The Multinational Monitor

AUGUST 1986 - VOLUME 7 - NUMBER 12


C O R P O R A T E   S E C R E C Y   v.   T H E   R I G H T   T O   K N O W

Settling for Silence

Closed Court Records Hinder Debate

by Con Hitchcock

For the past 20 years, the Freedom of Information Act has shone a spotlight on the workings of federal agencies, and many states have adopted their own laws giving citizens access to records of state and local bodies.

While the value of such laws is widely recognized, there is another branch of government where citizens would benefit if they had greater access to records-the judiciary.

In 1980, the Supreme Court issued a landmark ruling in the case of Richmond Newspapers v. Virginia, which held that the public enjoyed a constitutional right to attend criminal trials.

Previous court rulings had left the impression that trials and other courtroom proceedings could be closed at the request of the defendant. Since the Richmond Newspapers decision, courts have expanded on the ruling and have held that the public also has the right to attend civil trials and various pre-trial hearings.

But many cases never get to trial. In the federal courts, in fact, more than 90 percent of all cases are resolved without a trial, either because the parties settle or because the case can be decided on the basis of motions filed by the opposing sides.

During the pre-trial "discovery" phase, parties are supposed to respond to written questions and requests for documents that are filed by their opponents. The responses to these requests allow the parties to assess the strength of their case, and allow journalists and other members of the public to assess the validity of the charges and counter-charges.

All too often, however, those records are sealed, and public disclosure is prohibited. When parties balk at turning over records to an adversary, the judge is required to rule on the need to comply with a particular request. To speed a case to trial, judges often give the parties this type of protection. The Supreme Court, which made it difficult for judges to close trials in the Richmond Newspapers case, in 1984 upheld the right of judges to impose such broad sealing orders before trial, so long as there is "good cause" for doing so.

But when the pre-trial documents are sealed and the case is settled out of court, the public is deprived of an opportunity to assess the validity of the parties' claims. It is the public that loses. Many court cases raise issues that are important to the general public-civil rights, antitrust violations, environmental hazards, corporate wrongdoing, the list goes on and on.

Several cases illustrate the problems of excessive secrecy iii this area. A few years ago, an Alabama women, seriously injured in an auto accident, sued Ford Motor Company, claiming that the company was negligent in failing to have installed airbags in her vehicle. During pre-trial discovery, Ford produced many documents for the woman's lawyer, but only on condition that the materials remain under seal. Ford then agreed to settle the case for approximately $1 million, on the condition that the woman's lawyer return all of Ford's documents to the company.

Consumer groups argue that auto safety and the efficacy of airbags are issues of undisputed public concern, and that corporate records on airbag technology is essential to informed public debate.

Ford's strategy was hardly unique. Manufacturers often insist on pre-trial secrecy when they are sued for defective or unsafe products and settle only on condition that the records in the case will be returned to the company.

As a result, information about hazardous products or practices may seep out slowly, if at all.

Consumers are the real losers in this situation. In 1982, the Brown & Williamson Tobacco Company, following a decision by the Federal Trade Commission (FTC) that the company's advertising may be understating the tar and nicotine ratings on its Barclay cigarettes, filed suit to overturn the FTC ruling. The company persuaded the judge to seal all documents on which the Commission relied in making its ruling.

Although a federal appeals court ordered the records unsealed one year later, the company had temporarily succeeded in preventing disclosure of damaging records-evidence that could show that the public health hazard of Barclay cigarettes was higher than the company would admit.

Secrecy orders also cover up settlement agreements. When the Franklin National Bank failed in the mid-1970s, marking the biggest bank failure in U.S. history, the Federal Deposit Insurance Corporation (FDIC), stepped in and sued officers, directors, and a number of other parties who allegedly contributed to the bank's demise in an effort to recover funds the FDIC would have to pay depositors.

In one of the principal suits, brought against the bank's auditors for negligence the defendants insisted that the terms of the settlement be sealed. The trial judge later denied requests to have the documents released.

When a class of 200,000 Vietnam veterans sued several chemical companies, claiming that their exposure to the extremely dangerous defoliant known as Agent Orange during the war had caused irreparable damage to their health and to the health of their children, the chemical companies agreed to settle for the sum of $180 million.

But the companies demanded that all the records they produced during discovery, most of which were under seal, be returned to them. District Judge Jack B. Weinstein, however, refusing the companies' request. Noting the considerable public interest surrounding the case, he mandated a full public record. Even more important, disclosure helped substantiate other suits pending against the companies. Unfortunately disclosure, as in the Agent Orange case, is the exception, rather than the norm.


Con Hitchcock is an attorney with the Public Citizen Litigation Group in Washington, D.C. who has litigated cases in this area, including some of the cases mentioned in this article.


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