California Forum

Secret settlements are endangering the public. This California bill will fix that

Attorney Bob Patterson moves a shredded Firestone AT tire used as evidence in a 2001 lawsuit against Bridgestone/Firestone Inc. More than 150 people died because of a defect in their construction before they were recalled in 2000, but the public was unaware due to confidentiality clauses in court settlements.
Attorney Bob Patterson moves a shredded Firestone AT tire used as evidence in a 2001 lawsuit against Bridgestone/Firestone Inc. More than 150 people died because of a defect in their construction before they were recalled in 2000, but the public was unaware due to confidentiality clauses in court settlements. AP

California should join several other states in prohibiting settlement agreements that keep secret information about dangerous products and environmental hazards.

A bill introduced by Assemblyman Mark Stone, Assembly Bill 889, would prevent lawsuits from being settled on the condition that information be kept confidential when it is about a defective product or an environmental condition that poses a danger to public health and safety. Such secrecy leads to deaths and serious injuries as the public and regulators are kept in the dark about unsafe products and toxic conditions.

Businesses fight hard to try and keep secret information about defects in their products and environmental hazards that they have created. They fear that revelations will cause a loss of sales and harm their reputation. So lawyers for businesses routinely ask courts to issue protective orders preventing plaintiffs from disclosing information that they have learned and insist, as a condition of settling a lawsuit, that the parties remain silent about the matter.

The result is that dangerous products stay on the market much longer. There are many high-profile examples of this. For instance, before Bridgestone/Firestone tires were recalled in 2000, more than 150 people died because of a defect in their construction. More than 200 cases had been secretly settled in the decade prior to the recall.

In late December, the National Highway Traffic Safety Administration opened an investigation of Goodyear Tire and Rubber Company’s G159 tires, which have been shown to fail at high speeds when used on motor homes; they were meant to be used on delivery trucks running at low, stop-and-go speeds. There have been dozens of lawsuits about this for the last two decades. In explaining why it took so long to begin an investigation, the NHTSA said: “(T)he data produced in litigation was sealed under protective orders and confidential settlement agreements, precluding claimants from submitting it to NHTSA.”

Secrecy, of course, is not just in cases about tires. Similar protective orders and confidentiality agreements have occurred in countless other instances involving medical products, car defects, firearms and toxic hazards. In all of these instances, public disclosure of dangers would have led to greater consumer awareness, more pressure for change and even regulatory action that could have prevented needless deaths.

Court records should be public documents open to public inspection. This obviously is important in cases involving a public danger, such as a defective consumer product or environmental hazard. But all too often, businesses receive protective orders from courts that keep discovery information secret and insist on agreements that prohibit the parties from disclosing anything about the product dangers or the case. Secrecy in litigation is not appropriate if it keeps evidence of a public danger from public scrutiny.

Under current law, lawyers for plaintiffs are placed in an unconscionable dilemma. They ethically must do what is best for their clients, and that often includes a settlement agreement which requires secrecy. But the result is that the lawyers are gagged from warning the public of dangers that exist. The law must be changed so that lawyers no longer are parties to concealing dangerous products and putting the public at risk.

AB 889 would solve this. It provides that in an action based upon the existence of a danger to the public health or safety, information relating to the danger that was discovered during the course of litigation cannot be kept secret in an agreement between the parties or a court order. There is a necessary exception, however, if a court finds that revealing the information would disclose “trade secrets.” A secret formula or design for a product is a trade secret; the dangers it poses are not.

At the outset, AB 889 states its purpose: “to better protect Californians from death or substantial injury caused by any danger to the public health or safety, including defective products and environmental hazards, by creating a presumption against secrecy that protects the openness of information acquired through discovery.” This is long overdue. Secrecy that allows dangerous products and toxic conditions to remain uncorrected leads to deaths and injuries. AB 889 is an essential step to stop this.

Erwin Chemerinsky is dean and professor of law at the UC Berkeley School of Law. He can be reached at echemerinsky@law.berkeley.edu.

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