A move by judges of the U.S. District Court for South Carolina to ban sealed settlements is drawing a decidedly negative response from businesses and insurers.
The proposed rule, which could be adopted after a public comment period ends at the end of this month, could hamper the discovery process, encourage litigation and set ''price floors'' for certain types of cases without taking into account the unique nature of each case, say attorneys. In fact, judges already have the power to reject settlement agreements they regard as inappropriate, some point out.
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A well-known consumer advocate, however, sees the move as overdue and worthy of emulation by other courts.
''We're very opposed to sealed settlements. When there are public health and safety issues involved that the public and government regulators need to know about, they should never be sealed,'' said Joanne Doroshow, executive director Center for Justice & Democracy in New York.
''We hope the courts follow the South Carolina lead and we hope the legislatures move more quickly to ban confidential settlements.''
''I've heard plaintiffs attorneys say that they feel like there's a gun to their head, that they would prefer not to have to sign these agreements. If the government prohibits them, it relieves the pressure on the victims,'' Ms. Doroshow said.
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