AAI Opposes Attempt to Ban Confidential Court Settlements in R.I.

March 25, 2003

A bill being heard Tuesday by the Rhode Island House Judiciary Committee is reportedly an attempt by the trial bar to restrict the use of confidentiality and settlement agreements in certain legal actions. If passed, it will only clog the state’s courts and harm the state economy, according to the Alliance of American Insurers (AAI).

The Alliance is opposing the bill, HB 5292, which would reportedly severely restrict the use of confidentiality agreements, settlement agreements and protective orders in actions alleging damages caused by a defective product, an environmental hazard or a financial fraud.

“Rhode Island is one of 11 states to see this type of legislation introduced on behalf of the trial bar this year,” said Frank O’Brien, vice president and New England Regional manager for the Alliance, in testimony before the committee. “The Alliance believes that the judiciary must be able to maintain its discretion to issue protective orders on a case-by-case basis.

“This bill, and much of the legislation that other states are currently considering regarding confidentiality agreements, is contrary to U.S. Supreme Court decisions that have held that evidence produced in discovery may not become public documents. Eliminating the ability to issue a protective order serves only one purpose – it gives the trial bar access to the discovery process so that they can generate more fodder for more litigation.”

O’Brien added that, “Eliminating protective orders will slow down the discovery process, increase the costs of litigation and discourage settlement of cases. It also will further burden the already overcrowded court dockets and turn the judiciary into an information agency by requiring courts to review and supervise the distribution of thousands of documents currently exchanged between the parties in the discovery process without court supervision.

“Over the past several years, the Rhode Island General Assembly has worked hard on economic development matters. A key component of this work has been an unwillingness to pass new laws that could have a chilling effect on economic development efforts. HB 5292 is just such a bill, and if passed, will harm the state’s economy.”

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