Delaware Chancery Court’s State-Sponsored Arbitration Program is Held Unconstitutional

Delaware Coalition for Open Government, Inc. v. Strine, 733 F.3d 510 (3d Cir. 2013).  It is rare that judges, and a court, are defendants in a lawsuit.  It is even more rare that they are the losers in such an action.  This decision, in which a 2-1 majority of the Third Circuit declared unconstitutional Delaware’s state-sponsored arbitration program in its Chancery Court, due to a lack of public access to those proceedings, is one of those rare exceptions.

The three judges on the panel, Judges Sloviter, Fuentes, and Roth, issued three separate opinions.  Judge Sloviter found the Chancery Court’s arbitration scheme as a whole unconstitutional.  Judge Fuentes, the other judge in the majority, concurred, finding that only one portion of the statute applicable to the arbitration process, and two implementing Chancery Court rules, were unconstitutional.  Judge Roth, the only panel member who is from Delaware, would have upheld the arbitration program in its entirety.

The majority’s ruling affirmed a decision by the district court to grant judgment on the pleadings.  The standard of review of a judgment on the pleadings is de novo, as Judge Sloviter stated.

In general, as the first sentence of Judge Sloviter’s opinion stated, the issue was “whether the public has a right of access under the First Amendment to Delaware’s state-sponsored arbitration program.”  A proceeding qualifies for First Amendment rights of access if “there has been a tradition of accessibility” to that type of proceeding and if “access plays a significant positive role in the functioning of the particular process in question.”  That two-part inquiry is known as the “experience and logic” test.   The district court had not applied the experience and logic test.  Instead, that court had ruled that because Delaware’s state-sponsored arbitration process was “sufficiently like a trial,” to which there is a right of public access, public access to the arbitration process was likewise required.  Judge Sloviter rejected that reasoning and stated that the experience and logic test had to be applied.  She then went through an elaborate historical analysis using that test, going back to twelfth century English practice, and concluded that both experience and logic dictated that the state-sponsored arbirtration proceedings had to be open to the public.

In his concurrence, Judge Fuentes found that only one statute and two rules of the Chancery Court regarding public access was unconstitutional, not several others that the district court had found unlawful.  Judge Fuentes did not apply the experience and logic test.  Neither did Judge Roth, whose dissent found no difficulties with any aspect of the statute or the Chancery Court rules applicable to the arbitration program.

It would not be surprising if this case were the subject of further review.  The fact that no one opinion commanded a majority, and that only Judge Sloviter found the experience and logic test applicable, as well as the importance of arbitration at a time when that procedure is displacing litigation more and more (for better or worse) may lead to en banc consideration of this very interesting case.