The Problem: Confidentiality agreements in lawsuit settlements can be harmful, e

[Guest guest]

Confidentiality Agreements

The Problem: Confidentiality agreements in lawsuit

settlements

can be harmful, even deadly, to the public

The prevalence of confidentiality or secrecy agreements is

perhaps one of the least discussed and most fundamental

problems with our civil justice system. At various stages

of a lawsuit, a plaintiff suing a large corporation for

causing serious harm will gain access to compelling

information. If the parties decide to settle, there is a

chance that all of this information, including that which

implicates the corporation's role in broader public health

and safety hazards, will be kept secret under a

confidentiality agreement. In participating in a

settlement, the plaintiff signs away his or her ability to

share information gained about the harm being committed,

the settlement amount, and other valuable details.

As a result of confidentiality settlement agreements, a

defendant corporation that is conducting harmful business

practices may freely continue engaging in the same

practices after settlement, with no fear of public

reprisal. As a result, more unsuspecting victims are

injured by concealed hazards, and then are being forced to

re-invent the wheel in asserting their claims against the

perpetrators. This system can lead to astonishingly tragic

outcomes. For example, the Firestone and Bridgestone tires

that exploded on Ford Explorers, killing at least 88

people, were first made in 1993 but not recalled until the

year 2000.(1) This is because the public had no access to

the vital, life-saving information from prior lawsuits

that was kept secret under confidentiality agreements

prior plaintiffs had signed during settlement.(2)

Perhaps the most extreme example of this phenomenon is

asbestos litigation: lawsuits against manufacturers for

knowingly exposing their employees and others to toxic

levels of asbestos, causing often fatal lung and

respiratory diseases. The first asbestos case was brought

and settled in 1933, compensating eleven clients to the

tune of $30,000 ($450,000 in today's dollars).(3) The

settlement agreement required that the lawyer not be

involved in any future cases, effectively closing off the

evidence and expertise he had accumulated.(4) It took

forty-five years for anyone to discover this secrecy

agreement.(5) Seventy-four years, hundreds of thousands of

plaintiffs, and billions of dollars in paid damages later,

asbestos litigation remains on the nation's dockets. Had

the details of the health risks of this first case been

released to the public, many of these injuries and the

litigation they required could have been avoided by

implementing stricter and ultimately far less expensive

safety standards on the asbestos industry and its service

providers.

Many plaintiffs file lawsuits not just for individual

compensation for their injuries, but also to prevent the

wrongdoer from inflicting harm on future victims. But

these plaintiffs face external pressure to settle their

lawsuits under confidentiality agreements even when public

safety and health are at stake. Although many of these

plaintiffs do not wish to settle under such conditions,

they often feel they have no other realistic choice.

Public interest lawyer Arthur describes the dilemma:

[W]hat happens at the settlement, is the company often

says: `We will pay you some large sum of money but only if

the amount we're paying you is confidential, you agree to

return all those documents to us, and you agree not to

tell anybody what you saw.' And often the plaintiff will

say, `Well I don't want to agree to that,' and the company

will say, `Fine, then we will go back to court and keep

fighting for years and years and you'll never get a

penny.' Again many of the plaintiffs and their lawyers

feel essentially blackmailed as if they have no choice,

particularly when you're representing somebody who is

seriously injured and needs the money to pay their medical

bills, they really don't have any choice. And that's the

way it ends up being kept secret through settlement.(6)

Supporters of confidentiality agreements argue that the

corporate defendant's right to privacy and to contract

should trump any larger public safety goals involved in a

lawsuit.(7) The privacy interest behind confidentiality

settlements is usually recognized when secret information—

for instance trademark information—is at issue.(8) But the

privacy argument is also often used to protect

corporations not from having their valuable trade secrets

exposed, but from the " harm " of public accountability for

their wrongdoing. As much as privacy is valued, a

corporation's privacy regarding its misdeeds simply should

not trump the general public's right to be aware of

serious public health and safety threats.

Even when the plaintiff agrees to secrecy, the judge has

the authority to protect the public interest and deny a

secrecy agreement, but experts have found that most judges

do not.(9) Corporations are supposed to show " for each

particular document it seeks to protect… that specific

prejudice or harm will result if no protective order is

granted, " but often the pressure on judges of running a

full docket means that secret settlements are " filed under

seal as a matter of course. " (10)

Supporters of confidentiality complain that prohibiting

these agreements will prevent many cases from being

settled and thus " clog " the courts with full-blown trials.

(11) It is this argument that some scholars say creates

pressure for many plaintiffs, as well as pressure for

plaintiffs' lawyers and judges, to settle instead of fully

adjudicate their claims.(12) But this argument is weak in

comparison to the public's health and safety interest in

disclosure. As the asbestos example demonstrates, early

public disclosure would save lives and prevent future

lawsuits, as well as help businesses model their

operations in a way that is beneficial to society, and

ultimately, to the business' reputation and profit margin.

The Policy Proposal: Prohibit Secrecy When Public

Health/Safety Are At Stake

The next President must support the introduction of

federal legislation prohibiting confidentiality agreements

in matters that involve the general public's health or

safety. This would not only reduce repetitive litigation

over the same harm with different plaintiffs, but would

give corporations added incentive to engage in responsible

and safe business practices. Most importantly, it would

protect the American public against undue harm.

Consumer advocates and legal experts concerned about the

public's interest advocate this approach.(13) And evidence

shows that the American public agrees. A New Jersey poll

showed that 69 percent of respondents opposed secrecy

agreements that hide hazards in the products they use, and

agreed that " when lawsuits over allegedly defective

products are settled out of court, the public has a right

to know its terms. " (14)

A few states have taken the lead and implemented rules

prohibiting or restricting secrecy agreements that would

adversely affect the public's health or safety.(15) In

Texas, courts must balance the presumption of openness and

the potential adverse effect that sealing would have on

public safety with a specific and substantial interest a

party may have for sealing the records.(16) The records

can be sealed only if a significant interest outweighs the

interest in keeping the records open.(17) The court must

also find that there is no less restrictive means to

protect the privacy interest asserted by the party.(18)

Florida law prohibits a court from enforcing a secrecy

agreement that has " the effect of concealing a public

hazard or any information concerning a public hazard. " (19)

Forty additional states have introduced similar bills, but

none has become law. What is needed is universal federal

legislation that applies across the nation. Over the past

twelve years, Senator Herb Kohl (D-Wisconsin) and various

other Congressional representatives have proposed

legislation that would do just that, but it has never

passed.(20) The Sunshine in Litigation Act of 2005, the

latest of these proposed bills, would have barred judges

from enforcing confidentiality agreements related to

public health and safety. This bill essentially declares

such confidentiality agreements unenforceable due to

conflict with public policy.

The passage of legislation like the Sunshine in Litigation

Act would signal significant progress in the effort to

rebalance priorities in favor of the public's health and

welfare. America needs a President who will actively

advocate for this legislation.

--For the entire article, go to:

http://www.tortdeform.com/archives/2007/11/confidentiality_

agreements_1.html