Donate Today

Judicial Council Considers Rules To End Secrecy Agreements

Court rules currently under consideration by California's Judicial Council would prohibit the sealing of any records filed in a court case merely upon an agreement of the litigants. Corporations often seek to hide key papers that would expose their fraudulent or dangerous practices by coaxing plaintiffs into signing such secrecy agreements in exchange for a favorable settlement.

Under the proposed rules supported by the Foundation for Taxpayer and Consumer Rights and other consumer groups, sealing of documents would be disfavored by the courts. Only if the court determines that there is an overriding interest that outweighs the public's right to access court records could records be sealed. Members of the public would also have the right to ask the court to unseal previously sealed documents.

"Not only do insurance companies and other businesses force injured consumers into their own secret, private system of justice through mandatory binding arbitration, but they also have kept their abuses from the light of day even in the public court system through stipulations to seal court records," stated Foundation staff attorney and Fair Justice Project organizer, Pam Pressley "These rules will end secrecy agreements and protect the public's right to know about dangerous products or fraudulent acts that could seriously affect their safety and welfare."

Standards similar to those in the proposed court rules were included in a 1999 legislative proposal, SB 1254 (Schiff), which faced strong opposition from insurance and business groups including the Association of California Insurance Companies, California Chamber of Commerce, California Manufacturers Association, and the Securities Industry Association. The bill was ultimately held in committee. Currently, nine states have laws in place that ban or strictly limit confidentiality agreements in lawsuits, including Arkansas, Florida, Louisiana, Kentucky, Nevada, North Carolina, Oregon, Virginia, and Washington.

The proposed rules would be effective January 1, 2001.

FTCR's letter to the Judicial Council and the proposed rules can be found at http://www.consumerwatchdog.org/justice/fs/fs000686.php3.