AAI Continues to Fight Efforts to Ban Confidential Settlement Agreements

A bill introduced in the California Senate is the latest in a series of reported attempts by the trial bar to restrict the use of confidentiality and settlement agreements in certain legal actions.

The Alliance of American Insurers (AAI) is opposing SB 466, which would essentially bar the use of court-approved confidential settlement agreements in actions alleging damages caused by a defective product or an environmental hazard, according to the AAI.

“California is the eleventh state to see legislation introduced on behalf of the trial bar this year,” Peter Gorman, vice president and Western Regional manager for the Alliance, remarked. “We believe that the judiciary must be able to maintain its discretion to issue protective orders on a case-by-case basis. The Alliance will make every effort to ensure this bill does not become law.”

“Much of the legislation that the states are currently considering is contrary to U.S. Supreme Court decisions that have held that evidence produced in discovery may not become public documents,” Joyce Kraeger, Alliance staff attorney, added. “Eliminating the ability to issue a protective order serves one purpose – it allows the trial bar access to the discovery process so that they can generate more fodder for more litigation.

“Eliminating protective orders will slow down the discovery process, increase the costs of litigation, and discourage settlement of cases. It will also further burden the already overcrowded court dockets and turn the judiciary into an information agency by requiring courts to review and supervise the distribution of thousands of documents currently exchanged between the parties in the discovery process without the courts supervision. Limits on protective orders could have a chilling effect on new product development.”