In Atlantic Specialty Ins. Co. v. Royal Alliance Assoc's, Inc., No. 23-CV-9555 (JGLC), 2023 WL 8600548 (S.D.N.Y. Dec. 12, 2023), a federal judge once again stretched the rubber band of secrecy farther than it will usually go. To put it another way, the judge surveyed the outer bounds of secrecy in this insurance case.
Royal Alliance Associates (sometimes also called "the Associates") is a brokerage. It was issued a Securities Broker/Dealer Professional Liability Insurance primary policy. Atlantic issued the Associates an excess policy. The Associates made a claim for insurance coverage with Atlantic. Atlantic sued for declaratory relief of no coverage for the amounts claimed by the Associates, i.e., of no coverage for the settlements that Royal Alliance Associates made with their investors-customers.
Two initially filed versions of Atlantic's complaint are inaccessible on PACER, the Public Access to (Federal) Court Electronic Records. Ultimately, a redacted version of the complaint was made accessible to the public in this case. See Atlantic Spec. Ins Co. v. Royal Alliance Assoc's, Inc., Complaint, DE 21 (S.D.N.Y. Case No. 23-CV-9555 (JGLC)).
Royal Alliance successfully requested that the "names and amounts of the settlements" it made with its customers, for which it sought the insurance coverage from Atlantic, should be blacked out – in Atlantic's complaint. After repeating the oft-repeated acknowledgement that complaints are "'the cornerstone of every case,'" and after restating that the public presumption of access is protected both by the common law and by the First Amendment to the United States Constitution, the Court in this case equated "'the sealing of settlement negotiations materials'" with the names and amounts of the resulting settlements. In other words, the Court confused the process with the results.
The Court granted the motion to redact from Atlantic's complaint with respect to, among other things, the names and amounts of the settlements that the Associates made with their broker-customers including in Financial Industry Regulatory Authority (FINRA) arbitrations, for which the Associates now seek insurance coverage from Atlantic. No cornerstone here, no presumption this. No access either, at least not by the public in this case.
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