Two federal appellate judges in Washington today expressed hesitation about forcing American International Group (AIG) to disclose to Corporate Counsel reporter Sue Reisinger an independent consultants reports that addressed compliance with a settlement in 2004 with U.S. securities regulators.
A three-judge panel of the U.S. Court of Appeals for the D.C. Circuit is weighing whether to uphold a trial judge's ruling that requires AIG to reveal the reports, which the company contends are confidential. U.S. District Judge Gladys Kessler in April ordered the publication of redacted reports, saying the public's interest "far outweighs" the interests of AIG and the U.S. Securities and Exchange Commission.
Public disclosure, Kessler said in her opinion, is important "given the financial meltdown of 2008, the recession it spawned and the suffering the country has endured because of it." Lawyers for AIG, represented by Baker Botts, asked the appeals court to overturn Kessler's decision. Reisinger, a senior reporter with Corporate Counsel, is the plaintiff in the case.
The central issue in the case is whether the corporate monitor reports are "judicial records" that come with a presumption of public access. A lawyer for AIG, Baker partner Alexandra Walsh, argued that the reports are not judicial records. The documents, Walsh said, were never filed in any court proceeding and they never formed the foundation of any court ruling.
Walsh's position seemed to receive some favorable attention from Judge Brett Kavanaugh and Senior Judge Stephen Williams, who heard the case with Judge Janice Rogers Brown.
Kavanaugh asked Walsh about the implications of a D.C. Circuit decision against AIG. "The implications are immense," responded Walsh, who represented AIG with Baker partner William Jeffress Jr. She said companies, in the future, knowing that similar reports would be subject to public inspection, could be less forthcoming when it comes to sharing information with regulators.
Williams and Kavanaugh both appeared troubled by the fact the monitor records were never in court before a judge.
The AIG monitor reports, Kavanaugh said at one point, don't fit the "common sense" definition of a judicial record. Williams said: "These documents have never been before a judge's eyes." A ruling against AIG, the judge said, could open the door for the disclosure of documents that are a "sequel" to a lawsuit.
Walsh, a member of the defense team that represented I. Lewis "Scooter" Libby in Washington in 2007, said that if the SEC had any questions about AIG's compliance with its settlement with the government, the commission could have filed the consultant reports in court to initiate further proceedings. The consultant's reports, Walsh said, were provided to the SEC and to the U.S. Department of Justice.
J. Joshua Wheeler, director of the Thomas Jefferson Center for the Protection of Free Expression, representing Reisinger, tried to convince the D.C. Circuit panel that the corporate monitor reports were part of the underlying court proceeding against AIG. He argued that it doesn't matter that the reports themselves were not in existence at the time of the judgment against AIG.