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Anna Z. Skipper and Blaine Lucas, Babst, Calland, Clements and Zomnir (Photo: Courtesy Photo) Anna Z. Skipper and Blaine Lucas, Babst, Calland, Clements and Zomnir (Photo: Courtesy Photo)

Most lawsuits settle before disposition by the courts. Any settlement agreement is just that, an agreement between the parties, which to be enforceable must possess all the elements of a valid contract—offer, acceptance, and consideration or a meeting of the minds. In Pennsylvania, when one of the parties to a settlement agreement is a public entity, additional considerations come into play, most notably the Sunshine Act, 65 Pa. C.S. Sections 701-716.

Enacted by the General Assembly to facilitate more transparent means of governmental decision-making, the Sunshine Act has existed in some form since 1974, and places restraints upon a local agency’s ability to enter into contracts, including settlement agreements. Specifically, the Sunshine Act requires that all “official action,” including final decisions on the creation of liability by contract or the adjudication of rights, duties and responsibilities, must be taken at a duly advertised meeting open to the public. On the other hand, the Sunshine Act permits “deliberations” in six enumerated categories to take place in private “executive session.” One permissible reason to deliberate in private is to consult with the agency’s attorney regarding information or strategy in connection with litigation or with issues on which identifiable complaints are expected to be filed. However, any official action arising out of deliberations in executive session still must be taken at an open meeting. Thus, even if  settlement of a lawsuit is discussed in executive session, it still must be voted upon at a public meeting subject to all of the Sunshine Act’s requirements.

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