Senate Bill 2336

AN ACT TO PROVIDE THAT CERTAIN INFORMATION REGARDING A DEFECTIVE PRODUCT, FINANCIAL FRAUD, UNFAIR INSURANCE CLAIMS PRACTICES OR ENVIRONMENTAL HAZARD SHALL BE PRESUMED TO BE PUBLIC INFORMATION; TO ALLOW SUCH INFORMATION TO BE KEPT CONFIDENTIAL BY COURT ORDER; TO DEFINE CERTAIN TERMS; TO AMEND SECTIONS 75-26-5, 75-26-11 AND 75-26-15, MISSISSIPPI CODE OF 1972, TO CONFORM TO THE PROVISIONS OF THIS ACT; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. The Legislature finds and declares all of the following:

(a) Secrecy agreements that prohibit disclosure to the public or public safety agencies of information relating to defective products, financial fraud, unfair insurance claims practices or environmental hazards are injurious to the health, safety and economic well-being of all citizens of the State of Mississippi.

(b) Secrecy agreements can have tragic consequences. A widely known example of the disastrous consequences of secrecy agreements is the tragedy resulting from dangerous defects in Firestone tires, which have reportedly caused more than one hundred fifty (150) deaths and more than five hundred (500) injuries worldwide. For many years, Bridgestone/Firestone, Inc. knew about these dangerous defects, but kept the information out of the public eye by secretly settling many lawsuits brought as a result of crashes related to defective tires. During that time, the public continued to drive on Firestone tires, unaware of the mortal danger to their families and themselves. As a result of these hidden, dangerous defects, on August 9, 2000, Bridgestone/Firestone, Inc. and Ford Motor Company jointly announced that Firestone would recall over fourteen million (14,000,000) tires. In the absence of a secrecy agreement, information about this dangerous product could have been disclosed publicly, which could have saved lives and avoided injuries. However, the companies demanded secrecy as the price of compensation for victims, resulting in many deaths and injuries that could have been avoided absent demands for secrecy agreements.

(c) Secrecy agreements can allow companies to shield information that shows a practice of treating consumers unfairly and can permit those companies to continue illegal practices without accountability. The circumstances that allowed secrecy regarding the claims of victims of the Northridge earthquake and the contaminated drinking water connected with the story of Erin Brockovich also highlight the need for openness.

(d) Secrecy agreements allow companies to shield life-threatening dangers and harmful practices from public view, thereby severely jeopardizing public welfare and safety. It is against the public interest to allow secrecy agreements about defective products, financial fraud, unfair insurance claims practices or environmental hazards to remain confidential except in very limited circumstances upon careful judicial oversight and review.

SECTION 2. (1) It is the intent of the Legislature to better protect Mississippians from injuries, deaths, financial loss caused by defective products, financial fraud, unfair insurance claims practices or environmental hazards by also creating a presumption against secrecy for settlement agreements and confidentiality agreements not filed with the court and information acquired through discovery.

(2) Notwithstanding any other provision of law, in an action based upon injury, wrongful death, financial loss allegedly caused by a defective product, financial fraud, unfair insurance claims practices or environmental hazard, information concerning the defective product, financial fraud, unfair insurance claims practices or environmental hazard contained in settlement agreements and confidentiality agreements not filed with the court, and information acquired through discovery concerning the defective product, financial fraud, unfair insurance claims practices or environmental hazard, shall be presumed to be public information and may not be kept confidential pursuant to agreement of the parties. This information may be kept confidential for a period that the court deems appropriate only pursuant to a court order based upon a finding that either:

(a) The information is a trade secret or otherwise privileged under existing law.

(b) (i) An overriding interest exists that overcomes the right of public access to the information.

(ii) The overriding interest supports keeping the information confidential.

(iii) A substantial probability exists that the overriding interest will be prejudiced if the information is not kept confidential.

(iv) The proposed confidentiality is narrowly tailored.

(v) No less restrictive means exist to achieve the overriding interest.

(3) Unless the information is a trade secret or otherwise privileged under existing law, in an action based upon injury, wrongful death, financial loss allegedly caused by a defective product, financial fraud, unfair insurance claims practice or environmental hazard, any portion of an agreement or contract that restricts a party from disclosing information relating to the defective product, financial fraud, unfair insurance claims practice or environmental hazard to a governmental agency with enforcement authority over the defective product, financial fraud, unfair insurance claims practice or environmental hazard is void, contrary to public policy, and may not be enforced.

(4) In order to implement this section, the court may require the requesting party to provide an identifying log or other document.

(5) As used in this section:

(a) "Defective product" means a product that may be defective because of a defect in manufacturing or design or a failure to adequately warn the consumer of a hazard involved in the foreseeable use of the product, where the defect may result in personal injury to one or more persons.

(b) "Financial fraud" means any fraudulent insurance practice or any fraudulent plan or scheme to sell a publicly offered investment product without full disclosure of the risks associated with the purchase if the product, where the plan or scheme may cause or has caused financial loss.

(c) "Environmental hazard" means a release or threatened release of a hazardous substance that poses a threat to public health or safety involving present or future danger of death, bodily injury or health disability to human beings exposed to a hazardous substance release or threatened release.

(d) An attorney shall not sell or offer for sale any information obtained through discovery to any member of The Mississippi Bar or to any other person in violation of the prohibitions on attorney solicitation, fee splitting or financial arrangements among lawyers or nonlawyers. Violation of this paragraph shall be a basis for professional discipline by The Mississippi Bar. This section does not alter or mitigate any existing rule or provision that may also be applicable to the conduct.

SECTION 3. Section 75-26-5, Mississippi Code of 1972, is amended as follows:

75-26-5. (1) Except as provided in Sections 1 and 2 of Senate Bill No. 2336, 2004 Regular Session, actual or threatened misappropriation may be enjoined. Upon application to the court, an injunction shall be terminated when the trade secret has ceased to exist, but the injunction may be continued for an additional reasonable period of time in order to eliminate commercial advantage that otherwise would be derived from the misappropriation.

(2) In exceptional circumstances, an injunction may condition future use upon payment of a reasonable royalty for no longer than the period of time for which use could have been prohibited. Exceptional circumstances include, but are not limited to, a material and prejudicial change of position prior to acquiring knowledge or reason to know of misappropriation that renders a prohibitive injunction inequitable.

(3) In appropriate circumstances, affirmative acts to protect a trade secret may be compelled by court order.

SECTION 4. Section 75-26-11, Mississippi Code of 1972, is amended as follows:

75-26-11. Except as provided in Sections 1 and 2 of Senate Bill No. 2336, 2004 Regular Session, in an action under this chapter, a court shall preserve the secrecy of an alleged trade secret by reasonable means, which may include granting protective orders in connection with discovery proceedings, holding in-camera hearings, sealing the records of the action and ordering any person involved in the litigation not to disclose an alleged trade secret without prior court approval.

SECTION 5. Section 75-26-15, Mississippi Code of 1972, is amended as follows:

75-26-15. (1) Except as provided in subsection (2), this chapter displaces conflicting tort, restitutionary and other law of this state providing civil remedies for misappropriation of a trade secret.

(2) This chapter does not affect:

(a) Contractual remedies, whether or not based upon misappropriation of a trade secret;

(b) Other civil remedies that are not based upon misappropriation of a trade secret; * * *

(d) The provisions of Sections l and 2 of Senate Bill No. 2336, 2004 Regular Session.

SECTION 6. This act shall take effect and be in force from and after July 1, 2004.