Comments regarding Local Rule 5.03 (D.S.C.) on secret settlements
The Reporters Committee and others urged South Carolina federal judges to adopt a proposed rule that would ban secret settlements.
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BEFORE THE U.S. DISTRICT COURT
In the Matter of
COMMENTS OF
TABLE OF CONTENTS Discussion I. Banning secret settlements greatly benefits the public. A. Information contained in settlements is of vital public interest.
A. Current law supports open access to settlements.
2. Promoting settlements is insufficient to overcome the presumption of openness.
The Reporters Committee for Freedom of the Press, the National Press Club, The Radio-Television News Directors Association, and the Society of Professional Journalists submit these comments in response to Proposed Rule 5.03 banning secret settlements. We urge the Judiciary to adopt this Proposed Rule without modification. If the Judiciary decides to amend the Proposed Rule, we request the opportunity to address these modifications and the opportunity to testify at the public hearing if and when such a hearing is held. The Reporters Committee for Freedom of the Press is a voluntary, unincorporated association established in 1970 by news editors and reporters to defend the First Amendment and freedom of information rights of the print and broadcast media. The Reporters Committee assists journalists by providing free legal information via a hotline and filing amicus curiae briefs in cases involving the interests of the news media. The Committee produces several publications to inform journalists and media lawyers about media law issues, including a quarterly magazine, The News Media & The Law, a bi-weekly newsletter, News Media Update, as well as several informational guides and reports. Established in 1908, the National Press Club is an organization of journalists and communicators with 4,000 members in Washington, D.C. and around the world. Created in part to promote the ethical standards of journalists, the National Press Club serves as a center for the advancement of professional standards and skills and the promotion of free expression. The Radio-Television News Directors Association, based in Washington, D.C., is the world's largest and only professional organization devoted exclusively to electronic journalism. RTNDA is made up of more than 3,000 news directors, news associates, educators and students in radio, television, cable and other electronic media in over 30 countries. The Society of Professional Journalists is dedicated to improving and protecting journalism. It is the nation's largest and most broad-based journalism organization, dedicated to encouraging the free practice of journalism and stimulating high standards of ethical behavior. Founded in 1909 as Sigma Delta Chi, SPJ promotes the free flow of information vital to a well-informed citizenry; works to inspire and educate the next generation of journalists; and protects First Amendment guarantees of freedom of speech and press. We have reviewed the Proposed Local Rule 5.03 and support its adoption. We explain below why a ban on secret settlements would benefit the public and how the Proposed Rule is consistent with the notion that the presumption of openness to court documents should not be easily overcome. Discussion I. Banning secret settlements greatly benefits the public. A. Information contained in settlements is of vital public interest. As secret settlements become routine, the public is left in the dark -- deprived of vital health and safety information that could prevent needless injury, death and suffering. Recent events, including exposing years of sexual abuse of children by Catholic priests, injuries from medical malpractice, deaths caused by defective tires, and suffering by victims of asbestos, beg the question: Why didn't the public know sooner? In January 2002, The Boston Globe reported that over the last 10 years the Archdiocese of Boston secretly settled child molestation claims against at least 70 priests.(1) Although it is difficult to identify the number of victims involved due to the secrecy surrounding these settlements, The Boston Globe estimates that the number of abuse victims exceeds 200.(2) After The Boston Globe published its investigative report, hundreds of new victims came forward and reports across the country surfaced of priests' sexual abuse and misconduct.(3) Because these settlements were secret, the public had no way of knowing that sexual abuse of children by priests was a national problem. Even judges and attorneys who handled these cases were unaware of the extent of the harm and may have reconsidered permitting secret settlements. "If I had been aware of how widespread this issue was, I might have had a very different reaction to it [sealing the case.],"Superior Court Judge Margot Botsford told The Boston Globe regarding her 1995 order sealing the records of a clergy sex abuse case in Suffolk County, Massachusetts. (4) Because the use of secret settlements was routine, it took years before the public knew of the numerous accounts of sexual abuse of children by priests. By then, many more children suffered at the hands of priests. Even high-ranking priests who were aware of these secret settlements acknowledge that secrecy allowed abuse of children to continue. "Ultimately, there is nothing to be gained by secrecy except avoidance of scandal," wrote Roman Catholic Cardinal William Keeler of Baltimore in a letter to 180,000 registered families of his archdiocese. "And rather than shrinking from this scandal -- which too often, has allowed it to continue -- we must address it with humble contrition, righteous anger and public outrage. Telling the truth cannot be wrong." On September 25, 2002, Cardinal Keeler disclosed that in the last 20 years, the Baltimore Archdiocese and its insurance carriers have spent $4.1 million on settlements paid to victim-survivors and more than 1.5 million for living expenses, psychiatric and medical treatment for suspended priests, counseling for victim-survivors, and legal expenses for accused priests. As Laurence E. Hardoon, a Boston attorney who represents victims of clergy sex abuse noted, "If we had any inkling whatsoever of the magnitude of harm that was out there, maybe we, as a joint group of plaintiff lawyers, would have tried to encourage our clients to be outspoken in many cases. It is hard not to look back and say the greater good would really have been served by the lack of secrecy earlier on."(5) Secret settlements not only hide child abuse, they hide defects in numerous well-known products. A survey of news databases reveals that over the years secret settlements have concealed hundreds of injuries and deaths caused by the following products:
Manufacturers of all of these products have benefitted from secret settlements, while the public suffered. For example, in 1933, the Johns-Manville Co. secretly settled a case brought by 11 employees for asbestos related injuries.(6) According to a report by the Coalition for Consumer Rights, this secret settlement was not disclosed until 40 years later. During this time, thousands of workers contracted respiratory diseases as a result of asbestos. Had the public been aware of the original 1933 suit, it could have been alerted to the dangers surrounding asbestos sooner. More recently, the public learned of secret settlement agreements between the Ford Motor Co., Bridgestone/Firestone Inc., and the victims of defective Firestone tires. The National Highway Traffic Safety Administration estimates that Firestone tires caused more than 100 deaths and 500 injuries.(7) Even though approximately 100 lawsuits were filed over 10 years, until recently, the public was left in the dark about the dangers posed by these defective tire. Meanwhile, lives were lost. As former Texas Supreme Court Justice Lloyd Doggett noted, "I think there are lives being lost every week in America, due to hazardous products and hazardous activities, as a result of secrecy agreements."(8) Even the size of the settlement is critical to understanding the severity of risk to the public. Often corporations will settle cases for relatively small amounts of money in order to avoid the cost of litigation. However, the larger the settlement payment, the more likely the corporation perceives itself at risk for liability. The public can thereby discern the severity of the risk posed by a particular product. The Proposed Local Rule enables journalists to alert the public to possible safety and heath risks posed by consumer products or organizations - information that the public has a right to know. The secrecy of settlement agreements is bought and sold at the expense of the public. Sometimes referred to as "hush money," plaintiffs are often pressured into agreeing to secrecy as a condition of settlement. "I'm ashamed I took their money now. I should have gone and reported it to the police or filed a lawsuit and called a press conference to announce it. If we had done that, this problem would have been exposed long ago," said Ray Sinibaldi who was abused by a priest more than 30 years ago.(9) Plaintiffs' attorneys and the victims themselves are torn between obtaining the largest settlement possible and exposing these public threats. By banning secret settlements, defendants could not sell secrecy as a condition of settlement. II. The proposed local rule is consistent with the notion that the presumption of openness should not be easily overcome. The presumptive right of access to judicial proceedings and records is beyond dispute. Publicker Indus., Inc. v. Cohen, 733 F.2d 1059, 1066 (3d Cir. 1984). As the Supreme Court noted, "For many centuries, both civil and criminal trials have traditionally been open to the public. As early as 1685, Sir John Hawles commented that open proceedings were necessary so 'that the truth may be discovered in civil as well as criminal matters.'" Gannett Co. v. DePasquale, 443 U.S. 368, 386, n. 15 (1979). Open access to settlement agreements provides greater assurance that public will discover when defendants may be exposing the public to harm and encourages discussion of public affairs. In addition to promoting heightened public awareness, "[d]isclosure of settlement documents serves as a check on the integrity of the judicial process." Bank of America Nat. Trust & Savings Ass'n v. Hotel Rittenhouse Assocs., 800 F.2d 339, 345 (3rd Cir. 1986). The Proposed Local Rule banning secret settlements is consistent with current law establishing a presumptive right of access to court documents of all types. See, e.g., Nixon v. Warner Communications, Inc., 435 U.S. 589 (1978) (finding a common law right of access to judicial records); Republic of Phil. v. Westinghouse Elec. Corp.,949 F.2d 653 (3d Cir. 1991) (right of access to trial records); Globe Newspaper Co. v. Pokaski, 868 F.2d 497 (1st Cir. 1989) (right of access to trial records); Publicker, 733 F.2d at 1066-67 (common law right of access extends to "civil trial and records"); Rushford v. New Yorker Magazine, Inc., 846 F.2d 249, 253 (4th Cir. 1988) (right of access to documents filed with a summary judgment motion); Anderson v. Cryovac, 805 F.2d 1 (1st Cir. 1986) (stating that there is a long-standing presumption in the common law that the public may inspect judicial records); Associated Press v. U.S. (DeLorean), 705 F.2d 1143 (9th Cir. 1983)(finding a First Amendment right of access to court records); Brown & Williamson Tobacco Co. v. Federal Trade Comm'n, 710 F.2d 1165 (6th Cir. 1983), cert. denied, 465 U.S. 1100 (1984) (noting a First Amendment and common law right of access); United States v. Myers (In re Nat'l Broadcasting Co.), 635 F.2d 945 (2d Cir. 1980) (strong presumption of a right of access); Globe Newspaper Co. v. Fenton, 819 F. Supp. 89 (D. Mass. 1993) (right of access to court record indexing system). Courts have also extended this presumptive right of access to unseal secret settlement agreements. See Hotel Rittenhouse, 800 F.2d at 346 (granting motion to unseal settlement agreement between bank and developer); St. Vincent's Hosp. & Med. Ctr. v. Greenville Hosp. Sys., 1989 WL 205624 (D.S.C. Dec. 11, 1989) (granting application to unseal settlement agreement and documents in case involving hospital and the Secretary of Health and Human Services); Boone v. Suffolk, 79 F.Supp.2d 603 (E.D.Va. 1999) (unsealing settlement agreement in back pay dispute under the Fair Labor Standards Act where "federal common law and Virginia common law and public policy support disclosure of settlement agreements approved by courts"); In re Johnson, 598 N.E.2d 406 (Ill. App. 1992) (holding "the right of access extends to the documents filed with the court, including settlement agreement in the dissolution case"). The Proposed Rule codifies this presumption of open access to court documents and prevents secrecy in an institution historically open to public view. B. Most of the arguments used to defend secret settlements do not heavily outweigh the public's interest in access. Parties seeking secret settlements often claim their civil dispute is a "private matter." However, "[t]he presumption favoring disclosure reflects public interests that are independent of the parties' status as private persons." C.L. v. Edson, 409 N.W.2d 417, 422 (Wis. App. 1987) (unsealing settlement agreement between minor patients and medical personnel involving sexual and psychological abuse). When a private party commences a civil suit in a forum that is traditionally open to the public, any expectation of privacy is diminished. Id. By filing suit in a public form, private parties acknowledge that private remedies have not worked. Once parties request the full power of the state to assist them in resolving their dispute, the process is no longer a private matter and open access is required. The parties' simple desire to make their suit private by agreement never rises to the heightened interest necessary to overcome the presumption of openness. See, e.g., In re Johnson, 598 N.E.2d at 411 ("The parties' desire and agreement that the court records were to be sealed falls far short of outweighing the public's right of access to the files. . . . Courts cannot honor such requests without seriously undermining the tradition of an open judicial system."). The Proposed Rule strengthens the presumption of open access and prevents parties from contracting out of this common law right. 2. Promoting settlements is insufficient to overcome the presumption of openness. Claims that secret settlements promote increased settlements is speculative at best. Edson, 409 N.W.2d at 423. If parties enter into secret settlements to avoid publicity, these same parties will again seek to settle cases to avoid the publicity surrounding a lengthy trial. This "general interest in encouraging settlement" is not enough to overcome the presumption of openness. Hotel Rittenhouse, 800 F. 2d at 346. Even assuming that secret settlements encourage the quick resolution of cases and free court dockets, as one court held, "[w]e cannot permit the expediency of the moment to overturn centuries of tradition of open access to court documents and orders." Id. at 345. The public's interest in the preservation of open access to the judicial system greatly outweighs any general claims of efficiency. C. Open access is vital due to the nature of the federal judiciary and necessary to instill confidence in the judicial process. Maintaining the presumption of openness regarding judicial records is particularly important given the institutional nature of the judiciary itself. Openness is necessary for both the peace of mind of the public at large and the sanctity of our judicial system. When secret settlements occur under the auspices of the court, the judiciary contributes to the cloak of secrecy that conceals health and safety risks from the public. This gives the appearance that courts prefer to shield defendants from public scrutiny rather than alert the public to life-threatening harm, abuse or injury. The Proposed Rule banning secret settlements would increase confidence in the judiciary as courts would no longer be able to assist defendants in hiding their actions from public view. We greatly appreciate the Judiciary's consideration of these Comments and respectfully request that the Judiciary adopt Proposed Rule 5.03 to protect the public, promote open access to the court documents, and preserve the integrity of the judicial system. Respectfully submitted, Lucy Dalglish, Esq. John Aubuchon, President Kathleen Kirby, Esq. Bruce W. Sanford, Esq. September 27, 2002 FOOTNOTES: 1. Walter V. Robinson, "Scores of Priests Involved in Sex Abuse Cases Settlements Kept Scope of Issue Out of Public Eye," Boston Globe, January 31, 2002. 2. Id. 3. Walter V. Robinson, "Hundreds Now Claim Priest Abuse Lawyers Report Flood of Alleged New Victims," Boston Globe, February 24, 2002; Brooks Egerton and Reese Dunklin, "Bishops' Record in Cases of Accused Priests," Dallas Morning News, June 12, 2002 (reporting accusations of pedophilia, sexual abuse or harassment by priests in 41 states). 4. Walter V. Robinson and Sacha Pfeiffer, "Priest Abuse Cases Sealed by Judges," Boston Globe, February 16, 2002. 5. Sacha Pfeiffer, "Critical Eye Cast on Sex Abuse Lawyers Confidentiality, Large Settlements Are Questioned," Boston Globe, June 3, 2002. 6. Coalition for Consumer Rights, "Secrets that Kill: Dangers Buried in the Courthouse," March 2000. 7. Ken Paulson, "Inside First Amendment: Secret Settlements Undermine Public Safety," Gannett News Service, August 26, 2002. 8. Bob Van Voris and Matt Fleischer, "Critics: Sealed Tire Deals Can Kill But Clients' Needs Often Require Them, Trial Lawyers Say," National Law Journal, September 25, 2000. 9. Walter V. Robinson, "Scores of Priests Involved in Sex Abuse Cases Settlements Kept Scope of Issue Out of Public Eye," Boston Globe, January 31, 2002. |