Secrecy clauses in sexual molestation settlements: Should courts agree to seal documents in cases involving the Catholic Church?

Georgetown Journal of Legal Ethics, The, Summer 2003 by Seferian, Avedis H, Wakley, James T

INTRODUCTION

In today's highly litigious American society, settlements have come to represent an increasingly common form of resolving legal disputes.1 Many courts have acknowledged a preference for the settlement of disputes between parties, finding a strong public policy in favor of such agreements.2 However, current literature calls into question the prudence of such a policy.3

This Note examines the ethical considerations underlying the enforcement of a secrecy clause in a settlement agreement, paying particular attention to whether courts should agree to seal documents in cases involving alleged sexual molestation by Catholic priests. Part I will address the basic policy reasons and tradeoffs implicated in settlement agreements. Part II will address the role of courts in enforcing such agreements. Part III will evaluate the relationship between the Catholic Church and the secular legal system. Finally, Part IV will examine the specific considerations faced by a court in deciding whether to enforce a secrecy clause of a settlement agreement in a case involving alleged sexual molestation by a member of the Church.4

I. WEIGHING THE SCALES: COSTS AND BENEFITS OF SETTLEMENT AGREEMENTS

Settlement agreements in general - and secrecy clauses in particular - involve ethical tradeoffs at two levels. The first is at the level of the individual parties themselves, and the second is at the level of society at large. Within the latter, there are, in turn, two tradeoffs as well - a tradeoff between the interests of the parties and that of society, and another tradeoff between two competing interests of society itself (obtaining information versus the cost of conducting trials).

A. THE TRADEOFF AT THE INDIVIDUAL LEVEL

At the individual level, parties involved in litigation have two options available to them.5 Individual litigants may choose to engage in a drawn-out litigation process with an uncertain outcome and the potential risk of severe embarrassment to at least one of the parties involved. This option does however offer the possibility of a big payout for the plaintiffs and a public "victory" in the event of a guilty verdict.

On the other hand, the parties may opt for a much shorter, and less painful, settlement negotiation, where the risk of embarrassment to either party is reduced, because of the very low risk of public disclosure of the "problem." This option gives the plaintiffs a known, fixed amount of compensation. However, the settling plaintiff does sacrifice achieving a "moral" victory, because the other party will not be found liable by a court of law.

In short, as seen from the plaintiff's point of view, the tradeoff is between a bird in the hand (a fixed certain sum for the plaintiff with no admission of guilt by the defendant) and two in the bush (a risky trial where if the plaintiff wins, he gets both the money and the vindication of seeing the defendant found liable; but if he loses, he gets nothing).

This situation presents an ethical dilemma for most lawyers. The American Bar Association's Model Rules of Professional Conduct (Model Rules) do not explicitly address secrecy clauses in settlement agreements. This silence can be interpreted to mean that the Model Rules allow such agreements,6 and most lawyers believe the old adage about the bird in the hand being worth more than two in the bush. Often, the lawyer is faced with a situation where his client really needs the money, and so the lawyer's goal becomes a question of getting money for him.7 In the aftermath of the tragic combination of Firestone/Bridgestone tires and Ford Explorers, most lawyers reacted by saying that their "first duty was to win as much money as possible for the crash victims whom they represented."8

This tradeoff alone merits significant analysis.9 However, for the purposes of this Note, it suffices to submit the tradeoff to a Pareto analysis. Pareto efficiency is defined as a situation when no one can be made better off without making someone else worse off.10 Thus, if settling leaves both parties better off, it is therefore a more efficient outcome (or, in economic parlance, it is a Pareto superior outcome).11

If two parties agree to a settlement, it is presumably because, having weighed all their options, each feels it will be better off settling rather than seeking resolution in court. Therefore, the parties are choosing a Pareto superior outcome, and since litigation is a private venture, society should not second-guess their personal choice.12

On the other hand, opponents argue that settlements don't really solve the underlying issue, and, moreover, society's interest in having disputes resolved by public hearings in courts of law outweigh the interests the parties have in achieving a Pareto superior solution to their private dispute.13

The next sub-section will analyze this tradeoff between society's interests and those of the litigating parties, as well as the tradeoff between the desire to obtain information and the cost of conducting trials to do so.