A state appeals court judge has denied Coral Resorts' request to stop The Island Packet and The Beaufort Gazette from continuing to publish a sealed transcript of a hearing related to the Hilton Head Island timeshare company.
S.C. Court of Appeals Chief Judge John C. Few ruled that the newspapers do not have to take down from their websites the transcript of a controversial hearing the company had before the S.C. Real Estate Commission. The transcript has been sealed by two courts and a state regulatory official.
The newspapers received the transcript from an unknown, anonymous source and published it, believing it is a public document that the public has a right to see.
Coral Resorts attorney James Smith, a state legislator from Columbia, asked the judge to stop the newspapers from publishing the transcript. He argued that since the document is the subject of a pending appeals case, it is "out of the utmost necessity" that it stay private.
Coral Resorts officials have said the document includes trade secrets and proprietary information about the company, which operates Port O'Call at Shipyard Plantation, Island Links, Coral Sands and Coral Reef resorts.
"The Island Packet has published information that an appellate court has sealed in compliance with the South Carolina Timeshare Act, information which was rightfully determined by statute to be private," attorney Nekki Shutt said in a statement. "The newspaper should abide by the same laws as every individual in South Carolina."
Jay Bender, an attorney for the newspapers, said in a letter to the judge that halting publication would amount to prior restraint, which is unconstitutional.
The transcript of the January 2013 hearing sheds light on the company's failure to pay annual fees required by the state Department of Labor, Licensing and Regulation. The lapsed payments are likely to play a key role in about two dozen lawsuits filed by disgruntled owners of Coral Resorts timeshares.
The document also has sworn testimony from Hilton Head Island Mayor Drew Laughlin, also an attorney for Coral Resorts. He testified that punishing the timeshare business would hurt the island economy.
Laughlin, who was paid to appear, said this month that he testified as a private citizen -- not as an attorney for Coral Resorts or as mayor. He did not tell the commission that he worked for Coral Resorts, according to the transcript.
The newspapers are seeking to intervene in the appeal of a judge's decision to seal the transcript and other documents related to Coral Resorts. The newspapers want to get involved in the case to challenge 14th Circuit Judge Carmen Mullen's sealing of the once-public information. The Court of Appeals has not decided whether to let the newspapers intervene.
Follow reporter Dan Burley at twitter.com/IPBG_Dan.