The nation's courts are getting hit with a growing number of requests to seal divorce records, but not by squabbling couples.
Divorce lawyers say corporations -- along with the rich and powerful -- are increasingly asking judges to seal the divorce records of top executives to protect trade secrets or crucial financial information from leaking out, or simply to avoid embarrassment.
Attorneys note that while the courts have long protected children in divorce cases by sealing records, they are now doing the same for companies, treating trade secrets, assets, stock values and executive salaries as valuable, sensitive information that needs special protection.
And with state court records now available on the Internet in 30 states, fears of data theft or data leaks are at an all-time high among businesses.
"This has become an increasingly prevalent issue," said attorney James Feldman, head of the family law practice at Chicago's Jenner & Block, who in recent years has seen a notable increase in companies intervening in divorce cases. "This year alone I've represented several key executives in divorce cases where a protective order or a confidentiality agreement had to be obtained in order to prevent information from getting out." . . ."[T]he desire for corporate secrecy is outweighing the public's right to know," said First Amendment attorney Susan Seager, who argued against the sealing of records in the recent California case involving Capital Group Cos. Armour v. Ritter, No. BD 390510 (Los Angeles Co., Calif., Super. Ct.). "When courts conduct private proceedings behind closed doors it creates public mistrust and suspicion."
That is what she claims happened in the divorce trial of 45-year-old Timothy Armour, an executive with Capital Group, which last month convinced a judge to partially close the divorce trial to the public and seal various exhibits and transcripts. According to court documents, attorneys for Capital Group argued that certain information, such as executive pay levels and stock awards, would hurt the company if made public. . . .
[T]hose claims outraged Seager, who in arguing against Capital Group on behalf of The Los Angeles Times, The Associated Press and a newspaper group, claimed that the company had no grounds to close the trial.
"An executive salary is a trade secret? I've never heard of that before. And they argued that [disclosure] would hurt company morale. That doesn't seem to be a basis for shutting down a trial," Seager said. "It's one thing to ask that part of a deposition be sealed, or a part of a record that reveals an honest-to-God trade secret ... but that doesn't mean that the guts of the trial -- the testimony, the opening statements -- are done behind closed doors."
Details here from The National Law Journal via Law.com.
The lead case in California is a state Supreme Court decision denying Clint Eastwood's attempt to seal records relating to his breakup with Sandra Locke, NBC Subsidiary (KNBC-TV), Inc. v. Superior Court (Locke) (1999) 20 Cal.4th 1178; 86 Cal.Rptr.2d 778; 980 P.2d 337.