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Federal judges adopt rule banning secret settlements

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    NMU         SOUTH CAROLINA         Secret Courts         Nov 8, 2002    

Federal judges adopt rule banning secret settlements

  • A public comment period prompted public input, but did not lead to any changes to the wording of the broad rule.

After considering public comments highlighting the dangers of secret settlements and interests in confidentiality, federal judges in South Carolina adopted a proposed rule banning secret settlements without allowing for exceptions.

Effective Nov. 1, Local Civil Rule 5.03 reads: “No settlement agreement filed with the court shall be sealed pursuant to the terms of this rule.” The rule applies to all federal district courts in South Carolina.

Thirty-four interest groups — including universities, insurance companies, non-profit organizations, lawyer associations, and private law firms, as well as The Reporters Committee for Freedom of the Press — commented on the proposed rule. The South Carolina federal judiciary decided to adopt the proposed rule without change.

“From a defense statement, confidential statements are of paramount importance in an effort to protect trade secrets, financial information, and other proprietary information from reaching the general public,” wrote H. Mills Gallivan, President of the South Carolina Defense Trial Attorneys’ Association in public comments submitted to the judiciary. “Defendants, particularly, are reluctant to disclose the terms of a settlement lest those terms encourage others to sue,” Gallivan stated.

The federal judiciary declined to adopt alternative proposals permitting secret settlements offered by the South Carolina Defense Trial Attorneys’ Association and other defense associations.

“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,” the Reporters Committee wrote in its comments.

As Chief Judge Joseph F. Anderson pointed out in a July 11 letter to other members of the federal bench, “Here is a rare opportunity for our court to do the right thing, and take the lead nationally in a time when the Arthur Andersen/Enron/Catholic priest controversies are undermining public confidence in our institutions and causing a growing suspicion of things that are kept in secret by public bodies.”

ST

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