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Tuesday, August 03, 2004

Oops. Virginia Gambale and Deutsche Bank AG settled a sexual harassment lawsuit and filed a stipulation dismissing the case. The settlement agreement provided that the terms thereof would be kept confidential. The District Court, however, disclosed certain provisions of the agreement in a sua sponte order which unsealed certain documents relating to the action. The Bank appealed from the order, claiming that once the action was dismissed, the Court no longer had jurisdiction, and, even if the Court had jurisdiction, the order was otherwise improper. The Second Circuit, however, disagreed and upheld the order. The Court, however, remanded the case to the District Court with an instruction to maintain under seal the transcript of a conference in whcih the parties revealed to the Court the confidential amount that the Bank was paying Gambale, unless all confidential information and direct and indirect references to confidential information are redacted from the transcript.

The Second Circuit held that while the filing of a stipulation dismissing the case divests a Court of all jurisdiction over the case, it does not follow that the filing of such a stipulation divests the Court of the authority to either dispose of material in its files as it thinks appropriate or to modify or vacate its own protective orders with respect to such documents. The Second Circuit stated: "The records and files are not in limbo. So long as they remain under aegis of the court, tehy are superintended by the judges who have dominion over the court." Given the public's common law right to access to judicial documents, a district court that decides that such access is appropriate in a case "acts within its jurisdiction when it modifies or vacates a protective order to allow that access, irrespective of whether it does so before or after a stipulation of dismissal has been filed."

The Second Circuit, however, noted that the amount paid by the Bank to Gambale to settle the lawsuit "stands on starkly different footing." The amount is set out in the settlement documents that are not part of the court record. Hence, there is no presumption of access with respect to this information. While not precluding the possibility that some case could require such disclosure, the Court held that this was not such a case. Indeed, the Court noted that an agreement to keep the terms of a settlement confidential could facilitate settlement, a salutory result. Although the amount of the settlement was disclosed on the record at a conference, the Court found that the Bank's interest in confidentiality outweighed the public interest in disclosure.

The Second Circuit held that it was a serious abuse of discretion for the District Court to have revealed the settlement amount in its unsealing order. That order is available on Westlaw and Lexis, and the Court noted that it was unable to put the genie back in the bottle.

The decision in Gambale v. Deutsche Bank AG can be found here.

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