Court reaffirms tough standard for restraints in Business Week case

Court reaffirms tough standard for restraints in Business Week case

03/11/96

OHIO–A restraint on publication imposed on Business Week magazine by a federal District Court in Cincinnati last September did not meet the heavy burden necessary to justify a prior restraint on the news media, the U.S. Court of Appeals in Cincinnati (6th Cir.) ruled in a split decision released in early March.

The lower court order forbade Business Week to publish an article based on leaked pretrial documents concerning a racketeering lawsuit brought by Procter & Gamble against Bankers Trust.

The trial court did not make any of the requisite findings that irreparable harm to a substantial government interest would occur if publication of the story was not halted by a temporary restraining order, the appellate court found. While temporary restraining orders are correctly used by courts in most instances to maintain the “status quo” of a case while an issue is studied, the court explained, the status quo for the media is to publish news promptly.

The appellate court noted the original temporary order did not give Business Week an opportunity to argue its side at a hearing on the merits of the order. The court held that both the temporary order and the permanent order, which enjoined Business Week from ever publishing the documents despite their subsequent unsealing, were unconstitutional.

The appeals court found that the underlying protective order, which allowed the parties to seal discovery documents and amend that order solely upon their agreement, conflicted with the Federal Rules of Civil Procedure and was an abrogation of judicial oversight of proceedings. One judge noted in his concurrence that it is “ludicrous” to permit a protective order to be instituted by mere stipulation of the parties and to hold such an order to be effective against non- parties.

The appeals court also criticized the lower court for allowing the gag order to remain in place for weeks while it investigated how Business Week obtained the documents and whether reporters and editors knew the documents had been sealed. The appellate court reaffirmed the principle that such inquiries “are not appropriate bases for issuing a prior restraint.”

The majority opinion determined that even though the magazine eventually was allowed to publish the article, its appeal could still be heard because it is possible that the parties could attempt to keep further details of their litigation secret from the media. The dissenting judge said he would have dismissed the case as moot. (The Procter & Gamble Company v. Bankers Trust, et al, In Re The McGraw-Hill Companies, Inc.; Media Counsel: Victor Kovner, New York)