SB 1254 Confidentiality of writings. BILL NUMBER: SB 1254 INTRODUCED 02/26/99 BILL TEXT INTRODUCED BY Senator Schiff FEBRUARY 26, 1999 An act to amend Section 3426.5 of the Civil Code, and to add Section 188 to the Code of Civil Procedure, relating to confidentiality. LEGISLATIVE COUNSEL'S DIGEST SB 1254, as introduced, Schiff. Confidentiality of writings. Existing law provides for the confidentiality of trade secrets, government records, records maintained by financial and other institutions, privileged communications, and other writings. This bill would enact the "Sunshine in the Courts Act." The act would provide, as a matter of public policy, that upon the settlement or conclusion of any action based on financial fraud, as defined, or based on personal injury or wrongful death caused by a defective product or defined environmental hazard, the court shall not enter or enforce a part or all of any confidentiality agreement, settlement agreement, stipulated agreement, or protective order, except as specified, unless a final protective order regarding that information is entered by the court after a noticed motion, as specified. The bill would establish the bases for these protective orders and a procedure for contesting a court order, judgment, agreement, or contract that violates this provision, and would provide that a prevailing plaintiff is entitled to attorneys' fees and costs, as specified. The bill would entitle the party seeking protection to costs and attorney's fees if the action contesting the order, judgment, agreement, or contract is determined by the court to be frivolous, solely intended to cause unnecessary delay, or is brought by a vexatious litigant. The bill would prohibit the sale or offer for sale by an attorney of information obtained through discovery, as specified. The bill would also make conforming changes in the law regarding trade secrets. Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no. SECTION 1. Section 3426.5 of the Civil Code is amended to read: 3426.5. {- In -} {+ Subject to Section 188 of the Code of Civil Procedure, in +} an action under this title, a court shall preserve the secrecy of an alleged trade secret by reasonable means, which may include granting protective orders in connection with discovery proceedings, holding in-camera hearings, sealing the records of the action, and ordering any person involved in the litigation not to disclose an alleged trade secret without prior court approval. SEC. 2. Section 188 is added to the Code of Civil Procedure, to read: 188. (a) This section may be cited as the "Sunshine in the Courts Act." (b) Notwithstanding any other provision of law, as a matter of public policy, upon the settlement or conclusion of any action based on financial fraud, or based upon personal injury or wrongful death alleging damages caused by a defective product or an environmental hazard, the court shall not enter or enforce a part or all of any confidentiality agreement, settlement agreement, stipulated agreement, or protective order to keep from public disclosure information that is evidence of financial fraud, a defective product, or an environmental hazard, unless a final protective order regarding that information is entered by the court after a noticed motion. Subdivisions (c) to (p), inclusive, as follows, apply to actions described in this section: (c) In the court's review of the basis and scope of the proposed final protective order: (1) The party or parties seeking the final protective order shall identify for the court's review the writings or information that are evidence of financial fraud, a defective product, or an environmental hazard proposed for nondisclosure, and shall bear the burden for its justification. Other writings or information that are not evidence of financial fraud, a defective product, or an environmental hazard need not be identified for review by the court. (2) The court shall independently examine the basis and scope of the proposed final protective order and shall make findings pursuant to this section for each writing or item of information proposed for nondisclosure under the final protective order. (3) A final protective order shall be entered only for good cause shown, pursuant to this section, in order to encourage the broadest availability of information that is evidence of financial fraud, a defective product, or an environmental hazard to the public. (d) This section does not affect the issuance of any initial protective order or any discovery order protecting writings or information during the course of litigation. However, any initial protective or discovery order that pertains to evidence of financial fraud, a defective product, or an environmental hazard shall expire automatically within 30 days of entry of final judgment. Any writing or information that provides evidence of financial fraud, a defective product, or an environmental hazard that was protected from disclosure by the terms of any discovery order or initial protective order shall not be sealed or subject to further confidentiality pursuant to any agreement or final protective order unless the court affirmatively examines the writing or information and issues a final protective order pursuant to this section. (e) Any information that is evidence of financial fraud, a defective product, or an environmental hazard shall not be subject to a final protective order unless one of the following applies to that information: (1) The subject matter is privileged pursuant to Section 1040 of the Evidence Code. (2) Disclosure would violate an interest protected by the right to privacy guaranteed in the California Constitution. (3) Disclosure would reveal trade secrets information. (4) Disclosure would reveal confidential personal or business information that is not a trade secret; however, that information may only be subject to a final protective order if it does not indicate a public risk, hazard, or danger that would defraud the public, cause serious environmental danger, or pose a serious threat to the health and safety of one or more persons. (f) If protection of trade secrets is requested in a petition for a final protective order regarding information or writings that are evidence of financial fraud, a defective product, or an environmental hazard, those trade secrets may be granted confidentiality, provided there is a particularized showing of all of the following: (1) The proponent has a cognizable interest in the material, in that the material contains trade secrets as defined by Section 3426.1 of the Civil Code. (2) The material cannot be excised or redacted reasonably. (3) Public disclosure would cause a clearly defined and serious competitive and economic harm to the proponent of nondisclosure. (4) The need to maintain confidentiality of the trade secrets outweighs the benefit that would be afforded to the public by disclosure of the information regarding financial fraud, a defective product, or an environmental hazard. (g) If the court finds a basis for a final protective order but there are writings that indicate a public risk, hazard, or danger that would cause serious environmental damage, or indicate the posing of a serious threat to the health and safety of one or more persons or a serious threat of financial fraud on the public, the court either (1) shall not issue the final protective order where the court finds the public risk, hazard, or danger indicated in the writings would cause imminent danger to the public, or (2) shall issue the final protective order and affirmatively notify all interested regulatory agencies with jurisdiction over that damage or threat, and the Attorney General of the state. Any notification shall also be protected by the protective order. The recipient agency shall comply with the order to maintain confidentiality unless disclosure is required, in its judgment, to protect the environment and the health and safety of one or more persons. (h) (1) A person, other than a party to a contract or other agreement subject to this section, may contest an order, judgment, agreement, or contract that violates this section by motion in the court that entered the order or judgment, or by writ of mandate review pursuant to Section 1085, as appropriate. The motion or petition for the writ shall be filed within five years of the date on which the contract or other agreement subject to this section is executed, or within five years of the date of issuance of a final protective order, whichever is later, and shall specify the basis upon which the violation is alleged, which may be upon information and belief. Upon such a motion or writ, the court shall review the contested documents in camera. If the court finds there are writings or portions of writings of an agreement that are not properly confidential pursuant to this section, and it is reasonably feasible to excise or redact them, then the court shall make those portions not properly confidential subject to public disclosure. (2) Where a final protective order has been issued in an action, the burden shall be on the petitioner to show cause for disclosure of the protected information. (3) Any person bringing an action under this subdivision who prevails in any part of his or her motion or writ shall be entitled to costs and reasonable attorney's fees from the party seeking protection. (4) If the court finds that the motion or writ contesting the order, judgment, agreement, or contract is frivolous or is brought solely to cause unnecessary delay under Section 128.5 or brought by a vexatious litigant as defined in Section 391, the court may award costs and reasonable attorney's fees to the party seeking protection. (5) If more than one person files a motion or petitions for a writ pursuant to this subdivision, the court may consolidate the proceedings. If more than one motion or petition raises the same issue, the court shall consolidate the proceedings. (6) A motion or petition based on issues or facts asserted and decided in a prior motion or petition shall be dismissed unless the new motion or petition establishes to the satisfaction of the court newly discovered facts or circumstances supporting the new motion or petition. (i) Nothing in this section shall be deemed to compel the disclosure of any writing or interest protected by Section 1 of Article 1 of the California Constitution. (j) Nothing in this section shall be deemed to limit a court' s authority or discretion to prohibit the enforcement of a part or all of any confidentiality agreement, settlement agreement, stipulated agreement, or protective order in any other cases. (k) Nothing in this section shall be deemed to prohibit the entry or enforcement of that part of a confidentiality agreement, settlement agreement, or stipulated agreement between the parties which requires the nondisclosure of the amount of any money paid in settlement of a claim. (l) No attorney shall sell or offer 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 nonlawyers included in Rules 1-320, 1-400, and 2-200 of the Rules of Professional Conduct adopted by the Supreme Court. Violation of this paragraph shall be a basis for professional discipline by the State Bar. This section does not alter or mitigate any existing rule or provision that may also be applicable to the conduct. (m) As used in this section: (1) "Environmental hazard" means a release or threatened release of a hazardous substance which poses a threat to public health or safety involving present or future danger of death, bodily injury, or health disability to human beings exposed to a hazardous substance release or threatened release. (2) "Financial fraud" means any fraudulent insurance practice or any plan or scheme to sell an investment product to the general public without full disclosure of the risks associated with the purchase of the product, where the plan or scheme would cause or has caused financial loss to a large class of persons or to the general public. (n) Except for the fact of the settlement itself, and except for evidence of financial fraud, a defective product, or an environmental hazard, nothing in this section shall be construed to limit a court's discretion to issue a final protective order for the nondisclosure of the terms and conditions of a confidentiality agreement, settlement agreement, or stipulated agreement. (o) Nothing in this section is intended to affect the confidentiality of communications, negotiations, or settlement discussions between mediation participants pursuant to Section 1153.5 or 1154 of, or pursuant to Chapter 2 (commencing with Section 1115) of Division 9 of, the Evidence Code. (p) Nothing in this section shall limit the adoption or enforcement of local rules which impose greater restrictions on the prohibition or limitations of confidentiality agreements or protective orders. Searching keywords: (statusin) (authorSchiff) (HooS)