Mancheski v Gabelli Group Capital Partners

[*1] Mancheski v Gabelli Group Capital Partners 2006 NY Slip Op 52614(U) [20 Misc 3d 1118(A)] Decided on May 11, 2006 Supreme Court, Westchester County Jamieson, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on May 11, 2006
Supreme Court, Westchester County

Fredrick J. Mancheski, and David M. Perlmutter, Plaintiffs,

against

Gabelli Group Capital Partners, Defendant.



18762/03



To:Philip M. Halpern, Esq.

Collier, Halpern, Newberg, Noletti & Bock, LLP

Attorneys for Plaintiff Mancheski

One North Lexington Avenue

White Plains, New York 10601

Barbara Moses, Esq.

Morvillo, Abramowitz, Grand, Iason & Silberberg, P.C.

Attorneys for Plaintiff Perlmutter

565 Fifth Avenue

New York, New York 10017

Thomas J. Fleming, Esq.

Olshan Grundman Frome Rosenzweig & Wolosky, LLP

Attorneys for Defendant

Park Avenue Tower65 East 55th Street

New York, New York 10022

Richard Klapper, Esq.

Sullivan & Cromwell, LLP

Attorneys for Defendant

125 Broad Street

New York, New York 10004

Guy T. Parisi, Esq.

Parisi & Patti, LLP

Attorneys for Defendant

222 Bloomingdale Road, Suite 108

White Plains, New York 10605

Linda S. Jamieson, J.

Plaintiffs, Frederick J. Mancheski ("Mancheski") and David M. Perlmutter ("Perlmutter", collectively with Mancheski, "plaintiffs") are shareholders in defendant close-corporation, Gabelli Group Capital Partners, Inc. ("defendant" or "GGCP"). By the instant motions, defendant seeks to seal certain records.

By Order to Show Cause dated April 10, 2006, Bloomberg News seeks permission from this Court to intervene in this action for (I) the "limited purpose" of obtaining access to certain documents submitted to this Court in camera or submitted under seal and (ii) "authorizing a reporter" from Bloomberg News to attend a hearing on summary judgment scheduled for May 15, 2006. For the reasons stated below, the motion of Bloomberg as the first part of the application is granted subject to the limitations set forth below, which also disposes of the application of GGCP to seal certain records. As to the second part of the motion of Bloomberg [*2]regarding authorizing a reporter, the application is denied as it is moot.

The Court will assume familiarity with the underlying action in this matter for purposes of this Decision and Order.

Bloomberg News makes the argument in essence that full and complete disclosure of this matter is required under the First Amendment to the United States Constitution; that this action is of great importance; and that the public has a Constitutional and common law right to know.

For its part, GGCP first argues that the entity denominated as "Bloomberg News" can not maintain this application as it has not properly alleged its capacity, corporate or otherwise. Aside from this procedural argument, it then argues that Bloomberg News has not met the criteria for intervention as set forth in the Civil Practice Law and Rules. Its last argument is that public disclosure and dissemination is not warranted herein and the Court should grant a protective order pursuant to Civil Practice Law and Rules Section 3103.

The Court will address each issue seriatim.

"Corporate" Capacity

GGCP's first argument is that the entity seeking intervention "Bloomberg News" has not properly alleged its existence. It argues that if it is a corporation, it must allege the same pursuant to Civil Practice Laws and Rules Section 3015; if it is an unincorporated association, it may only sue in the name of its president or treasurer.

While this Court believes that "Bloomberg News" should have been more diligent in conforming to proper pleading procedures, it can not deny the application on this narrow procedural ground, especially when important First Amendment issues are present.

Right to Intervene

GGCP next argues as Bloomberg News has not included its proposed pleadings in its papers, intervention must be denied under Civil Practice Law and Rules Section 1014. This argument is much too formalistic and narrow and does not address to the practical realities of a newspaper organization wishing to obtain public access to ostensibly newsworthy Court proceedings. It really strains credibility to have to require such a news organization to formulate some sort of "pleading" to satisfy a provision for the Civil Practice Law and Rules to exercise such a valued constitutional right as that protected by the First Amendment. [*3]

Other Courts have recognized clearly recognized this and have allowed news organizations as Bloomberg News standing and the right to intervene. See In re Herald Co., 734 F.2d 93, 102 (2nd Cir. 1984). See generally Associated Press v. Bell, 70 NY2d 32 (1987); Beach v. Shanley, 72 NY2d 241 (1984).

This Court having rejected the procedural arguments of GGCP and finding that Bloomberg News can properly intervene in this action, will now consider the merits of the application.

Bloomberg News' Right to Attend May 15, 2006 Hearing

This Court has never issued any order much less direction that any hearing or oral argument in this Court be closed to the public, and the hearing scheduled for May 15, 2006 has not been closed to the public. Bloomberg News' application to "authorize" its news reporter to attend this hearing is moot as no such authorization is required.

First Amendment Considerations and the Public's Right to Know

There is a strong presumption favoring public access to court records. People v. Burton, 189 AD2d 532 (3d Dept. 1993); Doe v. NYU,6 Misc 3d 866 (Sup. Ct. 2004). It is believed that public scrutiny of court proceedings and records, is an important check against corruption and incompetence. Danco Lab., Ltd. v. Chemical Works of Gedeon Richter Ltd., 274 AD2d 1 (1st Dept. 2000).

22 NYCRR § 216.1 provides that court records shall not be sealed except upon a written finding of good cause "which shall specify the grounds thereof." The rule further requires the Court to consider the competing interests of the public and the parties. Thus, the court must, in the exercise of its discretion, engage "in a balancing process weighing the potential for harm and embarrassment to the litigants and public alike . . . ." Coopersmith v. Gold ,156 Misc 2d 594, 606 (citations omitted). The party seeking to seal the records has the burden of establishing the requisite "good cause." Doe v. NYU, supra at 899-900.

All the disputed records in this matter are included in the motion papers for summary judgment submitted in this action. The Second Circuit recently held that "documents submitted to a court for its consideration in a summary judgment motion are - as a matter of law - judicial documents to which a strong presumption of access attaches, under both the common law and the First Amendment." Lugosch v. Pyramid Co. of Onondaga, 435 F.3d 110, 121 (2d Cir. 2006). [*4]

The Delaware Courts, which like New York, apply a "good cause" standard to applications to seal records, and which routinely analyze corporate financial information in the context of litigation, generally consider the following categories of information to be confidential: 1) trade secrets; 2) third-party confidential material; and 3) non-public financial information. Fitzgerald v. Cantor, 2001 WL 422633 (Ct. Chancery 2001); Hewlett v. Hewlett-Packard Co., 2002 WL 32151538 (Ct. Chancery 2002). In addition, "preliminary discussions, opinions or assessments" of corporate board members, may be considered confidential, as well as current business strategies. Stone v. Ritter, 2005 WL 2416365 (Ct. Chancery 2005). Where, however, such information is so old as to be considered "historical" it can lose its confidential status. Id. at *2.

Much of the information defendant seeks to seal is best characterized as non-public financial information, of both the defendant corporation and its individual shareholders. In Dawson v. White & Case, 184 AD2d 246 (1st Dept. 1992) the Court held that the records of an accounting by the defendant law firm could be sealed. In so holding, the Court stated, "plaintiff does not explain why disclosure of financial information concerning defendant's partners and clients, relevant in the accounting for purposes of putting a dollar value on plaintiff's interest in defendant, is necessary to facilitate public discussion of policy issues identified by plaintiff, such as the financing and management of law firms." Id.

Finally, the fact that a party may consider certain information embarrassing, is alone, insufficient to overcome the presumption favoring public access to the records. Doe v. NYU, supra at 902. Conversely, the desire to cause embarrassment is not a legitimate "public interest". Dawson, supra .

In addition to these general considerations, the Court is mindful of the fact that GGCP is a private company and not subject to the securities law disclosures applicable to public companies. In balancing the competing interests herein, the Court endeavors to maximize fairness to the parties and the public.

The list of disputed records has been provided to the Court and parties, in a format which lists the document name, the exhibit number, and a brief description of the contents. The Court will follow the list in providing its ruling as to each disputed document. As to the Exhibits to the Wilderman Affirmation the Court rules as follows: [*5]

Exhibit B, Motion to seal granted as it contains recent non-public financial information;

Exhibit C, Motion denied, as the information contained therein is historical in nature and would not compromise GGCP's current business strategies;

Exhibit D, Motion denied, as the information contained therein is historical in nature and would not compromise GGCP's current business strategies;

Exhibit E, Motion denied,

Exhibit F, Motion denied, as the information contained therein is historical in nature and would not compromise GGCP's current business strategies;

Exhibit J, Motion to seal granted as it contains recent non-public financial information;

Exhibit K, Motion to seal granted as it contains recent non-public financial information;

Exhibit L, Motion to seal granted as it contains recent non-public financial information;

Exhibit M, Motion denied as it is the Court's understanding that these records have been unsealed in the Federal action and are already public records;

Exhibit N, Motion denied as it is the Court's understanding that these records have been unsealed in the Federal action and are already public records;

Exhibit O, Motion denied, as the information contained therein is historical in nature and would not compromise GGCP's current business strategies;

Exhibit P, Motion to seal granted, as the record contains confidential financial information concerning a third- party not a party to this action;

Exhibit Q, Motion to seal granted, as the record contains confidential financial information concerning a third- party not a party to this action;

Exhibit R, Motion to seal granted, as the record contains confidential financial information concerning a third- party not a party to this action; [*6]

Exhibit S, Motion denied, as the information contained therein is historical in nature and would not compromise GGCP's current business strategies;

Exhibit X, Motion denied, as the information contained therein is historical in nature and would not compromise GGCP's current business strategies, while perhaps potentially embarrassing, this is not grounds to seal the exhibit;

Exhibit EE, Motion to seal granted, as the record contains confidential financial information concerning a third- parties who are not a parties to this action;

Exhibit JJ, Motion denied, as the information contained therein is historical in nature and would not compromise GGCP's current business strategies;

Exhibit KK, Motion denied, as the information contained therein is historical in nature and would not compromise GGCP's current business strategies;

Exhibit NN, Motion denied, as these records contain a compilation of information concerning compensation from the public company and such information is already publicly available;

Exhibit OO, Motion to seal granted as this record contains non-public financial information;

Exhibit PP, Motion to seal granted as this record contains non-public financial information;

As to the exhibit annexed to the Affidavit of David Perlmutter,

Exhibit No.24, Motion to seal granted as the record contains non-public financial information;

As to the exhibits annexed to the Affidavit of Leon Reimer,

Exhibit C, Motion to seal granted as the record contains non-public financial information;

Exhibit E, Motion denied, as the information contained therein is historical in nature and would not compromise GGCP's current business strategies;

Exhibit F, Motion denied, as the information contained therein has been made public in another action; [*7]

Exhibit G, Motion denied, as the information contained therein has been made public in another action;

Exhibit H, Motion to seal granted as the record contains non-public financial information;

Exhibit I, Motion denied, as the information contained therein has been made public in another action;

Exhibit J, Motion denied, as the information contained therein has been made public in another action;

Exhibit K, Motion to seal granted as the record contains non-public financial information;

Exhibit L, Motion to seal denied;

Exhibit M, Motion to seal granted as the record contains non-public financial information;

Exhibit N, Motion to seal granted as the record contains non-public financial information;

As to the Reply Affirmation of Barbara Moses,

Exhibit B, Motion to seal granted as the record contains non-public financial information;

Exhibit C, Motion to seal granted as the record contains non-public financial information;

Exhibit D, Motion to seal granted as to all lines, as the record contains non-public financial information;

As to the Affidavit of Richard Klapper,

Exhibit K, Motion denied, as the information contained therein is historical in nature and would not compromise GGCP's current business strategies, however, defendants may redact the names of non-parties;

Exhibit Q, Motion to seal granted as the record contains non-public financial information;

Exhibit R, Motion to seal denied;

As to the Affidavit of Thomas Fleming, [*8]

Exhibit D, Motion denied, as the information contained therein is historical in nature and would not compromise GGCP's current business strategies;

As to the Reply Affidavit of Richard Klapper,

Exhibit B, Motion denied, as the information contained therein is historical in nature and would not compromise GGCP's current business strategies, however, defendants may redact the names of non-parties.

The parties are to file copies of their motion papers in accordance with the Court's Decision herein within ten (10) days of the date of this Decision & Order.

The foregoing constitutes the decision and order of the Court.

Dated:White Plains, New York

May 11, 2006

____________________________

HON. LINDA S. JAMIESON

Justice of the Supreme Court

To:Philip M. Halpern, Esq.

Collier, Halpern, Newberg, Noletti & Bock, LLP

Attorneys for Plaintiff Mancheski

One North Lexington Avenue

White Plains, New York 10601

Barbara Moses, Esq.

Morvillo, Abramowitz, Grand, Iason & Silberberg, P.C.

Attorneys for Plaintiff Perlmutter

565 Fifth Avenue

New York, New York 10017

Thomas J. Fleming, Esq.

Olshan Grundman Frome Rosenzweig & Wolosky, LLP

Attorneys for Defendant

Park Avenue Tower

65 East 55th Street

New York, New York 10022

Richard Klapper, Esq.

Sullivan & Cromwell, LLP

Attorneys for Defendant

125 Broad Street [*9]

New York, New York 10004

Guy T. Parisi, Esq.

Parisi & Patti, LLP

Attorneys for Defendant

222 Bloomingdale Road, Suite 108

White Plains, New York 10605