Secrecy in consumer lawsuits hides auto hazards

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Source:   —  April 13, 2016, at 7:07 PM

They work tough 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.

Secrecy in consumer lawsuits hides auto hazards

For businesses that create and sell risky products, secrecy is a cherished ally. They work tough 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 frequently targeted in lawsuits, so it's not surprising that car manufacturers are prominent among businesses adept at using judicial tools to hold documents from becoming public. Plaintiffs frequently consent to these court-approved confidential agreements or protective orders. In exchange for settlement money, they're prohibited from telling regulators or the public what's been discovered in their lawsuits. The facts simply disappear from the public record.

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

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

This was exemplified in a lawsuit tried in CA in two thousand-tenth. Two sisters were killed by a faulty Chrysler PT Cruiser that was recalled but left unrepaired by Undertaking Rent-a-Car. When sued by the youthful women’s parents, Undertaking 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 assistance of safety advocates and legislators to banning companies from renting recalled cars without first repairing them. It could save lives.

The Houck case, however, is an exception. The Middle 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's not only businesses that promote secrecy agreements. The American Organization for Justice, a trade organization of plaintiffs’ attorneys, well-known disapprovingly in a newsletter that “all too often, plaintiff lawyers simply consent to overbroad protective orders, sealing orders, and secret settlements in order to ‘get on with’ the litigation.”

By law or Ct policy, about a dozen states, including California, attempt to discourage confidential settlement agreements. Attempts to win such laws in more states and Congress have been successfully opposed by corporations. As one valid treatise states, companies that create unsafe products “fight love gladiators to hold the documents under wraps.”

So far, the gladiators are winning.

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