Court Rejects “No Seal, No Deal” Argument
P
arties cannot have a settlement
agreement
sealed
simply
because they have agreed to
keep the settlement amount secret
from the public. In re Thomas, No. 17-
20527 (Bankr. E.D. Ky. March 1, 2018). to grant a motion to seal a court
must find the reasons supporting
the motion are more compelling
than those supporting access and
that the seal itself is no broader than
necessary.
In the bankruptcy case she shared with
her husband Andrew, Brittany Thomas
filed an adversary proceeding against
AT&T and DirecTV alleging violation of
the automatic stay. She sought to make
the case a class action alleging that the
complained of conduct extended to
other non-party contract-holders with
the telecommunications companies.
Ms. Thomas and the companies settled
their claims as to Ms. Thomas alone,
and she agreed to dismiss the class
action claims. The parties presented
their settlement to the bankruptcy court
for approval and sought to have the
agreement sealed from public view in
perpetuity pursuant to section 107(b)
(1) (though in a separate brief to the
court, the companies sought a five-year
sealing period and limited the request
to the amount of settlement only). Here, the parties offered no
evidence to support their reliance
on this exception to the public
document rule. Instead, they argued
simply that the settlement would
not hold if the amount were made
public. The court was unpersuaded
by this argument for two reasons.
First, it was contradicted by the
settlement agreement itself which
acknowledged that confidentiality
was a matter for the court to decide
and did not make its terms contingent
upon sealing. Second, and more
broadly, the court found that sealing
records simply upon agreement by
the parties would improperly usurp
the court’s power and eliminate the
operation of section 107(b) when it
came to settlement agreements.
Section 107(b)(1) provides that
documents may be