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Thursday, May 28, 2009

Courts - "Dirty Laundry Aired: The Fight Over Revealing Divorce Details"

The Wall Street Journal has a long story today by Dionne Searcey. Some quotes:

Disclosures during divorce proceedings often elicit disgust over the revelation of intimate details -- or delight over the revelation of intimate details.

A string of recent divorce cases involving high-profile figures has laid bare that divide, in sometimes excruciatingly personal terms. Defenders of disclosure say revelations that come out of divorce cases can provide insight into the character and habits of elected officials and others who are accountable to the public, such as executives of public companies.

Despite the potential for tawdriness and spousal retaliation, there are often compelling reasons for openness, proponents of disclosure say. * * *

Divorce hearings are largely presumed to be open to the public. Case records, however, are often considered private. But the laws vary widely from state to state. In all states, courts heavily weigh the interests of children when determining whether to seal any part of a divorce case. And in some states, including California, parties are allowed to redact information if they show a compelling reason, such as financial information that could allow identity theft. * * *

A high-profile split in Connecticut involving the head of a large public company illustrates how open proceedings can serve shareholder interests, proponents of disclosure say. The wife of United Technologies Corp. Chairman George David says she deserved more than the roughly $43 million set out in the couple's post-nuptial agreement, in part, because she essentially helped run the company. Lawyers for Marie Douglas-David, a former investment banker, hope to highlight financial conversations the couple had as proof.

To that end, an attorney for Ms. Douglas-David suggested at a recent hearing that the couple discussed a merger of United Technologies with 3M Co. The proposed deal, which never happened, hadn't been disclosed prior to the divorce proceedings. * * *

Judges and legislatures at times see reasons why divorce information is in the public interest. In 2004, when Barack Obama was running against Jack Ryan for a U.S. Senate seat in Illinois, a lawsuit from the Chicago Tribune unsealed Mr. Ryan's divorce records in a custody battle that accused him of taking his wife to sex clubs and of trying to persuade her to perform sex acts for strangers. Mr. Ryan couldn't be reached for comment Wednesday. He issued denials during the 2004 campaign, but his poll numbers plummeted and he dropped out of the race.

The WSJ Law Blog picks up the story, asking "Should Details of Divorces be Allowed to be Made Public?"

The ILB had several entries on this issue in 2003 and 2004. A Jan. 14, 2003 NYT story, headed "Ernst & Young Financial Details Are Disclosed In Divorce Case," began:

Every detail that the global accounting firm Ernst & Young told its American partners about its financial performance through late 2000 became public late yesterday, including its profits, details of its capital structure, the hours billed to clients and the average earnings per partner. Many aspects of foreign operations were also disclosed.

While such information is normally closely held, the details were disclosed as part of a divorce case involving the firm's global chief executive, Richard S. Bobrow. The documents were released by Judge Steven R. Nation of Hamilton County Superior Court in Indiana, where the case is being heard, after motions were filed by The New York Times to obtain them.

The disclosure of the details is sure to arouse unhappiness among the firm's 1,900 American partners, experts said. They predicted that the information would put competitors at an advantage in bidding on contracts, hiring employees and settling lawsuits. The financial data will also be of interest to spouses of Ernst & Young partners who are planning a divorce.

See a follow-up ILB entry from April 15th, 2003 here, including this Indy Star quote:
A Hamilton County court decision has made the financial records of a privately owned global-accounting firm public, but they remain shielded from view. Hamilton County Superior Court Judge Steven Nation has denied a request from New York City-based Ernst & Young to seal and expunge financial information about the company from court records. Nation, however, did not lift a stay on the information, which blocks public access. He made the ruling last week in response to a request from The Indianapolis Star. Nation said he refused to lift the stay because lawyers from Ernst & Young have indicated they will file an appeal. "If the Indiana Court of Appeals disagrees with me, it wouldn't be (any) good for their side," Nation said.
The June 14, 2004 COA decision in the case of Ernst & Young, et al. v. Indianapolis Star is summarized in this ILB entry (last half of page). From the Indy Star's report on the decision:
Trade secrets should stay trade secrets in Indiana -- even after they no longer are secret, an Indiana Court of Appeals has ruled. Indiana's public records laws, the court ruled today, permit a trial court to seal public records that fall within certain mandatory exceptions, such as a business's confidential information, even after they have been disclosed as evidence.

The three-member court ruled in favor of accounting powerhouse Ernst & Young LLP , which sought to seal its business records after they were introduced as evidence in the divorce of former Ernst & Young chief executive Richard S. Bobrow. The records had not only been used as evidence in the Hamilton County divorce proceeding, but also publicized in the New York Times -- which had obtained them before the companies asked that they be sealed.

While Hamilton Superior Court Judge Steve Nation had ruled in April 2003 that the records, once admitted into evidence, should be public, he had kept them shielded pending the outcome of the appeal. Steve Key, general counsel to the Hoosier State Press Association, said the court's decision is like "trying to put a genie back in a bottle."

A June 18, 2004 ILB entry links to a still-accessible Chicago Tribune story (remember this was the 2004 Illinois U.S. Senate race where Ryan, the strong Republican candidate, bowed out, leaving Democratic candidate Barack Obama opposed only by Alan Keyes, who did not live in the state) that begins:
LOS ANGELES - Dealing a blow to the U.S. Senate candidacy of Republican Jack Ryan, a California judge ruled that several sealed divorce records likely to embarrass the candidate and his ex-wife should be opened to the public.

Ruling on a request brought by attorneys for the Tribune and WLS-TV, Superior Court Judge Robert Schnider acknowledged that the resulting publicity from the disclosure would be harmful to the couple's son, a key argument Ryan had raised in seeking to keep the documents from public view.

But Schnider said he had weighed the public interest of disclosure against the private interests of the Ryans and their child. "In the end," Schnider found, "the balance tips slightly to the public.

"They were aware they were in a public court system and protection from embarrassment cannot be a basis for keeping from the public what's put in public courts," said Schnider, referring to Ryan and his ex-wife, actress Jeri Lynn Ryan. Additionally, Schnider said, "the openness of court files must be maintained, so that the public ... can be assured that there is no favoritism shown to the rich and the powerful."

Posted by Marcia Oddi on May 28, 2009 03:06 PM
Posted to Courts in general