Supreme court building in Washington DC, USA.
U.S. Supreme Court building in Washington, D.C. ()

The U.S. Supreme Court will not hear the Delaware Court of Chancery’s appeal of a federal appellate court ruling declaring its confidential arbitration program unconstitutional. The Supreme Court’s refusal to grant certiorari ends the Chancery Court’s arbitration program after three years of litigation and two federal court decisions.

In an order issued Monday, the high court said it would not grant certiorari in Delaware Coalition for Open Government v. Strine, but did not provide more information.

The Supreme Court’s decision means that an October 2013 ruling by the U.S. Court of Appeals for the Third Circuit declaring that the arbitration program violated the public’s right to access civil trials under the First Amendment will stand.

David Finger of Finger & Slanina, an attorney representing the plaintiff, government transparency organization Delaware Coalition for Open Government (DelCOG), said it was “a no-brainer” that the arbitration program was akin to a civil trial.

“Any suggestion that the arbitration program was not the functional equivalent of civil litigation was, to me, pure form over substance,” Finger said. “The Supreme Court’s decision will strengthen public confidence in our courts in the long run.”

Andrew J. Pincus of Mayer Brown, a Washington, D.C., firm, is one of several attorneys representing the Chancery Court. He said in a released statement that he was “disappointed” that certiorari was not granted. He declined to address whether the Chancery Court would consider modifying the program to comply with the federal court decisions.

“We believe that our nation and Delaware have lost an important opportunity to provide cost-effective options to resolve business-to-business disputes to remain competitive with other countries around the world,” Pincus said. “Although it is premature to determine whether any particular statutory amendment or other change is an appropriate response to the outcome of the court proceedings, Delaware will continue to look for ways to achieve the objectives of the program that was the subject of the litigation.”

DelCOG filed litigation in 2011 challenging a Chancery Court program that permitted businesses to resolve their disputes by having the court’s chancellor or one of its vice chancellors confidentially arbitrate the issue. All documents submitted to the court during the arbitration would remain sealed and the disputes would not appear on any court document.

DelCOG said in court filings that because the program used taxpayer-funded judges in a public courthouse, it was a civil trial and violated the public’s right to access civil trials under the First Amendment of the U.S. Constitution. The Chancery Court countered by claiming the program was pure arbitration and distinct from a civil trial.

U.S. District Judge Mary A. McLaughlin of the Eastern District of Pennsylvania issued a 2012 opinion declaring that the program was a civil trial. The Chancery Court appealed her ruling to the Third Circuit, but it upheld McLaughlin’s decision in a 2-1 split decision.

The Chancery Court opted to take its case to the Supreme Court, filing a 116-page petition for a writ of certiorari in January.

Pincus continued the Chancery Court’s argument in the petition. He claimed that the program, created by a 2009 statute enacted by the Delaware Legislature, is pure arbitration, not a civil trial, so it is exempt from the public’s First Amendment right to court proceedings.

“Numerous state and federal laws provide for confidential government-sponsored arbitration, some of which closely resemble the program Delaware implemented here,” Pincus said in the petition. “The broad reasoning employed by the court of appeals would invalidate the latter and cast significant doubt on the constitutionality of all such measures. The decision thus creates significant uncertainty regarding the ability of state and federal courts to utilize innovative ADR techniques, which are critical to addressing the overcrowding that plagues the judiciary.”

DelCOG countered by alleging that the Chancery Court’s arbitration program was not an issue the Supreme Court needed to address because it did not have national implications.

“The Third Circuit appropriately applied a properly stated rule of law correctly, and in a manner consistent with rulings of this court and lower courts throughout the nation,” Finger said. “Because of the unique features of the Delaware statute, this issue is not likely to occur in other cases. There is no real and embarrassing conflict of opinion and authority between the circuits, or with any other court.”

It is difficult for parties to receive certiorari. Between June 30, 2011, and July 2, 2012, the most recent available statistics, the U.S. Supreme Court received 7,654 appeals and granted certiorari for 63 cases, or less than 1 percent, according to the high court’s website.

The Supreme Court operates two dockets: the in forma pauperis docket, which oversees criminal appeals for indigent defendants, and the paid docket, which handles noncriminal appeals. The Chancery Court’s petition fell under the paid docket, improving its odds slightly. During the same period between June 2011 and July 2012, the court received 1,564 paid petitions and granted oral arguments for 59 cases, or roughly 3.8 percent, according to the Supreme Court’s website.

Jeff Mordock can be contacted at 215-557-2485 or jmordock@alm.com. Follow him on Twitter @JeffMordockTLI.