Vol. 76, No. 10, October
Do We Need a Sunshine in Litigation Act?
Wisconsin has a long history of providing open access to court
records and documents, yet it has not specifically prohibited
confidential settlements. Does the state's open records law general
policy of open access to court records adequately protect the public? Or
does Wisconsin need a sunshine in litigation act?
by Andrew J. Schwaba
"To close a court to public scrutiny of the proceedings is to shut
off the light of law."1
A woman with an artificial heart valve was unable to learn of the
danger that the device's mechanism may fracture. After the woman died
because the valve failed, her husband learned that the manufacturer had
secretly settled litigation brought by other victims years
before.2 From cases involving exploding gas
tanks, defective tires, and child sexual abuse, these stories are
becoming more and more common.3 Sealed court
settlements are now widely used to prevent the public from learning the
nature of harmful conduct.
In November of 2002, South Carolina's federal court system banned
confidential legal settlements in everything from product liability
cases to child sexual abuse lawsuits.4 This
was not the first court system to ban sealed court settlements, nor will
it be the last. For the last eight years, Wisconsin Sen. Herb Kohl has
worked toward enactment of a federal sunshine law that would provide
standards for federal judges to decide whether to seal files and
records.5 Many state legislatures as well
have already enacted or are considering a ban on sealed court
Although Wisconsin has a long history of providing open access to
court records and documents, the state has not taken any measures to
specifically prohibit confidential settlements. The open records law
mandates a general policy of open access to court records. However, the
open records law has numerous statutory and common law exceptions. Thus,
the question remains: Is a general policy enough? Does it afford the
public adequate protection? Does Wisconsin need a state "Sunshine in
The Harm of Secrecy Agreements
Most often seen in the products liability arena, secret settlements
are used both before and after suit is brought. The party requesting
secrecy - usually the defendant - seeks to prevent exposure of the
alleged conduct that caused the harm. Upon settlement, the parties form
a contractual release agreeing not to disclose either the settlement
amount or any alleged conduct. If disclosure occurs, the settlement can
be declared null and void and any settlement proceeds returned. If a
lawsuit has been started, a motion can be brought requesting a
protective order that the court file be sealed as well. The defendant
conditions settlement on the other party's agreement not to oppose the
Plaintiffs agree to confidentiality because they are guaranteed a
recovery through settlement. They often can use confidentiality as a
bargaining chip to increase the settlement amount. Although all the
parties may be satisfied with the outcome, the public is put in danger
by this practice. Sealed settlements allow the continuation of wrongful
conduct that can result in harm to unknowing third parties.
The court is in the unique position to prevent further harm to third
parties by preventing sealed settlements. Unfortunately, for many
reasons, courts often agree to seal the file. For instance, the motion
for a protective order may be unopposed. Or the court may want to
relieve itself and the parties of the pressures of a trial. A judge may
feel compelled to seal the court file to encourage settlement rather
than risk seeing an injured person go uncompensated should the person
lose at trial. By avoiding a trial, the court complies with pressure to
reduce its docket. Of course, if a settlement is reached before suit is
brought, a court has no opportunity to prevent a confidentiality
Issues Surrounding "Sunshine in Litigation" Acts
Courts have grappled with the complex questions that revolve around
secrecy agreements. In general, everyone acknowledges that courts are
public institutions that should maintain a presumption of openness. A
sealed court file undermines the presumption of openness and, as a
result, the public's respect for courts.
Opponents and proponents of secrecy agreements differ on whether
secrecy encourages more litigation. Secrecy advocates believe secrecy
encourages settlements and offer a two-pronged justification in this
regard.7 Plaintiffs are discouraged from
initially filing lawsuits because of privacy concerns.8 Once suits have been filed, sealed settlements
reduce the length of litigation because defendants are more likely to
settle claims with the additional incentive of privacy.9
Opponents of secrecy balk at the idea that secrecy reduces
litigation. They point to California and Florida, where the per capita
litigation rates fell after the states passed "Sunshine in Litigation"
laws.10 The reasons for the drop in
litigation are unclear, but most agree that the alternative to a
settlement made public is a far more public trial.11 Therefore, a manufacturer of a defective product
is more likely to continue chipping away at a dispute if it believes a
secret settlement can be requested on the eve of trial. Parties desiring
secrecy often are more concerned with shielding a defective product or
harmful conduct, the exposure of which would create future litigation in
the long term. If secrecy were prohibited, parties would be better off
admitting a product was defective or conduct was harmful, thereby
avoiding future injuries. Furthermore, what good is a reduction in
litigation if the reduction causes justice to go undone?
Another argument made in favor of secrecy is that secrecy prevents
plaintiffs' lawyers from obtaining a "litigation kit." However, defense
attorneys already have access to their own litigation kit. Many product
liability cases are handled by national counsel dealing with hundreds of
cases involving the same product. Defense lawyers already have access to
the manufacturers' research, engineers, and designs. Prohibiting secrecy
only allows plaintiffs' attorneys a more level playing field. Also, a
litigation kit often refers to a series of "smoking gun" documents
displaying the worst of the defendants' tortious conduct. When those
documents are made public, settling those cases is much faster because
each party gains a better understanding of the other's case.
Secrecy advocates also claim that allowing court records to remain
open could result in exposure of proprietary and trade secret
information of key products.12 Secrecy
opponents counter that defective products should not have trade
protection. With the budget cuts of state and federal regulatory
agencies, an open court record could be the public's last and only place
to obtain information about defective products.13 In addition, many corporations are public
entities. Sealing a court file means keeping information with respect to
defective products from the public. Secrecy results in information
relative to stock value being kept from shareholders and vital health
and safety information being kept from consumers.
The 7th Circuit Approach
In federal court, Federal Rules of Civil Procedure 1 and 5(d), as
well as Rule 26(c), create a presumption of openness in civil
proceedings and discovery.14 The Seventh
Circuit has taken this presumption a step further with Operating
Procedures Rule 10.15 Rule 10 states that a
document filed in or by the court is "in the public record unless a
judge of this court orders it to be sealed."16 Documents originally sealed in the district
court remain sealed for 14 days in the appellate court to allow a
request to continue the seal.17 However,
Rule 10 is silent as to what standard is used to determine when a seal
will be continued.18
Seventh Circuit case law provides the standard. In civil litigation,
only trade secrets, information covered by a recognized privilege (such
as the attorney/client privilege), and information required by statute
to be maintained in confidence is entitled to be kept secret on
appeal.19 Motions to seal documents must
analyze the applicable legal criteria, contend that a document contains
a protectable trade secret, or state other legitimate and specific
reasons.20 Even claims of trade secrets are
viewed with skepticism. As the Seventh Circuit has explained, litigation
about trade secrets is regularly conducted in public; the court should
seal only the secrets, not the entire matter.21 Specifically, a settlement involving a public
hazard would not be included in the definition of trade secret.22
The Wisconsin State Court Approach
Wisconsin does not take any measures to prohibit confidential
settlements if they are reached before suit is filed. Currently, no
statute, case law, or supreme court rule prevents parties from entering
a confidential settlement pertaining to a public hazard before suit is
The Wisconsin state court approach to the dangers of sealed court
files in situations in which a case has been filed lacks the clarity of
the Seventh Circuit's approach. Once the dispute enters the courts, a
divergence of authority exists as to what standard applies to a request
for sealed court records, with one side favoring the "balancing test" of
the open records law and the other side favoring the "absolute right" of
Wis. Stat. section 59.20.
Wisconsin's open records law mandates a presumption that a
governmental body, including any court of law, is to allow open
inspection of records.23 However, numerous
exceptions undermine that presumption. Among the open records law's many
exceptions is one for "[s]ubstantive common law principles" that
construe the right to inspect, copy, or receive copies of
records.24 Common law provides a balancing
test to determine when a file is appropriately sealed,25 including use of the vaguely defined "public
policy" interest.26 Adding to the
confusion, in Linzmeyer v. Forcey, the court found a "public"
interest in protecting an individual's privacy and reputation.27
Wis. Stat. section 59.20 provides much stronger protection to the
public, an "absolute right" to inspect court records.28 However, section 59.20 has been undermined in
conflicts with the open records law, in State ex rel. Bilder v.
Township of Delavan and C.L. v. Edson. In Bilder,
the police chief sued a township over a wrongful suspension.29 The supreme court determined that the open
records law codified the common law "balancing test" for inspection of
government records.30 Once the government
records had been filed with the court, they were subject to an "absolute
right" to inspection, pursuant to Wis. Stat. section 59.14 (now section
59.20).31 Even this "absolute right" was
subject to statutory exceptions, constitutional rights, and a vague
exception described as "when the administration of justice
Before Bilder, the open records law had applied only in
cases involving government records. The court in C.L. v. Edson
further undermined section 59.20 when the court applied the open records
law balancing test to a case in which governmental records were not
involved. The Edson dispute involved allegations of a therapist
sexually abusing his minor patients. The court considered whether the
open records law or Wis. Stat. section 59.20 applied. The court held the
open records law's "balancing test" applied because it had been more
recently amended than Wis. Stat. section 59.20. The court reasoned that
the amendment to the open records law included "any court of law" as an
"authority" falling under the law's purview.33 Ultimately, the Edson court allowed
disclosure of the minor's settlement.34 The
court rejected an argument that there was no compelling public interest
in disclosing documents pertaining to private individuals.35 The Edson court disregarded the
Bilder court's resolution of the conflict between the
"balancing test" of the open records law and the "absolute right" found
in section 59.20.36
The Edson court also addressed the "administration of
justice" exception considered in Bilder.37 The proponents for the exception argued that
making settlements public would have a chilling effect on future
litigants.38 The court rejected this
argument, reasoning that the trial court could create an edited version
of any settlement in order to protect any legitimate privacy
Other Sunshine in Litigation Acts
The scope of sunshine in litigation acts throughout the country
varies widely. Many states prohibit the sealing of court records.40 Some states, like Louisiana and Washington,
recognize that trade secrets and commercial information are factors to
consider.41 Many states allow third parties
to challenge confidentiality provisions in orders or agreements.42 The state of Washington even gives the court the
right to award costs and attorney fees in a suit to roll back a
Arguably the sunshine act providing the most protection to the public
is found in Florida. Florida law bars protective orders that conceal
public hazards, but the judge can enter orders for good cause
shown.44 Trade secrets are protected in
Florida, but only if they are not pertinent to a public hazard.45 Florida law also allows third parties the right
to contest a protective order and renders any confidential settlement
agreement by a government agency void.46
Many question the usefulness of a ban that does not apply to unfiled
cases, because only 3 percent of cases actually make it into the
courts.47 Consequently, some states ban
confidentiality agreements whether or not the case is filed in court. In
Lousiana, agreements with a confidentiality provision relating to a
public hazard are unenforceable.48
California already has a court rule providing access to materials filed
in court,49 but is also considering a bill
that would prevent confidentiality with respect to civil discovery as
well.50 Arkansas has a similar law that
prevents confidential settlement agreements, whether filed in court or
not, from containing any language that restricts a person's right to
disclose the harmfulness of a hazard, and declares such agreements
Wisconsin has a long history of integrity in its public institutions.
Allowing parties to seal a court record with no specific justification
undermines that integrity. Unfortunately, the law remains unclear as to
what test applies to a request to seal court records. Wisconsin's
failure to ban sealed court records and private confidentiality
agreements jeopardizes the public's health and well-being. Whether by
statute or supreme court rule, Wisconsin needs a clarification of when,
if ever, records relating to public hazards are sealed from the public's
Andrew J. Schwaba, DePaul 1998, practices with
Previant, Goldberg, Uelmen, Gratz, Miller & Brueggeman S.C. in
1State v. Cottman Transmission
Systems Inc., 75 Md. App. 647, 659, 542 A.2d 859, 864 (Md. App.
2Bob Gibbins, Secrecy Versus
Safety: Restoring the Balance, 77 A.B.A. J. 74 (Dec. 1991).
3Nichole Schultheis, Court
Secrecy: A Continuing National Disgrace, 28 Litig. 29 (Winter
4Nation in Brief: Judges In
S.C. Ban Secret Settlements, Wash. Post (Nov. 8, 2002)
5Vincent J. Schodolski,
Lawyers, Judges Push to Open Civil Court Records, Chi. Trib.
(Sept. 30, 2002)
6See, e.g., Eric Frazier,
S.C. Judges Limit Sealed Deals, Charlotte Observer (Aug. 12,
2002) <http://www.charlotte.com/mld/charlotte/3845677.htm>; Larry
Lebowitz, Judges Study Limiting Secret Settlements In Civil
Cases, Miami Herald (Oct. 8, 2002)
Digges, Confidential Settlements Under Fire in 13 States, Law.
Wkly. USA, April 30, 2001, at 353; Sarah Hoffman Jurand, South
Carolina Federal Judges Ban Secret Settlements; Other Jurisdictions May
Follow, Trial, Nov. 2002, at 17; Schodolski, supra note
7Adam Liptak, In South
Carolina, Judges Seek to Ban Secret Settlements, N.Y. Times, Sept.
2, 2002, at 1.
8Lebowitz, supra note
10Digges, supra note
11Liptak, supra note
12Paul Marcotte, Keeping
Secrets: Plaintiffs' Lawyers Claim Sealed Records Harm The Public,
75 A.B.A. J. 32 (Nov. 1989).
13Why Sealing of Court
Records Must Be Stopped and Why Government Regulatory Agencies Are Not
Sufficient to Guarantee Safety, Pub. Citizen (May 1, 2001)
Marcotte, supra note 12.
14Fed. R. Civ. P. 1, 5(d),
157th Cir. Op. P. R. 10(a).
177th Cir. Op. P. R. 10(b).
187th Cir. Op. P. R. 10.
19Baxter Int'l Inc. v. Abbott
Labs., 297 F.3d 544 (7th Cir. 2002); Union Oil Co. v.
Leavell, 220 F.3d 562 (7th Cir. 2000).
20Baxter, 297 F.3d at
22Union Oil Co., 220
F.3d at 567.
23Wis. Stat. §§ 19.32,
24Wis. Stat. § 19.35.
25Linzmeyer v. Forcey,
2002 WI 84, 254 Wis. 2d 306, 646 N.W.2d 811.
26Wis. Stat. § 19.35;
Linzmeyer, 2002 WI 84, ¶ 12, 254 Wis. 2d 306.
27Linzmeyer, 2002 WI 84,
¶ 31, 254 Wis. 2d 306.
28Wis. Stat. § 59.20.
29State ex rel. Bilder v.
Township of Delavan, 112 Wis. 2d 539, 334 N.W.2d 252 (1983).
30Id. at 553.
31Id. at 553-54.
32Id. at 556.
33C.L. v. Edson, 140
Wis. 2d 168, 181, 409 N.W.2d 417 (Ct. App. 1987).
34Id. at 181.
35Id. at 183.
36Id. at 183-84.
37Id. at 185.
39Id. at 185.
40See, e.g., 22 N.Y.
A.D.C. 216.1 (New York); Ga. R. Unif. Super. Ct. 21 (Georgia); Del. R.
Super. Ct. R.C.P. 5(g) (Delaware); Tex. R. R.C.P. 76(a) (Texas).
41Wash. St. 4.24.601
42See, e.g., Wash. St.
4.24.601 (Washington); Del. R. Super. Ct. R.C.P. 5(g) (Delaware); Tex.
R. R.C.P. 76a (Texas); La. C.C.P. art. 1426 (Louisiana).
43Wash. St. 4.24.601.
44Fla. Stat. § 69.081.
45Fla. Stat. §
46Fla. Stat. § 69.081.
47Schodolski, supra note
48La. C.C.P. art. 1426.
49Cal. R. Ct. 243.1(a)(2).
50Cal. AB 36/SB 11 (2002).
51Ark. Stat. §