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Joy v. North - 692 F.2d 880 (2d Cir. 1982)

Rule:

Documents used by parties moving for, or opposing, summary judgment should not remain under seal absent the most compelling reasons.

Facts:

Plaintiff shareholder challenged an order of the United States District Court for the District of Connecticut that granted summary judgment to defendants, directors and officers, in plaintiff's derivative suit alleging diversity of citizenship, common law breach of trust and fiduciary duty, and violations of the National Bank Act, 12 U.S.C.S. § 84. The trial court dismissed certain defendant directors and officers in plaintiff's shareholder derivative action in which plaintiff alleged diversity of citizenship, common law breach of trust and of fiduciary duty, as well as violations of the National Bank Act, 12 U.S.C.S. § 84. A special litigation committee, which included some defendants, submitted a recommendation that there was a limited possibility of liability. The trial court concluded that the business judgment rule limited judicial scrutiny of the committee's recommendations to a determination of the good faith, independence, and thoroughness of the committee and placed the report under seal.

Issue:

Did the District Court err when it dismissed a derivative action against certain directors and officers upon a recommendation of a special litigation committee and placing that report under seal?

Answer:

Yes

Conclusion:

The court reversed the order sealing the report because the good cause asserted therefor was the attorney-client privilege, which had been waived by the submission of the report as a basis for summary judgment. The court disagreed with the committee's report and reversed the trial court, finding that a material issue of fact existed as to the liability of defendants, which precluded summary judgment.

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