World of Warcraft player Antonio Hernandez filed a motion claiming he has settled his dispute with virtual property dealer Internet Gaming Entertainment and asking the court for permission to file the settlement “under seal” (.pdf), but Judge James I. Cohn of the United States District Court for the Southern District of Florida refused to allow the filing under seal (.pdf) unless the parties can demonstrate that there are “extraordinary circumstances.”  The judge left open the possibility that the settlement can be filed under seal, but has made it clear that he will not do so without good reason.  The public cannot access documents that are filed under seal.

Hernandez, readers will recall, was supposed to be the lead plaintiff in a class action lawsuit representing a class of millions of World of Warcraft players against IGE.  A motion for class certification was filed earlier this year, but the court had not yet ruled on that motion when the parties apparently reached an agreement to settle the case.  As I pointed out last month, settlement before class certification is decided raises questions, particularly if the value of the settlement exceeds the reasonable value of a named plaintiff’s individual claimed damages — here, a diminished World of Warcraft experience.

For the full background of this case, see VB’s complete coverage of Hernandez v. IGE. In brief, plaintiff sued IGE on behalf of essentially all World of Warcraft players on the grounds that IGE, by farming gold, spamming chat, camping spawns, and generally diminishing the game experience, allegedly prevented players from receiving the full benefits Blizzard intended them to receive as third party beneficiaries of Blizzard’s Terms of Use and End User License Agreement.

The court, in refusing to accept the filing under seal unless the parties can demonstrate “extraordinary circumstances,” commented as follows:

Plaintiff seeks permission to file a motion to enforce a settlement under seal, because “certain terms of the settlement are to remain confidential.” The motion is unopposed by Defendant. However, the Court has an obligation to consider the public interest before allowing an entire motion or settlement agreement to be sealed. “It is clear that the courts of this country recognize a general right to inspect and copy public records and documents, including judicial records and documents.” Nixon v. Warner Communications, Inc., 435 U.S. 589, 597 (1978).  [...] [I]f a settlement agreement is filed with the court for approval or interpretation, then the parties must demonstrate extraordinary circumstances in order to deny the public access to the agreement. Brown v. Advantage Eng’g Inc., 960 F.2d 1013, 1016 (11th Cir. 1992).

The order leaves open the possibility that the parties could demonstrate “extraordinary circumstances” that would justify filing under seal, but the language of the order seems to limit that possibility, noting that “secrecy has been deemed compelling” in situations seemingly dissimilar to this case, such as “cases involving trade secrets, the privacy of children, the identify of informants, or when the information could be used for scandalous or libelous purposes.”  The court also noted that there is a “presumption of openness” that is “stronger for documents that directly affect an adjudication.”

Commentary

I am very happy to see the court take this position, and I hope that the court subjects the parties’ likely forthcoming motion arguing that the settlement needs to remain secret to this high level of scrutiny.  I say this both as a writer and a lawyer; public access to court records is a cornerstone of the judicial system.  As the court noted, there are good reasons to seal some documents, but the parties here have not made any argument, let alone a compelling one, why the terms of their settlement ought not be made public.  Were this simply a case of a single plaintiff and defendant, no one would care, but it isn’t.  This case is styled as a class action, and the interest of a potential class of millions are at stake.  That is why the judge is being asked to approve this settlement in the first place, and why he was right to decline to seal it.

Notably, the parties’ proposed settlement agreement was not attached to Hernandez’s filing.  The filing appears to have been designed to test the waters on this issue without giving the court the opportunity to immediately make the settlement agreement public.

VB will be watching the next steps closely, and I suspect that public interest groups and larger media outlets (the traditional intervenors in this situation) may now start paying attention as well.