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Confidentiality clauses in labor arbitration agreements are common, especially for a corporation eager to keep the lid on disgruntled employees’ complaints or to protect trade secrets. But should the secrecy remain when an employee goes further and sues on grounds that the arbitration process itself was a fraud perpetuated by the workers’ own lawyers and the company? That’s an issue facing Essex County Superior Court Judge Theodore Winard in a case against Prudential Insurance Co. The plaintiff, a former sales agent, alleges the company and New York civil rights firm Leeds, Morelli & Brown conspired to trick him and 358 other employees into a rigged arbitration process. After the complaint was filed in November, Superior Court Judge Edward Schwartz sealed the record, on the theory that the parties’ promises to keep the dispute confidential during the arbitration applied to the suit as well. Prudential reasoned that the sealing wasn’t just to protect Prudential; it would safeguard hundreds of employees who weren’t party to the suit and still might have an expectation of confidentiality. Winard’s task, presumably, is to determine whether the company will be irreparably harmed if the case plays out openly only to be resolved with a finding that Prudential did nothing wrong and the confidential ADR process was proper. The plaintiff, eager to open the case to public scrutiny, has moved to have the record unsealed and has been getting support in letters, seen by the New Jersey Law Journal, from lawyers in similar cases and from a media company, Bloomberg News. Bloomberg local counsel Aldo DiTrolio, a partner in Belleville’s Gaccione, Pomaco & Malanga, wrote that articles about the case in the Law Journal and the Record of Hackensack before the record was sealed suggest the allegations “raise matters of strong public interest.” He urged Winard to fashion an order protecting the public’s right to know. At issue in Lederman v. Prudential Insurance Co. is whether Prudential and Leeds Morelli conspired to defraud former employee Lawrence Lederman and, by implication, the 358 others in an alternative dispute resolution program Prudential set up in 1999. Employees the company had identified as potential claimants in discrimination cases against the company participated in the program. According to the suit, Lederman was an executive with a potential whistleblower case against Prudential involving alleged retaliation against agents who observed redlining. But instead of suing, he opted for the confidential ADR program in which Leeds Morelli represented all the workers. Only later did he discover that Prudential had paid $5 million in advance fees to the firm and that Leeds, Morelli had agreed to a cap on total awards, making the firm guilty of malpractice and the company guilty of fraud, the suit says. Prudential has denied it did anything wrong, but the sealing makes the parties reluctant to talk to reporters, so there was no comment last week from Prudential spokesman Bob DeFillippo or lawyers at the principal firms: Roseland’s Lowenstein Sandler for Prudential, Totowa’s Roper & Twardowsky for Lederman and Summit’s Rivkin Radler for Leeds & Morelli. It is evident, however, there is interest in having the record unsealed, particularly among lawyers who represent other companies’ employees who signed up with Leeds Morelli in ADR processes similar to the one Prudential used. Leeds Morelli bills itself as a champion of workers with civil rights complaints and has said in advertisements that it obtained large settlements quickly by fashioning ADR programs. Among the companies it said it targeted are Nextel, WorldCom and Xerox. Now it is a defendant in a suit by its former clients. Berthold Hoeniger, who heads a firm in Manhattan, wrote to Winard that he has petitioned a New York court to stay an arbitration proceeding in which Leeds Morelli represented more than 50 employees of broker Bear Stearns & Co. He said the Bear Sterns-Leeds Morelli arrangement seems to be a pattern of 25 or more similar settlements in which the firm received fees from the supposed adversary company and that “the financial interests of Leeds Morelli are completely aligned with the interests of the supposed adversary rather than those of its ‘clients.’” Hoeniger added, “The sealing of court records when this pattern is challenged obviously prevents disclosure of the facts to the public .It also has the effect of hamstringing the efforts of lawyers who, like myself, represent clients injured by that apparent collusion, from representing those clients with maximum effectiveness.” Richard Grodeck of West Orange’s Feldman Grodeck wrote to Winard that past and present Prudential employees have consulted him and that he, too, would like to know what’s going on with the Lederman case. He wrote that the public had an interest in knowing whether collusion occurred, and “the continued sealing or the closure of any and all hearings related to the dispute undermine the public interest and make the court an unwitting participant in the injury.” Bloomberg counsel DiTrolio suggested in his letter to Winard that even if some secrecy is warranted, closure orders can be tailored narrowly to balance the interest in confidentiality and the public’s right to know. Winard was scheduled to hear Lederman’s unsealing motion on May 23, but he adjourned the matter after outside parties asked if they could come and he has set no new date. Ironically, one of the cases involving similar allegations is proceeding unsealed in Essex County Superior Court. Clark Alpert of West Orange’s Alpert Butler Sanders Norton & Bearg represents the plaintiff in a suit alleging wrongdoing in a Leeds Morelli case arbitration with Penguin Putnam, the New York publisher. That complaint, filed earlier this year and open to the public, was mistakenly assigned to a judge no longer on duty and still hasn’t been reassigned. Alpert says he believes, in general, that advocates of sealing in such cases “have a tough row to hoe,” but he says he is not familiar with the specific legal issues Winard faces.

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