arbitrations under Delaware’s statutory scheme are not “trials.”

NYSE and NASDAQ appear concerned that the Court of Appeals’ approach to this question might sweep in FINRA securities arbitrations that are mandated for many securities disputes.

Twenty-four large U.S. law firms that practice regularly in the Delaware State courts joined in a second amicus  filing seeking reversal, criticizing the approach of the 3rd Circuit and certain other Circuits of purportedly disregarding prior Supreme Court holdings that public access to governmental proceedings is Constitutionally required only when “there is an unbroken, uncontradicted history of public access” and the “proceeding is essential to our justice system.”

 As the decision below illustrates, no longer is an unbroken, uncontradicted history of public access, nor is a proceeding essential to our justice system, required in order for the right of access to attach. The result has been a broad usurpation of executive, legislative, and state power by courts that have “confuse[d] what is ‘good,’ ‘desirable,’ or ‘expedient’ with what is constitutionally commanded by the First Amendment.” Houchins, 438 U.S. at 13 (plurality opinion). The Court should grant certiorari in this case to restore the First Amendment right of access to its properly narrow scope.

 All of the amicus submissions filed at this stage of the case, including the two mentioned above, support granting the State’s certiorari petition and overruling the Court of Appeals. One might presume that, if the cert petition is granted, then at the merits stage other amicus will surface supporting the 3rd Circuit ruling.

As a reminder, the appellate ruling held that the Delaware Business Arbitration Program was unconstitutional because the arbitration proceedings would employ public resources (e.g., judges and court facilities, among others) but would not be open to the public. If the Delaware program were to be modified to permit public access to the arbitrations, then the District Court and Court of Appeals rulings would not prevent the Delaware Business Arbitration Program from continuing on that modified basis.

- Mark Kantor, Washington, DC
mkantor@mark-kantor.com
www.mark-kantor.com