Pretense is Gone in Sealing Court Records

Sealing court records as a condition of settlement or payment of a verdict in a civil suit is rearing its head again in Illinois and throughout the country.

In the wake of the Firestone scandal, in which the tire manufacturer continued to produce the defective product that allegedly cause fatalities while secretly settling wrongful death suits, at least 13 states are considering legislation that would ban confidential settlements in cases that compromise public safety.

In Illinois, State Rep. James Broshahan ( D- Evergreen Park) introduced H.B. 4277 in late January, entitled " Sunshine in Litigation." It provides that a court cannot enter an order or judgement that seals information when a public hazard in involved unless trade secrets, identity of informants or the privacy of minors is involved. As of late February, the bill was in the Judiciary- Civil Law Committee.

A separate bill was introduced in late January ( H.B. 3990) that prohibit secrecy agreements when public entities are involved. State Rep. Dale Righter, R-Mattoon sponsor of the bill, state that he intends to amend that bill, though, to make it " more expansive" in light of the recent ruling of the 7th U.S. Circuit Court of Appeals that dealt with that very issue.

In Jessup v. Luther ( No. 01-1523) ( 7th Cir., decided Jan. 17, 2002), the 7th Circuit reversed the District Court and held that the settlement agreement dealing with the termination of a public college vice president was a public record.

The appeals court granted the intervener newspaper’s motion to unseal the agreement. Judge Richard Posner, writing on behalf of a unanimous court, said, " Not only do such records often concern issues in which the public has an interest, in which even concealing the records dissevers the values protected by the free speech and free press clauses of the First Amendment, but also the public cannot monitor judicial performance adequately if the records of judicial proceedings are secret."

Courts, as in Jessup, use a balancing test, weighing the interest in secrecy against any competing interests.

I applaud these efforts to examine on a case-by-case basis the attempted cover-up of critical information often dealing with the health and safety of the public. Too often defects in dangerous products, environmental hazards of financial fraud are the core of these controversies.

From silicone breast implants, to defective heart valves, to slipping transmissions, negligent conduct affecting hundreds or thousands of people is kept secret to the detriment of unknowing consumers.

And the mindset is becoming even more frightening. It used to be that company executives couched the need for secrecy in proprietary business interests or trade secret information. Now even that pretense is gone; and defendants simply are stating that they simply don’t’ want similarly situated plaintiffs to know others’ settlement amounts. That is wrong.

Not only does this effectively deprive all other potential litigants of their rights to a full and fair remedy, it also undermines the historic policy of openness in the judicial processs. In fostering secrecy, the court system appears to be working for the advantage of those who settle early, sometimes for much-needed compensation, and to the detriment of others who are further down the settlement road.

This attitude also works to undermine the public confidence in the judicial process, which already is suffering, according to public perception surveys. Furthermore, confidential settlements prevent effective government regulations of products that are potentially dangerous, as the court is Jessip noted.

Certainly, privacy is a cherished right; and business information can be an important commodity. Lawyers are often put in an ethical bind if the settlement best serves his or her client’s interests but it comes only in exchange for a cloak of secrecy. Lawyers, however, must be mindful of the larger landscape and fight for those without a voice if their own client’s interests are not compromised.

What is unconscionable, though, are lawyers themselves who enter into agreement with defendants who prohibit the use of discovery information in similar future cases; and then these lawyers excuse themselves from even participating in that litigation.

Careful judicial review prior to the sealing of documents or settlements is necessary, particularly when the public interest is involved. Although private parties should be allowed to freely contract, when a public interest is at stake, public policy demands judicial scrutiny to prevent a blanket or widespread ban and to ascertain the need and breadth of protective orders.

Although legislation may provide some guidelines, it still will be up to the courts to judge each case on an individual basis to assure that the public’s right to know it protected, particulary when dangerous products or detrimental conduct is at issue. It is the courts that must remain the guardian of the public good.