    [House Hearing, 110 Congress]
    [From the U.S. Government Publishing Office]

                       SUNSHINE IN LITIGATION ACT OF 2008

    =======================================================================

                                    HEARING

                                   BEFORE THE

                                SUBCOMMITTEE ON
                       COMMERCIAL AND ADMINISTRATIVE LAW

                                     OF THE

                           COMMITTEE ON THE JUDICIARY
                            HOUSE OF REPRESENTATIVES

                           ONE HUNDRED TENTH CONGRESS

                                 SECOND SESSION

                                       ON

                                   H.R. 5884

                                   __________

                                 JULY 31, 2008

                                   __________

                               Serial No. 110-202

                                   __________

             Printed for the use of the Committee on the Judiciary

          Available via the World Wide Web: http://judiciary.house.gov

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                           COMMITTEE ON THE JUDICIARY

                     JOHN CONYERS, Jr., Michigan, Chairman
    HOWARD L. BERMAN, California         LAMAR SMITH, Texas
    RICK BOUCHER, Virginia               F. JAMES SENSENBRENNER, Jr.,
    JERROLD NADLER, New York                 Wisconsin
    ROBERT C. ``BOBBY'' SCOTT, Virginia  HOWARD COBLE, North Carolina
    MELVIN L. WATT, North Carolina       ELTON GALLEGLY, California
    ZOE LOFGREN, California              BOB GOODLATTE, Virginia
    SHEILA JACKSON LEE, Texas            STEVE CHABOT, Ohio
    MAXINE WATERS, California            DANIEL E. LUNGREN, California
    WILLIAM D. DELAHUNT, Massachusetts   CHRIS CANNON, Utah
    ROBERT WEXLER, Florida               RIC KELLER, Florida
    LINDA T. SANCHEZ, California         DARRELL ISSA, California
    STEVE COHEN, Tennessee               MIKE PENCE, Indiana
    HANK JOHNSON, Georgia                J. RANDY FORBES, Virginia
    BETTY SUTTON, Ohio                   STEVE KING, Iowa
    LUIS V. GUTIERREZ, Illinois          TOM FEENEY, Florida
    BRAD SHERMAN, California             TRENT FRANKS, Arizona
    TAMMY BALDWIN, Wisconsin             LOUIE GOHMERT, Texas
    ANTHONY D. WEINER, New York          JIM JORDAN, Ohio
    ADAM B. SCHIFF, California
    ARTUR DAVIS, Alabama
    DEBBIE WASSERMAN SCHULTZ, Florida
    KEITH ELLISON, Minnesota

                Perry Apelbaum, Staff Director and Chief Counsel
          Sean McLaughlin, Minority Chief of Staff and General Counsel
                                     ------

               Subcommittee on Commercial and Administrative Law

                    LINDA T. SANCHEZ, California, Chairwoman

    JOHN CONYERS, Jr., Michigan          CHRIS CANNON, Utah
    HANK JOHNSON, Georgia                JIM JORDAN, Ohio
    ZOE LOFGREN, California              RIC KELLER, Florida
    WILLIAM D. DELAHUNT, Massachusetts   TOM FEENEY, Florida
    MELVIN L. WATT, North Carolina       TRENT FRANKS, Arizona
    STEVE COHEN, Tennessee

                         Michone Johnson, Chief Counsel

                        Daniel Flores, Minority Counsel

                                C O N T E N T S

                                  ----------

                                 JULY 31, 2008

                                                                       Page

                                    THE BILL

    H.R. 5884, the ``Sunshine in Litigation Act of 2008''............     3

                               OPENING STATEMENTS

    The Honorable Linda T. Sanchez, a Representative in Congress from
      the State of California, and Chairwoman, Subcommittee on
      Commercial and Administrative Law..............................     1
    The Honorable Chris Cannon, a Representative in Congress from the
      State of Utah, and Ranking Member, Subcommittee on Commercial
      and Administrative Law.........................................     8

                                   WITNESSES

    Mr. Richard D. Meadow, the Lanier Law Firm, PLLC
      Oral Testimony.................................................    53
      Prepared Statement.............................................    56
    Mr. John P. Freeman, Distinguished Professor Emeritus, University
      of South Carolina Law School
      Oral Testimony.................................................    65
      Prepared Statement.............................................    67
    The Honorable Mark R. Kravitz, Judge, U.S. District Court for the
      District of Connecticut
      Oral Testimony.................................................    74
      Prepared Statement.............................................    76
    The Honorable Joseph F. Anderson, Jr., Judge, U.S. District Court
      for the District of South Carolina
      Oral Testimony.................................................    89
      Prepared Statement.............................................    91

              LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

    Material submitted by the Honorable Chris Cannon, a
      Representative in Congress from the State of Utah, and Ranking
      Member, Subcommittee on Commercial and Administrative Law:
        Letter from the Judicial Conference of the United States.....     9
        Letter from the American Bar Association (ABA)...............    17
        Letter from the U.S. Department of Justice...................    20
        Letter from Arthur R. Miller, Professor, New York University
          School of Law..............................................    36
        Prepared Statement of Stephen G. Morrison, Esquire...........    44
    Prepared Statement of the Honorable Herb Kohl, a U.S. Senator
      from the State of Wisconsin, submitted by the Honorable Linda
      T. Sanchez, a Representative in Congress from the State of
      California, and Chairwoman, Subcommittee on Commercial and
      Administrative Law.............................................    51

                                    APPENDIX
                   Material Submitted for the Hearing Record

    Attachments to the Prepared Statement of the Honorable Mark R.
      Kravitz, Judge, U.S. District Court for the District of
      Connecticut....................................................   108
    Answers to Post-Hearing Questions from Richard D. Meadow, The
      Lanier Law Firm, PLLC..........................................   321
    Answers to Post-Hearing Questions from John P. Freeman,
      Distinguished Professor Emeritus, University of South Carolina
      Law School.....................................................   323
    Answers to Post-Hearing Questions from the Honorable Mark R.
      Kravitz, Judge, U.S. District Court for the District of
      Connecticut....................................................   324
    Answers to Post-Hearing Questions from the Honorable Joseph F.
      Anderson, Jr., Judge, U.S. District Court for the District of
      South Carolina.................................................   327

                       SUNSHINE IN LITIGATION ACT OF 2008
                                  ----------

                            THURSDAY, JULY 31, 2008

                  House of Representatives,
                         Subcommittee on Commercial
                                and Administrative Law,
                                    Committee on the Judiciary,
                                                        Washington, DC.

        The Subcommittee met, pursuant to notice, at 10:40 a.m., in
    room 2237, Rayburn House Office Building, the Honorable Linda
    Sanchez (Chairwoman of the Subcommittee) presiding.
        Present: Representatives Sanchez, Cannon, and Jordan.
        Staff present: Matthew Wiener, Majority Counsel; Daniel
    Flores, Minority Counsel; Andres Jimenez, Majority Professional
    Staff Member; and Megan Crowley, Minority Clerk.
        Ms. Sanchez. This hearing of the Committee on the
    Judiciary, Subcommittee on Commercial and Administrative Law
    will now come to order.
        I will now recognize myself for a short statement.
        Serious concerns have been raised as to whether court
    secrecy orders may endanger public safety and health. There are
    several examples of court secrecy orders that have concealed
    from the public and governmental regulatory agencies
    information about dangerous products and other potential harms.
        None is more well known, perhaps, than the secrecy orders
    involving Firestone tires. Defective Firestone tires resulted
    in more than 250 deaths and many more serious injuries
    throughout the 1990's. Although Firestone knew of the defects
    by the early 1990's, it concealed the information from the
    public by settling numerous lawsuits under the cover of court
    secrecy orders. Those orders prohibited plaintiffs from sharing
    information with the public about the defects uncovered during
    litigation.
        Not until 2000, when Firestone issued a recall, did the
    public finally learn of them. By then it was too late for those
    who were already victims and for their families. This is just
    one notable example. We expect to hear about others during this
    morning's testimony.
        The fundamental question before us is whether Congress
    should leave the issue of court secrecy in the hands of Federal
    judges or, instead, address the issue itself. Should we choose
    the latter, we have H.R. 5884, the ``Sunshine in Litigation Act
    of 2008.'' H.R. 5884 mirrors a bill pending before the Senate
    that has been favorably reported by a bipartisan majority of
    the Senate Committee on the Judiciary.
        H.R. 5884 is modest in its scope. Its key provision would
    require courts to do what some Federal judges already do:
    consider the public's interest in health and safety before
    entering certain confidentiality orders that would conceal
    information from the public uncovered during discovery.
        H.R. 5884 would not prohibit a court from ordering the
    confidentiality of discovery materials when confidentiality is
    due, such as when protecting a trade secret, other proprietary
    commercial information, or personal information of a private
    nature.
        It would simply require a court, before entering a
    nondisclosure order, to find that the asserted interest in
    confidentiality outweighs the public interest in open access.
    And it would require that the nondisclosure order be no broader
    than necessary to protect the privacy interest that justifies
    its issuance.
        To help us evaluate whether these and related restrictions
    on court secrecy orders should be legislatively mandated, we
    will hear from four witnesses. They are: Richard Meadow, a
    partner in the Lanier Law firm in New York; Professor John
    Freeman, Distinguished Professor Emeritus of Law at the
    University of South Carolina School of Law; the Honorable Mark
    Kravitz, a judge on the United States District Court for the
    District of Connecticut, who is testifying on behalf of the
    Judicial Conference of the United States; and the Honorable
    Joseph Anderson, Jr., a judge on the United States District
    Court for the District of South Carolina. Accordingly, I look
    forward to hearing today's testimony from our witnesses.
        [The bill, H.R. 5884, follows:]

        Ms. Sanchez. And at this time, I would now recognize my
    colleague Mr. Cannon, the distinguished Ranking Member of the
    Subcommittee, for his opening remarks.
        Mr. Cannon. Thank you, Madam Chair.
        Just as a matter of curiosity, which I should probably
    frame as a parliamentary inquiry, I would think this normally
    would come under the jurisdiction of the Intellectual Property
    and Courts Subcommittee. Is there a reason why we are doing it
    here?
        Ms. Sanchez. I would expect that, perhaps, for issues
    involving trade secrets that might be the case. But we are
    talking about issues of public health and welfare. So I believe
    the jurisdiction is properly in this Subcommittee.
        Mr. Cannon. As the Chair knows, I am always anxious to
    expand the jurisdiction of this Committee. And so I think we
    should go forward. But my sense is that since we are dealing
    with the rules, or the way we make the rules, that this
    probably would fit--what we probably ought to do is get courts
    in this Committee, because IP has plenty of other things to do.
        I want to thank the witnesses for their testimony today
    regarding H.R. 5884, the ``Sunshine in Litigation Act of
    2008.'' Oftentimes we hold hearings on legislation in this
    Subcommittee which is supported or opposed by partisan groups
    on opposite sides of the issue. That is not the case with the
    bill we are considering today.
        Rather, the Sunshine in Litigation Act is opposed not just
    by what would generally be perceived as conservative or pro-
    business groups but by non-partisan groups such as the Judicial
    Conference of the United States and the American Bar
    Association. The bill is also opposed by the Department of
    Justice.
        I ask unanimous consent that opposition letters from the
    Judicial Conference, the ABA and the Department of Justice be
    entered into the record.
        Ms. Sanchez. Without objection, so ordered.
        [The information referred to follows:]

        Mr. Cannon. And why are these groups opposed to 5884?
        First, they are opposed that the bill circumvents the
    regular order for promulgating changes to the Federal Rules of
    Civil Procedure established in the Rules Enabling Act. The
    Rules Enabling Act was passed by Congress so that before a
    Federal rule is adopted or modified, it is thoroughly vetted
    and studied by the Judicial Conference, the public, and the
    Supreme Court before being presented to Congress.
        There is no reason to abandon that process for the rules
    changes proposed in H.R. 5884.
        Second, they are opposed because the bill is not only
    unnecessary but would increase the burden and cost of
    litigation. This bill is unnecessary because discovery
    protective orders are rare. An extensive empirical study
    conducted by the Judicial Conference revealed that in the
    Federal judicial districts surveyed, protective orders were
    requested in only 6 percent of all civil cases.
        This bill will increase the burden and cost of litigation
    because if confidentiality and privacy are not protected,
    litigants will be forced to oppose any document request that an
    opposing party makes for information which may be sensitive or
    confidential.
        It will also force judges to make findings of fact every
    time a protective order is requested. As Judge Kravitz wrote in
    his testimony, requiring courts to review discovery information
    to make public health and safety determinations in every
    request for a protective order, no matter how irrelevant to
    public health or safety, will burden judges and further delay
    pretrial discovery--which already, by the way, takes way too
    long. I think we have a consensus on that.
        For these reasons, the Judicial Conference has consistently
    concluded that provisions affecting Rule 26(c)--similar to
    those sought in H.R. 5884--were not warranted and would
    adversely affect the administration of justice.
        In short, this bill is a bad idea, and it is a bad idea
    made worse by skipping the process that Congress set forth in
    the Rules Enabling Act. Hopefully, after this hearing we can
    lay this bill to rest.
        Madam Chair, the size of this panel did not allow us to
    call some additional witnesses to testify in person. However,
    these witnesses have graciously provided us with their written
    views on the bill. I ask unanimous consent that written views
    of Professor Arthur Miller, a professor at New York University
    School of Law and one of the foremost experts on this area of
    the law, be entered into the record.
        Ms. Sanchez. Without objection, so ordered.
        [The information referred to follows:]

        Mr. Cannon. As well as the written views of Stephen
    Morrison, a partner at Nelson Mullins, who has tried more than
    240 cases to a jury verdict and has argued more than 60 appeals
    in the nation's highest courts, including the Supreme Court of
    the United States.
        Ms. Sanchez. Also without objection, so ordered.
        [The information referred to follows:]

        Mr. Cannon. I thank you, Madam Chair. I yield back.
        Ms. Sanchez. I thank the gentleman for his statement.
        I would also ask unanimous consent to enter into the record
    a statement of Senator Kohl, who has introduced substantially
    this legislation in successive cycles. Without objection, his
    testimony will be entered into the record.
        [The prepared statement of Senator Kohl follows:]
    Prepared Statement of the Honorable Herb Kohl, a U.S. Senator from the
                               State of Wisconsin
        Thank you, Chairwpman Sanchez, for holding a hearing H.R. 5884, the
    Sunshine in Litigation Act of 2008, and the use of secrecy agreements
    and sealed settlements. I would also like to thank Congressman Wexler
    for introducing this legislation; legislation that I have been working
    on for many years and which recently passed the Senate Judiciary
    Committee with bipartisan support. I am pleased to see the bill
    advancing here in the House and I look forward to working with
    Congresswoman Sanchez and Congressman Wexler on this important issue.
        Far too often, court approved secrecy agreements and sealed
    settlements hide vital public health and safety information from the
    American public--putting lives at stake. We are all familiar with well-
    known cases where protective orders and secret settlements prevented
    the public from learning about the dangers of silicone breast implants,
    IUDs, a prescription pain killer, side-saddle gas tanks, and defective
    heart valves and tires. This critical health and safety information did
    not deserve court endorsed protection.
        The Sunshine in Litigation Act is a narrowly targeted measure that
    will make sure court-endorsed secrecy does not keep the public from
    learning about health and safety dangers. Under the bill, judges must
    consider public health and safety before granting a protective order or
    sealing court records and settlement agreements. They have the
    discretion to grant or deny the secrecy based on a balancing test that
    weighs the public's interest in a potential public health and safety
    hazard and legitimate interests in secrecy. The bill does not place an
    undue burden on our courts. It simply states that in a limited number
    of cases, judges must a closer look at requests for secrecy.
        Last December, at a hearing in the Senate Judiciary Subcommittee on
    Antitrust, Competition Policy and Consumer Rights, we learned that
    while some judges may be more aware of the issue, this problem
    continues and we have examples to prove it. Johnny Bradley told us the
    chilling details of a car accident caused by tire tread separation that
    killed his wife and left him and his son severely injured. During his
    lawsuit against Cooper Tire, he learned that information about similar
    accidents had been kept secret for years through court orders and
    secret settlements. Today, details about this tire defect remain
    protected by court orders while Cooper Tire continues to aggressively
    fight attempts to make them public.
        We also learned about the case of Zyprexa, a drug used to treat
    schizophrenia and bipolar disorder. In 2005, the drug company Eli Lilly
    settled 8,000 cases related to Zyprexa. The cases alleged that Eli
    Lilly did not disclose known harmful side-effects of Zyprexa, such as
    inordinate weight gain and dangerously high blood sugar levels that
    sometimes resulted in diabetes. Documents exchanged during discovery
    showed that Eli Lilly knew of the harmful side effects but did not
    inform prescribing doctors or the FDA. However, all of the settlements
    required plaintiffs to agree ``not to communicate, publish or cause to
    be published . . . any statement . . . concerning the specific events,
    facts or circumstances giving rise to [their] claims.'' As a result,
    the public did not learn about these settlements or Zyprexa's dangerous
    side effects until two years later when The New York Times leaked
    documents from the case that were covered by a protective order.
        Finally, we heard from Judge Joe Anderson, a federal district court
    judge in South Carolina. We are pleased that the Subcommittee will hear
    from him today. Judge Anderson expressed his support for the Sunshine
    in Litigation Act as a balanced approach to address ``a discernable and
    troubling trend'' for litigants to ask for secrecy in cases where
    public health and safety might be adversely affected. He told us about
    a local rule in South Carolina, one that goes even further than our
    bill, and how it has been a great success. Despite concerns for the
    increased burden such a measure would put on South Carolina's federal
    courts, the number of trials has not increased and cases continue to
    settle even though secrecy is no longer an option.
        In response to concerns about national security and personally
    identifiable information, we included language to ensure that this
    information is protected. We have also heard concerns about protecting
    trade secrets. I would like to make it very clear that our bill
    protects trade secrets. We are confident that judges, as they are
    already required to do, will give ample consideration to them as part
    of the balancing test. However, we will not permit trade secrets that
    pose a threat to public health and safety--such a defective tire
    design--to justify secrecy.
        We take great pride in our court system and its tradition of
    fairness for plaintiffs and defendants alike. However, the courts are
    public institutions meant to sometimes go beyond simply resolving cases
    between private parties; they also serve the greater goods of law,
    order and justice. We must not allow court endorsed secrecy to
    jeopardize public health and safety or undermine the public's
    confidence in our judicial system.
        Again, I thank Chairwoman Sanchez and Congressman Wexler for their
    attention to this important issue and I look forward to working with
    them to enact the Sunshine in Litigation Act.

        Ms. Sanchez. Without objection, the Chair will be
    authorized to declare a recess of the hearing at any point.
        And at this point, I am now pleased to introduce the
    witnesses for our hearing. Our first witness is Richard Meadow.
    Mr. Meadow has successfully tried over 25 cases to verdict.
    Since joining the Lanier Law Firm, Mr. Meadow was part of the
    trial team that obtained plaintiff verdicts in the Vioxx
    litigation in excess of $300 million. An active participant in
    New York and national bar associations, Mr. Meadow currently
    serves on the board of directors of the New York State Trial
    Lawyers Association. Mr. Meadow has lectured at numerous legal
    conferences and has been appointed to many committees that
    explore issues germane to the medical and legal communities. I
    want to welcome you to today's panel.
        Our second witness is John Freeman. Professor Freeman
    joined the University of South Carolina Law Faculty in 1973.
    Prior to that, Professor Freeman started law practice in 1970
    with the Jones Day law firm and subsequently worked for the
    Securities and Exchange Commission, where he served as special
    counsel analyzing mutual fund issues. He has taught corporate
    and securities law and legal ethics for over 30 years, and has
    testified as an expert witness or served as trial counsel in
    various legal malpractice lawsuits, ethics proceedings, and
    investment-related cases.
        Professor Freeman has written and lectured extensively on
    ethics, malpractice and business-related matters, and writes a
    regular column on professionalism topics for the South Carolina
    Lawyer. Most recently, Professor Freeman has been addressing as
    a writer and commentator certain problems with the way mutual
    fund sponsors conduct their businesses. Professor Freeman
    retired from the faculty in 2008. He has received various
    service awards and serves as one of the four public members on
    South Carolina's Judicial Merit Selection Commission. We want
    to welcome you to today's panel.
        Our third witness is Mark Kravitz. Judge Kravitz was
    appointed in 2003 by President George W. Bush to the U.S.
    District Court for the District of Connecticut. Previously,
    Judge Kravitz was a partner at the law firm of Wiggin & Dana,
    LLP, where he worked for nearly 27 years, most recently as the
    chair of the firm's Appellate Practice Group. Before joining
    Wiggin & Dana, Judge Kravitz served as a law clerk to Circuit
    Judge James Hunter, III, of the U.S. Court of Appeals for the
    Third Circuit, and then to Justice William H. Rehnquist of the
    United States Supreme Court.
        From 2001 to 2007, Judge Kravitz served as a member of the
    Standing Committee on the Rules of Practice and Procedure in
    the United States Courts, the body that oversees the rules of
    procedure and evidence that apply in all Federal courts. During
    that period, he also served as liaison member of the Advisory
    Committee on Criminal Rules. In June of 2007, Chief Justice
    John Roberts, Jr., appointed Judge Kravitz to chair the
    Advisory Committee on Civil Rules, the body that oversees the
    Federal Rules of Civil Procedure.
        From 1999-2003, Judge Kravitz was a regular columnist and
    commentator for the National Law Journal on appellate law. He
    has also authored numerous articles on a variety of topics.
    Judge Kravitz served as an adjunct professor at the University
    of Connecticut School of Law from January 1995 to 2001 and a
    lecturer in law at the Yale University Law School in 2000.
    Welcome to today's panel.
        Our final witness is Joseph Anderson, Jr. After clerking
    for the Fourth Circuit's chief judge, Clement Haynsworth, Judge
    Anderson entered private practice with his family law firm. In
    1980, he was elected to the South Carolina House of
    Representatives, where he served until his appointment to the
    Federal bench. Judge Anderson was also active in political
    campaigns other than his own, twice serving as county chair for
    Senator Strom Thurmond's reelection efforts and once for
    Congressman William Jennings Bryan Dorn's bid for governor.
        Judge Anderson has been very active in the community as a
    member, board member and president of various organizations,
    including the Lions Club, United Way and the Boy Scouts. As a
    practicing lawyer and judge, he has published a variety of
    articles on substantive topics in trial advocacy.
        I want to thank you all for your willingness to participate
    in today's hearing.
        Without objection, your written statements that you have
    provided will be placed into the record in their entirety.
        And we are going to ask that you please limit your oral
    testimony to 5 minutes. We do have a lighting system that we
    sometimes remember to employ here. You will get a green light
    when your time begins. When the light switches from green to
    yellow, that is a warning that you have about a minute to
    conclude your testimony. And then when you receive the red
    light, that will let you know that your time has expired. Of
    course, if you are mid-sentence or mid-thought when you get the
    red light, we will allow you to complete your final thought
    before moving on to the next witness.
        With that, at the conclusion of your testimony, we will
    then allow Members to ask questions subject to the 5-minute
    limit.
        If everybody understands the rules and everybody is ready
    to proceed, I would invite Mr. Meadow to please begin his
    testimony.

                    TESTIMONY OF RICHARD D. MEADOW,
                       THE LANIER LAW FIRM, PLLC

        Mr. Meadow. [Off mike.]
        Ms. Sanchez. Rarely do we have a witness that keeps it to
    less than 5 minutes.
        Mr. Meadow. I am pleased to appear before the Committee
    today to testify on behalf of myself and my law firm in support
    of the Sunshine in Litigation Act.
        My name is Rick Meadow. I am the managing attorney of the
    Lanier Law Firm in New York City. We are a Houston-based law
    firm with offices in Los Angeles and Palo Alto, Houston and New
    York. We are involved in pharmaceutical litigation, asbestos
    litigation, toxic tort, and a number of other litigations. Led
    by Mr. Lanier, we took the forefront in the Vioxx litigation as
    lead counsel. As you previously stated, we achieved three of
    the successful verdicts in the Vioxx litigation against Merck
    Pharmaceuticals.
        Because of the nature of our particular practice, we are
    subject to numerous confidentiality orders and numerous
    confidentiality settlements. It is for that reason that we
    appear here today on behalf of and in favor of the Sunshine in
    Litigation Act.
        I would like to discuss the effect of these confidentiality
    settlements and confidentiality protective orders on numerous
    litigations.
        The first I would like to discuss is the public health and
    safety of the Zyprexa litigation, but because of the
    confidentiality order I can't address that.
        I would also like to discuss the public health and safety
    that is in effect because of the Bextra litigation, but because
    of the confidentiality order in effect I cannot do that either.
        I would like to discuss the Ortho Evra litigation that we
    are involved in, but I can't do that as well.
        Nor can I discuss those litigations involving Kugel Mesh,
    Vioxx--which continues--Avandia and many of the other
    litigations that we are involved in.
        Because of the nature of today's practice, where the
    majority of our litigations end up in the Federal court because
    of the multi-district litigation process, I am not at liberty
    to discuss the public health and safety and welfare of a number
    of products that this act would take care of and allow us to
    talk about it.
        I would also like to talk about how some corporate
    executives, based on internal emails, sell stock unbeknownst to
    an unknowing public, but I can't discuss that as well.
        I could also, would love to, discuss how some corporations
    pollute surrounding neighborhoods with cancer-causing toxic
    agents, but because of the confidentiality agreement and orders
    I am not allowed to discuss that as well.
        And there is one other litigation I would like to discuss
    where a major automobile manufacturer redesigned their product
    in midstream after a couple of rollover deaths, but I can't
    discuss that as well. But because of----
        Ms. Sanchez. I can now see why you were so confident your
    testimony would be less than 5 minutes.
        Mr. Meadow. Well, yes, these are--and you lead me to my
    next line--these are just a few of the many examples where the
    public safety and welfare have taken a backseat to the
    interests of corporate defendants as well as settling
    defendants that are injured by hazardous products and
    practices.
        At a time when the nation faces the looming possibility of
    Federal preemption, the lack of the disinfectant of the
    Sunshine Law would free corporations to operate under the cloak
    of darkness with full immunity on an unsuspecting and
    unprotected public. This is a concept which must concern you,
    the Members of Congress who are entrusted with the significant
    responsibility to represent and protect the public welfare.
        These same interests are behind many meritless arguments
    that the Sunshine Act would chill settlements and overburden
    the court system. I beg to differ. Not only is there no proof
    of this assertion, it impugns the integrity of the bar on both
    sides of any civil dispute.
        I have addressed these issues in my written statement, but
    this morning I would like to focus on the potential deterrent
    aspects of the Sunshine Act.
        Today, those who choose profits over people, and thus risk
    litigation if they are caught, take comfort in their proven
    ability to demand confidentiality in exchange for providing
    unfettered discovery and in exchange for ultimately settling
    with some claimants, who are often only a tiny fraction of the
    victims of a hazardous product.
        If the Sunshine Act were in place, these same interests
    would have good reason to think twice before rushing a product
    to market because their actions would be unveiled for all the
    public to see.
        The need for the Sunshine Act has recently become more
    urgent. The American public increasingly has nowhere to turn.
    The FDA, Consumer Product Safety Commission, EPA, and other
    governmental agencies are overworked, underfunded, and in some
    cases unmotivated to protect the public welfare. The last line
    of defense may rest with Congress beginning with the Sunshine
    in Litigation Act.
        Thank you.
        [The prepared statement of Mr. Meadow follows:]
                    Prepared Statement of Richard D. Meadow

        Ms. Sanchez. Thank you, Mr. Meadow. We appreciate your
    testimony.
        At this time, I would invite Professor Freeman to give his
    testimony.

    TESTIMONY OF JOHN P. FREEMAN, DISTINGUISHED PROFESSOR EMERITUS,
                UNIVERSITY OF SOUTH CAROLINA LAW SCHOOL

        Mr. Freeman. Thank you, Madam Chairwoman.
        I am delighted to be here. As my written statement
    reflects, I have taught various courses, including White Collar
    Crime, Securities, and Professional Responsibility, over the
    years, over 35 years, before my retirement. From time to time I
    also assisted either as a lawyer, a consultant or an expert
    witness in certain big-case litigation, including Big Tobacco--
    which to a considerable extent was driven out of South Carolina
    by some of our top lawyers, asbestos cases the same--but also
    other cases that affect the public interest, such as Dalkon
    Shield litigation, sexual predators and Catholic priests,
    defective car seats, Benlate fungicide, which cut a wide swath
    among farmers, and so forth.
        From my experience in big complex cases, protective orders
    are very, very common and very overbroad. As my written
    statement reflects, decades ago judges were complaining about
    the issuance of protective orders, and one judge saying on the
    record he was unaware of any case in the past half-dozen
    years--and this is 1981--of even a modicum of complexity where
    an umbrella protective order was not agreed to.
        I included in my written statement a recent, to update,
    within the last 2 months, order from the Seventh Circuit, a
    District Court order, where you have a magistrate judge
    complaining about lawyers in that circuit--which has taken the
    lead in trying to clamp down on protective orders--just not
    doing it, lawyers not following, not getting the message. And
    somebody needs to send a strong message. It hasn't been sent
    over decades.
        The secrecy selling is of keen interest to me. As you know,
    we have dealt with that in South Carolina. And I would just
    raise a hypothetical, two actually, with you.
        One: Assume that you have a witness to a vicious criminal
    assault who is a sole witness and the only person whose
    testimony could really convict the wrongdoer. And assume that
    the perpetrator's lawyer goes to that witness and says, ``Here
    is $25,000. I want you to take this money. I don't want you to
    report to the police. I don't want you to cooperate with the
    authorities. It didn't happen.'' It is just: Wipe it off the
    map, and here is the money. Go spend it. Enjoy it. And assume
    that that transaction is struck.
        And nobody would have a problem condemning that transaction
    for witness tampering, obstruction of justice, conspiracy,
    bribery, all kinds of heinous things.
        Well, suppose it is a design defect in an automobile. And
    there, after tremendous discovery and a lot of effort, finally
    the plaintiff has figured it out and has come up with the
    killer documents--the key documents, the smoking gun documents.
        And the company, realizing that it is going to get stung
    and that all this is going to come out, goes to the plaintiff
    and goes to the plaintiff's lawyer and says, ``Here is a
    million. Here is $3 million. We want your file. It didn't
    happen. You can't talk to anybody about it. We will--you will
    owe us liquidated damages if you--you are not cooperating with
    a soul.''
        And you might say, ``Well, so what?'' The deal goes down.
    The settlement is agreed to. The money is exchanged. And you
    can say, ``Well, that happens every day. Nothing wrong with
    that. And it is a free country.''
        But what has happened in the hypothetical number two is the
    same thing that happened in hypothetical number one: You have a
    victim of serious wrongdoing or a witness to serious wrongdoing
    taking money in exchange for a promise not to cooperate with
    anybody. And we forget that victims of torts involving health
    and safety are often witnesses. And for them to take money and
    have their testimony and their ability to cooperate bought off,
    I say is heinous. It is heinous in the criminal case. I say it
    is heinous in the civil case. It is not what we talk about in
    our ethics courses. It is not proper.
        As for some of the complaints, you know, there are theories
    that it is going to take too much time away; it is going to tie
    up our courts in knots. I don't believe that for a second. I
    mentioned that there is a group, the Lawyers for Civil
    Justice--Mr. Morrison was a--didn't represent them, but was a
    former president of that group--and they declare it is
    imperative that this legislation be killed; it is bad
    legislation, and if you pass it other people are going to
    emulate it at the state level.
        Well, if it is bad legislation and it is going to tie our
    courts in knots, there is no risk that anybody is going to
    follow it. What I suggest people are really afraid of is that
    this starts momentum going in favor of truth in our courts. I
    want to see that.
        Thank you.
        [The prepared statement of Mr. Freeman follows:]
                     Prepared Statement of John P. Freeman

        Ms. Sanchez. Thank you, Professor Freeman. We appreciate
    your testimony.
        At this time, I would invite Judge Kravitz to please begin
    his testimony.

        TESTIMONY OF THE HONORABLE MARK R. KRAVITZ, JUDGE, U.S.
             DISTRICT COURT FOR THE DISTRICT OF CONNECTICUT

        Judge Kravitz. Thank you, Madam Chairperson. I am pleased
    to be here on behalf of the Judicial Conference Standing
    Committee and the Civil Rules Committee.
        I just want to give you a little bit about my background,
    as the others have, so you will understand where I am coming
    from on this issue. I practiced for 27 years, and during that
    period of time I worked with protective orders for both
    plaintiffs and defendants. And a large portion of my practice
    was devoted to representing media companies who were trying to
    intervene in cases and open government. And I am proud to say
    that I have received two awards in Connecticut for my efforts
    at open government and efforts against secrecy in government.
    And I say that not to be boastful but rather so that you know
    that I do not have a personal history of secrecy in government
    at all.
        Yet, the Rules Committee is opposed to this legislation
    for, I think, three very good reasons.
        First, there is no empirical evidence to suggest that
    protective orders or sealed settlements are substantially used
    in the Federal courts or that there is any abuse. My friend
    Professor Freeman talked about every case having a protective
    order. We have actually dug into the data, and 6 percent of
    Federal cases have protective orders, and sealed settlements
    are in one half of 1 percent of all cases that are solved.
        The Rules Committee actually devotes itself to using
    empirical information, not anecdotal information, and
    information about the Federal courts, not the state courts, to
    inform the rules process. And I would just say, if the
    committee has empirical information that suggests there is a
    problem to get it to the Rules Committee so that it can use
    that in the context of the rules process.
        Secondly, this is not, with all due respect, Madam
    Chairperson, at least insofar as the protective orders are
    concerned, a modest proposal. What this proposal suggests is
    that at the start of a case, before the judge knows anything
    about the case, the judge is going to have to review the
    documents, sometimes millions of pages of documents that the
    defendant is going to have to turn over, and before those
    documents have been given to the plaintiff is going to have to
    make a determination as to whether those documents are
    ``relevant to public health and safety.''
        We are not talking about documents being filed in court.
    Once documents are filed in court, the protective order
    provisions aren't what govern. It is the Constitution and the
    substantial body of case law that protects open judicial
    proceedings that govern. So we are talking about the exchange
    of information between parties outside of court to get the
    plaintiff up to speed as to what the facts are.
        And in my experience, both as a judge and a lawyer, the
    entry of a protective order allows litigants to exchange more
    documents at an earlier point in the litigation than would be
    possible without them.
        This legislation will require--the burdens of it really
    cannot be overstated. I am going to have to--I cannot make a
    determination that documents are relevant to public health and
    safety unless I review those documents. I am going to have to
    review them without the plaintiff having them because this is
    all before the plaintiff gets them. And then I am going to have
    to make a judgment with no help from experts or anything
    whether they implicate or are relevant to the public health and
    safety.
        First of all, I don't think I have the time to do that. And
    second of all, I don't think I have the knowledge to do that on
    any reasoned basis. And what we are going to result in is
    satellite litigation which is going to bog down the discovery.
    We should be in the business of getting Mr. Lanier the
    documents as quickly as possible, not as slowly as possible and
    not as expensively as possible. And Rule 1 of the Federal Rules
    says the goal here should be a just, speedy and inexpensive
    determination of the cases. And I believe that this provision
    on protective orders will disserve that interest.
        And finally, even though it sounds good, these provisions,
    they are unlikely to produce any benefits because the
    agreements that Professor Freeman talked about, they are going
    to be entered into anyway, and they just won't get filed with
    courts. Settlements are secret not because judges are sealing
    them. It happens in only .5 percent of all cases. Settlements
    are secret because the parties themselves are agreeing to
    secrecy orders. So the benefits that this act is designed to
    achieve, I am afraid, and the Rules Committee is afraid, won't
    be achieved.
        Thank you, Madam Chairperson.
        [The prepared statement of Judge Kravitz follows:]
              Prepared Statement of the Honorable Mark R. Kravitz*
    ---------------------------------------------------------------------------
        *See Appendix for attachments to the prepared statement of this
    witness.

        Ms. Sanchez. Thank you. I appreciate your testimony, Judge
    Kravitz.
        And at this time, I would invite Judge Anderson to please
    present his testimony.

    TESTIMONY OF THE HONORABLE JOSEPH F. ANDERSON, JR., JUDGE, U.S.
           DISTRICT COURT FOR THE DISTRICT OF SOUTH CAROLINA

        Judge Anderson. Thank you, Chairwoman Sanchez, Ranking
    Member Cannon, and Members of the Subcommittee. Thank you for
    inviting me to appear before you to discuss the Sunshine in
    Litigation subject, of particular importance to me as a trial
    judge with 22 years experience.
        I should say at the outset that I am not here representing
    the Judicial Conference or any other organization. I am here
    simply to convey my thoughts on the need for the awareness of
    the adverse consequences of what I prefer to call ``court-
    ordered secrecy.''
        As civil litigation has mushroomed in the United States
    courts in the past two decades, litigants have frequently
    requested that judges ``approve'' a settlement, often in cases
    where court approval is not legally required. And as part of
    the approval process, judges are sometimes asked to enter
    orders restricting public access to information about the case
    and its procedural history.
        In these instances, litigants are not content to simply
    agree between themselves to remain silent as to the settlement
    terms. Instead, their preference is to involve the trial court
    in a ``take it or leave it'' consent order that brings to bear
    the contempt sanctions of the court to anyone who breaches the
    court-ordered confidentiality.
        Unfortunately, trial judges often struggle under the crush
    of burgeoning case loads. Eager to achieve speedy and concrete
    resolutions to their cases and ever mindful of the need for
    judicial economy, many judges all too often acquiesce in the
    demands for court-ordered secrecy.
        In late 2002, the judges on the District Court of South
    Carolina voted unanimously to adopt a local rule for our court
    which places some modest restrictions on court-ordered secrecy
    associated with settlements in civil cases. We were then, and
    we remain, the only Federal district court in the country with
    such a rule.
        In the brief time allotted to me, I would like to relate
    several events which prompted me to propose this rule to our
    court and say just a word about our court's 6-year experience
    in operating under the rule.
        In 1986 when I was a 36-year-old baby judge, I was assigned
    a case that had been pending on another judge's docket for
    several years. The case was ready for trial, and the lawyers
    predicted a grueling 6-month trial. It was brought by 350
    plaintiffs who lived around a large 56,000-acre freshwater lake
    in upstate South Carolina. The plaintiffs contended that the
    defendant had knowingly deposited excessive amounts of PCBs
    into the lake, and that they had experienced severe health
    problems associated with being exposed to this toxic substance.
        Much to my relief, shortly before the trial was to begin,
    the parties announced that they had reached an amicable
    settlement. The defendant would pay three-and-a-half million
    dollars into a fund to be set up to provide primary medical
    monitoring and care for the 350 plaintiffs, and then there was
    a small amount of a per capita distribution to each of the
    plaintiffs to settle the case.
        There was one catch, however: The settlement was absolutely
    contingent upon my entry of a gag order prohibiting the parties
    from ever discussing the case with anyone and also requiring
    the return of all allegedly ``smoking gun'' documents. I was
    advised by counsel for both sides that if I did not go along
    with their request, the carefully constructed compromise
    settlement would disintegrate, and the case would proceed to
    the 6-month trial.
        As a judge with less than a year's experience on the court
    and other complex cases stacking up on my docket, and believing
    it was the fairest and best thing do in the case, I agreed to
    the request for court-ordered secrecy. When I signed the order,
    everyone was content: The plaintiffs had a handsome settlement;
    the lawyers for both sides were paid; the defendant received
    its court-ordered secrecy; there were no objections to my
    order; and I had one less case to try.
        In the ensuing years, I began to question my decision to
    enter a protective order in that particular case. Other people
    lived around that lake and were exposed to the same substance.
    I saw lawyers request the court order secrecy both at
    settlement and in connection with the exchange of documents
    during discovery.
        Just to take another example, I knew of a case on our
    docket of another judge who restricted information to case
    information about a go-cart which was allegedly defective and
    which was settled for one-and-a-half million dollars. Again, a
    court ordered gag order secrecy; the plaintiff's lawyer was
    restricted from discussing the case or even representing
    another litigant involving that same go-cart, which I later
    learned was still being marketed to the public.
        These are just two instances, nothing anecdotal about
    them--people live around the lake; children ride those go-
    carts--where the judge had lit the lightning match through the
    appellate court system through an order restricting information
    about those hazards.
        Responding to this series of events, I proposed to our
    court that we adopt a local rule prohibiting, in most civil
    cases, court-sanctioned secret settlements. When we proposed
    our rule for comment, we received heated objections from around
    the country. There were dire predictions that our court would
    be overwhelmed with the number of cases that went to trial as a
    result of our rule restricting court-ordered secrecy.
        Well, after 6 years, the dire predictions have appeared to
    be wrong. Our case has actually tried fewer cases in the 6
    years following the enactment of our local rule than it did in
    the 6 years preceding the enactment of our rule.
        Of the national furor that was created when our rule was
    proposed at least brought this attention to the forefront. I
    think judges are now more aware of the adverse consequences of
    court-ordered secrecy. This legislation has served to further
    that interest and raise the consciousness of judges on this
    very important topic.
        Thank you very much.
        [The prepared statement of Judge Anderson follows:]
          Prepared Statement of the Honorable Joseph F. Anderson, Jr.

        Ms. Sanchez. Thank you, Judge Anderson. We appreciate your
    testimony.
        We will now begin the first round of questioning. And I
    will begin by recognizing myself.
        Mr. Meadow, I would like to start with you. Some critics of
    the Sunshine in Litigation Act say that there is no empirical
    evidence establishing that court secrecy orders endanger public
    health and safety, that proponents of this act are simply
    relying on anecdotal evidence alone. How would you respond to
    that criticism?
        Mr. Meadow. Based on my experience, the litigations that we
    are involved in are mass torts affecting--each drug we are
    involved in is affecting thousands and thousands of people. So
    if they come up and say it is only 6 percent, that one--maybe 1
    percent of that can involve tens of thousands of people. So any
    time we discover a dirty document or something like that, it is
    going to affect thousands and thousands of people.
        So I think the overall public policy speaks to a favorable
    climate for this act vs. the small--I haven't seen the
    empirical data. But in my personal experience from the
    litigations I am involved in, you are talking about tens of
    thousands of people who are affected by one protective order.
        Ms. Sanchez. Thank you.
        Professor Freeman, why do you believe, as you state in your
    prepared statement, that judges can't be counted on to address
    the problem of court secrecy?
        Mr. Freeman. Because it is ubiquitous and because nothing
    seems to be happening. I didn't say that all Federal cases have
    protective orders. I said in----
        Ms. Sanchez. Many.
        Mr. Freeman [continuing]. Quoting a judge, cases with
    complexity are what we are talking about here. And there the
    protective orders are very, very common, and secrecy agreements
    are very common. And as I read the legislation, it deals not
    just with the approval of secret settlements, essentially to
    cover up evidence, but also the enforcement of secret
    settlements, which to me is important.
        But, you know, I would refer you to this order that was
    issued by the magistrate within the last 60 days in a circuit
    where the judges led by Judge Posner and Judge Easterbrook have
    really sought to crack down on overbroad protective orders. And
    that was a 1999 decision that led the way with follow-up
    decisions--1999, we know, now is--what?--9 years ago. And this
    is within the last 60 days the judge saying, ``You know, I--in
    this case, the magistrate judge entered a directive to the
    lawyers in the case saying, ``Don't you come to me and ask for
    a protective order unless it meets the following standards, one
    through whatever.'' And then he didn't get that. And that is
    why he wrote that order.
        And, you know, people have been talking a long time, but
    where is the beef? Where is the actual output that protects--
    that promises to protect--the public on matters of limited
    nature, health and safety in particular? It is time to do
    something because it just hasn't happened yet.
        Ms. Sanchez. Thank you.
        We know that plaintiffs sometimes, and maybe oftentimes,
    agree to these various types of confidentiality orders covered
    by the Sunshine in Litigation Act. And one example of that
    would be a protective order prohibiting the disclosure of
    discovery materials or an order sealing a settlement agreement.
        Why do lawyers who represent plaintiffs agree to such
    orders even though they may be contrary to the public interest?
        Mr. Freeman. For the money--for themselves and for their
    clients. This is about selling secrecy, and secrecy is a very,
    very valuable commodity it turns out, particularly when there
    is something very wrong that needs to be covered up.
        A company that has tremendous exposure, say running to the
    billions, can be very happy to pay the plaintiff and the lawyer
    who have figured out--gotten the smoking gun documents under a
    protective order, can't disclose them to anybody--got them, and
    now the company is faced with the possibility of the truth
    coming out, and being picked up on the Internet, being picked
    up on the news. It becomes a very simple transaction to buy
    that evidence and pay these people off.
        And the lawyer, you can say, ``Well, that is crooked on the
    part of the lawyer.'' But the problem is for the lawyer, the
    lawyer's job is to protect the client and do the very best for
    the client. The lawyer doesn't see himself or herself as
    representing society as a whole. So that skews the transaction.
        Legislation that came in and inserted the public interest
    into the calculation would be excellent.
        Ms. Sanchez. Thank you.
        Judge Anderson, you noted in your prepared statement that
    the local rule adopted by the district in which you sit as a
    judge has not inhibited settlement or increased the judges'
    workload. That rule, as I understand it, addresses only sealed,
    court-filed settlement agreements.
        The Sunshine in Litigation Act goes a little bit further
    than that. It also covers, among other things, protective
    orders. And I am wondering if you believe that the provisions
    of the act would, as some critics have claimed, inhibit
    settlement or significantly increase the workload of our
    courts, if that.
        Judge Anderson. I don't think it would inhibit settlement.
    It would increase the workload of the district judge. I do
    think we could count on the litigants to point out to us what
    is confidential, or what is arguably confidential. So it would
    increase our workload to some extent, but we could handle it.
        Ms. Sanchez. Thank you.
        My time has expired. So at this time I would recognize the
    Ranking Member for his 5 minutes to question.
        Mr. Cannon. Thank you, Madam Chair. Do you intend to do a
    second round? I personally don't see a need, but.
        Ms. Sanchez. I do have probably another question or two
    that I would like to ask. And given that there are not many of
    us here, I don't think that it would be overburdensome to go
    through a second round of questions.
        Mr. Cannon. I don't think it would be overburdensome at
    all. I don't know how we move this issue forward, though,
    because it is not going to be in our jurisdiction, it appears
    to me.
        But Mr. Kravitz, you seem to have had a response to what
    Mr. Anderson said about the parties. I suspect you are thinking
    in terms of the parties, plural, because----
        Judge Kravitz. Well, we won't have parties. I mean, the
    idea is this is all before Mr. Lanier and Mr. Meadow have the
    documents. So I am going to have to review them presumably
    under seal with no expertise at all with the defendants trying
    to convince me that it doesn't involve the public health and
    safety.
        We are far better served by getting Mr. Meadow the
    documents and then having him tell me where the smoking guns
    are, and having him tell me that public health and safety is
    implicated. And so, no, we are not going to have the parties,
    because he won't have the documents before I decide what the
    confidential agreement is, and whether the statute is met.
        And I will say in this regard, I am unsure. I--you know, we
    have heard it is only a problem in complex cases. But this
    statute applies to all cases. So in every single case--so if I
    have a case that involves a person, an employment case where a
    person was allegedly fired for having child pornography at
    work. Is that a case that has relevance to public health and
    safety? I mean, I am going to have to go through these
    questions on each one of my cases, not just the complex drug
    cases.
        Mr. Cannon. I--what you say, since we have a couple of
    judges here, that I am astonished at how hard it is to be a
    judge, and I appreciate your work. And I don't see much reason
    to make it more difficult.
        Judge Anderson, can I just follow up on this and add, ask
    this question: You said that your district has done a modest
    rule. In fact, under the current rules, no judge ever has to
    sign one of these agreements. You have talked about the
    pressure that he is under with his docket.
        But aren't we--why do we have to have this rule, taken out
    of order, passed by Congress instead of going through the
    normal rule enabling process, to do something that judges
    already pretty much have discretion and are able to do?
        Judge Anderson. And that is the best question that could be
    asked on this subject. We judges have life tenure, and why do
    we need some rule to hide behind on protective orders?
        My answer is: We judges have to work very hard to stay
    current. We, in my district, we are assigned between five and
    six hundred cases per year. But we have to close out between
    two and three cases each working day to stay current.
        So when the parties walk in with a settlement that they
    have worked out together and it provides for some payment of
    money, it is awfully difficult for the judge to say, ``Well, I
    am going to stand in the way of that settlement. I am not going
    to approve it. We are going to trial.'' And the plaintiffs
    might lose at trial, and then the judge has impaired a
    compromise settlement that was worked out legitimately just in
    the court.
        Mr. Cannon. Right. And that is a great answer. And part of
    the reason I am so anxious to give honor to the judiciary--you
    guys do a great job. These are very hard things. But isn't the
    answer to that to step back as a society and say we need more
    judges, or address the issue in some other way?
        Because you didn't deal with the issue of: Do you have
    discretion? Clearly your court, your district, has taken upon
    itself an additional set of guidelines. And while they are
    modest compared to this bill, each individual judge has a great
    deal of latitude.
        Shouldn't we be looking--and this is why it is
    inappropriate for this Subcommittee, because we are not the
    Subcommittee that deals with courts. And I have been on that--
    in fact I am on the other Subcommittee. We deal with this issue
    all the time. Isn't that the place where we say, ``How do we
    want to administer justice in America? Do we need more judges?
    What is taking time? What are our judges not doing?''
        And if our judges are not doing their--the job that you
    would like them to do based on your testimony, which is to be
    looking more carefully at these kinds of cases because someone
    may be impaired in the future, that the plaintiff may be
    impaired because he doesn't get his settlement, or otherwise.
    Shouldn't we be looking, then, at some other solution rather
    than a rule that we legislate instead of taking through the
    rules process?
        Judge Anderson. Well, I am a big fan of the rules making
    process. And I will say we judges work very hard. But I join
    the bandwagon for more judges. I take a briefcase home every
    weekend to read for the next week.
        Mr. Cannon. I will say that--and I know many, many Federal
    judges and state judges--that they work amazingly hard. And I
    don't want to make it more difficult by going out of order--
    regular order of the rules, regular order on our Committee--and
    do something that I just don't see a compelling reason for
    doing, especially when you have got judges like in your
    district, Judge Anderson, and who generally, who don't--without
    the support of your rule, judges around the country have, I
    think, have the same kind of discretion that this allows. They
    do have, I grant you, the kind of pressures. And maybe we ought
    to look at that.
        And, the light--I see the time is running out.
        Ms. Sanchez. The gentleman's time has expired.
        And I would just also remind the Members of the Committee
    that the full Committee has jurisdiction over such issues, and
    they referred it to this Subcommittee. So it is proper for us
    to consider it here today.
        I am going to just go into a second round of questions. I
    have a few last questions, and hopefully we will conclude the
    hearing fairly soon so that you gentlemen can get back to what
    you do in your normal, everyday lives.
        I want to start with Judge Kravitz. In your prepared
    statement, you say that the Sunshine in Litigation Act would,
    and I am quoting from your testimony, ``effectively amend the
    Federal Rules of Civil Procedure outside the rulemaking
    process, contrary to the Rules Enabling Act.'' And you add that
    ``direct amendment of the Federal Rules through legislation
    circumvents the careful safeguards Congress itself has
    established.''
        But isn't it true that the act wouldn't actually amend the
    Federal Rules, but instead it would amend Title 28 of the
    United States Code?
        Judge Kravitz. Well, technically it does. But it says that
    a court shall not enter an order under Rule 26(c) of the
    Federal Rules of Civil Procedure. That is what the act says.
        So what it is doing is, in effect, amending the Rules of
    Civil Procedure and saying that a court cannot enter the order
    that is otherwise provided unless they make these findings.
        And the Rules Enabling Act process is an exacting and
    thorough process, as I know Judge Anderson understands. There
    are--it is also transparent, completely transparent. We publish
    these rules for comment; we have--and for these rules, we had
    three hearings nationwide----
        Ms. Sanchez. I understand that.
        Judge Kravitz [continuing]. People testify.
        Ms. Sanchez. I understand that. But I am just trying to get
    at the authority issue here because I want to make it clear for
    the record. It isn't the position of the Judicial Conference,
    is it, that Congress lacks the authority to legislate with
    respect to matters covered by the Sunshine in Litigation Act?
        Judge Kravitz. No, no. No, no.
        Ms. Sanchez. Okay.
        Judge Kravitz. No. The idea is that there is a Rules
    Enabling Act process that Congress put together. It has worked
    extremely well. And the rules that come out of that process are
    very, very good, and they are based on empirical data, not
    stories from my courtroom. And----
        Ms. Sanchez. I want to draw your attention to----
        Judge Kravitz [continuing]. It is the----
        Ms. Sanchez [continuing]. Something that Judge Abner Mikva
    has said, that the Sunshine in Litigation legislation involves,
    and I am quoting from him, ``policy issues that should be
    decided by policymakers in Congress, not by judges.''
        And my question is: Why should Congress defer to the
    Judicial Conference if the Judicial Conference has, by its
    inaction, acted inconsistently with what Congress believes to
    be a fundamental mandate of good public policy, which is trying
    to protect the health and welfare of other potential victims
    who will never have this information come to light because of
    these secrecy orders?
        Judge Kravitz. Well, listen, the Congress obviously has the
    power to pass legislation--it is not that. It is just that
    Congress established a very orderly and sensible process for
    coming up with rules of civil procedure and criminal procedure.
    That process has worked extremely well for the last 70 years on
    a variety of topics, many of which have policy implications to
    them.
        And this is a way of short-circuiting that process--not
    getting the empirical information, not having input from a wide
    spectrum of professors and others. And so that is why I think
    the Judicial Conference is so adamant about the fact that this
    process has just worked so extremely well that----
        Ms. Sanchez. I understand that. But we also do have
    processes in Congress by which receive testimony; we get
    experts to send testimony; we get to question witnesses, much
    like what is happening today. And, you know, there are--
    legitimately, if there is a perceived lack of movement in an
    area in which Congress has a fundamental policy interest in
    looking after----
        Judge Kravitz. I can't disagree with you. All I can say,
    though, is I would like to see the empirical information about
    how often protective orders that have been entered in
    connection with discovery. I am not talking about sealed
    settlements that have actually ended up, in Federal court,
    ended up with a health and safety issue. We have looked at that
    issue carefully, and it is not there.
        Ms. Sanchez. Let me ask you this, Judge Kravitz. Although
    it is perhaps that the number of them is not huge, or gross of
    the overall docket, would you agree with Mr. Meadow, though,
    that the potential people that are affected by just one could
    be in the tens of thousands if not hundreds of thousands?
        Judge Kravitz. I would like to hear that information. We
    found that protective----
        Ms. Sanchez. But what about the fact that Mr. Meadow can't
    provide it because there are all these secrecy agreements that
    hide the number of people that have been impacted?
        Judge Kravitz. I will say that that was very dramatic. But
    I gather that--I would venture to say that Mr. Meadow actually
    filed pleadings in court. And those pleadings in court are
    subject to the constitutional right of public access. And Mr.
    Meadow, I am sure, makes very strong arguments in court in
    those public documents about the health and safety in the
    conduct of defendants. So--and you, the Congress and other
    people, can get copies of those pleadings.
        I talked to Mr. Meadow--his Vioxx cases were in state
    court; they weren't in Federal court. We are talking about the
    Federal rules. And I just think we need to look carefully at
    what has actually happened in Federal court, not in state
    court, and see if there is a problem. And if it is a problem,
    we will deal with it.
        Ms. Sanchez. I understand.
        But the question, more specifically, was--leaving aside
    state cases--was to talk about Federal cases in which there is
    an interest in potential effects to other plaintiffs. Do you or
    do you not agree that a plaintiff who has been injured, or even
    killed, because of the negligence or the fault of another,
    keeping that information secret does have the potential to
    impact tens of thousands of people?
        Judge Kravitz. It does. But I think we have to distinguish
    between during the course of discovery before trial or
    settlement and at the end of the case. And what I am saying is,
    the provisions here about the course of discovery are going to
    slow down things and not get Mr. Meadow the information he
    needs.
        Now, if at the end of the case he believes that--well,
    first of all, if it is tried, it is all open to the public. If
    it is settled, and not he but somebody else wants access to
    that information, they have an ability to come to the courts.
        And courts do modify orders; courts do vacate orders. In
    the Wyeth case dealing with the vaccines, the court vacated the
    order and allowed that information to go to public authority.
    But that is the end of the case, after we have gotten Mr.
    Meadow the information that he wants. And I thinks that is the
    real--but that this order requires it during the discovery
    process.
        Ms. Sanchez. I understand that distinction that you are
    making.
        Mr. Meadow, would you care to respond to that? Or I also
    have another question I would like to ask.
        Mr. Meadow. No, absolutely. The judge is right that when we
    file a complaint, it is public; it is a public document; you
    can go down to the courthouse and read it. But these complaints
    are mere allegations of what we think a company has done wrong.
    We don't have any specific information. It is not until we get
    the actual documents.
        And, normally, after we file a complaint, it could be
    months before we get any documents because we spent the first 6
    months negotiating for a protective order and for
    confidentiality. And when we finally get the confidentiality
    order, and we start getting the documents, those documents are
    redacted. And we have to fight yet again. The defendants who
    are going over these documents, and they are normally multi-
    billion-dollar corporations, usually turn on six to seven law
    firms to review the documents. So they have already been gone
    through.
        And this legislation places the burden of whoever seeks the
    protective order on that who is seeking the order. So the
    defendants know what documents are affected by the protective
    order.
        So the complaint, I don't think--I think it is a red
    herring in this because it is bare-bones, and nobody goes down
    and reads our complaints. You know, the press may pick it up,
    and then the company denies all allegations and says they are
    all false anyway. So until we get a protective order in place,
    we can't see the documents. And then we have a second go-around
    with those documents.
        Ms. Sanchez. Thank you, Mr. Meadow.
        My time has expired. I would now recognize Mr. Cannon for 5
    minutes.
        Mr. Cannon. Thank you, Mr. Kravitz. Did you want to respond
    to Mr. Meadow's comments?
        Judge Kravitz. Well, I just--can I just give you--I have
    talked about anecdotal information, so I shouldn't do it. But
    here is a case I just tried about a year ago: The plaintiff
    alleged that the brakes on the truck were defective. The
    defendant alleged that the driver was drunk and asleep at the
    time of the truck accident, which killed two people.
        Truckloads of information was given to the plaintiff under
    the form of a protective order, during the course of which we
    got the plaintiff's new information; there were experts on both
    sides. It was tried to a jury. The jury found that the driver
    was asleep and drunk and that the brakes were fine.
        Now, that is--we know that at the end of the case. Now,
    tell me, at the beginning of this case, when the requests for
    information about the brakes were coming, is that a case that
    is relevant to public health and safety or not? I just don't
    know how I am going to decide that information in those cases.
    And you can go on and on about the scenarios.
        So all I am saying is I think that there is--judges have
    the ability to modify orders, and they do. Judges have the
    ability at the end of the case to allow information that has
    been subject to a confidentiality agreement to get out to the
    public, so that if the brakes were found to be defective by the
    jury, and somebody else wanted this information, they could get
    it. Of course, this all came out at a public trial of that
    case.
        So I just think we--I would urge the Committee to just kind
    of look at the sealed settlement provisions differently from
    the discovery proceedings. And we do not need to impose further
    burdens and costs on litigants in the course of discovery;
    there is already plenty of them. And I do believe that this
    would impose significant costs, and it will result in Mr.
    Meadow not getting his documents any time soon.
        Mr. Cannon. Thank you.
        You know, these are complicated issues. And sitting on both
    this Committee and the Committee on Intellectual Property and
    the Courts, it is--let me just give you one little experience.
    I sat on that Committee for 6 years with Barney Frank. Now,
    Barney Frank and I are on the opposite sides of the political
    spectrum. But after 6 years, he left the Committee to be, I
    think, the Ranking Member on Financial Services. But we had a
    little chat, and it occurred to us--or to me, at least--that we
    had sat on that Committee and disagreed on many things but had
    never once disagreed about judicial oversight and economy.
        And we have in place here a system that allows for the
    development of rules in an open and public fashion where all
    thoughts can be weighed. And that system was--actually I agree
    with you, Mr. Kravitz--that has worked for a long time. In
    fact, I was just thinking how long I have been involved as a
    lawyer, and it tracks back quite a ways. And it has worked
    well, and I have followed it closely.
        On the other hand, we in Congress have some pretty dramatic
    authority. We, for instance, can get from you, outside of your
    agreement system that is, the content of the information that
    you can't disclose to us because we are Congress, and we are
    not constrained by those agreements. There are some
    limitations, and we have to work through those. But we have
    great powers.
        And those great powers, I think, we need to use very
    thoughtfully, very carefully, especially when society is
    changing as rapidly as it is right now. We need to maintain, in
    some ways, continuity. And so in the regular order of
    developing a rule, things happen that make sense. And in the
    regular order of this Congress, things happen we hope that make
    sense.
        And going out of regular order, it is true that the full
    Committee can't actually mark this bill up now. But this
    Subcommittee, I don't believe, can mark this bill up, and I am
    not--I don't believe that this testimony is even going to be
    relevant when we get to a full Committee markup if it goes that
    far.
        There is a good reason for having these kinds of regular
    order. And it just seems to me that there is nothing that has
    been said here at this hearing that compels anything, any
    activity, by this Committee or by the full Committee.
        I am very impressed with Judge Anderson's comments about
    what they have done and what he has done in his--the other
    judges in his district have done. That makes enormous sense.
        I think that there is agreement by the panel that judges
    have a lot of latitude, and I don't think anyone would disagree
    with Judge Kravitz that orders can be changed. I don't think
    anybody would disagree with Judge Kravitz that after a trial
    has happened that that is a different environment and that this
    rule would create burdens before you can get to that open a
    trial.
        And, in fact, I believe that the greatest benefit that most
    plaintiffs really ultimately have is the threat of the trial
    that the defendants will have to defend. And going through that
    process may mean that the brakes are determined not to be
    defective. And, therefore, there are classes of people that
    could emerge to sue won't be empowered. But on the other hand,
    it means that you have gotten a decision in a public, open
    fashion, and that leaves a very small number of cases where you
    might have a settlement agreement.
        And I think we have heard great insight on that process. I
    don't think that insight leads us to change the ordinary course
    and create by legislation a new rule. I think it makes it,
    gives a basis for thinking about how these things should go.
    And I think it creates a basis for other districts to look at
    what your district has done, Judge Anderson, and say, ``Do we
    want to do the same kind of thing?''
        I think that these are very powerful ideas, but they are
    not ideas that should motivate this Congress or any other to do
    a bill that would change by legislative fiat rules that have
    grown in an organic, open and public fashion.
        And so, Madam Chair, my time is----
        Ms. Sanchez. Would the gentleman yield?
        Mr. Cannon. Certainly.
        Ms. Sanchez. Just because Judge Kravitz seems to be so
    interested in empirical information, I would ask--and we will
    submit written questions as well, which I will go over
    shortly--but I would be interested to know just how many times
    judicial orders are actually changed regarding these
    confidentiality agreements. So if you have that information, we
    will allow you to submit that.
        Judge Kravitz. It actually is, if you read the study on
    protective orders that is part of attached to my testimony,
    there are statistics--I don't have them at my hand----
        Ms. Sanchez. Okay.
        Judge Kravitz [continuing]. On modifications and which
    orders come through stipulations----
        Ms. Sanchez. Because I would suspect--and this is just
    speculation on my part, of course, until I receive the
    information--that it is probably not very often that that
    occurs.
        Judge Kravitz. I don't know that you are right about that.
        But let me just say, too, I said in 6 percent of all cases
    where a protective order, in only 9 percent of that 6 percent
    involves personal injury. I mean, the vast number involves
    things that have nothing to do with personal injury.
        So we could look at the--but I, my recollection was that
    there was information on there. And, actually, only 50
    percent--50 percent--of those protective orders were actually
    stipulated. Most of them were litigated, and then there was a
    decision by a judge about them as to whether or not to have
    them.
        Mr. Cannon. In reclaiming my time, let me just point out
    that you would expect a very small number of these orders would
    be reviewed, but they get reviewed when there is a serious
    issue. And a judge, he gets paid--not enough, by the way;
    although we did increase that, and I----
        Ms. Sanchez. We have attempted, have attempted----
    [Laughter.]
        Mr. Cannon. We ought to grab it on anything that will go.
        At least we have done our work on our side, I believe. And
    hopefully the Senate can actually do something before they are
    out.
        But the whole point here is that Federal judges are in a
    position of stature--and not adequately paid, but hopefully
    better paid in the future--to make these kinds of decisions
    about what is important and what kind of rules and what kind of
    rulings that they have issued should be changed.
        And so I am not sure that the number is so important as
    compared to the fact that it is done by men of judgment and
    women of judgment when it is reasonably required. And I think
    that you are going to find that the bench is competent. And,
    therefore, the orders, the changes on those rulings are going
    to be appropriate, and not that the number is significant but
    the action by judges, I think, that you will find to be
    appropriate.
        Thank you, Madam Chair.
        Ms. Sanchez. That remains to be seen.
        We want to thank all of the witnesses for their testimony
    today.
        Without objection, Members will have 5 legislative days to
    submit any additional written questions--I told you I would
    tell you about that--which we will forward to the witnesses and
    ask that you answer as promptly as you can so that they can be
    made a part of the record.
        Without objection, the record will remain open for 5
    legislative days for the submission of any additional materials
    as well.
        Again, I want to thank everyone for their patience. And I
    wish everyone a safe and productive August work period.
        And this hearing of the Subcommittee of Commercial and
    Administrative Law is now adjourned.
        [Whereupon, at 11:45 a.m., the Subcommittee was adjourned.]
                                A P P E N D I X

                                  ----------

                   Material Submitted for the Hearing Record

    Attachments to the Prepared Statement of the Honorable Mark R. Kravitz,
           Judge, U.S. District Court for the District of Connecticut

                                  ATTACHMENT 1

                                  ATTACHMENT 2

                                  ATTACHMENT 3

           Answers to Post-Hearing Questions from Richard D. Meadow,
                           the Lanier Law Firm, PLLC

     Answers to Post-Hearing Questions from John P. Freeman, Distinguished
          Professor Emeritus, University of South Carolina Law School

     Answers to Post-Hearing Questions from the Honorable Mark R. Kravitz,
           Judge, U.S. District Court for the District of Connecticut

        Answers to Post-Hearing Questions from the Honorable Joseph F.
      Anderson, Jr., Judge, U.S. District Court for the District of South
                                    Carolina