S.C. takes lead in opening lawsuit settlements to public view
By The Associated Press
09.23.02
Editor's note: As expected, South Carolina's federal judges did ban confidential legal settlements, making the state the first federal judicial district to take such a step, the Associated Press reported on Nov. 7, 2002.
COLUMBIA, S.C. — Lawsuit settlements involving everything from defective products to molestation to medical malpractice are often reached behind closed doors, the results kept hidden from public view.
Defense lawyers say that veil of privacy encourages clients to settle a case even when they aren't at fault to avoid bad publicity or to just make a case go away. But plaintiffs' attorneys say keeping the settlements under wraps leaves others in the dark — and possibly in danger.
Now, South Carolina is taking the lead in opening up some settlements in federal and state civil cases, a move that's causing a stir in a legal community where sealed records often seal the deal.
Advocates believe keeping court records open would allow quicker discovery of faulty products, such as the Firestone tires the government says contributed to 300 deaths in the late 1990s.
"When they have 100 tire-exploding cases, they can't settle 90 of them and sort of swear they never happened," said Gedney Howe, a Charleston trial lawyer.
Joe Anderson, U.S. District Court chief judge, cited the Firestone cases this summer in a letter that helped win the support of the state's 12 federal judges to ban secret settlements.
"Arguably," he wrote, "some lives were lost because judges signed secrecy agreements regarding Firestone tire problems."
The federal ban could become permanent this fall after a public comment period ends Sept. 30. South Carolina Chief Justice Jean Toal said state courts would follow suit.
Toal said judges had apparently forgotten a 1991 state Supreme Court decision that said judges can seal documents only for a handful of reasons, including ensuring a fair trial and preventing possible harm to the parties.
"The fact that both parties agree to seal it is not good enough," she said.
But defense lawyers are fighting the change, saying it could lead more of their corporate clients to go to trial with cases that would ordinarily be settled.
"If this is going to be a matter that's disclosed and would therefore lead someone to believe that we were at fault, we are going to try it," said Mills Gallivan, president of the South Carolina Defense Trial Attorneys Association.
"There may be more of our clients that are saying, 'No, we are going to take this to trial because we want vindication.'"
South Carolina's proposed rules go further to open up court records than those in any other state, said Mary Alexander, president of the 56,000-member Association of Trial Lawyers of America.
Four states — Arkansas, Florida, Louisiana and Washington — ban privacy agreements in cases involving hazardous products. Twelve other states have general rules limiting when judges can seal court records, according to the association, whose Web site includes a special report titled "Secrecy Kills."
"I think it's far overdue," said Columbia attorney Jim Anders, whose firm recently settled — and was barred from discussing — a case involving seat belts. "What happens is we end up getting the same defendant and we have to do the same work again and again."
But even if the South Carolina rules go through, there will still be plenty of justice administered behind closed doors — the ban applies only to settlements approved by a judge. Local attorneys estimate about 75% of civil suits in the state are settled before that point.
Howe, the Charleston attorney, recently won $21 million on behalf of the families of three children who drowned in a sailboat wreck hours after calling the U.S. Coast Guard for help. He says some clients may get smaller settlements when the paperwork has to go public.
"When you are representing one individual and you are trying to get that individual the maximum recovery, you often squeeze to get a little more money in return for a privacy agreement," he said. "You can't do that anymore."
Dr. R. Duren Johnson Jr., president of the South Carolina Medical Association, wrote to Anderson, saying patients might want settlements sealed in malpractice claims to keep their condition and treatment private.
Other reasons for keeping settlements sealed include protecting the identity of molested children or victims of sexual harassment, Gallivan said.
"There are certain cases where trade secrets or proprietary information or just basic privacy issues are paramount, and it's just not appropriate to make everything public," said Gallivan, whose organization supports allowing judicial discretion on when records should be sealed.
Defense attorneys also say the change could clog a court system already suffering from budget cuts and overflowing dockets.
Toal, however, said that's not what she found in talking to chief justices in other states with some versions of the open settlement rules.
"They do not report any huge backlogs," Toal said. "In fact, it just uncomplicates things to have that taken off the table as a negotiating tactic."