Thank you for sharing!

Your article was successfully shared with the contacts you provided.
SACRAMENTO — The last time state legislators tried to end secret settlements, in 2001, they had the backing of the plaintiff bar and the celebrity of Erin Brockovich. Their bill, SB 11, sailed through the Senate before hitting a squall of resistance from business and tech interests in the state Assembly and dying without a vote. One legislator believes the climate is different today. Assemblywoman Fran Pavley, D-Agoura Hills, last week introduced AB 1700, aimed at making public “evidence concerning a public danger � discovered in the course of litigation.” One big difference between SB 11 and AB 1700 is the broad “public danger” trigger. SB 11 would have applied only in cases of wrongful death or financial loss caused by a defective product. According to Pavley’s chief of staff, Debra Gravert, the definition of “public danger” was taken from a successful Florida statute. Pavley has also put in a different threshold — one that requires the threat of “substantial” injury as opposed to “great bodily harm,” which “gets us away from a criminal standard,” says Gravert. But perhaps more important, Pavley has tweaked the rationale for barring secret settlements. Where SB 11 referenced product liability suits over Bridgestone tires, Pavley’s bill also cites “removal of the drug Vioxx and �disclosures of the dangers of suicide in children who use antidepressants.” And it invokes the clergy sex abuse scandals, noting that “priests in some parts of the country who had molested children” were able to continue harming others “because claims against them were settled secretly.” “This creates sort of a lightning rod and heightens the need for openness,” said Raymond Boucher, a longtime consumer attorney lobbyist and plaintiff attorney representing 350 clients allegedly molested by clergymen. “I think it was a brilliant strategic decision and one that is absolutely necessary when you are looking at the whole issue of secret settlements.” The senators who carried SB 11 –Martha Escutia, D-Whittier, and Sheila Kuehl, D-Santa Monica — have agreed to be co-authors of AB 1700. It hasn’t taken long for the bill to attract enemies, among them the tort reform group Civil Justice Association of California, corporate defense attorneys and the California Manufacturers and Technology Association, whose members include Ford Motor Co., General Motors Corp., Intel Corp., Merck & Co. and Hewlett-Packard Co. “It’s a big threat to trade secrets and proprietary business information,” said John Sullivan, CJAC’s president. TechNet, an industry and lobbying group of CEOs that was the most powerful opponent of secret settlements back in 2001, is in the process of reviewing AB 1700 but has already found the bill “worrisome,” particularly since it makes “a public presumption on a very broad scale,” said James Hawley, TechNet’s general counsel. Michael Brown, a product liability defense attorney with Reed Smith who lobbied against SB 11, agreed that AB 1700 threatens proprietary information. “There is still a means by which trade secrets can be put at risk if [the courts] believe there is a relation to some overly broad definition of public hazard or public danger,” said Brown. Some information disclosed in litigation may not rise to the level of a trade secret, he said, but “shouldn’t presumptively be public merely because someone spent $300 to file a lawsuit.” AB 1700 specifically creates a “presumption against secrecy for settlement and confidential agreements,” but allows courts to keep under wraps information deemed “a trade secret or otherwise privileged under existing law.” In any event, Brown said he thinks there’s little chance Pavley’s legislation will survive the scrutiny of her fellow lawmakers. “These bills have been introduced periodically,” he said. “They’ve never passed the Legislature, and they shouldn’t, and this one won’t either.” Still, consumer attorneys who favor the measure believe it can succeed where SB 11 failed. Greene, Broillet, Panish & Wheeler partner Bruce Broillet, who served as CAOC’s president during the bruising battle in 2001, said revelations about Vioxx and clergy sex abuse could make it harder for opponents to argue against the bill. “I think the public will is so strong on this issue that if it gets to the governor’s desk, he will have to sign it,” Broillet said. It might help that the once-mighty tech industry has lost some of its sway over lawmakers in recent years, said Boucher. “There’s no question about it, the tech industry single-handedly killed that bill” in 2001, he said. “Obviously, the luster has been taken off that industry.” “If you look at 2001, we were just beginning to hit the tech bust,” acknowledged TechNet’s Hawley. But, he adds, the industry — particularly biotechnology — is starting to rebound, and “something like this [AB 1700] becomes a very, very major issue to a certain subset of companies that are growing and thinking about locating in California.” A change in leadership within the Assembly makes it more likely Pavley will get a chance to air her bill before her colleagues. While Escutia wasn’t able to get a hearing in the Assembly, a spokesman for Assembly Speaker Fabian Nu � ez said all proposed legislation “will be fully vetted by the appropriate committees.” “This speaker has a lot more courage when it comes to standing up to business,” said Boucher. “[Former speaker] Bob Hertzberg had his own philosophical alignments, and they showed.” Hawley, who was not around for the SB 11 battle, said TechNet’s members have reasonably good relations with Nu � ez. “I think people think Fabian will listen,” said Hawley. TechNet donated $1,877 to Nu � ez’s campaign fund in 2004 and $10,000 to the California Recovery Team, which bills itself as a “legislative advocacy organization” providing “monetary and public support” for Gov. Arnold Schwarzenegger’s reform agenda. The group also contributed $10,000 to Californians for a Balanced Budget, which helped finance two ballot initiatives aimed at allowing the governor to restructure the state’s finances. Pavley received $1,000 from the Consumer Attorneys of California and another $500 from the Consumer Attorneys of Los Angeles. Her chief of staff said she’s tackling the issue on her own initiative. “The climate is right for this bill,” said Pavley, “because it is the right thing to do.”

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]

Reprints & Licensing
Mentioned in a Law.com story?

License our industry-leading legal content to extend your thought leadership and build your brand.


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.