Judge's Opinion Denying TRO Against Arkansas Democrat-Gazette as to Publishing of Data Center Plans

The Volokh Conspiracy Mostly law professors | Sometimes contrarian | Often libertarian | Always independent Judge's Opinion Denying TRO Against Arkansas Democrat-Gazette as to Publishing of Data Center Plans This is the case I blogged about yesterday, where a data center construction company sought a temporary restraining order barring the Arkansas Democrat-Gazette from publishing certain alleged trade secrets that were allegedly improperly released by the Arkansas Public Service Commission to a citizen (Jessica Kivell) and were then sent by her to the Democrat-Gazette. I now have a copy of the transcript of Judge Lee Rudofsky's oral opinion that he delivered in court yesterday. The opinion is long, but here's I thought I'd pass along a slightly edited excerpt of the First Amendment discussion, which focuses on the TRO request against the press defendants. As usual, I use curly braces ({ and }) to indicate moved text, clean up some of the citations, and add or remove some paragraph breaks. The court concluded that, even "assuming arguendo that there's a fair chance that the press defendants have violated the federal and state trade secrets provisions," the First Amendment would preclude the TRO: What Entergy is asking for with regard to the press defendants is actually or is the equivalent of a prior restraint. Entergy is asking that the Court prevent the press defendants from publishing news articles that include information Entergy believes to be trade secrets…. [S]ome of [what follows] are quotes, some of these are slight paraphrases…. The Supreme Court has held that "prior restraints of expression come to courts bearing a heavy presumption against constitutional validity." … Bantam Books v. Sullivan (1963). "Prohibiting the publication of a news story is the essence of censorship." … Matter of Providence J. (1st Cir. 1986)…. "A plaintiff must make an extraordinary showing of harm in order to obtain a court order that stops the news media from publishing information on a matter of public concern." New York Times v. U.S. (1971)…. The prior restraint doctrine has been applied in the context of trade secrets cases as well, and although the Court acknowledges that in this context, just as in some other contexts, courts continuously note that not all prior restraints are per se unconstitutional…. [T]here is an absence of cases where a court has actually prevented the press from publishing trade secrets. Indeed, as I understand it from yesterday, plaintiff has only pointed to one case from the California Supreme Court. And, quite frankly, that case is both unpersuasive and very far afield from the facts of our case. Overall, … courts in trade secrets cases have noted that "To justify a prior restraint on pure speech, publication must threaten an interest more fundamental than the First Amendment itself." Procter & Gamble Co. v. Bankers Trust Co. (6th Cir. 1996)…. This exception to the prior restraint rule, a very, very small exception for when publications threaten an interest more fundamental than the First Amendment itself, has turned out to be extremely, extremely narrow, which, again, is really no surprise given the language of the Supreme Court and other cases used to describe that narrow exception. The Supreme Court has held that, "Even where questions of allegedly urgent national security or competing constitutional interests are concerned," it has imposed this most extraordinary remedy, meaning prior restraint, "only where the evil that would result from the reporting is both great and certain and cannot be militated by less intrusive measures." CBS v. Davis (1994) (Blackmun, J., in chambers)…. [But t]roop movements, obviously, things of that nature, military secrets are not what is at issue here…. If threats to national security are only sometimes sufficient to warrant a prior restraint, the threat to plaintiff's trade secrets are woefully inadequate…. Religious Technology Center v. Lerma (E.D. Va. 1995). There is no case the Court or Entergy itself appears to be aware of in the entire federal system that holds otherwise…. I want to emphasize, this is a TRO [temporary restraining order] ruling. For a PI [preliminary injunction] ruling, I will have more time to do additional research, and maybe I will find that that's not the case. But so far, that's where we are. In any event, Entergy's stated harms are in my view also much too vague to overcome the vital First Amendment interest here. As … Justice Brennan said in a concurring opinion in [New York Times v. U.S.], "The First Amendment tolerates absolutely no prior judicial restraints of the press predicated upon surmise or conjecture that untoward consequences may result." In my view, Entergy's contentions that the publication of pricing information and contract terms will actually harm its ability to negotiate with similar entities in the future is at best and on this record speculation. Whether there will be such harm and how great or little the harm would be with respect to Entergy's negotiating positions in the future is unclear to me at this point. It's certainly not clear enough to overcome the First Amendment prior restraint doctrine. I'll also note here that to the extent we had any conversations yesterday about interests that were sort of not Entergy's, meaning interests that were Entergy's negotiating partner's interests, that negotiating partner is not here. They are not a plaintiff in this suit, and so I am not considering those interests…. [Entergy also] argued that the prior restraint doctrine only applies to matters of significant public concern …. [But t]he information that Entergy alleges to be trade secrets in my view does constitute a matter of public concern, and that's true for a few reasons. First, from what the Court heard yesterday, it appears that the pricing information and other terms of the contract have, at the very least, an indirect effect on ordinary ratepayers throughout Arkansas…. Arkansans certainly have an interest in why their electric bills are whatever they are. Relatedly, while Entergy is a private company, it is also properly thought of as a public utility, and as the Court understands it, Entergy essentially or close to essentially has a monopoly—again, maybe something close to it; the record needs to be more developed on that point—over Arkansans' electric services. Given this monopoly or something close to a monopoly and the public nature of Entergy's business, including the need for PSC [Public Service Commission] approval generally and specifically related to this deal, Entergy's workings, its dealings, and the details of its business arrangements, especially with large users of power, for example, Altitude or Google, are matters that an ordinary Arkansan citizen may very well want to be aware of. {And I do want to, again, emphasize here I am making these determinations on a completely undeveloped record; nobody's fault again, but just given that this case is a day old.} … Nothing that I'm saying should suggest in one way or the other, you know, whether this stuff can be discoverable under FOIA [Arkansas's Freedom of Information Act], whether the PSC should release this information, whether or not the PSC should have a protective order in place to cover this information; that is not my point here. My point is that taking as a baseline that this information has somehow gotten its way to the press, I have to decide whether or not it's of public interest with respect to the First Amendment. I will also add here, there is nothing that I heard yesterday that suggests the Arkansas Democrat-Gazette or the other press defendants sort of, you know, nefariously got this information, or, you know, sort of were using Ms. Kivell or anyone else as a stooge to get this information. What I understand is through no sort of, you know, attempt of its own in these particular narrow circumstances, the information was given to the Arkansas Democrat-Gazette freely after the PSC provided it to Ms. Kivell…. A public utility company's [one-off] arrangement with a large datacenter may very well have repercussions across the state presumably, or at least potentially, in both very positive and potentially or presumably very negative ways, too. That is precisely why these sorts of service agreements must be filed in the first place with the Public Service Commission and the Public Service Commission gets to review them. The point being here, the Public Service Commission doesn't get to just review any private business's information. Part of the reason they get to review Entergy's dealings is because Entergy is not just any old private corporation. It has a significant public sweep and public import. Certainly, and I want to be clear about this, not all trade secrets of all businesses, or even all trade secrets of Entergy, will be matters of significant public concern. {[For instance, in] Purdy v. Burlington Northern Santa Fe Railroad Company (D. Minn. 2000),] … the Court enjoined the publication of Social Security numbers and salary information in connection with names of employees, and the Court concluded that doing that did not run afoul of the First Amendment, and that would be, I think, a fairly good example … of things that are truly just a matter of private concern and very clearly a matter of private concern.} But the ones at issue here, the ones that I've been pointed to that were in the paper and the ones I've been pointed to in the closed session yesterday that haven't been in the paper yet seem to be issues of significant public concern, at least on the Court's read of this very young and underdeveloped or undeveloped record…. I have used a fairly low, some might even say very low, threshold of what constitutes a matter of significant public concern. I think that's appropriate based on what the case law is on this issue, and I also think it's appropriate considering the fact that it's a very concerning thing for a judge, who is an official member of the government …[,] to be the one to get to decide whether something is or isn't a matter of public concern and to say … whether it falls on just the purely private side or the purely public side…. I'm required to do it, and so I have to give it my best shot. But … if I'm going to make an error here, I'm going to make an error leaning towards it being a matter of public concern as opposed to a matter of private concern. I think that's consistent with the [Supreme] Court's both explicit and implicit approach…. [I]f there is any fixed star in our constitutional constellation, it's the idea that the government cannot censor the press except in the rarest of circumstances not at issue here. In my view, that is a quintessentially American commitment, and it is enshrined in the First Amendment to our constitution. Granting Entergy's request for a TRO would flout that commitment. And the court concluded that its analysis applied equally to the request that the court "order that the Arkansas Democrat-Gazette remove from its website stories that it published earlier this week" and that it destroy its copies of the documents: [T]hese two requested actions would affect the press's ability to report and maintain public access to its reporting in a way that makes the actions prior restraints in everything but the most technical sense. So I think the prior restraint rules and doctrine apply even to those parts of the request…. [Moreover,] the information in the articles that have already been published is actually already out in the world. We can't put that particular genie back in the bottle, especially given modern technology like the Wayback Machine. The Court is not saying there would be absolutely no benefit to Entergy from removing these articles, but … the benefit would be exceedingly small. Similarly, even if the Court ordered the press defendants to destroy the documents, they have already seen the information claimed to be trade secrets. Accordingly—and, again, the Court is not saying that there would be no benefit to Entergy from removing the documents and removing the documents from the press defendants, making them destroy them and also removing the articles, but the Court is saying that the benefit would be exceedingly small because the press defendants already have that information and could publish articles on it. On the other hand, as the Court has explained above, the public and the press have significant interest in this information, even if the information should never have gotten out in the first place. Forcing a newspaper to take down articles or wrestling information out of a newspaper's hands is a serious harm … [that] significantly … cut[s] against a TRO …, even if we could sort of bypass the First Amendment prior restraint doctrine…. The court stressed, however, that this decision didn't imply anything "one way or the other whether the press defendants could face damages liability here"; that question wasn't before the court at this point. The judge added, I guess I will say to you so you all sort of know where my head is at, it does seem like Entergy has a fairly good argument that some of the things it pointed to yesterday are actually trade secrets. So, you know, I guess the point here is, for the press, you're sort of proceeding …. at your own risk, right? It may turn out that there is a viable and constitutional damages claim against you. It may turn out that there is not a viable or constitutional damages claim against you. I just want to be very clear with everybody that I am not deciding that issue. John T. Adams (James & Carter PLLC) represents defendants.