Can a Kentucky school district keep a lawsuit settlement secret with a confidentiality clause or court seal?

Plain-English summary

A Kentucky legislator asked whether a school district could keep a lawsuit settlement secret when all or part of the payment came from school funds. He described cases in which an insurer also paid. The Attorney General concluded that settlement agreements involving school districts were public records. A promise of confidentiality in the settlement did not by itself overcome the Open Records Act. The public agency or affected party bore the burden of showing an applicable disclosure exception.

The opinion drew a separate line for an agreement sealed by a court order. The Attorney General’s office could not override that order through an open-records decision; whether the public could inspect the sealed agreement had to be raised in court. The opinion also declined to decide whether the General Assembly could require settlement amounts to appear in local school board minutes.

Currency note

This opinion was issued in 2001. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Common questions

Q: Could a Kentucky school district hide a settlement just by agreeing to confidentiality? A: The Attorney General said no. A confidentiality clause did not itself provide an Open Records Act exception for a school-district settlement agreement.

Q: Did the public-records rule also cover a settlement paid partly with school funds? A: Yes. The opinion treated the use of public funds in settling litigation as a matter of public concern and said the agreement was a public record, subject to an applicable legal exception.

Q: Could the Attorney General order release of a settlement sealed by a court? A: No. The opinion said the office could not override a court sealing order; the question of access to that agreement belonged in the judicial system.

Q: Did the opinion require school boards to put settlement amounts in their minutes? A: No. It expressly declined that separate legislative question after resolving the public-records issue.

Background and statutory framework

KRS 61.871 stated Kentucky’s policy of open examination of public records and strict construction of exceptions. The opinion relied on a Kentucky Supreme Court decision recognizing a public interest in settlements paid by government and rejecting confidentiality clauses as a basis for secrecy. It also distinguished an earlier open-records decision involving a federal court order that sealed a school settlement. Under the opinion, disclosure could still be withheld where KRS 61.878(1) or other applicable law properly excluded the record, and the agency or affected party had the burden to show the exclusion.

Citations and references

Statutes: KRS 61.871; KRS 61.878(1); KRS 61.878(1)(a).

Case discussed: Lexington-Fayette Urban County Government v. Lexington Herald-Leader Company, 941 S.W.2d 469 (Ky. 1997).

Prior open-records decisions: 00-ORD-5; 00-ORD-13.

Source

• Landing page: https://kdla.access.preservica.com/uncategorized/IO_47803990-7d83-439c-99f5-418c7dc99051/
• Original PDF: https://kdla.access.preservica.com/download/file/IO_47803990-7d83-439c-99f5-418c7dc99051

Original opinion text

OAG 01-6
August 30, 2001
Subject:

School Districts; sealed settlement agreements

Requested by:

Gary Tapp
State Representative

Written by:

James M. Ringo

Syllabus:

A settlement agreement between a party litigant and a school district, sealed or unsealed, is a public record and can not be withheld from public disclosure, unless the document is properly excluded from disclosure by one or more of the exceptions set forth in KRS 61.878(1) of the Open Records Act or other applicable statutes.

Statutes construed:
OAGs cited:

KRS 61.871; KRS 61.878(1)(a)

00-ORD-5; 00-ORD-13

Opinion of the Attorney General
Representative Gary Tapp requested the Attorney General’s opinion on whether conduct of certain school districts violated the Kentucky Open Records Act. In his request, Representative Tapp indicated that it had been brought to his attention that school districts involved in civil litigation have settled lawsuits through sealed settlements. He stated that, in most cases, the settlements required payment of money out of school funds, in addition to payment by the

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insurance company, and are not made a public record. Specifically, he asked: Can a school district enter a sealed settlement with an aggrieved party, when all or a portion of the judgment paid to the party is out of school funds and the judgement is not made a part of the public record? If so, could the Kentucky General Assembly require local school districts to reveal in the minutes of the local board of education the amount of any settlement paid from local public funds or from the insurance company. The public policy of the Open Records Act is articulated in KRS 61.871. That statute provides: The General Assembly finds and declares that the basic policy of KRS 61.870 to 61.884 is that free and open examination of public records is in the public interest and the exceptions provided for by KRS 61.878 or otherwise provided by law shall be strictly construed, even though such examination may cause inconvenience or embarrassment to public officials or others. This office and the courts have long recognized that settlement of litigation by a governmental entity, which may involve the expenditure of public funds, is a matter of legitimate public concern which the public is entitled to scrutinize. Lexington-Fayette Urban County Government v. Lexington Herald-Leader Company, Ky., 941 S.W.2d 469 (1997); 00-ORD-5. In Lexington-Fayette Urban County Government, supra, the Kentucky Supreme Court recognized that such a settlement agreement was a public record. At issue in that case was whether the urban county government had violated the Open Records Act in denying an open records request for unredacted copies of three final settlement agreements in which the government agreed to pay litigants in

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lawsuits against the police department. The government relied in part on confidentiality clauses in two of the three agreements whereby the settlement recipients and their attorneys agreed not to disclose any terms of the agreements. Addressing the denial of unredacted copies issue, the Kentucky Supreme Court, at page 471, stated: There could be no viable contention that an agreement which represents the final settlement of a civil lawsuit whereby a governmental entity pays public funds to compensate for an injury it inflicted is not a public record. KRS 61.872(1) provides in part that “all public records shall be open for inspection by any person” and we think of no construction of this language which would permit exclusion of an agreement of the type at issue here. In fact, even before enactment of the Open Records statute, we held in Courier-Journal & Louisville Times Co. v. McDonald, Ky., 524 S.W.2d 633 (1974), that “the payment of city funds … is a matter with which the public has a substantial concern, against which little weight can be accorded to any desire of the plaintiff in that suit to keep secret the amount of money he received.” Id. At 635. Thus, the government is without any basis upon which to claim a right of privacy, and unless the documents are excluded from disclosure by one or more of the specific provisions of the Act, they must be produced. KRS 61.871. Typically, the provision relied upon by persons wishing to prevent disclosure id KRS 61.878(1)(a) which excludes “public records containing information of a personal nature where the public disclosure thereof would constitute a clearly unwarranted invasion of personal privacy.” The Supreme Court concluded that the government’s claimed right to privacy under authority of KRS 61.878(1)(a) to support nondisclosure of the settlement agreements containing confidentiality clauses was not sufficient to overcome the public's right to freely and openly investigate the payment of public funds as compensation for

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government-inflicted injuries. Id. at 472. The court adopted the reasoning of the Court of Appeals in its analysis of the agreements: In balancing the sacrosanct right of an individual to privacy against legitimate public concerns and the right of the public to inquire into the workings of government, we find that a settlement of litigation between private citizens and a governmental entity is a matter of legitimate public concern which the public is entitled to scrutinize. A confidentiality clause in such an agreement is not entitled to protection. . . . Id. at 473. In reaching its conclusion, the court stated: After weighing the competing interests, we must conclude that the privacy claim here is simply insufficient to overcome the public’s right of access to information of this type. Addressing this question, the Supreme Court of Alaska in Anchorage School District v. Anchorage Daily News, 779 P.2d 1191 (Alaska 1989), invalidated a confidentiality agreement on the grounds of public interest in disclosure. We recognize the important public policy served by those measures which encourage settlement . . . . We recognize also that some litigants are unwilling to settle unless terms of settlement remain confidential, and that a municipality’s inability to assure confidentiality may, therefore, adversely affect its ability to negotiate a settlement. Nevertheless, the specific statutory provisions upon which the Daily News relies reflect a policy determination favoring disclosure of public records over the general policy of encouraging settlement. The people of this state, through their elected representatives, have stated in the clearest of terms that it is more important that they have access to this type of information than that it remain confidential. Thus, we hold that a public agency may not circumvent the statutory

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requirements by agreeing to keep the terms of a settlement agreement confidential. Id. at 1193. Prior decisions of this office have also addressed the issue of whether a confidentiality clause reached by agreement of governmental entity and the party litigant is subject to public inspection. In 00-ORD-5, we held that a confidentiality clause reached by agreement of the Danville Independent School District and a party litigant could not in and of itself create an inherent right to privacy superior to and exempt from the statutory mandate for disclosure contained in the Open Records Act. We rejected the school district’s argument that KRS 61.878(1)(a), along with the confidentiality clause appearing in the settlement agreement , authorized its nondisclosure. In reaching that conclusion, we noted that review of the settlement agreement revealed little if anything in the agreement which would cause [the former employee] such serious personal embarrassment or humiliation that it would overcome the presumption of openness and that the [former employee’s] desire “to keep secret the amount of money [she] received,” or the terms of the settlement, can be accorded little weight. Quoting from 98-ORD-24, we stated: An agency “may not circumvent the statutory requirements by agreeing to keep the terms of a settlement agreement confidential.” Id. citing Anchorage School District v. Anchorage Daily News, 779 P2d 1191, 1193 (Alaska 1989). Finding that the contents of the settlement agreement did not contain sufficient information of a personal nature to overcome the presumption of openness, we held that neither KRS 61.878(1)(a) not the confidentiality clause authorized nondisclosure of the settlement agreement.

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However, in 00-ORD-13, we held that the Montgomery County Schools had properly denied an open records request for a copy of a settlement agreement between the school system and a former school bus driver on the basis that disclosure of the document was prohibited by order of the United States District Court. In that case, the court had entered an order placing the terms of the dismissal and settlement agreement under seal. In reaching that conclusion, we recognized that this office had no authority under the Open Records Act to override a court order placing the record under a seal of confidentiality. We held that a determination of the validity of the confidentiality agreement and whether the public’s right of access outweighed the litigant’s right of privacy must be raised in a collateral action in the judicial system. Of course in a proceeding in the court system, application of the principles of analysis set forth in Lexington-Fayette Urban County Government, supra, set forth above would apply. Thus, in answer to Representative Tapp’s first question, we conclude that a settlement agreement between a party litigant and a school district, sealed or unsealed, is a public record and cannot be withheld from public disclosure, unless the document is properly excluded from disclosure by one or more of the applicable exceptions of KRS 61.878(1) of the Open Records Act or other applicable law. If the settlement agreement is sealed by order of a court, the question of whether the document is subject to public inspection must be raised in the judicial system. The burden of showing that the record is exempt from disclosure falls upon the public agency or the affected party.1 1

In Beckham v. Board of Education, Ky., 873 SW2d 575 (1994), the court held that a

party affected by a public agency’s decision to release records in response to an open records request has standing to contest the agency’s decision in court. The court focused on the language of KRS 61.882(1) granting the circuit court of the county where the agency has its principal place of business or where the record is maintained jurisdiction to enforce the Open Records Act “by injunction or other appropriate order on application of any person.” Declining the invitation to construe KRS 61.882(1) as a remedy for denial of access only, the court held that “the language used is without any such limitation” and that it would be anomalous to “disregard plain statutory language to conclude that an affected party who may possess a right to have documents excluded lacks standing to assert that right.”

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Because we hold that the settlement agreements cannot be withheld from public disclosure, unless the document is properly excluded by one or more of the exceptions set forth in KRS 61.878(1) or other applicable law, we do not address Representative Tapp’s second question as to whether the General Assembly could require local school board’s to reveal the amount of any settlement of public funds or from the insurance company, in its board minutes. The amount of a settlement of public funds is a matter of public record, unless properly exempted from disclosure under the standards set forth above in Lexington-Fayette Urban County Government, supra, and 00-ORD-5. However, any application of the exceptions in KRS 61.878 or otherwise provided for by law

should be strictly construed in order to overcome the presumption of openness of public records. KRS 61.871. Albert B. Chandler III Attorney General

James M. Ringo
Assistant Attorney General

Beckham at 578 and 579. “It would appear,” the court noted, “that the General Assembly sought to promote disclosure by devising easy means toward that end, but left the door ajar for those who seek to prevent disclosure by granting them a litigation remedy to enforce the exclusions.” Id. at 578. The Supreme Court concluded that the parties affected by disclosure, “having commenced litigation prior to release of the information sought, were entitled to be heard on their exclusion claims and entitled to appellate review of the merits in the Court of Appeals.” Id. at 579.