Legislature contemplates eliminating some confidential settlements

Assemblymember Mark Stone (D-Scotts Valley), chair of the Assembly Judiciary Committee, has introduced legislation that would make it unlawful, and an ethical violation by attorneys, to enter secret settlement agreements related to public dangers.

AB 889 would require attorneys for both parties seeking to enter a confidential settlement agreement to petition the court and get an order approving the confidentiality of the agreement. The judge would be required to apply a balancing test, favoring public disclosure of the records in cases where the interest in public safety is deemed paramount. The bill prohibits a court from approving a secret settlement if it would restrict: (1) the disclosure of information relating to the danger at issue in the case; (2) the disclosure of information about the danger; (3) access to court records containing information about the danger.

The author is seeking to prevent the suppression of vital public information. For example, should Ford Motor Co. be able to settle, secretly, a case where someone was injured by an exploding Pinto? Assemblymember Stone says “no.”

Preventing companies from confidentially settling cases related to public health will ensure that the public has access to information about potentially dangerous products, practices, and businesses. The California Chamber of Commerce, which opposes the bill, interprets the current language as being so broad as to also prevent secret settlements in employment actions and more.