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Secrecy in consumer lawsuits hides auto hazards

Clarence Ditlow, executive director of the Center for Auto Safety, displays a GM ignition switch similar to those linked to deaths and dozens of crashes.
Clarence Ditlow, executive director of the Center for Auto Safety, displays a GM ignition switch similar to those linked to deaths and dozens of crashes. Associated Press file

For businesses that make and sell dangerous products, secrecy is a cherished ally. They work hard to prevent safety regulators and litigants from learning about their products’ hazards. One way is by concealing information revealed in lawsuits filed on behalf of those who have been injured or killed.

Automobiles are often targeted in lawsuits, so it is not surprising that car manufacturers are prominent among businesses adept at using judicial tools to keep documents from becoming public. Plaintiffs often agree to these court-approved confidential agreements or protective orders. In exchange for settlement money, they are prohibited from telling regulators or the public what has been discovered in their lawsuits. The facts simply disappear from the public record.

The incentive for plaintiffs to settle can be great – to receive compensation for their loss but also to avoid the costs and uncertainties of a trial. Accepting a secrecy provision may seem like a small price to pay, but concealing information can mean that more people will die or be injured until the defect is finally exposed, which may take years or never happen.

Recently the National Highway Traffic Safety Administration took a step toward discouraging gag-order settlements by issuing an “enforcement guidance bulletin” asking that litigants ensure that such agreements allow information to be provided to the agency. Although NHTSA has the power to demand defect information from automakers, it cannot do so if is not first made aware that there is a safety issue. Lawsuits against manufacturers are a key source of that information.

This was exemplified in a lawsuit tried in California in 2010. Two sisters were killed by a defective Chrysler PT Cruiser that was recalled but left unrepaired by Enterprise Rent-a-Car. When sued by the young women’s parents, Enterprise offered to pay $3 million, but only in exchange for a secrecy agreement. They refused, the case went to trial and a jury awarded $15 million to the parents.

The mother, Carol Houck, then enlisted the help of safety advocates and legislators to win passage last December of a federal law banning companies from renting recalled cars without first repairing them. It could save lives.

The Houck case, however, is an exception. The Center for Auto Safety, a Washington-based watchdog group, has notified NHTSA of numerous lawsuits in which information about safety problems was suppressed by settlement agreements, thus delaying discovery of the defects.

It is not only businesses that promote secrecy agreements. The American Association for Justice, a trade association of plaintiffs’ attorneys, noted disapprovingly in a newsletter that “all too often, plaintiff lawyers simply agree to overbroad protective orders, sealing orders, and secret settlements in order to ‘get on with’ the litigation.”

By law or court policy, about a dozen states, including California, try to discourage confidential settlement agreements. Attempts to win such laws in more states and Congress have been successfully opposed by corporations. As one legal treatise states, companies that make unsafe products “fight like gladiators to keep the documents under wraps.”

So far, the gladiators are winning.

Ben Kelley is a board member of the Center for Auto Safety and author of “Death By Rental Car: How the Houck Case Changed The Law.” He can be contacted at ben.kelley@yahoo.com.

A version of this commentary also appears on FairWarning, a Pasadena nonprofit news organization that focuses on public health, safety and environmental issues.

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