Anti-Protective Orders Legislation Poses Threat To All Corporations

Monday, May 4, 2009 - 01:00

Barry Bauman and Tim Doescher

Lawyers For Civil Justice

Lawyers for Civil Justice (LCJ) is working closely with the U.S. Chamber of Commerce Institute for Legal Reform (ILR) and an array of defense organizations to strongly oppose S. 537 (the so- called "Sunshine in Litigation Act"). This dangerous legislation, which was introduced in the U.S. Senate by Senator Herb Kohl (D-WI), would restrict judges from issuing protective orders and sealing settlement agreements. If enacted, it would undermine the courts' present authority, which now enables them to protect privacy and property rights by ensuring that information, such as trade secrets and medical records, are kept confidential.

Protective and sealing orders are invaluable litigation tools to allow litigants to respond to extraordinarily broad discovery requests by ensuring the confidentiality of valuable and sensitive information produced in discovery. The Kohl bill's severe restrictions on such orders will have a chilling effect not only on discovery and settlements but also on the commencement and defense of claims.

Many judges make use of protective orders to keep information exchanged in civil litigation confidential between the parties. They use confidential settlement agreements to keep information disclosed during a case confidential after disposition as is often required by law. The U.S. Supreme Court and the Federal Rules recognize that protective orders are appropriate in many cases, and that there is no public right of public access to such materials.

In reporting to Congress, the Civil Rules Advisory Committee to the Federal Judicial Conference recounted the extensive studies made by that Committee, the Federal Judicial Center, and the Federal Courts Study Committee over a number of years and concluded: "These studies all suggested that there is no need to make it more difficult to issue discovery protective orders," because, " there is no evidence that protective orders in fact create any significant problem in concealing information about public hazards or in impeding efficient sharing of discovery information."

Many observers have concluded that there is no compelling need to restrict the issuance of confidentiality orders. Businesses likely to generate health and safety risks are already intensively regulated by both state and federal agencies. Those agencies already have the right to demand any documents purportedly related to a health or safety issue - assuming the defendant was not already under an obligation to provide the material to the regulator.

The Kohl bill is opposed by a broad industry coalition. It is also opposed by the Federal Judicial Conference.Judge Lee Rosenthal, Chair of the Committee on Rules of Practice and Procedure of the Judicial Conference of the United States, advised in a letter to Rep. John Conyers, Chairman of the House Judiciary Committee (D-MI) that, "the Rules Committee concluded that the legislation is not necessary to protect the public health and safety and that the discovery protective order provision would make it more difficult to protect important privacy interests and would make civil litigation more expensive, more burdensome, and less accessible."

And more recently, the legislation has encountered opposition from the American Bar Association, which stated that "The proposed bill may therefore drive important litigation from the federal courts to private arbitration, where there is no oversight by a federal judge and far less public visibility." It also stated that, "There appear to be no studies or statistical evidence that would support the need for such fundamental change."

Current law provides judges with the 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. 537. As a result, efforts to enact such legislation in the past have repeatedly failed. In recent years, the plaintiffs' bar (formerly ATLA and now AAJP) has initiated similar state legislation in most of the fifty states. But these efforts have failed. Congressional passage of S. 537 would undoubtedly reignite an interest in this type of state legislation.

Given the current anti-business climate in Washington, passage of anti-privacy legislation is a more serious threat than at any time in recent years. In addition, state legislatures and court rules committees continue to consider proposals to restrict or eliminate the use of protective and sealing orders.

In the last Congress, forceful testimony by LCJ members at House and Senate Congressional hearings combined with written statements opposing the "Sunshine in Litigation Act of 2007" established the foundation for individual follow-up with members of the House and Senate Judiciary Committees. LCJ is working closely with the U.S. Chamber Institute for Legal Reform to reinforce this advocacy in 2009 by building upon a pro-active strategy to oppose protective and sealing order restrictions this year in both the House and the Senate.Readers of this article are encouraged to contact members of the Congressional House and Senate Judiciary Committees to urge Committee members to oppose this legislation.If you have a strong relationship with Judiciary Committee members, please notify me at bbauman@lfcj.com or contact the LCJ office at (202) 429-0045.