February 19, 1997

In re: James Thomerson/City of Nicholasville

Open Records Decision

This matter comes to the Attorney General on appeal from the City of Nicholasville's denial of the open records request of Ms. Darla Carter, Reporter, The Lexington Herald-Leader Company, to inspect settlement agreements reached in several different lawsuits brought against the City and certain of its police officers. Specifically, Ms. Carter requested to inspect the settlement agreements in the federal lawsuits of Larry Reed, Case No. 85-174; Mary Beatrice Reynolds, Case No. 86-241; and Jean Baker, 95-265.

The City responded that it had no written information on the settlement of the Baker case and no documents on the Reed and Reynold cases as to settlements.

On behalf of Ms. Carter and the Lexington Herald-Leader Company, Mr. James L. Thomerson, Esq., appeals from the City's responses to the open records requests. In his letter of appeal, Mr. Thomerson states that subsequent verbal communications between the parties occurred after the City's responses, and relates the following:

[C]ounsel for the City, Mr. William M. Arvin, explained it was the City's position that it did not possess the records since they were in the possession of the City's insurance company and the attorney hired by the insurance company. Mr. Arvin stated that when the City and/or one of its employees are sued, the matter is referred to the insurance carrier to handle and the City is not involved in the resolution of the case. Thus, the

City argued that the records were not “public records” as that term is used in the Open Records Act, KRS 61.870(2).

In his letter of appeal, Mr. Thomerson argues that a settlement agreement held by the City's attorney, or its insurance company, is a “public record” as defined by KRS 61.870(2) and subject to disclosure.

On December 18, 1996, we sent a “Notification of Receipt of Open Records Appeal” to the City and enclosed a copy of Mr. Thomerson's letter of appeal. As authorized by KRS 61.880(2) and 40 KAR 1:030, Section 2, Mr. Dave Whalin, Esq., on behalf of the City, provided this office with a response, to the issues raised in the appeal.

In his response, Mr. Whalin states that Mr. Thomerson is correct in his position that, as a general proposition, a settlement agreement held by the City's attorney is deemed to be in the possession of the City and is a public record subject to disclosure.

However, he argues that the particular circumstances of the Baker case require a different result. In the Baker case, the Agreed Order of Dismissal incorporates the settlement agreement reached by the parties, including a confidentiality agreement regarding the terms of settlement. The U. S. District Court's Order states, in relevant part:

IT IS FURTHER ORDERED AND ADJUDGED, as evidenced by the signatures of respective counsel below, that the parties have agreed to enter into a confidentiality agreement regarding the terms of settlement, and it is FURTHER ORDERED that the non-offending party may seek sanctions with the Court for breach of such confidentiality agreement by the offending party.

Mr. Whalin contends that the Court's adoption of the settlement agreement and the confidentiality agreement into its Order of Dismissal and subjecting a violating party to sanctions by the Court removed the Baker settlement agreement from the application of the Open Records Act.

Subsequent to the receipt of Mr. Whalin's response, Mr. Robert F. Houlihan, Jr., Esq., and Mr. David E. Fleenor, Esq., on behalf of Ms. Carter and the Herald-Leader, provided this office with a response to the issue as to whether the agreed order entered had the effect of negating the general rule that records reflecting settlements of civil suits by public agencies are subject to full disclosure under the Open Records Act.

They argue that to sanction this method of obtaining confidentiality for settlements involving public agencies would have the effect of completely negating the Open Records Act and the public's right to know the terms of a public agency's settlement agreements. They claim that any public agency that wished to shield the terms of a settlement from public scrutiny would only have to convince the Plaintiff in the case to agree to a confidentiality provision.

We are asked to determine whether the City's responses were consistent with the Open Records Act. For the reasons which follow, we conclude that the City properly denied the request for copies of settlement agreements which were under a court order of confidentiality. Regarding the disclosure of such records this office, in OAG 92-126, stated:

Although this Office has consistently recognized that records reflecting settlements of civil suits by public agencies are subject to full disclosure, OAG 78-35; OAG 88-43; OAG 90-36; OAG 91-20; OAG 92-17, we have also recognized that public records which have been placed under a court ordered seal of confidentiality may not be disseminated to the public. OAG 80-353; OAG 89-22; OAG 91-121. In OAG 89-22, at p. 3, we reasoned that if an agency is a party to the litigation, and the requested documents come within the purview of the protective order, the agency and its employees “may be in contempt of court and subject to other civil liability if they release the documents in question.” See also, OAG 80-353 (holding that a court order sealing a deposition makes the deposition unavailable for public inspection, the Open Records Act notwithstanding). The Open Records Act in no way supercedes an order entered by a court of competent jurisdiction when a public agency is properly before the court as a party to the litigation. Indeed, the entry of such an order removes a document within its terms from the application of the Act.

See also 94-ORD-139, where we held that the public agency was required to adhere to an “Agreed Order of Confidentiality” of the circuit court out of deference to the judicial process and the requested records could not be made available for inspection.

The Agreed Order in this case does not reveal whether the Court took into account open records considerations when it entered the order imposing the confidentiality agreement. Mr. Houlihan and Mr. Fleenor , citing the Courier Journal and Louisville Times Co. v McDonald, Ky., 524 S. W. 2d 633 (1974), argue that “even a court- ordered confidentiality provision cannot operate to shield from view a settlement agreement in which the public has a substantial concern. If the court is without power to order confidentiality, clearly the parties cannot by agreement reach that result.”

The Kentucky Court of Appeals in McDonald, in dicta, offered its view that a court-ordered confidentiality would not withstand a test of validity in the face of the public's right to know the terms of public settlements of suits involving the alleged misconduct of public officers and the payment of public funds.

In the instant case, the validity of the confidentiality agreement in the Agreed Order and whether the public's right of access outweighs the litigant's right of privacy must be raised in a collateral action in the judicial system. In McDonald, the Court stated:

The petitioners [the Courier-Journal and one of its reporters] are not precluded from seeking to attack the validity of the order in question collaterally by an appropriate civil action in which the question of whether the order is a valid basis for denial of an inspection of the city records can be placed in issue.

Id. at 635. See, also, Courier-Journal and Louisville Times Co. v Peers, Ky., 747 S. W. 2d 125 (1988). This office is without authority to overturn or modify a court-ordered confidentiality agreement. We have previously recognized that public records made confidential by court order are not reachable under the Open Records Act. 94-ORD-139; OAG 92-126. Accordingly, we conclude the City properly denied the request for a copy of the Baker settlement agreement.

A similar result was reached in GTE Sylvania. Inc. v Consumers Union of the United States, Inc., 445 U.S. 375, 63 L. Ed. 2d 467, 100 S. Ct. 1194 (1980), in which the United States Supreme Court held that a federal agency which had been ordered by a court not to disclose information was not required to release such information under the Freedom of Information Act.

As to the requested settlement agreements in the Reed and Reynolds cases, Mr. Whalin states that the city, including the city attorney, is not in possession of those settlement agreements and, thus, acted consistently with the Open Records Act by notifying Ms. Carter that it did not possess the requested Reed and Reynolds documents.

To the extent the City does not have the requested documents or they no longer exist, the City's response was consistent with the Act. 96-ORD-228. A November 9, 1996, Lexington Herald-Leader article by Ms. Carter, attached to Mr. Whalin's response, indicates that both the Reed and Reynolds settlement agreements were subject to confidentiality agreements. If those agreements were placed under a court order of confidentiality, then they would be removed from the application of the Open Records Act for the same reasons of the Baker settlement agreement. If not, they would be open for inspection unless exempt under some other applicable exception to disclosure.

Because the foregoing is dispositive of this appeal, we need not address, in this decision, the additional issue of whether copies of the settlement agreements, which may or may not be in the possession of the City's insurance company or the insurance company's attorney, are deemed to be documents held by the City for purposes of the Open Records Act. We do note that in OAG 90-36, we held that records in the possession of the City of Winchester's insurance company relating to the settlement of a legal action against the City were not reachable under provisions of the Open Records Act.

A party aggrieved by this decision may appeal it by initiating action in the appropriate circuit court pursuant to KRS 61.880(5) and KRS 61.882. Pursuant to KRS 61.880(3), the Attorney General should be notified of any action in circuit court, but should not be named as a party in that action or in any subsequent proceeding.

A. B. Chandler III

Attorney General

James M. Ringo

Assistant Attorney General


Distributed to:

James L. Thomerson

Robert F. Houlihan, Jr.

David E. Fleenor

Stoll, Keenon & Park

Suite 1000

201 East Main Street

Lexington KY 40507-1380

William Miles Arvin, Jr.

Nicholasville City Attorney

1098 Maple Street

Nicholasville KY 40356

Dave Whalin

Landrum & Shouse

Suite 1550

400 West Market Street

Louisville KY 40202