(CN) - The Dodd-Frank Act does not categorically protect corporate disclosures made to financial regulatory agencies from Freedom of Information Act requests, the D.C. Circuit ruled.
"The right of public access is a fundamental element of the rule of law," Judge Merrick Garland said. "There is nothing in the language of Dodd-Frank to suggest that Congress intended to displace the long-standing balancing test that courts apply when ruling on motions to seal or unseal judicial records."
The 2010 Dodd-Frank Wall Street Reform Act established the Financial Stability Oversight Council (FSOC), and granted it the authority to place a non-bank financial company under enhanced supervision by the Federal Reserve if it determines that the firm's financial instability could pose a threat to U.S. markets.
The council placed the insurer MetLife on enhanced supervision after reviewing 21,000 pages of documents the insurer voluntarily submitted.
MetLife challenged the council's decision in court, and both parties submitted redacted briefs plus appendices.
A federal judge reversed the council's decision, but not before the public interest group Better Markets filed to unseal the briefs and related documents.
Better Markets' Freedom of Information Act (FOIA) request was denied, but the D.C. Appeals Court reversed that ruling August 2.
"A company does not in fact surrender the confidentiality of its information by seeking judicial review," Garland said. But, "it is important to remember that, even while a company's information is solely in FSOC's hands, its confidentiality is not categorically protected because Dodd-Frank renders it subject to FOIA."
Rather, courts must apply a balancing test to determine if the company's privacy interests are outweighed by the public's interest in understanding the basis of a court's decision, the 27-page opinion says.
"Our conclusion is further confirmed by considering the logical consequence that would result from instead adopting the appellees' position. As both MetLife and FSOC forthrightly acknowledged at oral argument, accepting their view would also require a court to redact portions of its own opinion that discuss data or information submitted by a company to the Council - even key applications of law to fact," Garland said. "Such a requirement would contradict a fundamental norm of our judicial system: that judges' decisions and their rationales must be available to the public."