http://www.fjc.gov/public/pdf.nsf/lookup/huntseal.pdf/$file/huntseal.pdf

3. Why Are Settlement Agreements Sealed?

It is well-known that a large proportion of civil cases settle. Preliminary

research for this project showed that 22% of a selection of federal civil

cases were coded in the Administrative Office’s database of cases as settled,

and another 2% were coded as terminated by consent judgments.106

Many cases coded as voluntary dismissals or “other” dismissals probably

were settled as well.

It is very common for settlement agreements to include confidentiality

provisions. Uncertainty about case outcomes works to the advantage of

repeat defendants. If the settlement is large, confidentiality can also protect

plaintiffs, especially minors, from predators. Typically, however, it is not

necessary for settlement agreements to be filed. The case can be dismissed

voluntarily by the plaintiff, and the settlement agreement can be enforced

as a private contract.107

Why would a settlement agreement be filed? First, settlement agreements

are filed in cases requiring court approval of the agreements.108 Such

cases include cases with minors as parties, class actions, and cases under

the Fair Labor Standards Act.109 Second, a settlement agreement might be

filed in federal court to preserve federal jurisdiction over its enforcement.

110 Parties typically seek to file settlement agreements under seal to

give effect to confidentiality terms.

What is kept secret by secret settlements? In the course of our research

we were able to examine many settlement agreements. Sometimes a sealed

settlement agreement became unsealed or was, perhaps inadvertently, filed

unsealed attached to a motion to enforce it. Sometimes we were given access

to sealed documents. The agreements we saw confirmed what we

might have supposed in advance.

[S]ettlement agreements, sealed or otherwise, generally contain four essential

elements: (1) a denial of liability, (2) a release of liability, (3) the

amount of settlement, and (4) a requirement of confidentiality. In unfair

106. See id. at 1 n.1.

107. See Doré, supra note 1, at 798–800.

108. One might think that for the court to approve a settlement agreement, the agreement would

have to be filed, but my impression in reviewing case files for this project was that sometimes settlement

agreements were approved without being made part of the record.

109. See FJC 2004 REPORT, supra note 50, at 5.

110. See Doré, supra note 1, at 801.

460 CHICAGO-KENT LAW REVIEW [Vol 81:439

competition cases, especially cases involving patents, the terms of settlement

typically bind the parties to certain actions in addition to or instead

of the payment of a settlement amount. In general, however, the

only thing kept secret by the sealing of a settlement agreement is the

amount of settlement.111

What our research

shows is that sealed settlement agreements per se are not common in

federal courts, and the seals typically keep secret only the amounts of settlement