State Legislatures and courts move to make government settlement agreements public record

From the Spring 2010 issue of The News Media & The Law, page 12.

Open government advocates in Kentucky and Nebraska have recently turned to judges and legislators to address an important issue involving taxpayer dollars: Can public agencies hide how much they paid to settle lawsuits out of court?

The Kentucky Supreme Court in March ruled in favor of a local newspaper when it unsealed a settlement agreement between a Kentucky school board and a teacher who sued for sexual harassment at one school and for not being hired by another.

The case began in 2007 when the Central Kentucky News-Journal asked for the agreement under the state’s public records law, but both a trial court and an appellate court refused to unseal the documents, citing privacy exemptions — a premise with which the Kentucky Supreme Court disagreed. “We think it quite clear that the settlement agreements are presumably public records subject to disclosure, regardless of their confidentiality provisions,” the state high court’s opinion read.

The court said proceeds from the settlement agreement were paid by the taxpayer-funded Kentucky School Board Insurance Trust and resolved claims against “the school districts, and its agents in their official (as well as personal) capacities, thus negating any notion that the agreements concerned purely personal matters.”

The newspaper’s three-year battle to unseal the records was well worth it, said News-Journal editor Rebecca Cassell. “This was important to us because it was public money and public business should be conducted in public view,” Cassell said. “Otherwise, we have no idea what our public officials are doing.”

The outcome of the case could have had far-reaching effects, Cassell said. Had the court refused to unseal the settlement agreements, “I don’t even want to imagine what kind of information other public agencies would continue to try to keep secret, not just in our community but across the state,” she said.

David Thompson, executive director of the Kentucky Press Association, which stepped in to provide half of the newspaper’s legal fees, agreed. Since 1996, the association’s legal defense fund has provided more than $400,000 toward open-government cases. “We know that public agencies almost have a bottomless pit to fight legal cases, and newspapers do not,” Thompson said.

Thompson hopes the case will change the way public bodies approach settlement agreements. “The more we get decisions saying settlement agreements cannot be sealed, I think it will discourage public agencies from attempting to keep things secret. It should also encourage taxpayers to stand up and tell public agencies it is our right to know what is going on,” Thompson said. “Public agencies should not keep thinking, ‘oh, we’ll just seal the records and no one will know.’”

The Kentucky Supreme Court’s decision isn’t the first time state high-court judges have decided the public’s right to access government records can outweigh the privacy interest agencies cite. In a similar case, the Pennsylvania Supreme Court in 2003 sided with a newspaper requesting the confidential settlement agreement between a county housing authority and an employee who sued for gender discrimination. The court held that the state’s Right-to-Know law indicated that in enacting open government laws on behalf of the public, lawmakers believed “that it is more important that they have access to this type of information than that it remain confidential.”

Despite favorable court cases unsealing public agency settlement agreements in recent years, the dispute over whether the agreements are public records is far from settled in many jurisdictions. In some states, the cause is being taken up by the state legislature.

Open-government advocates in Nebraska, for instance, are tackling the secrecy of confidential settlement agreements with public agencies by changing the law. In April, Nebraska Gov. Dave Heineman signed a law that will make it more difficult for government entities to keep costly legal settlements secret and prevent them from arguing that confidentiality clauses prohibit the public’s right to access the documents. The bill was proposed by Sen. Beau McCoy, an Independent from Omaha, after a secret settlement last year that paid $280,000 to a former mayoral aide who claimed she had been sexually harassed and assaulted by the mayor.

“It’s my opinion that we had a successful outcome to this legislation because we went through the legislature,” as opposed to the courts, McCoy said. Though school districts across the state voiced “vociferous opposition” to the bill, “we succeeded in a way that might have come out differently in the courts.”

McCoy said part of the problem was that the school districts for decades had been interpreting the public record statutes incorrectly and avoided public scrutiny by “using the state’s very lax statutes regarding settlement agreements to move teachers around and get rid of administrators.”

Many of the public bodies opposed to the legislation claimed to not even keep a written record of settlement agreements, McCoy said. But by the end of debate on the legislation, McCoy said he was pleased to have no opposition to the bill. “Hopefully, we closed the loophole on where a lot of our taxpayer dollars are going.”

“In an era where many state government budgets are in sad shape, we found this to be one way to address what is happening with spending and to make those political subdivisions think twice about these settlement agreements, knowing full well they will come to light,” McCoy said.