Jessup, Goble v. Luther, Robert

In the
United States Court of Appeals
For the Seventh Circuit
No. 01-1523
Goble Jessup,
Plaintiff-Appellee,
v.
Robert Luther, et al.,
Defendants-Appellees.
Appeal of Mid-Illinois Newspapers, Inc.,
Intervenor/Appellant.
Appeal from the United States District Court
for the Central District of Illinois.
No. 97 C 2241--David G. Bernthal, Magistrate Judge.
Argued September 28, 2001--Decided Janaury 17, 2002
Before Posner, Easterbrook, and Kanne,
Circuit Judges.
Posner, Circuit Judge. A newspaper
publisher appeals from the denial of its
motion to unseal a settlement agreement
that had been sealed and deposited in the
federal district court in which the
motion was made. The agreement resolved a
dispute between a former vice president
of a public college, and the college,
concerning the termination of his
contract of employment. He had sued the
college in federal district court under
42 U.S.C. sec. 1983, charging that the
termination had deprived him of property
and liberty without due process of law,
in violation of the Fourteenth Amendment.
The suit was filed in 1997 and the
following year settlement discussions
were conducted that a magistrate judge
presided over as authorized to do by a
local rule of the district court. The
parties reached an agreement and embodied
it in a signed document that they gave
the judge. He "approved" the agreement,
we are told, but the significance of this
approval is unclear. He did not embody
his approval in a judicial order that
would have made the agreement enforceable
by contempt proceedings in the event that
either party violated its terms. He
merely ordered that the suit be dismissed
with prejudice and that "all documents
related to the settlement are to be
sealed. This will include any documents
submitted by the parties other than the
order of dismissal." The publisher inter
vened, see Jessup v. Luther, 227 F.3d 993
(7th Cir. 2000), but, as we have said,
its motion to unseal the agreement was
denied, precipitating this appeal. The
denial of the motion was a final,
appealable order, 28 U.S.C. sec. 1291,
for nothing remained pending in the
district court after its entry.
The general rule is that the record of
a judicial proceeding is public. Press-
Enterprise Co. v. Superior Court, 464
U.S. 501, 509-10 (1984); United States v.
Ladd, 218 F.3d 701, 704 (7th Cir. 2000);
Smith v. United States District Court
Officers, 203 F.3d 440, 441 (7th Cir.
2000); In re Cendant Corp., 260 F.3d 183,
192 (3d Cir. 2001); In re Sealed Case,
237 F.3d 657, 666 (D.C. Cir. 2001). Not
only do such records often concern issues
in which the public has an interest, in
which event concealing the records
disserves the values protected by the
free-speech and free-press clauses of the
First Amendment, but also the public
cannot monitor judicial performance
adequately if the records of judicial
proceedings are secret. Union Oil Co. v.
Leavell, 220 F.3d 562, 567-68 (7th Cir.
2000); United States v. Eppinger, 49 F.3d
1244, 1252-53 (7th Cir. 1995); B.H. v.
McDonald, 49 F.3d 294, 301 (7th Cir.
1995); United States v. Amodeo, 71 F.3d
1044, 1048 (2d Cir. 1995). These
considerations, however, support a strong
presumption rather than an absolute rule.
When there is a compelling interest in
secrecy, as in the case of trade secrets,
the identity of informers, and the
privacy of children, portions and in
extreme cases the entirety of a trial
record can be sealed. Citizens First
National Bank v. Cincinnati Ins. Co., 178
F.3d 943, 945 (7th Cir. 1999); Doe v.
Blue Cross & Blue Shield United of
Wisconsin, 112 F.3d 869, 872 (7th Cir.
1997); Miller v. Indiana Hospital, 16
F.3d 549, 551 (3d Cir. 1994). The
interest in secrecy is weighed against
the competing interests case by case.
Central National Bank v. United States
Dep’t of Treasury, 912 F.2d 897, 900 (7th
Cir. 1990); Chicago Tribune Co. v.
Bridgestone/Firestone, Inc., 263 F.3d
1304, 1314-15 (11th Cir. 2001); Miller v.
Indiana Hospital, supra, 16 F.3d at 551;
see also United States v. Ladd, supra,
218 F.3d at 705-06.
Parties who settle a legal dispute
rather than pressing it to resolution by
the court often do so, in part
anyway,because they do not want the terms
of the resolution to be made public.
Defendants in particular are reluctant to
disclose the terms of settlement lest
those terms encourage others to sue. See
generally Laurie Kratky Dore, "Secrecy by
Consent: The Use and Limits of
Confidentiality in the Pursuit of
Settlement," 74 Notre Dame L. Rev. 283
(1999). This might seem a material
consideration in the present case, since
the settlement was with an employee of
the defendant and if the terms were
favorable to the employee it might
encourage other employees of the
defendant to sue as well--yet it was the
plaintiff rather than the defendant that
requested that the terms of the
settlement be kept secret, and the judge
gave no reason why he acceded to the
request. Ordinarily, though, settlement
agreements, like most arbitration awards
and discovery materials, are private
documents, Union Oil Co. v. Leavell,
supra, 220 F.3d at 568, not judicial
records, and so the issue of balancing
the interest in promoting settlements by
preserving secrecy against the interest
in making public materials upon which
judicial decisions are based does not
arise--there is no judicial decision.
Even if the parties reach settlement
after suit has been filed, the settlement
agreement will not be a judicial record,
B.H. v. McDonald, supra, 49 F.3d at 300,
because the parties will file a
stipulation of dismissal pursuant to
which the suit will be dismissed without
further ado or court action, Fed. R. Civ.
P. 41(a)(1)(ii), and the settlement
agreement that motivated the stipulation
of dismissal will then have the identical
status as any other private contract.
Kokkonen v. Guardian Life Ins. Co., 511
U.S. 375, 380-81 (1994); Professional
Service Network, Inc. v. American
Alliance Holding Co., 238 F.3d 897 (7th
Cir. 2001); Montgomery v. Aetna Plywood,
Inc., 231 F.3d 399 (7th Cir. 2000); Carr
v. Runyan, 89 F.3d 327, 331 (7th Cir.
1996); McAlpin v. Lexington 76 Auto Truck
Stop, Inc., 229 F.3d 491, 501-04 (6th
Cir. 2000); Langley v. Jackson State
University, 14 F.3d 1070, 1072-75 (5th
Cir. 1994).
Settlement agreements that contain
equitable terms, an injunction for
example, will usually be embodied in a
consent decree so that the judge will
have continuing jurisdiction to enforce
their terms. But consent decrees are
judicial orders and therefore are public
except insofar as particular provisions
may be concealed in order to protect
trade secrets or other compelling
interests in secrecy. B.H. v. McDonald,
supra, 49 F.3d at 300; EEOC v. National
Children’s Center, Inc., 98 F.3d 1406,
1409 (D.C. Cir. 1996).
What is unusual about this case is that
even though the settlement agreement does
not contemplate the retention by the
district court of jurisdiction to enforce
any of its terms-- for remember that upon
"accepting" the agreement the judge
dismissed the suit with prejudice--the
agreement was submitted to and approved
by the judge and a copy deposited in the
files of the court and then ordered
sealed. The district judge’s "approval"
of a settlement, unless that approval is
embodied in a judicial order retaining
jurisdiction of the case in order to be
able to enforce the settlement without a
new lawsuit, has no legal significance.
Kokkonen v. Guardian Life Ins. Co.,
supra, 511 U.S. at 381; Lucille v. City
of Chicago, 31 F.3d 546 (7th Cir. 1994);
McCall-Bey v. Franzen, 777 F.2d 1178,
1188-89 (7th Cir. 1985); Miener v.
Missouri Dep’t of Mental Health, 62 F.3d
1126, 1127 (8th Cir. 1995); Gardiner v.
A.H. Robins Co., 747 F.2d 1180, 1189-90
(8th Cir. 1984). "There must be a
deliberate retention of jurisdiction. . .
. An unconditional dismissal terminates
federal jurisdiction." McCall-Bey v.
Franzen, supra, 777 F.2d at 1190. But
litigants may negotiate with more
confidence if they know that a neutral
third party, namely the judge presiding
over their case, will look over the
settlement agreement and note any
ambiguities or other flaws in it that
might frustrate or complicate its
enforcement should the parties ever come
to blows over its meaning. The judge’s
participation, though informal, may be
helpful; it is not improper merely
because it gives rise to no enforceable
rights or duties.
Whatever the rationale for the judge’s
participation in the making of the
settlement in this case, the fact and
consequences of his participation are
public acts. He was not just a kibitzer.
But even if he had been, judicial
kibitzing is official behavior. The
public has an interest in knowing what
terms of settlement a federal judge would
approve and perhaps therefore nudge the
parties to agree to. All this would be of
no moment, however, if the agreement were
not in the files of the court, for it is
the agreement that the newspaper wants.
Yet for some reason there is a copy of
the agreement in those files. There is a
suggestion that the judge has retained a
copy in order to resolve any disputes the
parties may have over its meaning. If so,
there has been a mistake, because, to
repeat, once a suit is dismissed with
prejudice the judge loses all power to
enforce the terms of the settlement that
may lie behind that dismissal. See also
Neuberg v. Michael Reese Hospital
Foundation, 123 F.3d 951, 955-56 (7th
Cir. 1997); Caudill v. North American
Media Corp., 200 F.3d 914, 916-17 (6th
Cir. 2000); National Presto Industries,
Inc. v. Dazey Corp., 107 F.3d 1576, 1580
(Fed. Cir. 1997). The settlement is just
another contract to be enforced in the
usual way, that is, by a fresh suit.
Kokkonen v. Guardian Life Ins. Co.,
supra, 511 U.S. 378-82; B.H. v. McDonald,
supra, 49 F.3d at 300; Kinan v. Cohen,
268 F.3d 27, 34 (1st Cir. 2001); Scelsa
v. City University of New York, 76 F.3d
37, 41 (2d Cir. 1996); Sheng v. Starkey
Laboratories, Inc., 53 F.3d 192, 195 (8th
Cir. 1995). No matter; the fact remains
that the district court’s files now
contain a document that reflects input by
a federal judge, and so the document is
presumptively a public document.
We learned at argument that the
newspaper has sued the defendant college
separately under the state’s freedom of
information act for a copy of the
settlement agreement. 5 ILCS 140/1 et
seq. Should the suit succeed, the
newspaper will obtain the same relief it
is seeking in this case; the sealing
order does not state and cannot
reasonably be understood to mean that it
would be violated by a decision by a
state court requiring the college to turn
over its copy of the agreement. The order
is limited to the copy in the district
court’s possession. But there is no
reason to force the newspaper to litigate
another suit in another court to obtain
relief to which it is entitled in this
suit. Documents in judicial files are
presumptively open to the public and
neither the magistrate judge nor any of
the parties has given us any reason to
think the presumption might be rebutted
in this case. The order of the district
court is therefore reversed with
directions to grant the relief sought by
the intervenor.