Signed, sealed and locked away

From the Spring 2008 issue of The News Media & The Law, page 16.

In the legal world, secrecy often comes at a hefty price — particularly when the secret involves the details of a government official’s misdeeds.

Detroit Mayor Kwame Kilpatrick learned this lesson late last year when he signed an $8.4 million settlement agreement that appears to be aimed, in large part, at hiding text messages that were created by the mayor and his mistress using city-issued cell phones.

The agreement and the amorous text messages, which are now being used to prosecute Kilpatrick for perjury after the mayor previously denied under oath having an affair, were made public after the Detroit Free Press sued to force their release in February.

After the city appealed two lower court decisions, the Michigan Supreme Court ruled that both the agreement and the messages were subject to disclosure under the state’s Freedom of Information Act.

“There is no FOIA exemption for settlement agreements,” the high court wrote. “Moreover, a public body may not contract away its obligations under the FOIA.”

Kilpatrick and city attorneys had argued that portions of the agreement, including the text messages, were private details not mandated for disclosure under state law. The city also claimed that the decision would lead to longer and more costly litigation by essentially eliminating an incentive to a settlement with a state entity.

“The Michigan Supreme Court has made it much more difficult — not only for the city but for all individuals — to resolve lawsuits in the future since the personal information of people involved is no longer safeguarded from disclosure to the general public,” said the City of Detroit’s Corporation Counsel John Johnson, Jr., in a statement after the Supreme Court’s decision was released.

Those arguments were rejected by Michigan courts at every level with a degree of certainty that might make the city’s position seem like an anomalous error in legal judgment.

But a quick search around the country for cases involving confidential settlements and public bodies shows that the city’s tactics were hardly unusual.

Protecting themselves

Gregory Beck, an attorney for the Washington D.C.-based watchdog group Public Citizen, noted that confidentiality provisions are a common component of settlement agreements that include companies anxious to prevent bad publicity from reaching consumers as well as other plaintiff lawyers.

While public money may not be paid out through such agreements involving privately run businesses, ethical issues still arise when the original claim is derived from health or safety issues that could affect the greater public.

As examples, Beck cited confidentiality agreements that have potentially masked pharmaceutical companies’ patterns of incompetence in distributing prescription drugs and automobile manufacturers’ cover-ups relating to the frequency of rollovers.

When secret agreements include government entities as parties, not only is a potentially endemic problem being covered up, but taxpayer money is usually doled out to secure the arrangement.

In recent months, reports have surfaced about numerous secret settlements entered into by government bodies. A small sampling includes:

• California: A Ventura-area school district agreed to a confidential settlement in January with a high school principal who had accused the district of wrongful termination.

When the district and principal initially refused to disclose either the figure paid to the principal or the district’s attorneys fees, the Ventura County Star sued to force disclosure under California’s open records law.

After a judge ordered the school district to release both figures, the district revealed that it paid lawyers $532,123 to secure a $150,000 settlement with the principal.

• Connecticut: The Stamford Board of Education agreed to a confidential settlement in January with a student whose family claimed the board did not protect her rights after she received threatening and racist voicemail messages from other students.

After initially refusing to disclose the settlement amount and accompanying legal fees spent by the school district, the board acknowledged that it paid the family $37,500 and spent $25,000 on legal expenses, after the Norwalk Advocate filed a state Freedom of Information Act request.

• New Jersey: The West Milford Board of Education has refused to disclose the amount it paid a fired teacher’s aide, who claimed in a 2006 lawsuit that she had been terminated after reporting that a teacher had allowed students to watch an R-rated movie and play video games during class.

A local resident has filed a state open records law request to learn the details of the settlement.

• Virginia: As of press time, residents of Newport News were still waiting to find out how much their former city manager was paid in 2006 to drop a lawsuit alleging he was fired by an all-white majority of city council members for racially motivated reasons.

Former City Manager George Wallace, who had also filed and then dropped a slander claim against the city, had originally sought $7 million in damages.

The case and undisclosed settlement figures have resurfaced as an issue because Wallace and three defendants from his lawsuits are running for city council this spring.

New Jersey’s example

In the New Jersey case, former West Milford resident Martin O’Shea filed a lawsuit in September to force the disclosure of the settlement agreement using state open records law.

The case is complicated by the fact that the agreement was negotiated by attorneys for the board of education’s insurance company rather than for the board itself. In addition, a school board representative reportedly stated in October that the board would reverse its position, but then said the teacher’s aide had declined to waive their confidentiality obligations.

O’Shea said he still adamantly believes that because the agreement involved public funds and the policies of a public school system’s board of education, settlement details should be disclosed — regardless of the insurance company’s involvement or the misgivings of the former teacher’s aide.

“The public has a right to know how much money the board of education spent to settle this lawsuit,” O’Shea said. “That’s what it came down to.”

In a recent interview, O’Shea’s attorney said that the school board had contacted him in April and had tentatively agreed to release the settlement documents without a court order, citing a recent change of heart by the teacher’s aide that would release the board from the confidentiality agreement. At the time of the interview, reimbursement of legal expenses still appeared to be a sticking point preventing the documents’ release, said O’Shea’s attorney Donald Doherty.

Casting a more cynical eye on the reasons and timing for the board’s contact, Doherty suggested that the board might be keeping the settlement details out of the media as a result of pure political calculation.

“This is the ultimate delay tactic,” Doherty said. “There’s a time value to money and there’s a time value to news. And you know what? If you’re past the November election, you don’t care so much about coughing it up now.”

A call to the West Milford Board of Education requesting comment was not returned.

To the degree that the law is unclear in New Jersey and lawsuits like O’Shea’s have been necessary, state Sen. Nia Gill (D) introduced a bill in February that would explicitly ensure that “public entities” in the state could not enter into confidential agreements to settle claims to which the entity or the entity’s employee is a party.

The new law would make exceptions for matters involving national security. Identifying information relating to the victims of sex crimes and child abuse would also be withheld under the new law.

A practicing attorney, Sen. Gill said she believed the law was the first of its kind in New Jersey.

The bill was inspired after details of a settlement agreement reached between the state and the former director of the state parole board were sealed through a confidentiality provision.

The parole board director had allegedly been fired after he publicly claimed that a top aide to then-Gov. James McGreevey had intervened in the parole hearing of a reputed mob figure.

“Particularly in New Jersey, there’s a need for transparency so that the taxpayer can understand where their money’s going and so we can get information surrounding the issues and the causes of action that would be prevented,” Gill said.

Beck noted that confidential settlements also have the effect of forcing municipalities and other potential litigants to reproduce discovery — a timely and costly process — when such information may have otherwise been available through a publicly released settlement in an earlier case.

Beyond that, Beck noted that in states such as New Jersey, where open records statutes presume openness in regard to documents produced by public bodies, statutory law should simply trump any private agreements.

“While there is nothing preventing a city from entering a confidential settlement, the mere fact that there is a confidentiality agreement doesn’t mean that the public can’t obtain the settlement through a Freedom of Information request,” Beck said. “So the assertion of confidentiality would in fact be meaningless.”