California State Senate Approves Bill to Ban Confidential Agreements

June 8, 2001

Despite strong opposition from the business community, the California State Senate narrowly approved a trial-lawyer sponsored measure that will give public access to potentially all information exchanged during the civil discovery process.

The American Insurance Association (AIA), along with a strong coalition of business organizations have been aggressively lobbying against the measure, SB 11 (Escutia-D), which was approved on a partisan vote of 21 Democrats to 16 Republicans.

“This bill will devastate California’s business climate,” said Mark Webb, vice president, state affairs. “If this bill becomes law, anyone who files a lawsuit in California will be able to access a company’s confidential and proprietary information under the guise of protecting the public.” SB 11 is a companion measure to AB 36 (Steinberg), which is currently awaiting a vote by the state assembly.

SB 11 will ban confidential settlements in personal injury and wrongful death cases relating to product defects, unfair claims practices, energy price gouging and environmental hazards.

“This bill will flood California’s court system with thousands of requests for protective orders to seek relief from the onerous provisions of this bill,” Webb said. “Intellectual property is one of the most important assets of a company and this bill exposes these assets unnecessarily by threat of disclosure based upon unapproved allegations of harm.”

“AB 881, by Democratic Assemblyman Joe Simitian, would allow confidential information to be kept confidential but reported to regulatory agencies whose charge is to protect the public,” Webb said. “If the Legislature wants to ensure public safety while not exposing California’s businesses to abusive discovery practices, they should support AB 881.”

SB 11 will now move over for consideration by the California State Assembly.

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