F. Settlement records
In the Second Circuit, settlement negotiations and draft agreements "do not carry a presumption of public access" because "[t]he judge cannot act upon these discussions or documents until they are final, and the judge may not be privy to all of them.” Bernstein v. Bernstein Litowitz Berger & Grossmann LLP, 814 F.3d 132, 142 n.4 (2d Cir. 2016); see also United States v. Glens Falls Newspapers, Inc., 160 F.3d 853, 857 (2d Cir. 1998) (concluding that “the presumption of access to settlement negotiations, draft agreements, and conference statements is negligible to nonexistent”); United States v. Glens Falls Newspapers, 160 F.3d 853, 858 (2d Cir. 1998). Though settlement materials may be presumed access, the Second Circuit has held that they may remain sealed when needed for fair and efficient resolution of cases. See, e.g., United States v. Glens Falls Newspapers Inc., 160 F.3d 853 (2d Cir. 1998).
Applying the experience and logic test where the courts look at whether there is a tradition of openness and whether openness serves a meaningful purpose, the Second Circuit has determined that settlement compliance reports are judicial records subject to a constitutional right of access. This First Amendment right may be overcome with privacy and safety concerns that require sealing. See United States v. Erie County, 2014 WL 4056326 (2d Cir. Aug. 18, 2014).
Settlement agreements not filed with the court are not judicial records to which a right of access attaches. See Stephens v. Cty. of Albemarle, 422 F. Supp. 2d 640, 644 (W.D. Va. 2006) (citing Jessup v. Luther, 277 F.3d 926, 928 (7th Cir. 2002)).
Settlements that require judicial approval and which are filed with the court constitute judicial records to which the public’s right of access attaches. See Miles v. Ruby Tuesday, Inc., 799 F. Supp. 2d 618 (E.D. Va. 2011) (denying motion to seal FLSA settlement agreement); Stephens v. Cty. of Albemarle, 422 F. Supp. 2d 640, 644 (W.D. Va. 2006) (granting motion to unseal Section 1983 settlement; “The equation changes dramatically when settlement agreements are filed with the court for its approval.”); see also Owino v. IBM Corp., No. 1:12-CV-1041, 2013 WL 2947146, *1 (M.D.N.C. June 14, 2013) (denying motion to seal FLSA settlement agreement; “Courts in recent years have been virtually unanimous in finding that settlements under the FLSA should not be sealed in the ordinary course.”).
“It is essentially impossible for the public to judge the approval process . . . if the terms of the settlement, and the compensation of counsel, are not spread upon the public record.” Hall v. Beverly Enterprises-W. Virgina, Inc., No. CIV. A. 2:10-0842, 2010 WL 4813307, *2 (S.D. W. Va. Nov. 19, 2010). Thus, a confidentiality provision in a court approved settlement agreement is “of no effect.” Martin v. Am. Honda Motor Co., 940 F. Supp. 2d 277, 280 (D.S.C. 2013).
The public’s right of access to judicially approved settlement agreements is not overcome by the public’s disinterest in the specific litigation. See Miles v. Ruby Tuesday, Inc., 799 F. Supp. 2d 618, 623 (E.D. Va. 2011) (“[W]hile it is true that the public’s interest in judicial documents is greater when the case itself is already one of great public attention, the right of access still must be protected even where the case at hand does not appear to be one in which the public has already expressed interest.”).
A generalized interest in confidential settlements—without more—is insufficient to rebut the common law presumption of public access. Topiwala v. Wessell, No. CIV. WDQ-11-0543, 2014 WL 2574504, *3 (D. Md. June 5, 2014) (granting motion to unseal settlement agreement.).
In a civil action arising out of an alleged breach of a settlement agreement, the plaintiff’s speculation and conjecture about the harm it will suffer by disclosure was insufficient to justify sealing the agreement. See Monster Daddy LLC v. Monster Cable Prod., Inc., No. CIV.A.6:10-1170, 2010 WL 3885502, *1 (D.S.C. Sept. 29, 2010) (citing Stone v. Univ. of Md. Med. Sys., 855 F.2d 178, 180 (4th Cir.1988)).
Where the litigants seek judicial approval of a settlement, their interest in maintaining the confidentiality of the terms of the settlement is weak. See Stephens v. Cty. of Albemarle, 422 F. Supp. 2d 640 (W.D. Va. 2006) (granting motion to unseal Section 1983 settlement agreement).
The fact of judicial approval, the government being a party to the settlement, the absence of an improper purpose of the requesting party and the failure to comply with mandatory sealing procedures are all factors that weigh against overcoming the public’s right of access to a judicially approved settlement agreement. See Stephens v. Cty. of Albemarle, 422 F. Supp. 2d 640 (W.D. Va. 2006).
Protecting a minor’s privacy interests and medical information has been held a sufficient interest to overcome the public’s right of access to judicially approved settlements. See Mears v. Atl. Se. Airlines, Inc., No. 5:12-CV-613-F, 2014 WL 5018907 (E.D. N.C. Oct. 7, 2014) (granting motion to seal minors’ medical records submitted in connection with motion to approve wrongful death settlements and to redact the financial terms in the settlement agreements).
A private settlement agreement becomes a judicial record to which a right of access attaches if the agreement is filed with the court in connection with a stipulation of dismissal. In such instances, “the parties are always free to choose not to file the terms of their settlement with the court.” Washington v. Bruraker, No. 3:02-cv-00106, 2015 WL 6673177, *7 (W.D. Va. Mar. 29, 2015) (citing Bank of Am. Nat. Tr. & Sav. Ass'n v. Hotel Rittenhouse Assocs., 800 F.2d 339 (3d Cir. 1986)).
When a private settlement agreement is filed in connection with a motion to enforce the settlement, the parties may have a compelling interest in maintaining the confidentiality of terms not germane to the decision whether to enforce the settlement. See Copeland v. Dapkute, No. 8:17-cv-01566, 2018 WL 5619672, *9 (D. Md. Oct. 30, 2018) (citing Johnson v. City of Baltimore Dev. Corp., No. CIV.A. GLR-11-2174, 2013 WL 3934022, *4-5 (D. Md. July 29, 2013)).
Once a settlement agreement is filed in district court, it becomes a judicial record and thus is presumptively accessible to the media and the public. Sec. & Exch. Comm’n v. Van Waeyenberghe, 990 F.2d 845, 849 (5th Cir. 1993). In certain circumstances, particularly those involving public entities, the process of creating a settlement is itself newsworthy and thus implicates First Amendment concerns. Davis v. Capital City Press, 78 F.3d 920, 929 (5th Cir. 1996).
The right of access to judicial records is greater than a simple right to the information in the records. Sec. & Exch. Comm’n v. Van Waeyenberghe, 990 F.2d 845, 848 (5th Cir. 1993). Therefore, merely providing the media with details and information about what transpired in court proceedings or settlements is not equivalent to allowing access to the actual records themselves. Id.
When a district court sealed documents relating to the litigants’ settlement pursuant to their request, a newspaper's “presumptive right to access was implicated, and [it] should have been allowed to intervene for the limited purpose of challenging the district court's order.” Jessup v. Luther, 227 F.3d 993, 997 (7th Cir. 2000) (remanding for determination of access right). On appeal after remand, the Seventh Circuit held that the newspaper was entitled to a copy of the settlement agreement that was in the court files under seal. The court observed that “[o]rdinarily . . ., settlement agreements, like most arbitration awards and discovery materials, are private documents . . ., not judicial records . . ., because the parties will file a stipulation of dismissal pursuant to which the suit will be dismissed without further ado or court action,” and the settlement agreement “will then have the identical status as any other private contract.” Jessup v. Luther, 277 F.3d 926, 928 (7th Cir. 2002).
However, in Jessup, the settlement agreement “was submitted to and approved by the judge and a copy deposited in the files of the court and then ordered sealed. . . . Whatever the rationale for the judge's participation in the making of the settlement in this case, the fact and consequences of his participation are public acts. . . .The public has an interest in knowing what terms of settlement a federal judge would approve and perhaps therefore nudge the parties to agree to.” Id. at 929. “[T]he district court's files now contain a document that reflects input by a federal judge, and so the document is presumptively a public document. . . . [N]either the magistrate judge nor any of the parties has given us any reason to think the presumption might be rebutted in this case.” Id. at 929-30.
“If though it is part of the judicial record the settlement is made without any court action,” i.e., approval, “there will rarely be a good reason to require that its terms be made public, because making them public would not reveal anything about judicial activity.” Goesel v. Boley Int’l (H.K.) Ltd., 738 F.3d 831, 834 (7th Cir. 2013) (Posner, J., in chambers). “[F]or the most part settlement terms are of potential public interest only when judicial approval of the terms is required, or they become an issue in a subsequent lawsuit, or the settlement is sought to be enforced. . . . In all such cases the presumption of a right of public access to court documents should apply.” Id.
“Calling a settlement confidential does not make it a trade secret, any more than calling an executive's salary confidential would require a judge to close proceedings if a dispute erupted about payment (or termination). Many a litigant would prefer that the subject of the case . . . be kept from the curious (including its business rivals and customers), but the tradition that litigation is open to the public is of very long standing.” Union Oil Co. of California v. Leavell, 220 F.3d 562, 568 (7th Cir. 2000) (in dispute over breach of settlement agreement, blanket sealing of record and closure of proceedings was improper); accord Herrnreiter v. Chicago Housing Auth., 281 F.3d 634, 637 (7th Cir. 2002).
If the parties to a lawsuit wish to enter an agreement and keep it secret, they may agree upon a settlement and file a motion to dismiss litigation between them. Arkansas Best Corp. v. Gen. Elec. Capital Corp., 317 Ark. 238, 247, 878 S.W.2d 708, 712 (Ark. 1994). In that situation, the settlement remains their private business. Id. If, however, they wish to make the settlement a court record and seek the imprimatur of a court, then it becomes the public’s business. Id.
Settlement agreements filed with a court are inherently public documents and are available for public inspection in accordance with Rule 21 unless the harm otherwise resulting to a person’s privacy interest clearly outweighs the public interest. Atlanta Journal v. Long, 258 Ga. 410, 415 (1988). In Long the Supreme Court of Georgia rejected the argument that the public interest in promoting private settlements before trial justifies limiting public access to pre-judgment court records. See also City of Helen v. White County News, 1996 WL 787416, 25 Media L. Rep. 1123 (White County Super. Ct. 1996) (settlement documents relating to police chief’s civil rights suit against city are public records under state open records act; confidentiality provision is void as against public policy).
Settlement agreements involving public entities are public record. Cowles Publ’g Co. v. Kootenai Cty. Bd. of Cty. Comm’rs, 144 Idaho 259, 265, 159 P.3d 896 (2007). However, “records of any risk retention or self-insurance program prepared in anticipation of litigation or for analysis of or settlement of potential or actual money damage claims against a public entity and its employees or against the industrial special indemnity fund” are not subject to disclosure. Idaho Code § 74-107(11). “These records shall include, but are not limited to, claims evaluations, investigatory records, computerized reports of losses, case reserves, internal documents and correspondence relating thereto. At the time any claim is concluded, only statistical data and actual amounts paid in settlement shall be deemed a public record unless otherwise ordered to be sealed by a court of competent jurisdiction.” Id.
Kansas law allows a court to seal or redact records only after finding that a safety, property, or privacy interest “outweighs the strong public interest” in having access to information. K.S.A. 60-2617(d).
In an interpretation of the Kansas Open Records Act, the Kansas Attorney General has said that a settlement agreement entered into by a city is a public record, and it cannot be confidential. If a contractual provision attempts to close the conditions of the settlement agreement, it “is void as against public policy.” Op. Kan. Att’y Gen. No. 93-55 (1993), http://ksag.washburnlaw.edu/opinions/1993/1993-055.htm. However, the Attorney General acknowledged that settlement agreements involving a city—or specific portions of such settlements—might be exempted from disclosure under KORA's personal privacy exemption, as well as on the basis of “federal or state laws, Supreme Court rules, or other exemptions.” Id. Nevertheless, these exemptions should be construed narrowly in light of the state's strong presumption of open public records. See K.S.A. 45-216.
Under Mississippi law, settlement agreements may be protected from the reach of Public Records Act requests. See Estate of Cole v. Ferrell, 163 So. 3d 921 (Miss. 2012) (trial court, relying on Public Records Act, abused its discretion in denying motion to preserve confidentiality of settlement agreement reached in wrongful death action against motor vehicle manufacturer).
Provided that settlement records do not have the effect of concealing a public hazard, a court may seal records which contain confidential terms of a settlement agreement of the parties. SRCR 3(4)-(5); cf. Civil Rights for Seniors v. AOC, 129 Nev. 752, 313 P.3d 216 (2013) (holding that Foreclosure Mediation Program (FMP) records are not subject to disclosure); 2013 Nev. Op. Att'y Gen. No. 08 (Dec. 27, 2013) (reports submitted to Board of Medical examiners which contain confidential civil malpractice settlement amounts are public records which must be open to public inspection).
With respect to settlements that resolve claims against New Mexico agencies, the agreements can be obtained only following the expiration of a confidentiality period and upon request under the Inspection of Public Records Act. As of June 20, 2019, however, Governor Michelle Lujan Grisham’s administration announced an intention to publish settlements online as soon as allowable by law: either 180 days after the settlement is reached or the department closes the claim administratively. Dan McKay, NM to Start Posting Legal Settlements Online, Albuquerque Journal (June 20, 2019, 10:47 PM), https://www.abqjournal.com/1331040/nm-to-start-posting-legal-settlements-online.html. Otherwise, the New Mexico Mediation Procedures Act, NMSA 1978, Section 44-7B-4, sets forth that “all mediation communications are confidential, and not subject to disclosure and shall not be used as evidence in any proceeding.” A district court's denial of a motion to seal is reviewed for an abuse of discretion. Fred Loya Ins. Co. v. Swiech, 2018-NMCA-022, ¶ 16, 413 P.3d 530, 534.
The Pennsylvania Superior Court has noted that the public and press have a presumptive right to access settlement agreements filed with the court. Stenger v. Lehigh Valley Hosp. Ctr., 554 A.2d 954, 960 (Pa. Super. 1989) (citing Bank of Am. Nat’l Tr. & Sav. Ass’n v. Hotel Rittenhouse Assocs., 800 F.2d 339, 342-43 (3d Cir. 1986)). Similarly, a Pennsylvania Common Pleas Court has held that a plaintiff’s petition for approval of a settlement is presumptively open. Korczakowski v. Hwan, 68 Pa. D. & C. 4th 129 (Lackawanna Cty. C.C.P. Sept. 23, 2004). The court reasoned that because the petition is filed with the court, it is a public judicial record and is subject to a presumption of openness.
In Storms v. O’Malley, the Superior Court affirmed the trial court’s denial of a physician’s motion to seal the record in a medical malpractice case that resulted in a settlement. 779 A.2d 548, 570 (Pa. Super. 2001). The Superior Court held that the policy interest in encouraging settlements (which the physician argued could be facilitated by keeping records of settled cases confidential) was not sufficient to rebut the presumption of openness. Id.
Although many settlement agreements are not filed with the court and thus, do not become part of the court’s records, if settlement agreements require court approval or are entered into by a public entity, they will become publicly available. For example, class action settlement agreements must receive court approval, see V.R.C.P. Rule 23(e), as do settlement agreements involving the distribution of wrongful-death proceeds. See 14 V.S.A. § 1492; see also In re Estate of Simonds, No. 51-1-13, 2013 Vt. Super. LEXIS 1, *3-4 (Vt. Super. Ct. January 23, 2013) (holding that a private confidentiality agreement between parties is not in itself sufficient to overcome the presumption that a petition for approval of wrongful-death settlement presented to the court is publicly available). Similar case law holds that public entities cannot override the Vermont Public Records Act through a contract or settlement agreement. See e.g., Katz v. S. Burlington Sch. Dist., 2009 VT 6, ¶ 7, n.2, 970 A.2d 1226, 1228 (Vt. 2009) (noting that case law supports the view that a school district’s separation agreement and general release with its former superintendent is a public record subject to disclosure); Hoffman v. S. Burlington Sch. Dist., No. 1069-11-15, 2015 Vt. Super. LEXIS 96, *6 (Vt. Super. Ct. Dec. 10, 2015) (“a contract or settlement agreement cannot override the Public Records Act").
See Journal/Sentinel, Inc. v. School Bd. of School Dist. of Shorewood, 186 Wis. 2d 443, 521 N.W.2d 165 (Wis. App. 1994):
Furthermore, if the school board’s argument were accepted, public scrutiny of most if not all settlement agreements involving government would be barred – promises of confidentiality would then be de rigueur. This would effectively end-run the openness mandated by Wisconsin’s public-records law, and the presumption of access. If a lawsuit cannot be settled unless its terms are kept secret, the case will go to trial, where, absent special circumstances, public access is the rule.
The presumption that public records in Wisconsin are open to the public is not outweighed by whatever benefits may have accrued to the public as the result of the Shorewood District’s promise to Moore that the terms of the settlement would not be disclosed to the public.
See C.L. v. Edson, 140 Wis. 168, 409 N.W.2d 417 (Wis. App. 1987):
The original parties first argue that because they are private individuals, there is no compelling public interest in disclosing the sealed [settlement] documents. The presumption favoring disclosure reflects public interests that are independent of the parties’ status as private persons.
Moreover, sec. 807.10, requiring judicial review of settlements involving minors, represents a legislative mandate for scrutiny. This mandate is better served when the public can monitor judicial supervision of minor settlements.
The parties have failed to show that the public’s interest in encouraging settlements overcomes the strong presumption favoring disclosure of court documents.
We conclude that the circuit court correctly weighed the considerations presented by the original parties in deciding that the public interest in disclosure outweighed any need for secrecy.