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Federal Bar Update: Confidentiality not always enforceable

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Federal Bar UpdateAmendments

In Dugdale Communications v. Alcatel-Lucent USA, No. 1:09-CV-960 (S.D. Ind. Feb. 11, 2011), the court addressed defendant’s motion to amend its answer. Magistrate Judge Tim Baker denied the motion, starting the court’s opinion by writing, “Leave to amend pleadings is freely granted when justice requires. But when, as in this case, a party waits until significant deadlines have passed to seek leave to make amendments that could have been made earlier, and which would unduly prejudice the opposing party, justice requires denial of leave to amend.”

As with most discretionary amendment issues, the opinion turns on its unique facts, but one of the desired amendments – to add a statute of frauds defense – was denied due to undue delay. The court explained, “While Dugdale’s discovery responses may not have been entirely consistent, Alcatel waited to depose Witham until the day before the discovery deadline. As a result of this and other circumstances, Alcatel cannot in fairness claim that it now should be allowed to add a claim based on something it should (or easily could) have known long ago. The court has already enlarged CMP deadlines twice and recently declined to further delay progress in this case. Accordingly, the court denies Alcatel’s motion for leave to add a statute of frauds defense.”

Enforcing confidential settlement agreements

As federal practitioners know, the 7th Circuit is particularly strict about protecting public access to federal court filings. Trial judges within the 7th Circuit are thus equally strict in ensuring that sealed record requests meet the 7th Circuit standards. So can a confidential settlement agreement be enforced in federal court while preserving confidentiality?

This issue was addressed by the court in Gant v. Carrier Corp., No. 1:09-CV-1193 (S.D. Ind. Jan. 25, 2011). The defendant sought to enforce a confidential settlement agreement. The court set the matter for a court conference to try to informally resolve the matter, kept the agreement under seal until that conference, but expressed that it “has serious reservations about the propriety of maintaining the purported settlement agreement and related documents under seal given that the Court is now being asked to enforce this purported agreement.”

The court explained, “In Cincinnati Insurance, the Seventh Circuit noted that ‘[t]he parties to a lawsuit are not the only people who have a legitimate interest in the record compiled in a legal proceeding.’ Id. at 944. The public’s interest in a transparent and predictable legal system extends to the Court’s enforcement of settlement agreements. Many cases never reach the courtroom and others end without even a written opinion. As the Seventh Circuit stated in Jessup v. Luther, 277 F.3d 926, 929 (7th Cir. 2002), ‘[t]he public has an interest in knowing what terms of a settlement a federal judge would approve and perhaps therefore nudge the parties to agree to.’ The Seventh Circuit has further stated that ‘[p]eople who want secrecy should opt for arbitration. When they call on the courts, they must accept the openness that goes with subsidized dispute resolution by public (and publicly accountable) officials.’ Union Oil Co. of Cal. v. Leavell, 220 F.3d 562, 568 (7th Cir. 2000).”

The court continued, “In the case at bar, Carrier has provided no reasons why its desire for sealing overcomes the public’s legitimate interest in the record compiled by this legal proceeding. The purported settlement agreement contains a confidentiality clause, which presumably is at the heart of this sealing request. But the parties’ (or one party’s) desire for confidentiality does not override the public’s interest in open proceedings when disputes require the Court’s intervention. Certainly Carrier’s motion contains no authority supporting such an outcome.”

Thus, parties seeking to enforce confidential settlement agreements should be on notice that confidentiality cannot be assured in federal court. If confidentiality is vital, consideration should be given to possibly including enforcement mechanisms through arbitration or a simple state-law, state-court breach of contract action.

Mark your calendars

The annual Federal Civil Practice Seminar will be held Friday, Dec. 16, in Indianapolis.•

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John Maley, jmaley@btlaw.com, is a partner with Barnes & Thornburg, LLP, practicing federal and state litigation, employment matters, and appeals. The opinions expressed in this column are the author’s.

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  3. All these sites putting up all the crap they do making Brent Look like A Monster like he's not a good person . First off th fight actually started not because of Brent but because of one of his friends then when the fight popped off his friend ran like a coward which left Brent to fend for himself .It IS NOT a crime to defend yourself 3 of them and 1 of him . just so happened he was a better fighter. I'm Brent s wife so I know him personally and up close . He's a very caring kind loving man . He's not abusive in any way . He is a loving father and really shouldn't be where he is not for self defense . Now because of one of his stupid friends trying to show off and turning out to be nothing but a coward and leaving Brent to be jumped by 3 men not only is Brent suffering but Me his wife , his kids abd step kidshis mom and brother his family is left to live without him abd suffering in more ways then one . that man was and still is my smile ....he's the one real thing I've ever had in my life .....f@#@ You Lafayette court system . Learn to do your jobs right he maybe should have gotten that year for misdemeanor battery but that s it . not one person can stand to me and tell me if u we're in a fight facing 3 men and u just by yourself u wouldn't fight back that you wouldn't do everything u could to walk away to ur family ur kids That's what Brent is guilty of trying to defend himself against 3 men he wanted to go home tohisfamily worse then they did he just happened to be a better fighter and he got the best of th others . what would you do ? Stand there lay there and be stomped and beaten or would u give it everything u got and fight back ? I'd of done the same only I'm so smallid of probably shot or stabbed or picked up something to use as a weapon . if it was me or them I'd do everything I could to make sure I was going to live that I would make it hone to see my kids and husband . I Love You Brent Anthony Forever & Always .....Soul 1 baby

  4. Good points, although this man did have a dog in the legal fight as that it was his mother on trial ... and he a dependent. As for parking spaces, handicap spots for pregnant women sure makes sense to me ... er, I mean pregnant men or women. (Please, I meant to include pregnant men the first time, not Room 101 again, please not Room 101 again. I love BB)

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