Corporate Planes

Nordstrom Can’t Keep Family Plane Ride Claims Sealed

The following is from Law360. By Jonathan Randles
Law360, New York (April 07, 2015, 4:55 PM ET) — A Washington federal judge refused Tuesday to keep sealed portions of a lawsuit accusing Nordstrom Inc. of hiding the cost of operating a fleet of private airplanes for the Nordstrom family, rejecting the company’s argument that the plaintiff had agreed before filing the lawsuit to keep the information under wraps.U.S. District Judge John C. Coughenour denied Nordstrom’s motion to seal the complaint, ruling the company failed to give a “compelling reason” to keep information in the complaint a secret. Plaintiff Judith Burbrink has accused Nordstrom of filing misleading proxy statements with the U.S.Securities and Exchange Commission that mask substantial costs associated with operating the family’s planes.

Judge Coughenour said although a private agreement may have been reached between the parties before the start of the litigation, no deal has been presented to the court. Further, Nordstrom has only offered “vague” privacy concerns related to the release of the information that don’t trump the strong presumption that judicial documents be made public.

“It is possible that Plaintiff violated a private agreement by filing this lawsuit and converting non-public information into a judicial record,” Judge Coughenour said. “However, the Court is not presently tasked with interpreting or enforcing any promises made by Plaintiff to gain access to Nordstrom‘s records.”

Although the complaint was originally filed last month, specific figures detailing the approximate costs of the operation and other information is redacted in the complaint. Nordstrom, which sought to keep the data secret, argued that details related to the board’s “travel habits” should be kept private. The company said Burbrink, who obtained the information through a formal request for company records, agreed to keep the information a secret.

Nordstrom has maintained in SEC filings that the company charges the family market prices for services it provides them. Moreover, the company has stated that payments it receives from the family exceed the estimated costs of providing those services. It has denied the allegations in the complaint and said it will be vindicated in court.

However, the lawsuit claims that contrary to those filings, Nordstrom’s board “has never conducted any analysis of the costs of providing the services to the Nordstrom family.”

The complaint goes on to say that Nordstrom has been operating a “bloated and costly” flight department to manage company planes, as well as personal aircraft for the Nordstrom family. Burbrink claims the flight department has cost shareholders millions of dollars.

Nordstrom and an attorney representing Burbrink declined to comment on the order.

Burbrink is represented by Brad J. Moore of Stritmatter Kessler Whelan, Hung Ta, Natalia Williams and JooYun Kim of Hung G. Ta Esq. PLLC, Peter Safirstein and Roger Sachar of Morgan & Morgan PC and Konstantine W. Kyros of Kyros Law Offices.

Nordstrom is represented by David S. Keenan, Robert P. Varian and M. Todd Scott of Orrick Herrington & Sutcliffe LLP.

The case is Judith Burbank v. Phyllis J. Campbell et al., case number 2:15-cv-00377, in the U.S. District Court for the Western District of Washington.

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