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SB-1149 Civil actions: agreements settling actions involving public health or safety.(2021-2022)

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Date Published: 08/22/2022 09:00 PM
SB1149:v93#DOCUMENT

Amended  IN  Assembly  August 22, 2022
Amended  IN  Assembly  August 04, 2022
Amended  IN  Assembly  June 15, 2022
Amended  IN  Assembly  June 02, 2022
Amended  IN  Senate  May 09, 2022
Amended  IN  Senate  April 07, 2022

CALIFORNIA LEGISLATURE— 2021–2022 REGULAR SESSION

Senate Bill
No. 1149

Introduced by Senator Leyva
(Coauthors: Senators Newman and Stern)
(Coauthors: Assembly Members Reyes and Stone)

February 16, 2022

An act to add Chapter 3.8 (commencing with Section 1002.9) to Title 14 of Part 2 of the Code of Civil Procedure, relating to civil actions.


LEGISLATIVE COUNSEL'S DIGEST


SB 1149, as amended, Leyva. Civil actions: agreements settling actions involving public health or safety.
Existing law prohibits settlement agreements from containing provisions that prevent the disclosure of factual information related to specified claims or causes of action, such as information relating to an act of sexual harassment or an act that may be prosecuted as a felony sex offense.
This bill would prohibit a provision within an agreement between the parties in an action the factual foundation for which establishes a cause of action for civil damages regarding a defective product or environmental hazard that poses a danger to public health or safety, as defined, that purports to restrict the disclosure of factual information related to the action. The bill would provide that those provisions are void as a matter of law and as against public policy and unenforceable, except as specified. The bill would establish a presumption provide that the disclosure of discoverable factual information relating to those actions shall must not be restricted by stipulation or by order of a court or arbitral tribunal, except for specified categories of information such as medical information, personal identifying information, the amount of the settlement, current proprietary customer lists, trade secrets, or citizenship or immigration status. The bill would allow a person for whom it is reasonably foreseeable that the person would be affected by a provision, agreement, or order, to challenge the provision, agreement, or order, as specified. The bill would allow a party, including an intervenor that has become a party, or a person whose attendance in the action or production of documents or other tangible things is required by subpoena, subpoena duces tecum, or other means, to file a motion for nondisclosure under these provisions. The bill would require a party requiring attendance in the action or production of documents of a person who is not a party to the action to be accompanied by provide a notice of the availability of a motion for nondisclosure of a proprietary customer list or trade secret to the person who is not a party to the action. The bill would provide that an attorney’s failure to comply with these provisions may be grounds for professional discipline.
Vote: MAJORITY   Appropriation: NO   Fiscal Committee: NO   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 This act shall be known and may be cited as the Public Right to Know Act of 2022.

SEC. 2.

 The Legislature finds and declares the following:
(a) The right to a public trial is so fundamental to our system that it is enshrined in the Bill of Rights, and court records in California are presumed to be public as a matter of law.
(b) U.S. Supreme Court Justice Louis Brandeis, concerned about “the wickedness of people shielding wrongdoers and passing them off as honest men,” noted that public transparency of dangerous products and other harms is a powerful tool for protecting the public. “Sunlight,” he wrote, “is said to be the best of disinfectants.”
(c) While generally ensuring openness in our court system is critical to our democracy and public safety, maintaining the privacy of monetary settlements also can be in the best interests of all litigants, can minimize unnecessary conflict, and can beneficially reduce the costs of resolving disputes in our judicial system. Likewise, appropriately protecting trade secrets of responsible enterprises is important to business innovation, fairness, and the functioning of our economy.
(d) Striking a balance between protecting certain aspects of litigant privacy and encouraging settlements of conflicts, on the one hand, and ensuring disclosure of evidence of dangers and harms vital to public safety, on the other, is vital to protecting public health and safety.
(e) Yet increasingly in California courts, and courts across the country, secrecy has too often become the norm rather than the exception. The public is routinely excluded from the discovery process, which once was carried out almost entirely in open court. The scales in this process are often tilted heavily in favor of the holder of the information, creating an incentive for delays that can last as long as a year and often longer. As a result, the public’s right to know has become little more than a bargaining chip among opposing parties, even when public health and safety are at risk.
(f) The consequences of such secrecy can be deadly. A recent investigation by Reuters found that judges sealed evidence relevant to public health and safety in about half of the 115 largest product-defect cases over the past 20 years due to the ease and tradition of secrecy in such complicated and costly court cases.
(g) For example, nondisclosure orders kept sealed 32,000 FDA complaints regarding a medical birth control device, which was linked to chronic bleeding, miscarriages, and death for women who used these devices before they were taken off the market. And perhaps most destructively, for over a decade, protective orders kept out of public view evidence that a pharmaceutical company spent years successfully misleading doctors into widely prescribing a drug by knowingly minimizing the risk of addiction for patients, a major factor in an epidemic that has killed more than a quarter million Americans. These are two of many recent examples.
(h) It is particularly important that California take steps to protect its citizens now in the wake of the efforts by the previous federal administration to diminish the effectiveness of agencies charged with oversight of dangers and protecting consumers. The Consumer Product Safety Commission and the National Highway Traffic Safety Administration remain significantly weakened in their efforts to protect consumers.
(i) Californians pay for our court system, and they rightly expect courts to consider the public interest when they are asked to consider secrecy agreements and protective orders that prohibit public disclosure of evidence of defective products or environmental hazards that can be dangerous to their health, safety, and well-being. The current system of discovery does not give due consideration to the public interest in health and safety. A better system is available that will maintain legitimate corporate secrecy while still allowing disclosure of information related to public health and safety.
(j) Therefore, it is the intent of the Legislature to better protect all Californians, including its workers, from significant or substantial danger to public health or safety posed by a defective product or environmental hazard, by creating a presumption against reducing secrecy in civil litigation in cases involving a defective product or environmental hazard where public health and safety are at particular risk, while at the same time reasonably protecting the privacy of civil awards and trade secrets.

SEC. 3.

 Chapter 3.8 (commencing with Section 1002.9) is added to Title 14 of Part 2 of the Code of Civil Procedure, to read:
CHAPTER  3.8. Agreements Settling Actions Involving Public Health or Safety

1002.9.
 (a) As used in this section, the following terms have the following meanings:
(1) “Covered civil action” means a civil action the factual foundation for which states a cause of action for civil damages regarding a defective product or environmental hazard that poses a danger to public health or safety. “Covered civil action” shall not include a civil action regarding a motor vehicle that is brought pursuant to the Song-Beverly Consumer Warranty Act (Chapter 1 (commencing with Section 1790) of Title 1.7 of Part 4 of Division 3 of the Civil Code) unless the action also includes a claim of physical personal injury.
(2) “Defective product or environmental hazard that poses a danger to public health or safety” means a defective product or environmental hazard that has caused, or is likely to cause, significant or substantial bodily injury or illness, or death.
(3) “Trade secret” has the same meaning as set forth in Section 3426.1 of the Civil Code. Code, and may include particular portions of a party’s financial data, nonpublic business strategies, information regarding potential mergers or acquisitions, and nonpublic information pertaining to new product launches.
(b) Notwithstanding any other law, a provision within an agreement between the parties in a covered civil action that purports to restrict the disclosure of factual information related to the action is prohibited.
(c) Notwithstanding any other law, there shall be a presumption that the disclosure of discoverable factual information, as described in Section 2017.010, relating to a covered civil action shall not be restricted, and a court or arbitral tribunal shall not enter, by stipulation or otherwise, an order that restricts the public disclosure of such information, except in the form of an order of nondisclosure, as provided in paragraph (3) of subdivision (d).
(d) Subdivisions (b) and (c) do not preclude a provision or order that restricts the disclosure of any of the following information relating to a covered civil action:
(1) Medical information or personal identifying information, as defined in subdivision (b) of Section 530.55 of the Penal Code, regarding any party or other natural person from whom information is sought.
(2) The amount of a settlement.
(3) (A) Information relating to a current proprietary customer list or a trade secret, if the party seeking to restrict its disclosure moves the court or arbitral tribunal in good faith for an order of nondisclosure restricting the disclosure of specified information and the order is granted pursuant to subparagraph (B).
(B) A court or arbitral tribunal may enter an order of nondisclosure limit the scope of disclosure if it determines that a party or other affected person requesting the order demonstrates that the interest in nondisclosure of specified information described in subparagraph (A) if the party requesting the order demonstrates that the presumption in favor of disclosure is clearly outweighed by a specific and substantial overriding confidentiality interest. clearly outweighs the interest favoring disclosure of the information. The court may make this determination only pursuant to a motion for an order of nondisclosure by a party or other affected person, as provided by paragraph (1) of subdivision (g). The order shall be narrowly tailored to restrict the disclosure of no more information, and for no longer a period of time, than is necessary to protect the interest.
(4) The citizenship or immigration status of a person or group of persons, including the existence of any request, hearing, or determination made pursuant to Section 351.2 of the Evidence Code.
(e) Except as authorized by subdivision (d), a provision within an agreement between the parties in a covered civil action that purports to restrict the disclosure of factual information related to the action is void as a matter of law and as against public policy and shall not be enforced.
(f) A person, including a representative of news media acting on behalf of the public, for whom it is reasonably foreseeable that the person will be substantially affected by a provision, agreement, or order that violates subdivision (b) or (c), may challenge the provision, agreement, or order by motion in the covered civil action.
(g) (1) A motion for nondisclosure pursuant to this section may be filed by a party, including an intervenor that has become a party, or a person whose attendance in the action or production of documents or other tangible things is required by subpoena, subpoena duces tecum, or other means.
(2) A party requiring attendance in the action or production of documents or other tangible things of a person who is not a party to the action shall provide separate written notice to the person who is not a party of the availability of a motion under paragraph (3) of subdivision (d).
(h) An attorney’s failure to comply with the requirements of this section may be grounds for professional discipline, and the State Bar of California may investigate and take appropriate action in any such case brought to its attention, when the attorney does any of the following:
(1) Requests that a provision be included in an agreement between the parties that prevents the disclosure of factual information related to the action, as described in subdivision (b), and that is not otherwise authorized by this section to be included within such an agreement.
(2) Advises a client to sign or otherwise enter into an agreement that includes such a provision.
(3) Moves for an order of nondisclosure that does not meet the good faith requirement of paragraph (3) of subdivision (d).