Sunshine in Litigation Act, Polished Up a Little

By May 20, 2011Briefly Legal

The Senate Judiciary Committee has reported out a purportedly improved version of S. 623, the Sunshine in Litigation Act, but the legislation could still cast a cloud over the handling of business documents in federal court proceedings.

The original bill would permit plaintiffs’ lawyers to pry open sealed settlement agreements and documents closed under a judge’s order by asserting they could affect public safety or health. Trial lawyers have lobbied for the bill because it would make easier for them to acquire materials to use in alarmist campaigns against a company’s reputation. The legislation would make the discovery process even more expensive, useful leverage against a company to force a settlement.

In its new version (text of substitute amedment), the Sunshine in Litigation Act does the same thing, just with a few exemptions built in. Sen. Herb Kohl (D-WI) outlined the changes in his committee statement (which we’ve transcribed here):

Under our modest proposal, judges would be required to consider public health and safety before granting a protective order or sealing court records and settlement agreements. They would have the discretion to grant or deny the secrecy request based on a balancing test that weighs the public’s interest in disclosure of a potential public health and safety hazard versus legitimate interest in secrecy.

We’ve heard concerns about the reach of this legislation, so we clarified that it only applies to cases relevant to public health and safety, and our substitute amendment makes clear that it does not apply retroactively. We also include specific protections for national security information and personal information.

But, with the exception of new subsection (e) dealing with national security, the new legislative language closely tracks the original bill, to which business groups, including the National Association of Manufacturers, strenuously object.

Sen. Kohl maintains the bill is still needed to “curb the ongoing abuse of secrecy orders in federal courts.” Count us unpersuaded. The trial bar claims abuse, but that’s because the lawyers want access to documents for the tactical reasons we described above. The rationale for the bill is thin, the National Association of Manufacturers and other business groups argued in a letter sent from the Coalition to Protect Privacy, Property, Confidentiality, and Efficiency in the Courts.

According to studies conducted and analyzed by the U.S. Judicial Conference Rules Committee, there is no need to make it more difficult to issue discovery protective or sealing orders. This is because there is no evidence that protective orders create any significant problem of information about public hazards being inappropriately concealed or otherwise impede the efficient and appropriate sharing of discovery information. Current law provides judges with ample discretion to issue or deny protective and sealing orders, but does not impose upon them the mandatory, time consuming, and burdensome oversight role envisioned by S. 623.

Rather than addressing a real problem, creates new problems by undermining the privacy and property rights of all litigants. The new version is marginally better, that does not make the legislation any good.

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