BILL NUMBER: AB 36 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY FEBRUARY 5, 2001
INTRODUCED BY Assembly Member Steinberg
DECEMBER 4, 2000
An act to add Section 188 to the Code of Civil Procedure, relating
to confidentiality.
LEGISLATIVE COUNSEL'S DIGEST
AB 36, as amended, Steinberg. Confidentiality of writings.
Existing law provides for the confidentiality of trade secrets,
government records, records maintained by financial and other
institutions, privileged communications, and other writings.
This bill would provide that, in an action based upon injury,
wrongful death, or financial loss allegedly caused by a defective
product, financial fraud, unfair insurance claims practice, or
environmental hazard, as defined, specified information contained in
settlement agreements and confidentiality agreements not filed with
the court, and specified information acquired through discovery,
shall be presumed to be public information and may not be kept
confidential pursuant to an agreement of the parties. The bill would
permit this information to be kept confidential only pursuant to a
court order based upon specified findings. The bill would further
provide that, unless the information is a trade secret , as
defined, or otherwise privileged, in an action based upon
injury, wrongful death, or financial loss allegedly caused by a
defective product, financial fraud, unfair insurance claims practice,
or environmental hazard, any portion of an agreement or contract
that restricts a party from disclosing certain information to a
governmental agency, as specified, is void and may not be enforced,
with specified exceptions. The bill would authorize a court to
request certain documents to implement its provisions. This
bill would provide that its provisions are not intended to affect the
confidentiality of communications, negotiations, or settlement
agreements between participants in mediation proceedings, or the
confidentiality of evidence protected under specified sections of the
Evidence Code. The bill would also state legislative
findings.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all of the
following:
(a) Secrecy agreements that prohibit disclosure to the public or
public safety agencies of information relating to defective products,
financial fraud, unfair insurance claims practices, or environmental
hazards are injurious to the health, safety, and economic well-being
of all Californians.
(b) Secrecy agreements can have tragic consequences. A
widely known example of the disastrous consequences of secrecy
agreements is the tragedy resulting from dangerous defects in
Firestone tires, which have reportedly caused more than 150 deaths
and more than 500 injuries worldwide. For many years,
Bridgestone/Firestone, Inc. knew about these dangerous defects, but
kept the information out of the public eye by secretly settling many
lawsuits brought as a result of crashes related to defective tires.
During that time, the public continued to drive on Firestone tires,
unaware of the mortal danger to their families and themselves. As a
result of these hidden, dangerous defects, on August 9, 2000,
Bridgestone/Firestone, Inc. and Ford Motor Co. jointly announced
that Firestone would recall over 14 million tires. In the absence of
a secrecy agreement, information about this dangerous product could
have been disclosed publicly, which could have saved lives and
avoided injuries. However, the companies demanded secrecy as the
price of compensation for victims, resulting in many deaths and
injuries that could have been avoided absent demands for secrecy
agreements.
(c) Secrecy agreements can They can also
allow companies to shield information that shows a practice of
treating consumers unfairly and can permit those companies to
continue illegal practices without accountability . The
circumstances that allowed secrecy regarding the claims of victims of
the Northridge earthquake and the contaminated drinking water
connected with the story of Erin Brockovich also highlight the need
for openness.
(d) Secrecy agreements , and allow companies
to shield life-threatening dangers and harmful practices from public
view, thereby severely jeopardizing public welfare and safety.
It is
(c) It is therefore against the public interest to allow
secrecy agreements about defective products, financial fraud, unfair
insurance claims practices, or environmental hazards to remain
confidential except in very limited circumstances upon
careful judicial oversight and review .
SEC. 2. Section 188 is added to the Code of Civil Procedure, to
read:
188. (a) The Legislature finds that the Judicial Council has
adopted Rule 243.1 of the California Rules of Court, which creates a
presumption against secrecy for certain documents filed with the
court. It is the intent of the Legislature to better protect
Californians from injuries, deaths, or financial loss caused by
defective products, financial fraud, unfair insurance claims
practices, or environmental hazards by also creating a presumption
against secrecy for settlement agreements and confidentiality
agreements not filed with the court and information acquired through
discovery.
(b) Notwithstanding any other provision of law, in an action based
upon injury, wrongful death, or financial loss allegedly caused by a
defective product, financial fraud, unfair insurance claims
practice, or environmental hazard, information concerning the
defective product, financial fraud, unfair insurance claims practice,
or environmental hazard contained in settlement agreements and
confidentiality agreements not filed with the court, and information
acquired through discovery concerning the defective product,
financial fraud, unfair insurance claims practice, or environmental
hazard, shall be presumed to be public information and may not be
kept confidential pursuant to agreement of the parties. This
information may be kept confidential for a period that the court
deems appropriate only pursuant to a court order based upon a finding
that either:
(1) The information is a trade secret , as defined in Section
3426.1 of the Civil Code, or otherwise privileged under
existing law.
(2) (A) An overriding interest exists that overcomes the right of
public access to the information.
(B) The overriding interest supports keeping the information
confidential.
(C) A substantial probability exists that the overriding interest
will be prejudiced if the information is not kept confidential.
(D) The proposed confidentiality is narrowly tailored.
(E) No less restrictive means exist to achieve the overriding
interest.
(c) Unless the information is a trade secret , as defined in
Section 3426.1 of the Civil Code, or otherwise privileged under
existing law, in an action based upon injury, wrongful death, or
financial loss allegedly caused by a defective product, financial
fraud, unfair insurance claims practice, or environmental hazard, any
portion of an agreement or contract that restricts a party from
disclosing information relating to the defective product, financial
fraud, unfair insurance claims practice, or environmental hazard to a
governmental agency with enforcement authority over the defective
product, financial fraud, unfair insurance claims practice, or
environmental hazard is void, contrary to public policy, and may not
be enforced.
(d) In order to implement this section, the court may require the
requesting party to provide an identifying log or other document.
(e) As used in this section:
(1) "Defective product" means a product that may be defective
because of a defect in manufacturing, or design, or a failure to
adequately warn the consumer of a hazard involved in the foreseeable
use of the product, where the defect may result in personal injury to
one or more persons.
(2) "Financial fraud" means any fraudulent insurance practice or
any fraudulent plan or scheme to sell a publicly offered investment
product without full disclosure of the risks associated with the
purchase of the product, where the plan or scheme may cause or has
caused financial loss.
(3) "Unfair insurance claims practice" means any act or omission
that would constitute a violation of subdivision (h) of Section
790.03 of the Insurance Code.
(4) "Environmental hazard" means a release or threatened release
of a hazardous substance that poses a threat to public health or
safety involving present or future danger of death, bodily injury, or
health disability to human beings exposed to a hazardous substance
release or threatened release.
(f) An attorney shall not sell or offer for sale any information
obtained through discovery to any member of the State Bar or to any
other person in violation of the prohibitions on attorney
solicitation, fee splitting, or financial arrangements among lawyers
or nonlawyers included in Rules 1-320, 1-400, and 2-200 of the Rules
of Professional Conduct adopted by the Supreme Court. Violation of
this paragraph shall be a basis for professional discipline by the
State Bar. This section does not alter or mitigate any existing rule
or provision that may also be applicable to the conduct.
(g) Nothing in this section is intended to affect the
confidentiality of communications, negotiations, or settlement
agreements between mediation participants pursuant to Chapter 2
(commencing with Section 115) of Division 9 of the Evidence Code, or
the confidentiality of evidence protected by Section 1153.5 or 1154
of the Evidence Code.
(h) Nothing in this section shall be deemed to prohibit the entry
or enforcement of that part of a confidentiality agreement,
settlement agreement, or stipulated agreement between the parties
which requires the nondisclosure of the amount of any money paid in a
settlement claim.