Sealed Bankruptcy Records Protected by Code, Third Circuit Says

Bankruptcy courts are bound by federal statute, not common law, when determining whether documents should be sealed from public view, a federal appeals court ruled in a challenge involving Essar Group subsidiary Mesabi Metallics Co.

The bankruptcy code “differs from and displaces the common law standard for sealing judicial records,” the US Court of Appeals for the Third Circuit said in a ruling Wednesday. The decision returned a sealed records dispute between Mesabi and competitor Cleveland-Cliffs Inc. to the US Bankruptcy Court for the District of Delaware.

The bankruptcy court erred in concluding that confidential materials Cleveland-Cliffs produced to Mesabi in litigation over mineral leases could be unsealed based on a common law presumption of openness, Judge Cheryl Ann Krause wrote for a three-judge panel.

The standard for weighing that question is set by Section 107 of the bankruptcy code, “which imposes a heavy, but distinct, burden for a party to keep docketed records from the public eye,” Krause said.

The panel instructed the Delaware court to review Mesabi’s unsealing request through an “objective lens” to see if it would cause “competitive injury.”

Mesabi, formerly known as Essar Steel Minnesota LLC, initiated the underlying bankruptcy court suit in 2017, alleging Cleveland-Cliffs violated its Chapter 11 protections and engaged in anticompetitive practices designed to impede Mesabi from completing an iron ore pellet production facility.

Seeking to prevent Cleveland-Cliffs from acquiring mineral leases in Minnesota previously awarded to Mesabi, the Essar unit asked to have discovery materials made public.

In a 2023 ruling, Judge Craig T. Goldblatt applied a common law standard and found the records could be unsealed because Cleveland-Cliffs hadn’t shown “disclosure will work a clearly defined and serious injury.” The judge then certified the question for Third Circuit review.

The panel said in Wednesday’s ruling that it joined other federal courts of appeal that have issued similar findings.

The decision was joined by Judges Thomas L. Ambro and Stephanos Bibas.

Mesabi is represented by White & Case LLP. Cleveland-Cliffs is represented by Jones Day LLP.

The case is Mesabi Metallics Co. LLC v. Cleveland-Cliffs Inc., 3d Cir., No. 23-02954, Opinion 4/16/25.