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Al jazeera America, LLC v. AT&T Services, Inc.

Court of Chancery of Delaware

October 14, 2013

Al Jazeera America, LLC
AT&T Services, Inc.

Date Submitted: October 1, 2013

John L. Reed, Scott B. Czerwonka Andrew H. Sauder DLA Piper LLP

Kenneth J. Nachbar, Shannon E. German Morris, Nichols, Arsht & Tunnell LLP

Dear Counsel:

The parties in this contract action wish to keep the nature of their dispute confidential, for understandable business reasons. The Court of Chancery, however, like any public court, serves not only the litigants before it; it has a public function as well. Several news reporters have filed objections to the parties' redactions in the pleadings, seeking to vindicate that public function. The Court has addressed the tension created by these public and private interests, and the procedure for resolving it, in Court of Chancery Rule 5.1. This Letter Opinion applies that rule to the dispute here.

The parties, Al Jazeera America, LLC ("Al Jazeera") and AT&T Services, Inc. ("AT&T"), enmeshed in a contractual dispute, have redacted virtually all the contract terms in dispute as well as descriptions of the nature of the dispute itself. They note that this Court traditionally has allowed redaction of discrete sensitive information, such as a price term, in contractual disputes where disclosure of such a term could disadvantage a party in dealings with customers or competitors.[1] That is because, on balance, the detriment to the parties of disclosure outweighs the public interest in such a discrete piece of information. The parties argue that disclosure of this information-the terms of their contract and how it is interpreted by the parties-is capable of causing similar harm if disclosed; giving a competitive edge to third parties in unrelated transactions, much as would a price term. This, I assume, is so. The difference here is that the public interest in the nature of matters brought in this public forum, which interest I must weigh in determining continued confidentiality under our Rule 5.1, is high. Several news organizations have objected to confidentiality designations under this Rule. The public interest in the judicial process cannot be vindicated if the nature of the litigation remains masked in a fundamental way. Indeed, it is difficult to envision a judicial opinion in this matter that could maintain the confidentiality of all the designated material and yet be comprehensible to the reading public; this Letter Opinion itself is circumscribed in order to provide a decision that may be appealed without destroying the confidentiality that any appeal will seek to preserve.

This matter involves the entry of Al Jazeera into the national cable news arena, and its allegations that AT&T wrongfully terminated and breached an Affiliation Agreement between the parties. Both Al Jazeera and AT&T redacted large portions of Al Jazeera's Verified Complaint ("the Complaint"), including information about the nature of the dispute, the parties' contractual relationship, and inter-party negotiations and discussions. Several news reporters subsequently filed objections pursuant to Court of Chancery Rule 5.1(f), opposing both the degree and substance of the parties' redactions. Because I find that, with minor exceptions, neither party has shown "good cause" to maintain confidential treatment of the redacted Complaint, I direct Al Jazeera to file a largely unredacted copy of the Complaint, save for the exceptions enumerated below, within five business days.[2]

A. Factual Background

The Al Jazeera Media Network ("AJMN") operates over seventy television and print news bureaus throughout the world.[3] Aspiring to expand into the United States market but "fac[ing] a high barrier to entry, " AJMN elected to acquire a company with an existing cable and satellite presence.[4] AJMN set its sights on Current TV, LLC ("Current"), a company which had an existing news cable channel and "distribution contracts with a number of cable and satellite television operators, " including AT&T.[5] As a result of AJMN's acquisition, Current "merged into a new entity that became Al Jazeera, "[6] and Al Jazeera became Current's successor to an Affiliation Agreement with AT&T.[7] Al Jazeera planned to launch its new service "Al Jazeera America" on August 20, 2013, and anticipated that it "would reach approximately 48 million U.S. households on its first day."[8]However, AT&T purportedly refused to carry Al Jazeera's signal, leading to this action.[9]

On August 20, 2013, Al Jazeera filed its Complaint, alleging that AT&T wrongfully terminated the Affiliation Agreement between the parties for pretextual reasons that attempted to mask its true bad-faith motivation, and thus breached its contractual duties to Al Jazeera.[10] Al Jazeera seeks declaratory relief, specific performance of the parties' obligations under the Affiliation Agreement, and compensatory damages.[11] Al Jazeera promptly notified AT&T that it was filing the Complaint confidentially in accordance with Court of Chancery Rule 5.1(e), and provided AT&T with a proposed public version containing Al Jazeera's redactions.[12] AT&T subsequently added its own redactions to the Complaint and filed a public version on August 23.[13]

Al Jazeera has redacted information such as the nature of the dispute and information about the parties' contractual relationship, including the terms of the Affiliation Agreement underlying this dispute and the parties' dealings under this agreement.[14] AT&T similarly redacted information related to the parties' negotiations and discussions about the terms of the Affiliation Agreement, their alleged contractual breaches, and "quotes and descriptions of key terms of the Affiliation Agreement, including the rights and obligations of the parties (such as payment obligations), pricing, subscribers to the network, and other commercially sensitive provisions."[15]

Between August 26 and 29, Jef Feeley of Bloomberg News; Kyle Wagner Compton and Sharon Bradley of The Chancery Daily; Peg Brickley of Dow Jones; Randall Chase of The Associated Press; and Rita Farrell, a freelance reporter filed objections to the confidential designations under Rule 5.1(f). On September 3, in accordance with Rule 5.1(f)(2), AT&T and Al Jazeera separately filed Motions to Maintain Confidential Treatment. AT&T, in addition to its Motion, submitted a version of the Complaint containing fewer redactions. On September 9, Peg Brickley of Dow Jones filed a Joint Opposition to the Motions to Maintain Confidential Treatment on behalf of herself, Kyle Wagner Compton, Randall Chase, Rita Farrell, and Sharon Bradley. On September 11, Randy Shapiro, Global Media Counsel for Bloomberg News, filed a letter in opposition to the parties' Motions.

I heard oral argument on September 24, 2013. In addition to argument by Plaintiffs and Defendant's counsel, Andre Bouchard, representing Bloomberg News, and Kyle Compton Wagner, a Delaware attorney and writer for the Chancery Daily, also addressed the Court. A portion of the September 24 hearing was closed to the public; the court transcript remains under seal in order to preserve the confidentiality of the matters at issue.[16]

During oral argument, Al Jazeera noted that certain information was redacted from the Complaint solely in order to avoid breaching the confidentiality provision in the Affiliation Agreement.[17] Accordingly, 1 requested that Al Jazeera amend and resubmit its redactions, disregarding the confidentiality provision and using only Rule 5.1 as guidance. Additionally, I requested that Al Jazeera submit information to clarify the effect that disclosure of certain redacted information would have. Al Jazeera submitted the requested supplemental material on ...

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