this matter is far higher and argues that therefore the settling parties have not met even their preliminary burden of demonstrating that the settlement is in good faith.
AT&T and Arkwright have submitted affidavits testifying that they reached the settlement in good faith, and setting forth the reasons why the proposed settlement amount is reasonable. These affidavits, along with the evidence supporting them, suffice to make the preliminary showing of good faith. The court, however, considers also whether the settlement is "within a reasonable range of the settlor's fair share." Johns-Manville, supra, citing Wasmund v. Metropolitan Sanitary District, 135 Ill. App. 3d 926, 930-31, 90 Ill. Dec. 532, 482 N.E.2d 351 (1st Dist. 1985).
G&W points to a number of factors which it claims tend to demonstrate that AT&T's liability in this matter is quite probably higher than $ 5 million. First, G&W notes that prior to January 1, 1984, Illinois Bell was part of the AT&T system and all the equipment at HCO prior to that date was supplied exclusively by AT&T. AT&T was also responsible until that date for all modifications, alterations or removals affecting the equipment. Even after divestiture, AT&T supplied a significant amount of equipment and services to HCO. G&W also points to the finding in the ICC report that the presence of armored and dc cable in the same trays was a contributing cause of the fire. It was AT&T, not G&W, which designed the system placing both types of cable in the same tray.
AT&T, on the other hand, offers a number of factors which could serve to mitigate its liability. First, AT&T claims that the practices challenged in the complaint were accepted and approved by Illinois Bell. Indeed, the presence of armored cable in the same trays as DC cable was hardly a "hidden defect". Rather, since Illinois Bell was owned by AT&T at the time the system was established, knowledge of the mechanics of the system would likely be imputed to it. Thus, AT&T argues convincingly that its liability would be mitigated by Illinois Bell's contributory negligence.
The proposition that Illinois Bell was contributorily negligent is supported by other facts cited in the ICC report as well as G&W's memorandum opposing the AT&T/Illinois Bell settlement. Namely, Illinois Bell delayed in reporting the fire; the cable trays in the HCO were overly congested; and there was no readily identifiable method of shutting off power to the HCO. All three of these factors contributed to the spread of the fire and to the amount of destruction it caused.
Next, AT&T points out that whether or not it should have placed armored and DC cable in the same tray, the fire would not have started had not G&W damaged the insulation protecting certain DC cables. This argument too has a basis in Illinois law. See Ziemba v. Mierzwa, 142 Ill. 2d 42, 153 Ill. Dec. 259, 566 N.E.2d 1365 (1991).
Third, AT&T points out that the system was installed prior to January 1, 1984, the date of divestiture. AT&T therefore claims it is released from tort liability to Illinois Bell by the terms of the Reorganization and Divestiture Agreement which provides that Illinois Bell releases AT&T from "any and all claims . . . arising from any events on or prior to the Divestiture Date."
Finally, AT&T cites a provision in each of its contracts with Illinois Bell for work performed after the divestiture date which states that "the liability of Supplier and Purchaser to one another hereunder shall in no event exceed $ 15 million per occurrence." AT&T maintains that because that provision is contained in a section of the contracts separate from the sections dealing with AT&T's warranties, it limits tort claims as well as contract claims.
The court's task is not, of course, to assess with exactitude the relative liability of the parties but rather to decide whether the proposed $ 5 million settlement falls within the wide range of "reasonableness" as defined by Illinois law and discussed above. Illinois Bell's claim of $ 42 million in its complaint is based on the replacement costs paid by Arkwright in repairing the damage caused by the fire. That amount is not necessarily the relevant amount for assessing the liability of the defendants. Rather, it will be mitigated by a number of factors, most significantly by Illinois Bell's contributory negligence.
In light of the likely existence of such negligence on Illinois Bell's part as well as its release of AT&T from liability for pre-divestiture events (such as installation of the HCO system) and the strong evidence that G&W's negligence during the cable mining process damaged DC cable, proximately causing the fire, and finally, Illinois Bell's offers settle with G&W for $ 11 million, this court finds that G&W has not met its burden of showing even by a preponderance of the evidence, let alone by clear and convincing evidence, that the proposed $ 5 million settlement with AT&T is in bad faith. Accordingly, the court finds that the proposed $ 5 million settlement between Arkwright/Illinois Bell and AT&T is in good faith. *
Finally, there is the question whether the settlement should be filed under seal. AT&T has requested that the settlement be sealed and G&W has not objected to that request. The court, however, believes that the public interest will be disserved by preserving the secrecy of the settlement and accordingly will not allow the settlement documents to be filed under seal. The courts are public institutions and their proceedings should be public unless a compelling argument for secrecy can be made. The matters with which this case is concerned are of significant and legitimate public concern. The telephone service of many thousands of citizens was disrupted for a very lengthy period. The public has a right to know of this resolution.
Arkwright/Illinois Bell's and AT&T's motion for approval of their settlement is granted. The settlement documents may not be filed under seal.
BRIAN BARNETT DUFF
UNITED STATES DISTRICT COURT
DATE: December 5, 1991
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