In October 2007, the Attorney General sued Fremont Investment & Loan (Fremont) under the consumer protection law alleging that the mortgage company had acted unfairly in originating certain "subprime" mortgage loans in Massachusetts. "Subprime" loans are offered to borrowers who would not qualify for conventional mortgages. During pretrial discovery the Attorney General and Fremont filed a joint motion for a protective order governing the exchange of documents that were claimed by the parties to be confidential. A Superior Court judge granted the motion and these documents which number about 5.5 million pages remained sealed after the case was settled and a consent order was issued in June 2009.
Samuel Lieberman who was himself involved in a lawsuit against Fremont sought access to the documents in the Massachusetts case. He filed a public records request in May 2009 which the Attorney General denied on the grounds that they were subject to a protective order. Lieberman then sued alleging that that he should have access to the documents under the public records law. While that case was pending in Superior Court, Lieberman filed a motion to intervene in the original enforcement case against Fremont so as to challenge the scope of the protective order. Lieberman claimed that many documents were improperly designated as confidential. When Lieberman lost on both legal theories in Superior Court, he appealed and the Supreme Judicial Court agreed to hear the case.
The Court first addressed Lieberman's public records request. Lieberman claimed that all the documents submitted by Fremont in its litigation with the Attorney General should be made available to him since there was no express statutory exemption from disclosure for documents placed under a protective order. Lieberman alleged that the public records law (M.G.L. Ch. 66 Sec. 10) compels disclosure of records unless some exemption provision in M.G.L. Ch. 4 Sec. 7 Cl. 26 applies to the situation at hand. Lieberman did agree that M.G.L. Ch. 4 Sec. 7 Cl. 26 (g) exempts "trade secrets or commercial or financial information voluntarily provided to an agency." In its litigation with the Commonwealth, however, Fremont was required to submit these documents in pretrial discovery to the Attorney General. Lieberman argued that the Legislature never intended to exempt from disclosure under paragraph (g) any records whose production was compelled. In the absence of some statutory exemption, Lieberman argued that the requested documents should be released.
The Supreme Judicial Court agreed there was no express legislative exemption for records subject to a protective order. The Court thus had to decide whether the public interest in acquiring access to government records supersedes the authority of courts to issue protective orders thereby requiring the Attorney General to release the documents to Lieberman. The Court observed that the judiciary has certain inherent powers which are essential for the operation of the court. Among those powers was the ability to issue protective orders which facilitate discovery for trial. In the Court's view, these inherent powers exist independently of state statute and for separation of powers reasons are protected by Article 30 of the Massachusetts Declaration of Rights, which states in pertinent part that, "the legislative department shall never exercise the executive and judicial powers, or either of them." The Court declined to interpret the public records law as overriding a protective order since it would raise State constitutional questions about the validity of the statute. According to the Court, the public records law did not abrogate judicial protective orders. The Court reasoned that this decision was consistent with its holding in Suffolk Construction Company v. Division of Capital Asset Management, 449 Mass. 444 (2007). In Suffolk Construction, the Court held that the public records law did not abrogate the attorney-client privilege even though the legislation was silent on this issue. The Court reasoned that the same logic applied in the case at hand since the public records law was similarly silent on inherent judicial powers.
Having dismissed Lieberman's public records claim, the Court then addressed the plaintiff's motion to intervene to modify the protective order. Lieberman argued that he should be allowed to intervene on a theory of permissive intervention as found in Rule 24 (b) of the Massachusetts Rules of Civil Procedure. Lieberman contended that permissive intervention was appropriate under Rule 24 (b) where he could bring a separate action to challenge the protective order and because it would be more efficient for the trial judge who managed the discovery and issued the protective order to hear the challenge to the order. The Court ruled that Lieberman did have standing to challenge the protective order and to argue that changed circumstances rendered some of the documents no longer validly covered by the protective order. For this reason, the Court remanded the case to the Superior Court judge to rule whether modification of the protective order was appropriate.
By this decision in Fremont the Supreme Judicial Court made an important interpretation of the public records law.
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