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Terrible 'Sunshine in Litigation Act' rises again



Sen. Herb Kohl (D-WI) has again introduced the Sunshine in Litigation Act, trying to limit the discretion of federal judges in issuing protective orders or approving settlement agreements that maintain the confidentiality of materials obtained in court proceedings. The Senate Judiciary Committee already has a mark-up of the bill, S. 623, scheduled for Thursday, even though no hearing has been held this year. (We understand consideration may be postponed until after the Easter recess.)

According to CRS, the bill would amend the federal judicial code to prohibit a court, in any civil action in which the pleadings state facts relevant to the protection of public health or safety, from entering an order restricting the disclosure of information obtained through discovery, approving a settlement agreement that would restrict such disclosure, or restricting access to court records, unless in connection with such order the court has first made independent findings of fact that: (1) the order would not restrict the disclosure of information relevant to the protection of public health or safety; or (2) 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, and the requested protective order is no broader than necessary to protect the confidentiality interest asserted.

Rep. Jerrold Nadler (D-NY) has introduced the House version, H.R. 592.

Similar legislation has been floated in Congress since 1991 and sponsored by Sen. Kohl since at least 1995 (S. 374). Supporters claim legislation is necessary to bring information about potential health or safety hazards into the public eye. Their solution to this theoretical problem is to force judges to compromise the legitimate property and privacy interests of parties in civil litigation, in the process generating lengthy delays and unnecessary expense. Not surprisingly, the trial lawyers emerge as the strongest advocates for the legislation.

Business groups have vigorously fought the bill over the years. In a 2009 letter to the House Judiciary Committee, the Coalition to Protect Privacy, Property, Confidentiality and Efficiency in the Courts (which includes my employers at the National Association of Manufacturers) argued:

[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, H.R. 1508 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 which allow litigants to respond to extraordinarily broad discovery requests. 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.

The Judicial Conference has also consistently opposed the legislation. In July 2008, Judge Mark R. Kravitz, chair of the Judicial Conference Advisory Committee on Civil Rules, testified against before the House Judiciary Subcommittee on Commercial and Administrative Law. (Hearing transcript) The Conference's newsletter, The Third Branch, reported:

"First," [Kravitz] said, "the bill is unnecessary. Second, it would impose an intolerable burden on the courts. Third, it would have significant adverse consequences on civil litigation, including making litigation more expensive and making it more difficult to protect important privacy interests."

Kravitz cited a study by the Federal Judicial Center, completed in 1996, that examined 38,170 cases filed in three districts between 1990 and 1992. Discovery protective orders were requested in only about 6 percent of the civil cases in those districts--most by motion, which courts carefully reviewed. Of the 398 cases that had protective order activity, only half involved a protective order restricting disclosure of discovery materials, and of those about 9 percent were personal injury cases.

"The empirical data showed no evidence that protective orders create any significant problem of concealing information about public hazards," said Kravitz.

Since the first bills made their appearances in the 1990s, electronic discovery has also become common, raising the potential costs much higher. Sen. Orrin Hatch (R-UT) cited those considerations at a 2007 hearing:

[In] preparation for this hearing, I found that the explosion of e-discovery has only strengthened the views of those opposed to this legislation. For example, some years ago Professor Arthur Miller of New York University Law School criticized sunshine litigation in the Harvard Law Review. In preparation for this hearing, however, Professor Miller wrote to me and stated that "My views on the subject are even stronger today, reinforced by dramatic changes in the litigation landscape....[T]he massive expansion of discovery in today's electronic world magnifies the need for broad judicial discretion to protect all litigants' privacy and property rights." I think that going forward the Committee should heed this warning.

Sen. Hatch continued by highlighting the constitutional issues raised by the bill.

These practical concerns also implicate constitutional interests of privacy and due process. The United States Supreme Court has addressed these privacy interests in Seattle Times v. Rhinehart, 467 U.S. 20 (1984). The Court found that "A litigant has no First Amendment right of access to information made available only for purposes of trying his suit," 467 U.S. at 32-33. Some appear to believe that the materials obtained in discovery and the content of settlement agreements are essentially public matters that are made private by protective orders. In my view, this gets it backward.

Sen. Kohl introduced his bill on March 17, with no indication of committee action until this week; frankly, it caught us by surprise. The arguments for the legislation have not improved over the years, and it's hard to believe the political landscape has improved with Republicans in control of the U.S. House. Still, given the plaintiffs bar's fervor and superficial appeal of anything with the word "sunshine" in it, the bill warrants serious attention and opposition.

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Isaac Gorodetski
Project Manager,
Center for Legal Policy at the
Manhattan Institute
igorodetski@manhattan-institute.org

Katherine Lazarski
Press Officer,
Manhattan Institute
klazarski@manhattan-institute.org

 

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.