[Senate Report 112-45]
[From the U.S. Government Publishing Office]
Calendar No. 64
112th Congress Report
SENATE
1st Session 112-45
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SUNSHINE IN LITIGATION ACT OF 2011
_______
August 2, 2011.--Ordered to be printed
_______
Mr. Leahy, from the Committee on the Judiciary,
submitted the following
R E P O R T
together with
MINORITY VIEWS
[To accompany S. 623]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Judiciary, to which was referred the
bill (S. 623), to amend Chapter 111 of Title 28, United States
Code, relating to protective orders, sealing of cases,
disclosures of discovery information in civil actions, and for
other purposes, having considered the same, reports favorably
thereon with an amendment and recommends that the bill, as
amended, do pass.
CONTENTS
Page
I. Background and Purpose of the Sunshine in Litigation Act of 2011.1
II. History of the Bill and Committee Consideration.................15
III. Section-by-Section Summary of the Bill..........................17
IV. Congressional Budget Office Cost Estimate.......................19
V. Regulatory Impact Evaluation....................................20
VI. Conclusion......................................................20
VII. Minority Views..................................................21
VIII.Changes to Existing Law Made by the Bill, as Reported...........24
I. Background and Purpose of the Sunshine in Litigation Act of 2011
The purpose of S. 623, the Sunshine in Litigation Act, is
to protect the public from potential health or safety dangers
that are too often concealed by court orders restricting
disclosure of information.
The bill requires judges, in cases pleading facts relevant
to public health and safety, to consider the public's interest
in disclosure of health and safety information before issuing a
protective order or an order to seal court records or a
settlement agreement. Under this bill, the proponent of such an
order must demonstrate that the order would not restrict the
disclosure of information relevant to protecting public health
and safety. If the order would restrict such disclosure, the
judge must find that the public interest in knowing about a
potential health or safety hazard is outweighed by a specific
and substantial interest in maintaining confidentiality before
issuing the order.
The bill also prohibits a court from approving or enforcing
any provision of an agreement between or among parties that
restricts a party from disclosing public health or safety
information that is relevant to the lawsuit to any Federal or
state agency with authority to enforce laws regulating an
activity related to such information. In addition, the bill
prohibits a court from enforcing any provision of a settlement
agreement that prohibits disclosure of public health or safety
information unless it has made findings of fact that the public
interest in disclosure of the potential health or safety
hazards is outweighed by a specific and substantial interest in
maintaining the confidentiality of the information.
A number of consumer advocacy and open government groups\1\
support S. 623 because it will protect legitimate interests in
confidentiality while ensuring that court-endorsed secrecy does
not jeopardize public welfare by concealing information about
potential public health or safety dangers from consumers and
regulatory agencies. Despite the concerns expressed in the
minority views, nothing in the Rules Enabling Act prevents
congressional action to protect public health and safety. This
legislation has arisen in part out of a concern that the courts
have not adequately considered the importance of transparency.
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\1\Letter to Senator Herb Kohl from Alliance for Justice, The
Center for Justice and Democracy, Consumers Union, Consumer Federation
of America, National Consumers League, US PIRG, and Public Citizen
(April 14, 2011). The bill was also endorsed by The New York Times.
Editorial, Need to Know, NY Times, March 12, 2008, http://
www.nytimes.com/2008/03/12/opinion/
12wed3.html?scp=3&sq=%22need+to+know%22&st=nyt (last accessed June 23,
2011).
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This legislation is prospective and will take effect 30
days after the date of enactment and apply only to orders
entered in civil actions or agreements entered into on or after
such date. It does not provide a basis for reconsidering an
order entered into before the effective date. The Sunshine in
Litigation Act is not intended to preempt or displace current
law, the Federal Rules of Civil Procedure, common law or First
Amendment law unless that law provides greater openness and
access to litigation documents, court records or proceedings.
Furthermore, this legislation is not meant to preclude other
interests the public may have in restricting disclosure
information, such as in the case of financial fraud or
environmental harms.
Court secrecy prevents the public from learning about
public health and safety dangers. Over the past 20 years, we
have learned about numerous cases where court-approved secrecy,
in the form of protective orders and sealed settlements, has
kept the public in the dark about serious public health and
safety dangers. At hearings in 1990 and 1994, the Judiciary
Committee's Subcommittee on Courts and Administrative Practice
heard testimony about some of the many examples of these cases
such as those involving complications from silicone breast
implants, adverse reactions to a prescription pain killer,
``park to reverse'' problems in pick-up trucks, and defective
heart valves. Other examples include cases involving dangers
from side-saddle gas tanks, playground equipment, IUD birth
control devices, tires and portable cribs.
In December 2007, the Judiciary Committee's Subcommittee on
Antitrust, Competition Policy and Consumer Rights received
testimony about more recent examples, including
phenylpropanolamine (PPA) in children's over-the-counter
medicine, Cooper tires and the prescription drug Zyprexa.
This problem most often arises in product liability cases.
Typically, an individual sues a manufacturer for an injury or
death that has resulted from a defect in one of the
manufacturer's products. In these cases, the victim generally
faces a large corporation that can spend large sums of money
defending the lawsuit and delaying its resolution. Facing a
formidable opponent and mounting medical bills, plaintiffs are
discouraged from continuing and often seek to settle the
litigation. In exchange for monetary damages, the victim is
often forced to agree to a provision that prohibits him or her
from revealing information disclosed during the case. While the
plaintiff gets a respectable award and the defendant is able to
keep damaging information from being publicized, the public
remains unaware of critical health and safety information that
could potentially save lives.
In some of the examples cited, the civil complaint and
other court records may have been available to the public.
However, this publicity is minimal and not sufficient to notify
the public and regulatory agencies or to prevent additional
injuries.\2\ In cases involving dangerous products, often it is
the ``smoking gun'' documents, uncovered during discovery and
sealed in settlement agreements, that will adequately inform
the public and regulators about a health or safety danger. As a
result, without access to that information, it takes the public
and regulators much longer than it should to discover dangers
to health and safety. Furthermore, in most cases, defendants
continue to insist on secrecy even after some information has
become public.\3\
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\2\The Sunshine in Litigation Act: Does Court Secrecy Undermine
Public Health and Safety: Hearing Before the Subcomm. on Antitrust,
Competition Policy and Consumer Rights of the S. Comm. on the
Judiciary, 110th Cong. (Dec. 11, 2007) [hereinafter 2007 Hearing]
(testimony and responses to questions by Judge Anderson).
\3\According to Bruce Kaster, a lawyer who has represented clients
in cases against Cooper Tire, Cooper still aggressively fights
protective orders despite the fact that there is some publicity about
the cases.
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A. EXAMPLES OF COURT SECRECY
1. Zomax
The popular painkiller Zomax, manufactured by McNeil
Pharmaceuticals and linked to a dozen deaths and more than 400
severe allergic reactions, was taken off the market only after
McNeil settled dozens of lawsuits with sealed settlements. In
1990, Devra Lee Davis testified before the Subcommittee on
Courts and Administrative Practice that she nearly died from
taking this legally prescribed drug. She later learned that the
company had known the drug could kill some people and used
judicially-sanctioned secrecy to keep that information from the
public and from others injured by the drug.\4\
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\4\Examining the Use of Secrecy and Confidentiality of Documents by
Courts in Civil Case: Hearing Before the Subcomm. on Courts and
Administrative Practice of the S. Comm. on the Judiciary, 101st Cong.
(May 17, 1990) [hereinafter 1990 Hearing] (testimony of Devra Davis
Lee); Davan Maharaj, Tire Recall Fuels Drive to Bar Secret Settlements,
LA Times, September 10, 2000, at A1.
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2. Zyprexa
In 2005, the drug company Eli Lilly settled 8,000 cases
related to Zyprexa, a drug used to treat schizophrenia and
bipolar disorder. These cases alleged that Eli Lilly did not
disclose known harmful side effects of Zyprexa, such as
inordinate weight gain and dangerously high blood sugar levels
that sometimes resulted in diabetes. Eli Lilly was also accused
of promoting off label use of the drug by urging doctors to
prescribe it to elderly patients with dementia. All of the
settlements required plaintiffs to agree ``not to communicate,
publish or cause to be published . . . any statement . . .
concerning the specific events, facts or circumstances giving
rise to [their] claims.'' The public did not learn about these
settlements or Zyprexa's dangerous side effects until nearly
two years later, in 2006, when The New York Times received and
published leaked documents from a case that were subject to a
protective order.\5\
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\5\Alex Berenson, Drug Files Show Maker Promoted Unapproved Use, NY
Times, Dec. 18, 2006, http://www.nytimes.com/2006/12/18/business/
18drug.html?scp=10&sq=zyprexa&st=nyt (last accessed June 23, 2011);
Alex Berenson, Lilly Settles With 18,000 Over Zyprexa, NY Times, Jan.
5, 2007, http://query.nytimes.com/gst/fullpage.html?
res=9F00E5DB1430F936A35752C0A 9619C8B63&sec=&spon=&pagewanted=print
(last accessed June 23, 2011).
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3. Phenylpropanolamine (PPA)
In 1996, a seven-year-old boy in Washington State suffered
a sudden stroke and fell into a coma hours after taking an
over-the-counter medicine to treat an ear infection. After
three years in a coma, he died. The child's mother sued the
manufacturer of the medicine alleging that the stroke was
induced by PPA, an ingredient with deadly potential side
effects, which has since been banned by the Food and Drug
Administration (FDA). Unknown to the public, many similar
lawsuits in state and Federal courts had previously been filed
against the drug manufacturer, but were settled secretly, with
the lawyers and plaintiffs subject to restrictive
confidentiality orders. In 2005, the mother settled her case
and agreed to keep the information she learned and terms of the
settlement secret.\6\
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\6\Second Amended Complaint, Estate of Matthew Walker v. Whitehall-
Robins, No. 0105-05204 (filed Or. Cir. Ct., Oct. 26, 1999); Interview
with Leslie O'Leary, attorney for the Estate of Matthew Walker.
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4. Bjork-Shiley heart valve
Over the course of several years, Pfizer's Bjork-Shiley
heart valves were linked to 248 deaths. Pfizer insisted on
secrecy agreements when settling dozens of lawsuits, before the
FDA finally removed the valves from the market. The
Subcommittee on Courts and Administrative Practice heard
testimony from Fredrick Barbee about how court-endorsed secrecy
prevented him and his wife from learning about the potential
heart valve malfunction and ultimately prevented her from
getting the appropriate and life-saving treatment she needed
when her valve malfunctioned.\7\
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\7\1990 Hearing (testimony of Frederick R. Barbee); Davan Maharaj,
supra note 4.
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5. Dalkon Shield
In 1974, the FDA suspended use of the Dalkon Shield, a
popular intrauterine birth control device. The device was
linked to 11 deaths and 209 cases of spontaneous abortion.
Prior to the FDA's action, it was reported that the maker of
the device, A.H. Robins, had settled numerous cases with strict
confidentiality agreements. The manufacturer even attempted to
include agreements with the plaintiffs' lawyers that would have
prohibited them from taking another Dalkon Shield related
case.\8\
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\8\Maharaj, supra note 4.
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6. Silicone breast implants
Information about the hazards of silicone breast implants
was discovered during litigation as early as 1984, but because
of a protective order that was issued when the case settled,
the information remained hidden from the public and the FDA. It
was not until several years and tens of thousands of victims
later that the public learned of potentially grave risks posed
by the implants. The Subcommittee on Administration and the
Courts heard testimony from Sybil Niden Goldrich about her
injuries allegedly caused by silicone breast implants and how
the use of protective orders prevented the public from learning
about the risks posed by breast implants.\9\
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\9\S. 1404: Hearing Before the Subcomm. on Courts and
Administrative Practice of the S. Comm. on the Judiciary, 101st Cong.
(Apr. 20, 1994) [hereinafter 1994 Hearing] (testimony of Sybil Niden
Goldrich).
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7. Ephedra
Ephedra is a supplement that was widely popular until it
was banned by the FDA in 2004. The ban could have come earlier
and lives may have been saved had it not been for court-
endorsed secrecy through protective orders and confidential
settlements. Deaths related to Ephedra occurred as early as
1994. The existence of 14,700 consumer complaints about
Metabolife 356, and other documents relating to the safety
risks of Ephedra, although turned over in lawsuits against the
company, were concealed by protective orders and confidential
settlements. In 2000, the FDA tried unsuccessfully to intervene
in a consumer lawsuit to gain access to the complaints which
were under seal in a protective order.\10\ It took significant
public attention and a congressional investigation for
Metabolife to finally agree to provide the FDA and Congress the
adverse event reports. The subsequent investigation revealed
that prior to 1999, Metabolife had 138 reports of significant
adverse events, including heart attacks, strokes, seizures, and
psychosis.\11\
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\10\In Bloom vs. Metabolife, the FDA sought to intervene in order
to challenge a protective order that concealed health and safety
information. Penni Crabtree, Court orders often keep companies' darkest
secrets hidden, San Diego Union Tribune, Sept. 8, 2002, H-1; Dr. Lester
Crawford discusses the Justice Department and FDA investigation of
Metabolife for its use of Ephedra in its diet supplement, National
Public Radio (NPR) August 16, 2002.
\11\Adverse Event Reports from Metabolife, Minority Staff Report,
Special Investigations Division, Committee on Government Reform, U.S.
House of Representatives. Oct. 2002. http://
democrats.oversight.house.gov/images/stories/documents/20040827102309-
56026.pdf (last accessed June 23, 2011).
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8. ``Park-to-reverse'' malfunction
For many years, Ford was aware of problems associated with
a ``park-to-reverse'' malfunction in its pick-up trucks and
quietly settled cases stemming from this alleged defect. It was
not until several years later that Ford made a minimal effort
to notify original owners by sending stickers alerting them
that there was a problem. The stickers made no mention of the
potential risks of serious injury or death. Unfortunately, 2.7
million of these truck owners did not receive the warning. One
victim of the alleged defect was Tom Schmidt. His parents,
Leonard and Arleen Schmidt testified before the Subcommittee on
Courts and Administrative Practice. During their lawsuit they
learned that Ford had known about the problem as early as 1970
and for many years, Ford had quietly settled cases with strict
protective orders concealing information about the problem.\12\
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\12\1994 Hearing (testimony of Leonard and Arleen Schmidt);
Maharaj, supra note 4.
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9. Side-saddle gas tanks
Over the course of several years, General Motors quietly
settled more than 200 cases brought by victims of fiery truck
crashes involving the automaker's side-mounted gas tanks before
the defect came to light. It was not until 1993, when General
Motors sued Ralph Nader and the Center for Auto Safety for
defamation, that lawyers discovered records showing that
General Motors had been sued in approximately 245 individual
gas tank pick-up truck cases. The earliest cases had been filed
as far back as 1973. Almost all cases were settled and almost
all of the settlements required the plaintiffs to keep the
information they discovered secret.\13\
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\13\2007 Hearing (testimony of Richard Zitrin); Maharaj, supra note
4.
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10. Bridgestone/Firestone tires
From 1992 to 2000, accidents caused by tread separations of
Bridgestone and Firestone tires resulted in more than 250
deaths and 800 injuries. Over the course of several years,
Firestone quietly settled lawsuits relating to the tread
separation, most of which included secrecy agreements. It was
not until 1999, when a Houston public television station broke
the story, that the company acknowledged its wrongdoing and
recalled 6.5 million tires.\14\
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\14\Richard Zitrin, The Judicial Function: Justice Between the
Parties, Or a Broader Legal Interest?, 32 Hofstra L. Rev. 1573, 1567
(2004); Maharaj, supra note 4.
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11. Cooper tires
In 2002, Johnny Bradley's wife was killed, and he and his
son were injured, in a Ford Explorer rollover accident. The
accident was allegedly caused by tread separation in the SUV's
Cooper Tires. While litigating the case, Mr. Bradley's attorney
uncovered Cooper Tire documents that showed Cooper tires were
prone to tread separation because of design defects. These
documents had been kept secret through protective orders in
numerous cases prior to the Bradleys' car accident. In
Bradley's case against Ford and Cooper Tire, the jury found
that Ford was not liable for the accident. Before the trial
proceeded to the claims against Cooper, the claims were dropped
and the parties involved agreed to settle with almost all
litigation documents remaining confidential under a broad
protective order. Mr. Bradley and his lawyer, familiar with the
documents and unable to speak about the details due to
protective orders, believe that if the documents were made
public Cooper Tire would be forced to fix the tread separation
problem.\15\
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\15\2007 Hearing (testimony of Johnny Bradley, Jr.)
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12. All-terrain vehicles (ATVs)
While the Consumer Product Safety Commission (CPSC) has
long publicized information about ATV safety and maintained a
reporting system for collecting data about injuries and deaths,
it has not taken action on many alleged design and
manufacturing defects. There continue to be cases filed in
state and Federal courts about manufacturing and product design
defects in ATVs. The defendants routinely obtain protective
orders to keep information secret and plaintiffs often settle
before trial. In a case filed in the Central District of
Illinois, K.V. v. Kawasaki, the plaintiffs objected to the
protective order sought by the defendants. In this case, a
young boy was injured when his ATV flipped over in a corn
field. The corn stalks protected him from being crushed, but
the oil vent lacked a simple mechanism to prevent boiling hot
oil from leaking out and severely burning 25 percent of the
boy's body.\16\
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\16\200 U.S. Dist. Ct. Motions 615230; 2006 U.S. Dist. Cot. Motions
LEXIS 45118; Interview with Daniel Pope, Phebus & Koester, Oct. 22,
2007.
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Opposing the protective order, the plaintiff argued that
the defendant did not substantiate its claim that trade secrets
satisfied the ``good cause'' showing, required under Rule 26(c)
of the Federal Rules of Civil Procedure. The plaintiff also
claimed that the health and safety risks of ATVs, well
documented by the CPSC and the American Association of
Pediatrics, justified rejecting the protective order because it
would conceal information about the alleged defect. According
to the plaintiff's attorney, the judge simply issued the
protective order without opinion or written findings in
response to the plaintiff's arguments. The case settled shortly
thereafter. If this information were in the public domain, the
boy's attorney believes that the information he uncovered
during the lawsuit would either increase pressure on ATV
manufacturers to make their products safer or pressure the CPSC
to investigate and take action in response to the defects.
13. Playground equipment
Miracle Recreation Company manufactured and sold a piece of
playground equipment called Bounce Around the World. Dozens of
lawsuits were brought against the company alleging that it was
dangerous and caused serious injuries to young children,
including severed limbs and crushed bones. For 13 years, the
public and regulatory agencies remained in the dark about the
potentially crippling equipment because the company insisted on
settling lawsuits conditioned by confidentiality agreements.
Approximately 80 children between the ages of four and five
were seriously injured before the CPSC learned about the
magnitude of the danger and the company recalled the merry-go-
rounds. Following the recall, the Department of Justice (DOJ)
charged Miracle Recreation in a civil suit with failing to
reveal reports of injuries to dozens of children.\17\
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\17\Barry Meier, Legal Merry-Go-Round; Case Highlights Lack of Data
Sharing, Newsday, June 5, 1998 at 3.
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14. Portable cribs
In May 1998, 16-month-old Danny Keysar was strangled to
death at his licensed childcare facility when a Playskool
``Travel-Lite'' portable crib collapsed, trapping his neck in
the ``V'' of its folded rails. Danny's parents sued the crib
manufacturers, Kolcraft. During discovery, they learned that
three prior lawsuits involving the same product defect had been
settled secretly. Kolcraft offered Danny's parents a
settlement, but only on the condition that they agreed to a
secrecy provision. The parents would not accept a settlement
that mandated their silence. Despite intense pressure to agree
to a secret settlement, on the eve of trial, the parties
reached a non-secret $3 million settlement agreement.\18\
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\18\Jonathan Eig, How Danny Died, Chicago, Nov. 1998, http://
www.kidsindanger.org/docs/news/news_detail/1998_chicmag.pdf (last
accessed June 23, 2011); Danny's story on the Kids in Danger website at
http://www.kidsindanger.org/family-voices/danny/ (last accessed June
23, 2011).
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15. Seroquel
In Florida, plaintiffs' lawyers and Bloomberg News sued to
force AstraZeneca to make public clinical studies about the
harmful side effects of an antipsychotic drug, Seroquel, which
were discovered in lawsuits that were subsequently dismissed.
In 2009, the court unsealed some of the documents in question,
but denied requests to release AstraZeneca's submissions to
foreign regulators and sales representatives' notes about
doctors' meetings. Despite a recent $68.5 million settlement,
continued efforts to unseal crucial documents proved
unsuccessful.
16. British Petroleum Gulf oil spill
In April 2010, the Gulf Coast was devastated by a massive
oil spill in the Gulf of Mexico. Numerous lawsuits were filed
against British Petroleum. As the parties fight over crucial
documents in those lawsuits, injured parties continue to accept
secret settlements. These settlements may keep hidden documents
that could shed light on potential future public health and
safety risks.
17. Unintended acceleration problems
Recently, the world's largest automaker, Toyota, has faced
a barrage of litigation relating to its recall of over 8
million cars due to sudden unintended acceleration problems,
which may have caused more than 80 deaths. After years of
lawsuits, congressional oversight hearings, and Toyota's
efforts to keep settlements and product information secret, a
California Federal judge finally made public thousands of
previously sealed documents, noting that ``the business of this
litigation should be in the public domain.'' Had a judge been
required to weigh the public's interest in health and safety,
as this legislation would require, perhaps the public would
have known more about the risks sooner, and some of those lives
could have been saved.
B. CIVIL SUITS UNCOVER EARLY DANGERS
Civil lawsuits are often a critical first source of
information about dangerous products.\19\ For example, in a
class action case against Eli Lilly related to harmful side-
effects of their drug Zyprexa, lawyers uncovered documents that
showed Eli Lilly knew of Zyprexa's side effects and did not
adequately warn doctors or consumers. This lawsuit uncovered
information that the FDA did not have access to and did not
know about until information was leaked to The New York
Times.\20\ Had this information been available to the public
sooner, consumers would have been able to make an informed
decision about the benefits and risks of taking Zyprexa.
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\19\Catherine T. Struve, The FDA and the Tort System: Postmarketing
Surveillance, Compensation, and the Role of Litigation, 5 Yale J.
Health Pol'y L. & Ethics 587, 664 (2005); Wendy Wagner, When All Else
Fails: Regulating Risky Products Through Tort Litigation, 95 GEO. L.J.
693, 695-696 (2007), ``. . . the tort system plays an indispensable
role in supplementing agency regulation of risky products and
activities. In consumer and health protection, for example, the tort
system provides both more tools and more rewards than the regulatory
system for enterprising plaintiffs to uncover asymmetric information
held by regulated parties regarding their products' risks.''
\20\Berenson, supra note 4.
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Victims who suffer injuries related to a consumer product
often promptly report their injuries to the CPSC or other
relevant regulatory agencies. However, victims tend to learn
specific information about a product defect later, during the
course of a lawsuit. By this time, they are usually bound by
protective orders that prohibit disclosure of everything they
learn during the course of discovery. Because of extremely
restrictive confidentiality agreements, reporting this
information to a regulatory agency could mean violating a court
order and jeopardizing their ability to recover their losses.
Furthermore, when damaging information is revealed during
discovery, the company quickly and quietly settles the case
with a settlement that is almost always conditioned on total
confidentiality. Thus, the public and the regulatory agencies
are left in the dark about a dangerous product.
C. REFORM IS NEEDED TO PROTECT PUBLIC HEALTH AND SAFETY
Current practices do not adequately balance public
interests with interests in confidentiality. Judges are not
limited in the factors they may consider when deciding
protective orders. However, in the many examples cited above,
it is clear that judges do not always consider public health
and safety.
Judge Joseph Anderson, District Court Judge for the
District of South Carolina, testifying before the Subcommittee
on Antitrust, Competition Policy and Consumer Rights,
acknowledged that while some judges are mindful of the court
secrecy problem, many judges, facing ever increasing case
loads, are ``eager to achieve speedy and concrete resolutions
to their cases, and ever-mindful of the need for judicial
economy, many judges all too often acquiesce to the demands for
court-ordered secrecy.''\21\
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\21\2007 Hearing (testimony of Judge Anderson)
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Leslie Bailey, a public interest lawyer with Public Justice
who regularly represents clients who oppose protective orders
that are against the public interest, testified that in her
experience with requests for protective orders, judges, who are
often managing heavy caseloads, are inclined to agree to
whatever type of protection the parties agree on and easily
find that to be enough good cause.\22\
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\22\2007 Hearing (testimony of Leslie Bailey)
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Although plaintiffs may be concerned about notifying the
public of a potential safety hazard, they often agree to
secrecy out of perceived necessity. Leslie Bailey noted:
A plaintiff's lawyer may be so concerned with gaining
access to the key documents she needs to present her
client's case that she does not recognize an unlawful
protective order--or may decide it isn't worth slowing
down the litigation to fight. And when faced with a
settlement that will compensate their clients--
especially if the defendant is willing to pay a premium
for secrecy--few plaintiffs' attorneys balk at the
condition that the case and the settlement be kept
secret. To fight would be to delay justice for the
client, or possibly to lose the chance to settle
altogether, and many [clients] cannot afford that
risk.\23\
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\23\Id.
As a result of the differing interests of judges,
plaintiffs, defendants and the public, current litigation
practices do not adequately protect the public from court-
endorsed secrecy that conceals public health and safety
hazards.
D. CURRENT PRACTICES
1. Protective orders
Under Rule 26(c) of the Federal Rules of Civil Procedure, a
party or any person from whom discovery is sought may move for
a protective order to keep the discovery materials
confidential. The court may, for ``good cause,'' issue an order
to protect a party or person from annoyance, embarrassment,
oppression or undue burden or expense. Jurisdictions have
extensive case law dictating what must be shown to establish
``good cause.'' The ``good cause'' standard varies widely by
jurisdiction from little more than a stipulation from both the
parties that the order will expedite discovery to a more
rigorous showing that there is a specific need to keep the
information confidential.
2. Court records
Requests to seal court records or documents filed with the
court are generally held to a higher standard than that
required to obtain a protective order due to First Amendment
protections.\24\
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\24\Nixon v. Warner Communications, Inc., 435 U.S. 589 (1978);
Richmond Newspapers, Inc. v. Virginia, 448 U.S. 555 (1980); Globe
Newspaper Co. v. Superior Court, 457 U.S. 596 (1982); Press Enterprise
Co. v. Superior Court (Press Enterprise I), 464 U.S. 501 (1984).
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3. Settlement agreements
Under current law, there are no limitations on settlement
agreements, reached privately or filed with the court,
regarding the restriction of public health or safety
information. As with protective orders, judges are free to
consider public health and safety when reviewing other orders
that restrict access to information, including settlement
agreements, but no such consideration is required.
Parties in a civil action may choose to resolve pending
litigation by agreeing to a settlement that contains a
confidentiality provision sealing some or all of the discovery
documents uncovered during litigation, the terms of the
settlement, the fact that a settlement was reached and the fact
that a case was ever filed.
Even when not required by statute, parties may choose to
seek judicial approval of a confidential settlement and file
the settlement with the court in order to create a court order
of confidentiality. Once a court approves the confidential
settlement, the settlement is sealed away and stored by the
court. Since the court retains jurisdiction over the
settlement, the court can issue a contempt order against a
party that violates the confidentiality order. In this
situation, filing a separate lawsuit is not necessary for the
court to issue a contempt order.
Often, parties do not seek judicial approval of the
confidential settlement, but instead agree to a private
settlement that is not filed with the court. In these
instances, the court docket only reveals that the action was
dismissed by an agreement between the parties. These
settlements are not accessible to the public. If a party to the
settlement violates the settlement's confidentiality provision,
a breach of contract action must be filed before the court may
step in and enforce this provision.
E. EFFECT OF THE LEGISLATION
The Sunshine in Litigation Act of 2011 will not displace
current practices under the Federal Rules of Civil Procedure or
common law. Instead, it merely requires an additional step--
consideration of public health and safety--before issuing
protective orders, orders sealing court records, or settlement
agreements in cases pleading facts relevant to public health
and safety. By creating this additional requirement, S. 623
will ensure that court-endorsed confidentiality protection does
not jeopardize the public's ability to learn about potential
health or safety dangers. The additional requirement applies
only to cases pleading facts relevant to public health and
safety--a change made this Congress to clarify the reach of the
bill.
A minority of Senators on this Committee have raised the
concern that this legislation would lead to the filing of
frivolous lawsuits, or change discovery rules during lawsuits.
However, nothing in the purpose or content of this legislation
would alter lawsuit filing standards, which were recently
heightened by the Supreme Court. Further, nothing in this
legislation alters time-honored discovery rules during
litigation. Similar measures that have been in effect for more
than 15 years in Texas and Florida go even further than this
bill, and they have not resulted in increased trials or
litigation over discovery, or a decrease in settlements.
The bill will not burden the Federal court system. It will
affect only a small subset of Federal cases, those that plead
facts relevant to public health and safety, and judges
regularly weigh competing interests in balancing tests like the
one required by this bill.\25\ A minority of Senators on this
Committee have raised the concern that this bill would burden
courts by requiring judges to review all documents for
relevance to public health and safety. However, that is untrue.
The burden of proof rests on the proponent of the order to
point the court directly to the information it wants sealed,
and make the argument for such sealing.
---------------------------------------------------------------------------
\25\2007 Hearing (testimony of Judge Anderson)
---------------------------------------------------------------------------
1. Protective orders
Some judges already consider the public interest in
disclosure of public health and safety information when
reviewing protective orders. For those judges, the effect of
this legislation will be minimal. For those who do not, S. 623
simply requires them to make such a consideration.
The vast majority of cases in the Federal court system do
not plead facts relevant to public health and safety. In these
cases, this law will not apply. Therefore, in most cases,
judges will be able to issue a protective order without making
a significant inquiry based on S. 623.
In the relatively small number of cases that do plead facts
relevant to public health and safety, and where a judge finds
that such an order would restrict disclosure of information
relevant to protecting the public, the judge will have to weigh
interests in disclosure with interests in confidentiality.
According to S. 623, in these cases a judge may only issue the
order after making findings of fact that the public interest in
disclosure of potential health or safety hazards is outweighed
by a specific and substantial interest in maintaining the
confidentiality of the information or records in question.
Under this balancing test, judges will be required to make a
more detailed inquiry.
This additional step required for obtaining a protective
order will not overburden judges. First, the balancing test
will only be required in a limited number of cases. Second, S.
623 places the burden of proof on the proponent of the order.
It will be their responsibility to summarize and distill the
information that would be subject to the protective order. As
Judge Anderson told the Subcommittee on Antitrust, Competition
Policy and Consumer Rights, judges regularly engage in
balancing tests like the one required in S. 623.\26\ Finally,
judges can use magistrate judges and special masters to assist
them in more complex cases.
---------------------------------------------------------------------------
\26\Id.
---------------------------------------------------------------------------
The bill recognizes that there are appropriate uses for
protective orders, such as protecting trade secrets. It makes
sure that such information is protected by giving judges
discretion to consider any confidentiality interests that are
important to the proponent. Furthermore, the bill does not
limit judges' existing obligations under current law and
practice to protect information that truly deserves
confidentiality.
The legislation strongly protects trade secrets and it is
expected that judges, as they are already required to do, will
give ample consideration to them as part of the balancing test.
However, when a party claims that they need a protective order
because of a trade secret, they must demonstrate that their
interest in protecting the trade secret is not outweighed by
the public interest in disclosure of a public health or safety
hazard. In other words, this bill does not permit so-called
trade secrets that pose a threat to public health and safety--
such as a defective tire design--to justify court-endorsed
secrecy.
A protective order entered as a result of the balancing
test shall be no broader than necessary to protect the privacy
interest asserted. For example, when a party or parties request
a protective order for a trade secret, the judge should only
protect the materials that refer to the actual trade secret. If
the items sought to be protected contain information about a
potential public health or safety hazard, then to the extent
possible, the order shall only cover the trade secret and not
other information about the potential hazard. As a result, a
blanket protective order over all materials exchanged during
discovery cannot be justified by a claim that it deserves
protection because of a trade secret or other interest in
confidentiality.
2. Court records
The bill requires judges to take an additional step when
considering the existing First Amendment law dictating when
court records may be sealed. The bill does not purport to
replace existing law interpreting the First Amendment. Instead,
it creates an additional reason for openness when public health
or safety is at issue.
3. Settlement agreements
The legislation requires judges to apply the provisions in
subsection (a)(1) prior to approving or sealing a settlement
agreement. As with protective orders, if the settlement
agreement would restrict disclosure of information relevant to
protecting public health or safety, such as requiring the
destruction of documents or prohibiting a plaintiff from
discussing potential public health or safety dangers related to
his or her case, the judge must apply the balancing test in
subsection (a)(1)(B) to determine if the public interest in
disclosure is outweighed by a specific and substantial interest
in confidentiality.
Under subsection (c), S. 623 will also impact settlements
involving public health or safety, that otherwise would not be
reviewed under subsection (a), when and if parties petition the
court to enforce such settlements. For example, a case may
settle privately, outside of court, before any requests for
protective orders. In these cases, a settlement may be
conditioned on confidentiality and as a result conceal a
potential public health or safety hazard and prevent the
plaintiff from disclosing any and all information about their
case. A plaintiff may be prohibited from disclosing everything
from the nature of their injury, to the evidence they obtained
independent of the defendant, or even the very fact that they
sued the defendant.
Subsection (c) prevents courts from facilitating
defendants' efforts to conceal public health and safety
information. It says that a court shall not enforce a
settlement that restricts a party's ability to discuss a
settlement that impacts public health or safety. This will
protect plaintiffs, who were forced into out-of-court
settlement agreements with restrictive gag orders, from being
hauled into court by a defendant for speaking out about their
settlements involving public health or safety hazards.
Subsection (c), paragraph (2) makes it clear that the potential
for nonenforcement of a settlement agreement will only apply in
cases that restrict the disclosure of information relevant to
the protection of public health or safety. Thus, in the vast
majority of cases, S. 623 will not affect a party's ability to
make or enforce confidentiality provisions in settlement
agreements.
As we have seen with state and Federal court rules that
limit the ability to seal settlement agreements, the bill is
not likely to either increase the number of cases that proceed
to trial or decrease the frequency of settlements. More than 15
years ago, Florida and Texas adopted a law and court rule,
respectively, that limit the ability to conceal public health
and information in civil lawsuits.\27\ Critics of these
measures argued that the court system would be severely
disrupted because parties would no longer have the same
incentives to settle their cases, resulting in greater demands
on trial judges. Opponents made similar claims when the Federal
District Court for the District of South Carolina unanimously
adopted Local Rule 5.03(c), which prohibits all sealed
settlements.\28\ To date, none of these dire predictions has
come to fruition. In fact, South Carolina's district courts
have actually experienced a decrease in trials and cases
continue to settle.\29\
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\27\Fla. Stat. Sec. 69.081 (2000); Tex. R. Civ. Pro. 76a.
\28\Joseph F. Anderson Jr., Secrecy in the Courts: At the Tipping
Point?, presented Vil. L. Rev. Norman J. Shachoy Symposium: The Future
of Judicial Transparency, Feb. 2, 2008.
\29\Id.
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4. Personally identifiable information
When weighing the interest in maintaining confidentiality,
it is intended that judges will use procedures they currently
use to protect personally identifiable information and national
security information. Should this information be at issue when
a judge conducts the balancing test, subsection (d) establishes
a rebuttable presumption that the interest in protecting
personally identifiable information relating to financial,
health or other similar information of an individual outweighs
the public interest in disclosure.
Although under the balancing test in subsection (a)(1),
judges would be able to protect this information under current
practices, this subsection is intended to clarify that S. 623
would not compromise an individual's personally identifiable
information that, in all likelihood, has no bearing on
protecting public health or safety. For example, a judge may
find that the public has an interest in the disclosure of
medical information that describes the harmful side effects of
a drug because they pose a threat to public health and safety.
However, the personally identifiable information connected to
that medical information will remain confidential subject to
the rebuttable presumption in subsection (d).
5. Classified information
Similarly, S. 623 specifically addresses national security
information in subsection (e). A rule of construction states
that when weighing the interest in maintaining confidentiality
under Section (a), nothing in this section shall prohibit a
court from entering an order that would restrict the disclosure
of information, or an order restricting access to court
records, if in either instance such order is necessary to
protect from public disclosure information classified under
criteria established by an Executive order to be kept secret in
the interest of national defense or foreign policy. Further,
nothing in this section shall be construed to permit, require
or authorize the disclosure of information that is classified
under criteria established by an Executive order to be kept
secret in the interest of national defense or foreign policy.
Again, judges have the ability to protect this information
under current law and under the balancing test in subsection
(a). However, this subsection is included to make clear that S.
623 does not alter a judge's existing obligations to issue
protective orders, or orders sealing court records or
settlements when classified information is at issue.
II. History of the Bill and Committee Consideration
A. COMMITTEE CONSIDERATION--103RD THROUGH 111TH CONGRESSES
The Sunshine in Litigation Act was first introduced by
Senator Kohl in the 103rd Congress as S. 1404. On April 20,
1994, the Judiciary Committee's Subcommittee on Courts and
Administrative Practice held a hearing, ``S. 1404, a bill to
amend Chapter 111 of Title 28, United States Code, relating to
protective orders, sealing of cases, disclosures of discovery
information in civil actions, and for other purposes.'' On June
27, 1994, the Sunshine in Litigation Act, with some minor
changes,\30\ was offered as an amendment to S. 687, the Product
Liability Fairness Act. On June 28, 1994, the Senate conducted
a roll call vote on a motion to table the amendment.\31\ The
amendment was tabled by a vote of 51 to 49.
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\30\The differences between the amendment and the bill that was
reported out of Committee were: subsection (a)(1) stated, ``A court
shall enter an order under rule 26(c) of the Federal Rules of Civil
Procedure restricting the disclosure of information obtained through
discovery or an order restricting access to court records in a civil
case only after making particularized findings of fact that--'';
subsection (a)(1)(B)(i) stated, ``the public interest in disclosure of
potential health or safety hazards is clearly outweighed by a specific
and substantial interest in maintaining the confidentiality of the
information or records in question''; and the amendment did not include
anything after subsection (b).
\31\Vote no. 168, 103rd Congress, 2nd Session (June 28, 1994).
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The Sunshine in Litigation Act was introduced again in the
104th through 109th Congresses. In each Congress it was
referred to the Committee on the Judiciary and no further
action was taken.
In the 110th Congress, Senator Kohl introduced S. 2449, the
Sunshine in Litigation Act of 2007, on December 11, 2007.
Senator Patrick Leahy (D-VT) was an original cosponsor. Also on
December 11, 2007, the Senate Judiciary Committee's
Subcommittee on Antitrust, Competition Policy and Consumer
Rights held a hearing, ``The Sunshine in Litigation Act: Does
Court Secrecy Undermine Public Health and Safety?'' Testimony
was received from five witnesses including Johnny Bradley, Jr.
and Judge Joseph Anderson, Jr., District Court Judge for the
District of South Carolina.
Johnny Bradley, Jr. testified about his experience as a
plaintiff in a case against Cooper Tire Company related to a
serious car accident that killed his wife and injured him and
his son. During discovery, Mr. Bradley learned that there had
been dozens of cases involving Cooper Tire that ended with
confidential settlements. He told the Subcommittee that during
his case, his lawyer discovered documents showing that Cooper
Tires posed a threat to public safety. Due to protective orders
entered by the judge during the lawsuit, Mr. Bradley is unable
to publicly speak about these documents.
Judge Joseph Anderson testified about his views concerning
the adverse consequences of court-ordered secrecy. In his
experience, litigants frequently request judges ``approve''
their settlements even when the law does not require judicial
approval. Specifically, judges are often asked to enter orders
restricting public access to settlement information and
sometimes the case history. Litigants prefer to involve the
trial judge in order to ensure the court's power to enforce the
confidentiality of the agreement. Judge Anderson noted that
some judges already do consider public health and safety when
making these decisions. But, he recognized that many judges
have very large caseloads and, as a result, they often agree to
court-ordered secrecy with little more than consent of all
parties. Judge Anderson testified about cases he was directly
involved in and cases he was aware of where judges have agreed
to requests for court-ordered secrecy where one could
reasonably argue that public interest and public safety should
have required openness.
Judge Anderson also testified about the success of a local
rule, unanimously adopted in South Carolina's District Court in
2002, which bans secret settlements. Contrary to the claims of
those who opposed the rule, data indicates it has not resulted
in more trials and that cases continue to settle. In fact, the
number of trials has actually decreased since adoption of the
rule.
Judge Anderson has endorsed S. 623, noting:
[it is] carefully-crafted legislation [that] proposes a
nuanced approach that simply requires judges to employ
a balancing test--weighing the need for secrecy
compared to potential harm to the public--and then to
make specific factual findings before entering
confidentiality orders. This `balancing test' would not
be a new experience: weighing competing interests is
what judges do on a daily basis.\32\
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\32\Anderson, supra note 28.
On January 28, 2008, Senator Lindsey Graham (R-SC) signed
on as a cosponsor. On March 6, 2008, the Judiciary Committee
met in executive session to consider the bill. Senator Kohl
offered an amendment in the nature of a substitute that made
four changes to the bill. Two changes were technical. One
changed the bill title to the ``Sunshine in Litigation Act of
2008.'' The other added to subsection (c) a reference to
subsection (a)(1) to make clear that this provision only
applies to cases involving public health and safety. The other
two changes were rules of construction that make it clear that
the bill does not compromise protections for classified
information or personally identifiable information related to
financial, health or other related information. The substitute
amendment was accepted by unanimous consent.
The Committee then voted to report the Sunshine in
Litigation Act of 2008, with an amendment in the nature of a
substitute, favorably to the Senate. The Committee proceeded by
roll call vote as follows:
Tally: 12 Yeas, 6 Nays, 1 Pass
Yeas (12): Leahy (D-VT), Kennedy (D-MA), Biden (D-DE), Kohl (D-
WI), Feinstein (D-CA), Feingold (D-WI), Schumer (D-NY),
Durbin (D-IL), Cardin (D-MD), Whitehouse (D-RI),
Grassley (R-IA), Graham (R-SC)
Nays (6): Hatch (R-UT), Kyl (R-AZ), Sessions (R-AL), Cornyn (R-
TX), Brownback (R-KS), Coburn (R-OK)
Pass (1): Specter (R-PA)
The bill was introduced again in the 111th Congress on
March 5, 2009. The Sunshine in Litigation Act of 2009, S. 537,
was introduced by Senator Kohl, with Senator Lindsey Graham (R-
SC) joining as an original cosponsor. It was referred to the
Committee on the Judiciary and no further action was taken.
B. INTRODUCTION OF THE BILL AND COMMITTEE CONSIDERATION--112TH CONGRESS
The Sunshine in Litigation Act of 2011, S. 623, was
introduced by Senator Kohl on March 17, 2011. On March 28,
2011, Senator Lindsey Graham (R-SC) joined as a cosponsor. On
April 8, Senator Patrick Leahy signed on as a cosponsor.
On May 19, 2011, the Judiciary Committee met in executive
session to consider the bill. Senator Kohl offered an amendment
in the nature of a substitute that made three changes to the
bill. One restricted the application of the bill to cases in
which the pleadings state facts that are relevant to public
health and safety. The second incorporated the relevant
language from the Classified Information Procedures Act (CIPA)
into the provisions protecting national security information.
The original bill referred to CIPA, and the substitute
amendment incorporated the particular CIPA language, clarifying
that those protections would remain in place. The final change
made clear that the bill would not provide a basis for the
granting of a motion to reconsider, modify, amend or vacate a
protective order or settlement order entered into before the
effective date, or a basis for the reversal on appeal of a
protective order or settlement order entered into before the
effective date. The substitute amendment was accepted by
unanimous consent.
The Committee then voted to report the Sunshine in
Litigation Act of 2011, with an amendment in the nature of a
substitute, favorably to the Senate. The Committee proceeded by
roll call vote as follows:
Tally: 12 Yeas, 6 Nays
Yeas (12): Leahy (D-VT), Kohl (D-WI), Feinstein (D-CA), Schumer
(D-NY), Durbin (D-IL), Whitehouse (D-RI), Klobuchar (D-
MN), Franken (D-MN), Coons (D-DE), Blumenthal (D-CT),
Grassley (R-IA), Graham (R-SC)
Nays (6): Hatch (R-UT), Kyl (R-AZ), Sessions (R-AL), Cornyn (R-
TX), Lee (R-UT), Coburn (R-OK)
Also on May 19, 2011, Senator Dianne Feinstein (D-CA)
joined the bill as a cosponsor.
III. Section-by-Section Summary of the Bill
Section 1. Short title
This section provides that the legislation may be cited as
the ``Sunshine in Litigation Act of 2011.''
Section 2. Restrictions on protective orders and sealing of cases and
settlements
Section 2 (a) amends Chapter 111 of title 28 of the United
States Code, by adding section 1660 to the end of Chapter 111.
Title 28 of the U.S. Code governs the Federal judiciary and
Federal judicial procedure. Under current law, Federal courts
may enter protective orders under Rule 26(c) of the Federal
Rules of Civil Procedure simply by a showing that ``good
cause'' for the protective order exists. The new section 1660
augments this ``good cause'' showing by requiring a court to
make additional findings of fact for certain protective orders
under Rule 26(c) of the Federal Rules of Civil Procedure. In
the case of court records and sealed settlement agreements, the
new section augments existing laws, including common law and
First Amendment law, dictating the standard for sealing such
items.
Subsection (a), paragraph (1) requires that before entering
a discovery protective order, an order restricting access to
documents filed with the court, an order sealing a settlement
agreement that would restrict the disclosure of such
information, or an order restricting access to court records in
a civil case in which the pleadings state facts that are
relevant to the protection of public health or safety, the
court must make certain findings regarding public health and
safety.
Subparagraph (A) states that a judge may enter an order
referenced in (a)(1) when such order would not restrict the
disclosure of information which is relevant to the protection
of public health and safety.
Subparagraph (B), clause (i) states that in the event that
a judge finds that such an order would restrict disclosure of
information relevant to protecting public health and safety,
the judge may only issue the order after making findings of
fact that the public interest in disclosure of potential health
or safety hazards is outweighed by a specific and substantial
interest in maintaining the confidentiality of the information
or records in question.
Clause (ii) states that the protective order entered as a
result of the balancing test in clause (i) shall be no broader
than necessary to protect the privacy interest asserted.
Paragraph (2) states that no order entered in accordance
with paragraph (1), other than an order approving a settlement
agreement, shall continue in effect after the entry of final
judgment, unless, at the time of, or after, the court makes a
separate finding of fact that the requirements of paragraph (1)
have been met.
Paragraph (3) states that the party who is the proponent
for the entry of an order, as provided in this section, shall
have the burden of proof in obtaining such an order.
Paragraph (4) states that section 2 shall apply even if an
order under paragraph (1) is requested--(A) by motion pursuant
to Rule 26(c) of the Federal Rules of Civil Procedure; or (B)
by application pursuant to stipulation of the parties.
Paragraph (5), subparagraph (A) states that the provisions
of this section shall not constitute grounds for withholding
information in discovery that is otherwise discoverable under
Rule 26 of the Federal Rules of Civil Procedure.
Paragraph (5), subparagraph (B) states that no party shall
request, as a condition for the production of discovery, that
another party stipulate to an order that would violate this
section.
Subsection (b), paragraph (1) states that a court shall not
approve or enforce any provision of an agreement between or
among parties to a civil action in which the pleadings state
facts that are relevant to the protection of public health or
safety, or approve or enforce an order subject to subsection
(a)(1), that prohibits or otherwise restricts a party from
disclosing any information relevant to such civil action to any
Federal or State agency with authority to enforce laws
regulating an activity relating to such information.
Subsection (b), paragraph (2) states that any such
information disclosed to a Federal or State agency shall be
confidential to the extent provided by law.
Subsection (c), paragraph (1) states that, subject to
paragraph (2), a court shall not enforce any provision of a
settlement agreement described under subsection (a)(1) between
or among parties that prohibits one or more parties from--(A)
disclosing that settlement was reached or the terms of such a
settlement, other than the amount of money paid; or (B)
discussing a case, or evidence produced in the case, that
involves matters related to public health or safety. Paragraph
(2) states that paragraph (c)(1) does not apply if the court
has made findings of fact that the public interest in the
disclosure of potential public health or safety hazards is
outweighed by a specific and substantial interest in
maintaining the confidentiality of the information.
Subsection (d) is a rule of construction which says that
when weighing the interest in maintaining confidentiality under
Section (a), there is a rebuttable presumption that the
interest in protecting personally identifiable information
relating to financial, health or other similar information of
an individual outweighs the public interest in disclosure.
Subsection (e) is a rule of construction which says that
when weighing the interest in maintaining confidentiality under
Section (a), nothing in this section shall prohibit a court
from entering an order that would restrict the disclosure of
information, or an order restricting access to court records,
if in either instance such order is necessary to protect from
public disclosure--(A) information classified under criteria
established by an Executive order to be kept secret in the
interest of national defense or foreign policy; or (B)
intelligence sources and methods. Further, nothing in this
section shall be construed to permit, require, or authorize the
disclosure of information that--(A) is classified under
criteria established by an Executive order to be kept secret in
the interest of national defense or foreign policy; or (B)
reveals intelligence sources and methods.
Section 2 (b) amends the table of sections of chapter 111
of title 28 of the United States Code by adding after the item
relating to section 1659--``1660. Restrictions on protective
orders and sealing of cases and settlements.''
Section 3. Effective date and application
This section states that the effective date of the
amendments made by this Act shall take effect 30 days after the
date of enactment of this Act; and apply only to orders entered
in civil actions or agreements entered into on or after such
date; and not provide a basis for the granting of a motion to
reconsider, modify, amend or vacate a protective order or
settlement order entered into before the effective date, or a
basis for the reversal on appeal of a protective order or
settlement order entered into before the effective date.
IV. Congressional Budget Office Cost Estimate
The Committee sets forth, with respect to the bill, S. 623,
the following estimate and comparison prepared by the director
of the Congressional Budget Office under section 402 of the
Congressional Budget Act of 1974:
May 25, 2011.
Hon. Patrick J. Leahy,
Chairman, Committee on the Judiciary,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 623, the Sunshine in
Litigation Act of 2011.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Martin von
Gnechten.
Sincerely,
Douglas W. Elmendorf.
Enclosure.
S. 623--Sunshine in Litigation Act of 2011
S. 623 would, under certain conditions, prevent federal
judges from issuing protective orders restricting the use of
litigation records that could influence public health or
safety. The bill would take effect 30 days after enactment and
would apply to protective orders in civil actions or
arrangements entered on or after that date.
CBO estimates that enacting S. 623 would have no
significant impact on the federal budget. The bill could alter
and possibly increase the workloads of federal attorneys, court
staff, and judges. However, CBO estimates that any resulting
increase in spending would be small and subject to the
availability of appropriated funds. Enacting S. 623 would not
affect direct spending or revenues; therefore, pay-as-you-go
procedures do not apply.
S. 623 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would not affect the budgets of state, local, or tribal
governments.
The CBO staff contact for this estimate is Martin von
Gnechten. The estimate was approved by Theresa Gullo.
V. Regulatory Impact Evaluation
In compliance with rule XXVI of the Standing Rules of the
Senate, the Committee finds that no significant regulatory
impact will result from the enactment of S. 623.
VI. Conclusion
The Sunshine in Litigation Act of 2011, S. 623, is a
straightforward and narrowly targeted measure that will ensure
that court-endorsed secrecy will not jeopardize public health
and safety by concealing information about potential health or
safety dangers from consumers and regulatory agencies.
VII. Minority Views
----------
MINORITY VIEWS FROM SENATORS KYL, HATCH, SESSIONS, CORNYN, COBURN, AND
LEE
The ``Sunshine in Litigation Act'' has been proposed
numerous times since 1991, most recently as S. 623. Each time,
the bill has been vehemently opposed by industry, lawyers, and
judges. The Act purportedly would prevent judges in civil cases
from issuing protective orders that would keep information
confidential if it is relevant to the protection of public
health or safety. In reality, however, this bill would simply
provide a tool to trial lawyers to conduct fishing expeditions
and file frivolous lawsuits with impunity.
THE BILL IS UNNECESSARY
Proponents of the legislation cite anecdotal evidence of
defendants covering up public health and safety problems via
protective orders granted during litigation. However, as Judge
Mark Kravitz has noted, the cited cases have all occurred in
state courts.\33\ Judge Kravitz further emphasized that there
is no evidence that such problems have occurred in the federal
court system the only system that this legislation would
affect.\34\ This Act is directed at a problem that does not
exist.
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\33\Sunshine in Litigation Act of 2009: Hearing before the Subcomm.
on Com. and Admin. Law of the House Comm. on the Judiciary, 111th
Cong., 1st Sess. (June 4, 2009) at 52 (statement of Mark Kravitz)
[hereinafter ``Hearing of June 4, 2009''].
\34\Hearing of June 4, 2009 at 52 (statement of Mark Kravitz).
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Federal Rule of Civil Procedure (FRCP) 26 already allows
judges to weigh the need for protective orders against public
or private concerns when such an order is challenged. The FRCP
were created, and are normally amended, through the Rules
Enabling Act (REA), which allows the Judicial Conference to
create carefully crafted rules that are presented by the
Supreme Court to Congress for approval. Changes are made in
this manner to ensure that the rules governing federal courts
are consistent with the needs of courts, lawyers, and all
parties to litigation. Not only would this legislation
superfluously modify the FRCP, it does so in a manner contrary
to the REA.
The Judicial Conference has repeatedly strongly criticized
this bill and has conducted studies showing that the
legislation serves no purpose. The Conference found that only
about six percent of civil cases see requests for protective
orders.\35\ In the majority of these cases, the order had no
impact on public health or safety. And of the cases where it
did, ``the empirical data showed no evidence that protective
orders create any significant problem of concealing information
about public hazards.''\36\ Additionally, the study found that
in cases that raised public health or safety concerns, there
was sufficient information to inform citizens of the health
risks contained in publicly available court documents.\37\
Last, the study concluded that judges usually will only grant
protection orders for information that needs to be protected,
and judges tend to recognize the importance of allowing access
to data concerning public health risks.\38\
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\35\Hearing of June 4, 2009 at 58 (written testimony of Mark
Kravitz).
\36\Hearing of June 4, 2009 at 58 (written testimony of Mark
Kravitz).
\37\Hearing of June 4, 2009 at 58 (written testimony of Mark
Kravitz).
\38\Hearing of June 4, 2009 at 60 (written testimony of Mark
Kravitz).
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THE BILL'S ADVERSE EFFECTS ON CIVIL LITIGATION
This act will drive up the costs of litigation in a number
of ways. Without the certainty that a protective order will be
upheld, litigants will raise significantly more objections to
litigation discovery in order to protect confidential
information. Parties will be less willing to submit to
discovery if they believe information will be disclosed to the
public. This will inevitably result in expensive court battles,
putting a greater burden on courts as well as the parties
themselves. This is an unacceptable cost, especially when
weighed against the limited beneficial effects that the bill
would have.
Courts would be further burdened by this legislation
because they will be required to ensure that all pre-discovery
documents do not contain any information concerning public
health or safety hazards. In Seattle Times Co. v. Rhinehart,
467 U.S. 20, 33 (1984), the Supreme Court held that pre-
discovery materials are private matters and are not meant for
the public. This bill, however, would require judges to scour
these documents, which can be in the millions of pages, for any
information that might concern a public health or safety
hazard. Currently, to reduce the costs of litigation and speed
up the discovery process, parties will frequently conduct
discovery without judicial supervision. Passing this
legislation will make this money-saving option impossible.
Burdening these pre-discovery and discovery solutions would
only delay discovery and put added strain on judges, who
frequently already have heavy case loads.
Chilling discovery in this manner would further increase
the costs of litigation by disincentivizing parties to settle.
By forcing documents to be disclosed regardless of the outcome
of a suit, this bill removes a bargaining chip for litigants to
settle outside of court once discovery begins.
This bill would also encourage lawyers to go on fishing
expeditions seeking information in discovery that would
otherwise be protected. This would potentially allow frivolous
lawsuits to be filed with impunity. While most of these
lawsuits would be thrown out due to trial court discretion,
some of them would inevitably go to trial and be a drain on
court resources. And of course, even frivolous lawsuits that
are disposed of before trial needlessly consume valuable public
and private resources.
CONCLUSION
We stand in opposition to the ``Sunshine in Litigation Act
of 2011'' for the same reasons similar legislation has been
rejected by congress since 1991. There is no benefit to
enacting S. 623 into law--there is no evidence that protection
orders are abused in federal courts. The only effect of this
bill would be to increase litigation costs and burdens on
federal judges.
Jon Kyl.
Orrin G. Hatch.
Jeff Sessions.
John Cornyn.
Tom Coburn.
Mike Lee.
VIII. Changes to Existing Law Made by the Bill, as Reported
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, changes in existing law made by
S. 623, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, and existing law in which no
change is proposed is shown in roman):
28 U.S.C. CHAPTER 111
SEC. 1660. RESTRICTIONS ON PROTECTIVE ORDERS AND SEALING OF CASES AND
SETTLEMENTS
(a)(1) Except as provided under subsection (e), in any
civil action in which the pleadings state facts that are
relevant to the protection of public health or safety, a court
shall not enter, by stipulation or otherwise, an order
otherwise authorized under rule 26(c) of the Federal Rules of
Civil Procedure restricting the disclosure of information
obtained through discovery, an order approving a settlement
agreement that would restrict the disclosure of such
information, or an order restricting access to court records
unless in connection with such order the court has first made
independent findings of fact that--
(A) such order would not restrict the disclosure of
information which is relevant to the protection of
public health or safety; or
(B)(i) the public interest in the disclosure of past,
present, or potential health or safety hazards is
outweighed by a specific and substantial interest in
maintaining the confidentiality of the information or
records in question; and
(ii) the requested order is no broader than necessary
to protect the confidentiality interest asserted.
(2) No order entered as a result of the operation of
paragraph (1), other than an order approving a settlement
agreement, may continue in effect after the entry of final
judgment, unless at the time of, or after, such entry the court
makes a separate finding of fact that the requirements of
paragraph (1) continue to be met.
(3) The party who is the proponent for the entry of an
order, as provided under this section, shall have the burden of
proof in obtaining such an order.
(4) This section shall apply even if an order under
paragraph (1) is requested--
(A) by motion pursuant to rule 26(c) of the Federal
Rules of Civil Procedure; or
(B) by application pursuant to the stipulation of the
parties.
(5)(A) The provisions of this section shall not constitute
grounds for the withholding of information in discovery that is
otherwise discoverable under rule 26 of the Federal Rules of
Civil Procedure.
(B) A court shall not approve any party's stipulation or
request to stipulate to an order that would violate this
section.
(b)(1) In any civil action in which the pleadings state
facts that are relevant to the protection of public health or
safety, a court shall not approve or enforce any provision of
an agreement between or among parties, or approve or enforce an
order entered as a result of the operation of subsection
(a)(1), to the extent that such provision or such order
prohibits or otherwise restricts a party from disclosing any
information relevant to such civil action to any Federal or
State agency with authority to enforce laws regulating an
activity relating to such information.
(2) Any such information disclosed to a Federal or State
agency shall be confidential to the extent provided by law.
(c)(1) Subject to paragraph (2), a court shall not enforce
any provision of a settlement agreement described under
subsection (a)(1) between or among parties that prohibits 1 or
more parties from--
(A) disclosing the fact that such settlement was
reached or the terms of such settlement, other than the
amount of money paid; or
(B) discussing a civil action, or evidence produced
in the civil action, that involves matters relevant to
the protection of public health or safety.
(2) Paragraph (1) applies unless the court has made
independent findings of fact that--
(A) the public interest in the disclosure of past,
present, or potential health or safety hazards is
outweighed by a specific and substantial interest in
maintaining the confidentiality of the information or
records in question; and
(B) the requested order is no broader than necessary
to protect the confidentiality interest asserted.
(d) When weighing the interest in maintaining
confidentiality under this section, there shall be a rebuttable
presumption that the interest in protecting personally
identifiable information relating to financial, health or other
similar information of an individual outweighs the public
interest in disclosure.
(e) Nothing in this section--
(1) Shall prohibit a court from entering an order
that would restrict the disclosure of information, or
an order restricting access to court records, if in
either instance such order is necessary to protect from
public disclosure--
(A) information classified under criteria
established by an Executive order to be kept
secret in the interest of national defense or
foreign policy; or
(B) intelligence sources and methods; or
(2) shall be construed to permit, require, or
authorize the disclosure of information that--
(A) is classified under criteria established
by an Executive order to be kept secret in the
interest of national defense or foreign policy;
or
(B) reveals intelligence sources and methods.
APPENDIX FOR MINORITY VIEWS
American Bar Association,
Washington, DC, April 13, 2009.
Hon. Patrick J. Leahy,
Chairman, Committee on the Judiciary,
U.S. Senate, Washington, DC.
Dear Chairman Leahy: I am writing on behalf of the American
Bar Association to voice our strong opposition to S. 537, the
``Sunshine in Litigation Act of 2009.''
The Act would change Federal Rule of Civil Procedure 26(c)
by limiting a court's ability to enter an order in a civil case
(1) restricting disclosure of information obtained through
discovery; (2) approving a settlement agreement restricting the
disclosure of such information; or (3) restricting access to
court records in civil cases unless the court makes certain
findings that the order would not restrict the disclosure of
information relevant to the protection of public health or
safety, or that the public interest in disclosure of such
information is outweighed by a specific interest in maintaining
the confidentiality of the information and that the protective
order is no broader than necessary to protect the privacy
interest asserted.
The ABA opposes S. 537 for two reasons. First, the bill
would circumvent the Rules Enabling Act, the procedure
established by Congress for revising rules in the federal
courts. Second, the bill would impose additional, unnecessary
requirements on, and restrict the discretion of, federal courts
in ways that will only increase the burdens of litigation in
both time and expense. The existing provisions of Rule 26 are
currently operating to protect the public interest against
unnecessary restrictions on information bearing on public
health and safety, and protective orders are important to
facilitate the prompt flow of discovery in litigation without
imposing the additional burdens contemplated in the bill.
Rules Enabling Act issues
S. 537 is an unwise retreat from the balanced and inclusive
process established by Congress in the Rules Enabling Act. The
Rules Enabling Act process is based on three fundamental
concepts:
(1) the essential, central role of the judiciary in
initiating and formulating judicial rulemaking;
(2) the use of procedures that permit full public
participation, including participation by members of the legal
profession, in considering changes to the rules; and (3)
congressional review before changes are adopted.
S. 537 would depart from this balanced and inclusive
process. The failure to follow the processes in the Rules
Enabling Act would frustrate the purpose of the Act and could
do harm to the effective functioning of the judicial system.
Substantive issues
The current version of Rule 26(c) and the case law applying
it give judges appropriate authority to determine when to enter
a protective order and what provisions should or should not be
in it in light of the particular facts and circumstances of
each case. There are three substantive flaws in the proposed
legislation:
First, there is no demonstrable deficiency in the current
version of Rule 26( c) that requires a change. The Committee on
Rules of Practice and Procedure of the Judicial Conference of
the United States (the ``Rules Committee'') reported to this
Committee in 2008 that empirical studies since 1991 show ``no
evidence that protective orders create any significant problem
of concealing information about public hazards.'' A copy of the
Rules Committee's letter of March 4, 2008, is attached to this
letter.
Second, requiring particularized findings of fact before
any protective order could be issued in any case would impose
an enormous burden on both the courts and litigants. Only a
small fraction of civil cases involve issues that implicate the
public health and safety. Yet, the bill would impose a broad
rule that would apply to every civil case. Even in cases that
arguably may bear on public health and safety issues, requiring
a court to make detailed findings at the beginning of a case,
possibly on a document-by-document basis, will impose an
impossible burden on the court and the litigants. Protective
orders facilitate the timely production of documents and permit
challenges to particular documents after the parties have had a
chance to review them and the case has evolved to the point
when the parties and the court can understand their
significance and context. The Rules Committee correctly noted
in its letter to this Committee that the proposed legislation
``would make discovery more expensive, more burdensome, and
more time-consuming, and would threaten important privacy
interests.''
Third, the requirement that judges entering an order
approving a sealed settlement agreement must make the same
particularized findings of fact necessary for discovery
protective orders is also unnecessary. Only a small number of
cases involve a sealed settlement agreement and only a portion
of those cases involve a potential public health or safety
hazard. In those cases that do, the complaints and other
documents that are a matter of public record typically contain
sufficient details about the alleged hazard or harm to apprise
the public of the risk, the source of the risk, and the harm it
allegedly causes. Sealing a settlement agreement in these cases
would have no material impact on the public's ability to be
informed of potential health or safety hazards.
The ABA has adopted policy regarding secrecy and coercive
agreements on this very issue:
Where information obtained under secrecy agreements
(a) indicates risk of hazards to other persons, or (b)
reveals evidence relevant to claims based on such
hazards, courts should ordinarily permit disclosure of
such information, after hearing, to other plaintiffs or
to government agencies who agree to be bound by
appropriate agreements or court orders to protect the
confidentiality of trade secrets and sensitive
proprietary information; . . .
Following adoption of this ABA policy, the Rules Committee
and the Advisory Committee on Civil Rules of the Judicial
Conference explored at length the need for changes in Rule 26(
c) similar to the proposed changes in legislation such as S.
537. Both committees concluded that these changes are not
warranted. They are not warranted for one overriding reason:
the federal courts are already addressing these concerns when
they consider whether to enter a protective order.
Conclusion
The current version of Rule 26(c) is and has been an
appropriate, effective mechanism to protect the rights of both
litigants and the public, without overburdening the
administration of justice in the federal courts. Any proposed
amendment to its provisions should be addressed through the
existing Rules Enabling Act procedure. S. 537 would not serve
the public interest.
Sincerely,
Thomas M. Susman,
Director,
Governmental Affairs Office.
May 3, 2011.
Hon. Patrick J. Leahy,
Chairman, Committee on the Judiciary,
U.S. Senate, Washington, DC.
Hon. Charles Grassley,
Ranking Member, Committee on the Judiciary,
U.S. Senate, Washington, DC.
Dear Chairman Leahy and Ranking Member Grassley: The
undersigned members of the Coalition to Protect Privacy,
Property, Confidentiality, and Efficiency in the Courts
strongly oppose S. 623, the ``Sunshine in Litigation Act of
2011.''
Our collective opposition stems from the fact that the bill
would severely restrict existing judicial discretion to protect
the privacy, property, and confidentiality of all litigants by
requiring federal judges to make premature decisions about the
masses of information produced in modern civil litigation.
Ultimately, S. 623 would increase the costs and burdens
associated with civil litigation while stifling the federal
court system. Finally, the bill would confer unfair tactical
advantages on certain litigants at the expense of others.
Protective and sealing orders are invaluable litigation
tools. These orders help ensure the confidentiality of valuable
information produced in discovery. Severe restrictions on their
availability would have a chilling effect not only on discovery
and settlements but also on the commencement and defense of
claims.
Although S. 623 purports to benefit the public interest and
protect public health and safety, it is unnecessary and would
be harmful to litigants' rights and the U.S. judicial system.
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. As a result, efforts to
enact similar legislation in the past have repeatedly failed.
The Coalition strongly believes that the ``Sunshine in
Litigation Act'' would undermine the privacy and property
rights of all litigants. S. 623 would also have a profoundly
damaging impact on the United States civil justice system while
burdening and delaying the just disposition of litigation.
Accordingly the undersigned organizations urge you to oppose S.
623.
Sincerely,
Alliance of Automobile Manufacturers,
American Tort Reform Association,
American Insurance Association,
Civil Justice Association of California,
Lawyers for Civil Justice,
National Association of Manufacturers,
PhRMA,
U.S. Chamber Institute for Legal Reform,
U.S. Chamber of Commerce.