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TLPJ Defeats Secrecy Order Sealing Already-Public Documents Showing Insurer Linked Employee Compensation to Limited Payouts

Colorado Supreme Court Strikes Down Sweeping Secrecy Order Banning Injury Victim From Disclosing Key Insurance Documents Publicly Obtained

Trial Lawyers for Public Justice (TLPJ) won a unanimous Colorado Supreme Court decision in Jessee v. Farmers Insurance Exchange on Monday overturning a sweeping secrecy order sealing already-public documents. The documents, obtained by a crash victim charging her claim was denied in bad faith, show that Farmers Insurance linked its adjusters’ compensation to the amount they saved the company on claims. The secrecy order would have made this key evidence secret, even though it was already public and the crash victim’s attorney obtained it from another case against Farmers where it was not sealed.

“We applaud the court’s decision to strike down this outrageous secrecy order,” said TLPJ’s Leslie A. Brueckner, lead appellate counsel for the plaintiff. “The order would have allowed the insurance company to designate information that an attorney had already obtained from separate, public sources as ‘confidential.’ The Colorado Supreme Court made clear that a corporation cannot bend state law to hide evidence in this way.”

The unusually broad protective order in Jessee, which was issued without any showing of good cause for secrecy, would have required the plaintiff’s counsel to identify all documents in his possession relating to the subject matter of the case – and permitted the insurance company to label those documents “confidential” regardless of their source. It also required that any court records containing or referring to those documents be filed under seal. Finally, it obligated the crash victim and her attorney to return all “confidential” documents to the insurance company at the conclusion of the case. TLPJ argued that the order should be vacated because it violated Colorado law and the First Amendment to the U.S. Constitution.

Striking down the order, the Court unanimously held that, under the Colorado discovery rules, there is “no absolute right to hide the nature or existence of trade secrets from an opposing party.” The court emphasized that “Jessee already had acquired the documents prior to the filing of this case . . . without the protections of a protective order.” In light of this fact, the trial court was “not authorized . . . to place limits on the use of documents originally obtained outside of the discovery process in this case.” The court concluded that Colorado law “cannot now be used to protect that which Farmers already disclosed.” Because the court held that the order violated state law, it did not reach the First Amendment issue.

Jessee was filed in a Colorado state trial court against Farmers Insurance for breach of contract, bad faith, and unfair and deceptive trade practices. The victim, who was badly injured in a car accident, seeks damages for the company’s refusal to pay uninsured motorist coverage under her insurance policy. The complaint alleges, among other things, that Farmers Insurance trains its adjusters to limit the amount of compensation awarded on claims by linking the adjusters’ compensation to how much money they save the company on claims.

Jessee’s attorney, Randal R. Kelly of Denver’s Irwin & Boesen, P.C., had obtained documents produced by Farmers Insurance without any protective order in a South Dakota case and began using them in the Colorado case – in depositions and in support of discovery motions. Kelly had also received key documents relating to the company’s practices from an expert on insurance.

On the company’s motion, however, the trial judge in Jessee issued a protective order that precluded the plaintiff’s lawyer from disclosing to anyone documents that he obtained from other sources, not from Farmers and not in discovery in the case. TLPJ and Kelly successfully petitioned the Colorado Supreme Court to reach down and take the case directly from the trial court.

“When we obtained these documents, they were in the public domain and free of any protective orders or other restrictions,” said Kelly. “Farmers Insurance tried to stuff the genie back into the bottle by asking the trial court to designate those very documents as confidential in this case. It was always our position that the court lacked authority to seal the documents. We are extremely gratified that the Colorado Supreme Court agreed.”

In addition to Brueckner and Kelly, the Jessee legal team included TLPJ Brayton-Baron Fellow Leslie A. Bailey. The challenge to the protective order in Jessee is part of TLPJ’s Project ACCESS, a 15-year-old project against excessive court secrecy, and Access to Justice Campaign, a nationwide initiative to keep America’s courthouse doors open to all. The Colorado Supreme Court’s decision and TLPJ’s briefs challenging the protective order in Jessee can be viewed on TLPJ’s web site at www.tlpj.org.