Seventh Circuit Frowns on Sealed Settlement Agreements

, The National Law Journal

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Judge Richard Posner

The U.S. Court of Appeals for the Seventh Circuit has refused to allow the sealing of settlement agreements in two civil actions, citing the “presumption of public access to judicial records.”

Regarding one of the cases, Judge Richard Posner wrote, the information is important to future negotiations over attorneys’ fees in cases in which the plaintiff is a minor. “[N]o good reason—in fact no reason at all—has been given for thinking that concealment of the information would serve some social purpose,” he wrote.

The court issued the joint ruling on Thursday denying a motion to seal in Goesel v. Boley International (H.K.) Ltd. and dismissing a similar motion in Massuda v. Panda Express Inc.

Goesel involves Chicago firm Williams, Bax & Saltzman’s motion to keep the personal injury settlement and information about the lawyers’ costs and fees under seal pending an appeal of U.S. District Judge Milton Shadur’s June 2013 order cutting Williams Bax’s fee.

In Massuda, U.S. District Judge Ronald Guzmán in July 2013 dismissed most claims in a breach of fiduciary duty case, holding that those claims were derived from the parties’ previously settled case.

Posner began by acknowledging that “there will rarely be a good reason” to disclose the terms of settlements made without court action, even if they’re filed in court as part of the process of closing a case. Posner contrasted that with situations when the court does take action.

Even though both sides agreed to seal the information, it’s difficult to imagine what arguments or evidence could “rebut the presumption of public access to judicial records” unless the settlement terms affect trade secrets, personal or institutional privacy or national security, Posner wrote.

Regarding Massuda, he rejected the defendants’ request keep a redacted copy of the settlement agreement secret, noting that it didn't even contain the settlement amount. “[T]here is no indication that the amount of the settlement figured in the district court’s decision,” Posner wrote.

Attorney Peter Donoghue of Chicago argued for Andrew and Christine Goesel and Williams Bax. He declined to comment. Williams Bax attorney Louis Gale, also listed on the appeal, did not respond.

David Gray of Chicago’s Patton & Ryan, representing defendants including Boley International, did not respond to a request for comment.

Massuda attorney Robert Grabemann, a Chicago partner at Daspin & Aument, maintained that the confidentially terms of settlement agreement should be enforced. “I think it encourages settlement if both sides know the terms of the settlement would not be made public if that’s what both sides want,” he said.

Christopher Dusseault, a partner at Los Angele-based Gibson, Dunn & Crutcher who represented Panda Express and several other defendants, declined to comment. Its lawyer Michael Dockterman, a Chicago partner at Edwards Wildman Palmer of Boston, did not respond.

Sheri Qualters can be contacted at squalters@alm.com.

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