In a recent decision, a federal judge new to the bench in the Southern District of New York granted a defendant's motion to redact parts of the plaintiff's complaint because the plaintiff's allegations included the names, amounts, and "details regarding the negotiation" of settlements between the defendant and "its customers[.]" Atl. Spec. Ins. Co. v. Royal Alliance Assoc's, Inc., No. 23-CV-9555 (JGLC), 2023 WL 8600548, at *1 (S.D.N.Y. Dec. 12, 2023).
The federal judge in New York effectively ruled that everything about those settlements was confidential, and granted the defendant's motion:
Accordingly, confidential information contained in settlement agreements between Royal Alliance and its customers, including the amounts of the settlements and the counterparties thereto, as well as details regarding the negotiation of these settlements, may be properly redacted.
Atlantic Specialty Insurance Co., 2023 WL 8600548, at *2. (Although the federal judge did not say so, access to the unredacted portions of the complaint on PACER reveals that this is a "DJA" or declaratory judgment action over insurance coverage.)
In a decision more than a decade earlier, a federal judge who has been on the bench since President George W. Bush appointed her to the Southern District of California made a more surgical decision. The federal judge in California approved a Magistrate Judge's decision to deny a defendant's motion to seal or alternatively to redact a settlement conference transcript allegedly "containing the terms of the parties' settlement." Platypus Wear, Inc. v. Utd. States Fid. & Guar. Co., No. 09CV2839 JLS (WVG), 2010 WL 4281805, at *1 (S.D. Cal. Oct. 25, 2010). The plaintiff in that case did not oppose the defendant's motion but the Court denied the motion anyway.
The Magistrate Judge viewed the defendant's motion as an attempt "to insert, after-the-fact, a confidentiality provision into the parties' recitation of the terms of the settlement[.]" Platypus Wear, Inc. v. Utd. States Fid. & Guar. Co., No. 09-2839-JLS (WVG), 2010 WL 4055540, at *3 (S.D. Cal. Oct. 15, 2010) (Gallo, USMJ). Ten days later, the District Judge in California issued her opinion affirming the Magistrate Judge and going one step further.
The District Judge in California distinguished settlement discussions from settlement terms, a distinction that the District Judge in New York failed to make:
In making its argument to seal the transcript containing settlement terms, Defendant conflates settlement discussions with final settlement terms. Failing to differentiate between the two results in an unsettling conclusion....
The Court recognizes the importance of confidentiality in settling disputes. But the Court also differentiates between confidentiality necessary for settlement negotiations and confidentiality of settlement terms. The Local Rules and public policy speak to the settlement negotiation process. That process is not at issue here. Instead, Defendant requests the Court to seal settlement terms. And for that request, the Court begins with a strong presumption in favor of access. [Citation omitted.] Defendant has failed to provide the Court with reasons to overcome the presumption. Instead, Defendant focuses on Local Rules and public policy, both of which are inapposite in this situation.
Platypus Wear v. U.S.F.&G., 2010 WL 4281805, at *2.
As a practitioner, I often argued that the amounts of previous settlements should be kept secret. From an objective point of view today, I cannot find any justification for keeping names and amounts of previous settlements away from the public in every case, as the federal judge in New York seems to have done.
Rather, there is a clear distinction between settlement discussions and settlement terms which would necessarily include amounts, of course, in terms of the level of protection, if any, afforded one or the other, as the federal judge in California recognized. The distinction is crucial when secrecy is demanded in opposition to the constitutional and common law presumptions of public access to documents filed with the courts. This is particularly true where the court-filed documents contain requests for judges and juries to review the documents or the information in them, and make decisions accordingly.
Please read the disclaimer. ©2023 Dennis J. Wall. All rights reserved.
Comments