BILL ANALYSIS
AB 36
Page 1
ASSEMBLY THIRD READING
AB 36 (Steinberg)
As Amended June 6, 2001
Majority vote
JUDICIARY 6-3
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|Ayes:|Steinberg, Corbett, | | |
| |Jackson, Longville, | | |
| |Shelley, Wayne | | |
| | | | |
|-----+--------------------------+-----+--------------------------|
|Nays:|Robert Pacheco, Bates, | | |
| |Harman | | |
| | | | |
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SUMMARY : Seeks to limit the use of secrecy agreements and
protective orders in defective products and environmental hazard
cases only to bring greater "sunshine" on potentially lethal
harms to the public. Specifically, among other things, this
bill :
1)Finds that secrecy agreements that prohibit disclosure to the
public or public safety agencies of information relating to
defective products or environmental hazards are injurious to
the health, safety, and economic well-being of all
Californians, and that it is against the public interest to
allow them in these cases, except in very limited
circumstances.
2)Applies solely to lawsuits claiming physical injury or
wrongful death allegedly caused by a defective product or an
environmental hazard.
3)Provides that evidence obtained in discovery that shows a
product defect or environmental hazard may be kept
confidential under normal discovery procedures, for a time
period determined by a court, if the court orders such
confidentiality based on a finding that the evidence is
either: a) a trade secret, as defined, or otherwise
privileged under law; or, b) there exists, among other
factors, an overriding interest that overcomes the right of
public access to the information.
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4)Provides that, unless the information is a trade secret or
otherwise privileged under existing law, any portion of an
agreement or contract that restricts a party from disclosing
information that is evidence of a defective product or
environmental hazard to a governmental agency with enforcement
authority over the public hazard is void and may not be
enforced.
5)Prohibits any attorney from selling or offering 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 non-lawyers. A
violation would be a basis for professional discipline by the
State Bar.
6)Provides that nothing in this bill shall prohibit the
enforcement of that part of an agreement between the parties
which requires the amount of any money paid in a settlement to
be kept secret.
7)Provides that the court may redact proprietary or other
material it finds unnecessary for informing the public of a
defective product or environmental hazard.
8)Restricts the types of environmental hazards covered by the
bill's secrecy provisions to actual releases of hazardous
substances.
9)Clarifies that nothing in the bill shall be deemed to limit or
abrogate the attorney-client privilege, the work product
doctrine, or any other privilege recognized under law.
10)Clarifies that nothing in the bill is intended to affect
medical malpractice actions.
11)Makes various changes to the legislative findings and
declarations.
12)Eliminates the codified findings section of the bill.
13)Provides that the plaintiff seeking to disclose confidential
documents has the initial burden to show that the information
would be beneficial in protecting the public from defective
products or environmental hazards and provides that the burden
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of proving entitlement to confidential treatment shall be on
the party seeking confidentiality.
14)Provides that, in the event that the plaintiff seeks to make
a settlement or confidentiality agreement involving a
defective product or environmental hazard public in order to
protect the public, the same notice and other procedures
required by the bill for making documents obtained in
discovery public shall apply.
15)Provides that except for those documents denied confidential
treatment pursuant to a court order issued pursuant to the
bill, all other documents produced under the terms of a
protective order shall remain subject to the terms of that
order, subject to further order of the court and provides that
nothing in the bill shall prevent any party from issuing
subsequent notices.
16)Provides that, in order to streamline the process for review,
the court may require, pursuant to paragraph (3) of
subdivision (g) of Section 2031 of the Code of Civil
Procedure, the party who makes a motion for confidential
treatment to provide an identifying log or other document.
Nothing in the bill is intended to prohibit a party from
requesting that a record be filed under seal pursuant to
Section 243.2 of the California Rules of Court.
EXISTING LAW provides:
1)Upon a showing of good cause, that courts may issue protective
orders to prevent the public distribution of subpoenaed
documents, writings or papers.
2)Under Rule 243.1 of the California Rules of Court, that court
records are presumed to be open unless confidentiality is
required by law. The new court rule also provides that a
court may order a record sealed only if it expressly finds
that: a) there exists an overriding interest that overcomes
the right of public access to the record; b) the overriding
public interest supports sealing the record; c) a substantial
probability exists that the overriding interest will be
prejudiced if the record is not sealed; d) the proposed
sealing is narrowly tailored; and, e) no less restrictive
means exist to achieve the overriding interest.
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3)For the confidentiality of trade secrets in an action under
the Uniform Trade Secrets Act, by authorizing the court to
issue a discovery protective order which prohibits the
disclosure of a trade secret or limits its disclosure without
prior court approval.
FISCAL EFFECT : None
COMMENTS : This bill seeks to add California to a long and
growing list of states that have already adopted "sunshine" laws
or court rules. This bill limits, but does not ban, the use of
secrecy agreements and protective orders, which require secrecy
in the typical types of lawsuits where the public is most at
risk of repeated and society-wide harm. This bill is the
by-product of substantial efforts by the proponents to
compromise and narrow the legislation. Under the most recent
amendments, the bill's scope and procedures have been greatly
cut back.
The bill, and its companion measure SB 11 (Escutia), pending in
the Senate, also deletes several key provisions contained in
prior years' legislation, including an earlier standing
provision which allowed other parties to contest secrecy orders
or agreements, and a provision requiring notification to the
Attorney General. This year's bills also specifically allow
secrecy agreements for "privileged information," a provision not
included in prior years' anti-secrecy bills.
Trial court statistics continue to indicate that only about 2%
of civil cases go to trial. In other words, the great majority
of cases settle before trial. When this high proportion of
cases is settled before trial, evidence uncovered during
discovery which may, if open to the public and press,
potentially save countless lives and deter devastating financial
losses, is rarely, if ever, filed with the court. In fact,
settlement agreements typically require the return of documents
and the preservation of their confidentiality. The provisions
of this bill are therefore intended to supplement, and
complement, the court rule already adopted last year by the
Supreme Court which seeks to bring out in the sunlight as many
documents as possible that might help protect the public.
The recent Firestone/Bridgestone tire debacle highlights the
extent to which secrecy orders may literally be the difference
between life and death. To date, more than 150 people have died
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and more than 500 people have been injured while driving on
defective Firestone tires. Recalls of Firestone tires began
last summer. But long before, over the previous 10 years, over
200 of these cases were quietly settled with secrecy orders
attached, effectively muzzling victims, attorneys, and the media
from warning the public about the potentially fatal dangers
associated with their products. As many consumer groups have
noted, had information about tire separations been made public
years ago, there seems to be little question that many lives
could and would have been saved.
Two other separate public health hazards, tobacco and the drug
Fen-Phen, are also cited by the bill's sponsors to show how
disclosure of health risks can have dramatically different
outcomes and, according to this bill's supporters, demonstrate
the protective power of disclosure. Regarding tobacco,
supporters note that in 1994, the state of Florida brought an
action against several tobacco companies to recover health care
costs it expended due to tobacco-related illnesses. During the
litigation, tobacco documents were discovered that showed that:
1) the companies had knowledge of the harmful effects of
tobacco; 2) the companies knew nicotine was addictive; and, 3)
the companies specifically targeted minors in advertising
campaigns. Although this information had surfaced in prior
cases throughout the country, the information was hidden from
the public when the defendants obtained protective orders to
keep the documents secret. Fortunately, this bill's supporters
state, "Florida passed a 'Sunshine in the Courts Act' in 1991,
and the tobacco companies could not hide the documents under
Florida law. The discovery of these documents allowed
California to sue for the same cost recovery in 1996. The
California cases are now settled with a net gain of $25 billion
for California taxpayers over the next 25 years."
Conversely, assert this bill's supporters, "lack of disclosure
can lead to ugly consequences for consumers. In May 1997, a San
Francisco case settled against the manufacturers of Fen-Phen, a
popular diet drug, on the condition that documents be kept
secret. [The documents] showed that Fen-Phen caused heart valve
damage and the life threatening disease, pulmonary hypertension.
It was not until September 15, 1997, when the FDA removed the
product from the market, that the dangers became public. During
the five months between the first settlement and the recall,
unsuspecting patients continued to ingest Fen-Phen, causing
enormous harm, particularly since these heart disorders are
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affected by the length of time the patient took the drug. At
least ten manufacturers, including American Home Products, had
received 'adverse reaction reports' indicating the danger, but
failed to take adequate steps to protect users. Instead,
manufacturers used the current court system to hide the dangers.
There are currently coordinated actions pending in California
and in federal courts."
One of the principal attacks on this bill made by the bill's
opponents is that this bill will dramatically increase
litigation in California, which, they argue, has been suffering
from an explosion in lawsuits. However, recent evidence
suggests the claimed litigation explosion is more rhetoric than
reality. In a February 1, 2001, L.A. Times article, entitled
"We Aren't Seeing You in Court," the paper reported that
"America's litigation explosion has fizzled. Americans are no
longer suing each other as much. Californians are suing each
other much less. After years of steady decline, the number of
big-money personal injury lawsuits in California is roughly half
of what it was a decade ago. Small claims have fallen to levels
unseen in 30 years." According to this report, "No systematic
research has been done on the causes ? But a review of
statistics kept by the center and by California's Judicial
Council makes it clear that nationally, over the last decade,
the rate of tort lawsuits has slightly declined while, in
California and some other states, the rate has plunged."
If, as this bill's opponents assert, passage of an anti-secrecy
law in California will lead to a new litigation explosion, one
would expect to find the same trend in other states that have
already enacted similar laws. However, a review of case filing
statistics in other states that have passed anti-secrecy
legislation suggests that case filings have not in fact
increased after the new laws took effect.
With the latest amendments to the bill, some previous opponents
of the bill have changed their positions. The Big Five
accounting firms are no longer opposed to the bill, and Ford
Motor Company is now in support of the measure.
Analysis Prepared by : Drew Liebert / JUD. / (916) 319-2334
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