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Taking secrecy in civil proceedings to a new height, a New Jersey judge has sealed an opinion denying three news organizations’ request for access to documents and proceedings in a case against Prudential Insurance Co. Essex County Superior Court Judge Theodore Winard also ordered lawyers for ABC, Bloomberg News and The Record of Hackensack to refrain from showing the opinion to their clients, allowing them to give news executives only enough information to decide whether to appeal. Winard also denied an unsealing motion by the plaintiffs in the case, a group of former Prudential employees suing the company for fraud. A gag order bars lawyers from commenting on the judge’s Aug. 7 order denying the motion, the only public record of the secrecy dispute, a clerk in Winard’s office said Aug. 27. Attorneys outside the case who have litigated other court secrecy cases say they can recall no instance in which a judge who rejected a motion to unseal went further and declined to allow public access to the opinion outlining the reasoning. “I have never experienced that,” says Thomas Cafferty of Somerset’s McGimpsey & Cafferty, counsel to the New Jersey Press Association. Cafferty and other experts in the field say the traditional procedure in such cases is for judges to issue public opinions that explain the legal reasoning while avoiding sensitive factual revelations. When a ruling is made at a hearing and the opinion is in the form of a transcript, as in the Prudential case, judges avoid problems by picking their words carefully or redacting the transcript before making it part of the public record. In his Aug. 6 bench ruling, Winard chose neither option, sealing the entire transcript and making no reference to his reasoning in the order the following day. The New Jersey Law Journal learned of the opinion last week and also that the Appellate Division denied ABC’s motion for leave to appeal on an emergent basis. ABC, now appealing on the traditional time track, has suggested in its pleadings that the rulings in the case go beyond any secrecy orders in New Jersey history. The plaintiff in the case, Lederman v. Prudential Insurance Co., former agent Lawrence Lederman, alleges that he and 358 other present or former Prudential workers with potential employment disputes with the company were tricked into signing up for a rigged alternate dispute resolution program. The employees were represented in the ADR by a New York civil rights firm, Leeds, Morelli & Brown. But the suit alleges that Prudential signed a secret, sweetheart contract with the law firm, limiting the company’s exposure to damages and conspiring to keep the employees from obtaining fair settlements. Prudential has denied the allegation. The record was sealed at the company’s request despite opposition from the plaintiffs, who want as much publicity as they can get for strategic reasons. Lawyers in similar cases involving Leeds Morelli have written to the judge, saying openness will help them, too. The arguments over the secrecy order have been relatively simple. Prudential lawyer Theodore Wells, a partner in New York’s Paul Weiss Rifkin Wharton & Garrison, takes the position that secrecy is required because the ADR process in dispute was covered by a confidentiality agreement that Lederman signed. Under that agreement, Prudential trade secrets to which Lederman was privy as an agent would remain out of the public domain and his and other employees’ privacy — and private information given to Leeds Morelli — would be safeguarded. Winard apparently agreed with Prudential’s argument. He also suggested that unsealing was unnecessary because the complaint, plus documents allegedly supportive of the plaintiffs’ claims, have already been the subject of news reports. Since the preparation and filing of the suit last November, ABC, The Record and The New Jersey Law Journal have reported details of the case based on documents filed with the court and subsequently sealed. In ruling that unsealing of the record — at least at this stage — would prejudice Prudential and Leeds Morelli, Winard brushed aside plaintiff and media arguments that the sealing of the entire record violates the presumption of openness of court proceedings. The need for secrecy is outweighed by the interest of the public — and perhaps government regulators — in learning about possible fraud by one of the state’s largest companies and a major law firm, say the media companies’ lawyers, ABC staff counsel Nathan Seigel and Bruce Rosen of McCusker, Anselmi, Carvelli, Rosen & Walsh in Chatham. According to the complaint, which was public before the file was sealed, Prudential created the confidential ADR process to keep its employees from going public with whistleblower suits that alleged the company engaged in redlining — closing sales offices in predominantly black neighborhoods — and retaliated against agents who objected. Lawyers outside the case who have represented public interest groups with a stake in open court records say a blanket sealing order — rather than sealing of individual documents — is hard to imagine under New Jersey law. The sealing of an opinion denying an unsealing motion is impossible to imagine, they say. In Hammock by Hammock v. Hoffman-LaRoche, Inc., 142 N.J. 356 (1995), the Supreme Court resolved a dispute over sealing of drug company records in a product liability case by requiring judges to state with particularity, without disclosing any secrets, why access is being denied. Philip Elberg of Newark’s Medvin & Elberg, a plaintiff’s lawyer in Hammock,suggests that the decision stands for the notion that the courts — presumed to be open forums — can’t maintain their credibility without explaining the rationale for keeping certain information out of the public domain. If the reasoning is secret, “how is the public supposed to evaluate whether there is a need for confidentiality?” Elberg asks. What Winard did “sounds profoundly wrong,” he concludes. Michael Tankersley, counsel to Public Citizen Inc. in Washington, says courts have many ways to explain such rulings without disclosing sealable information. For example, in April, the 4th U.S. Circuit Court of Appeals managed to explain a ruling in a civil case without even identifying the litigants, Under Seal v. Under Seal, No. 02-1683. Tankersley says that decision also appears to be relevant to the substantive issues surrounding the sealing order in the Prudential case, namely the idea that confidentiality mandated by an arbitration process must be continued when full-scale litigation breaks out. In Under Seal, the 4th Circuit unsealed a False Claims Act complaint the federal government brought against participants in the National Flood Insurance Program, rejecting arguments that the unsealing would undermine legislative commitments to private arbitration of such disputes. The public interest in the matter trumped such considerations, the court ruled. In addition, Tankersley says, Winard’s procedure is “highly unusual” given the widespread publication of opinions on secrecy issues involving grand jury proceedings. Ironically, a case similar to the one against Prudential is proceeding openly in the same courthouse. In Ficklin v. Penguin Group USA, six employees of the New York publisher are alleging that they, too, were fraudulently induced by the company to hire Leeds Morelli — a firm that specializes in mass ADR representation of disgruntled workers. Like former Prudential agent Lederman, the Penguin plaintiffs claim they would have recovered more in litigation than they obtained in the ADR settlements. The complaint also alleges that while Leeds Morelli was counsel of record to the employees, it made a deal with Penguin Group to do legal work for the company when the employee cases were over. The defendants have denied the allegations and have moved to dismiss. Unlike Prudential’s lawyers, Penguin Group’s counsel at New York’s Proskauer Rose have not sought to seal the record; nor has Leeds Morelli’s counsel, Frederick Dennehy, a partner at Wilentz, Goldman & Spitzer in Woodbridge, N.J. Proskauer Rose lawyers familiar with the case could not be reached for comment. Plaintiffs’ lawyer Randall Peach, of West Orange, N.J.’s Alpert, Butler, Sanders, Norton & Bearg, says he’s not well enough versed in the Prudential case to analyze why that defendant sought secrecy and his didn’t. An examination of the complaints, though, suggests an answer. In the Prudential case, Lederman’s underlying employment claims include allegations that the company retaliated against him and other workers because they were potential whistleblowers. The Penguin Group plaintiffs are alleging violations of their individual rights under the state Law Against Discrimination, the kind of wrongdoing that rarely attracts attention from government regulators.

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