The public in California will be somewhat more protected from corporate wrongdoing under bills that passed both chambers in the California legislature this week. SB 11 and AB 36, differ in some ways, so it’s not clear which will go to Gov. Davis’ desk. Both, however, would reduce secrecy in court settlements, requiring that documents showing wrongdoing be made public in many cases.
But the technology industry and its TechNet lobbying arm, which vehemently opposed the laws and worked hard to get them amended, remains in full fury. These bills, according to Mike Morris at Sun Microsystems, are a gift to the nation’s trial lawyers and a full-blown assault on Silicon Valley.
The industry believes the legislation, if made into law, would open for public scrutiny just about any document produced in the discovery process during a lawsuit. What’s needed, by contrast, is disclosure of documents and other evidence that leads companies to settle cases where there is harm to the public, such as with product defects or environmental hazards
I’m not entirely convinced that the amended legislation is all that bad. But if Morris is right — that the bills would be little more than blackmail devices for lawyers extracting money from companies — then all hell is going to break loose after (if) this gets signed into law.
I have to note, nonetheless, that TechNet and its allies managed to carve out an serious exception in the Senate bill. They persuaded the legislators to remove language that would make public the documents leading to settlements in cases of financial fraud.
By that reasoning, the public is entitled to have information about companies that rig electricity markets, or about insurance companies that treat customers unfairly. But the public isn’t entitled to know about financial fraud.
I’m not sure where this goes from here. I’ll be looking further into it and will let you know what I find.