While it’s not something I advocate, or even approve, the truth is parties routinely enter into confidential settlements in product liability cases. Typically, these agreements prohibit the disclosure of the settlement amount and evidence revealing the wrongdoing of the manufacturer of the product. In most cases the plaintiffs agree to confidentiality solely because they are in need because of their situation. Manufacturers take advantage of the plight their victims are in and insist on confidentiality. Usually they claim it’s to protect trade secrets. But in reality it’s to prevent future claims based on the defective product. Unfortunately, a victim’s need for immediate compensation quite often has to override that person’s goal of protecting other consumers from the same harm.
Even when both parties agree to confidentiality, a number of courts around the country have become less likely to approve of secrecy when the case involves a product that could endanger the public. For example, the U.S. District Court for the Western District of Missouri recently denied a motion for protective order filed by Remington Arms Company, which asked the Court to bar disclosure of details of its defective trigger. The defect allowed the guns to fire without trigger pressure, according to the Plaintiffs, resulting in a number of fatalities. In denying the motion for protective order, the Court stated:
Given that this case involves alleged design flaws with the Walker Fire Control assembly, there is a strong public interest in not allowing the Court’s orders to be used as a shield that precludes disclosure of this danger. Pollard v. Remington Arms LLC, W.D. Mo., No. 13-cv-00086 (Dec. 3, 2014).
Remington later agreed not to oppose public access to court documents in personal injury cases brought over the alleged defect. I suspect the reason for the change was that the company’s keeping a known safety defect was indefensible. But at least they relented.
Similarly, the New York Supreme Court refused to approve a confidential settlement against Graco Children’s Products, Inc. even though the involved parents of a child agreed to confidentiality in the settlement. In that case, a defective stroller led to the strangulation of the parents’ child. The Court stated:
[T]he Court finds that there is a strong public interest in a lawsuit involving the death of a child allegedly caused by a defective baby stroller. The parties’ interest in keeping the details of their settlement confidential do not constitute good cause to the extent that it outweighs this public interest. Guardino v. Graco Children’s Prods., Inc., 2015 BL 392041, N.Y. Sup. Ct., No. 42325/2010 (Nov. 24, 2015).
The U.S. Court of Appeals for the Ninth Circuit also recently ruled that FCA US LLC, the successor to Chrysler Group LLC, will have to give “compelling reasons” to seal defect-related documents in a class action over its power modules, in The Ctr. for Auto Safety v. Chrysler Grp. LLC, 2016 BL 6286, 9th Cir., No. 15-55084 (Jan. 11, 2016).
The recent trend away from confidential settlements will raise public awareness of defective products that cause safety hazards. For the public good, I would like to see confidential settlements banned. The public is entitled to know about defective products that are dangerous and create safety hazards. In many cases where confidentially is required as a part of the settlement that doesn’t happen. Since we can’t depend on Congress to do anything in this area of concern, we must depend on the courts to take the steps necessary to protect the public from the dangers associated with defective products.
Source: Bloomberg BNA
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