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Confidential Settlements: Protecting Corporations not Victims from Faulty Vehicles

It was only after the recall of nearly 1.37 million cars and the deaths of at least 27 people that GM begin to take responsibility for its fatally flawed ignition switches. It was found that General Motors knew for more than a decade that its popular Chevy cobalts were defective. However, the greater issue at hand is how did GM managed to hide this danger from the public for over decade while simultaneously facing numerous personal injury and wrongful death lawsuits? The answer is through the use of Confidential Settlements.

GM, like many other corporations who face consumer safety lawsuits, hides its misdeeds through confidential or sealed settlements. Confidential settlements are when a corporate defendant agrees to settle with the victim, but only if the deal and the "crime" are kept a secret. It is one of the easiest means in which to keep the public in the dark about potentially widespread consumer safety issues.

The most common argument in favor of such settlements is that victims often receive more money and that secret settlements protect the corporation's trade secrets. Prior to GM, the most infamous example was the Ford/Firestone recall of more than 6.5 million tires in 2000. Firestone found itself facing intense government and public scrutiny as more than 300 incidents and 46 deaths occurred to due to the tires shredding on the highway.

However, it was reported that the company had been facing lawsuits alleging the dangers of the faulty tires since 1991. In fact, more than 80 tire lawsuits were filed and settled confidentially. Because of the secret settlements, crucial internal documents and sworn testimony by Firestone officials were never made public - information that could have prevented later deaths from occurring. Ford also settled with numerous victims on the condition of confidentiality.

Plaintiffs' attorneys frequently rely on the documents of similar cases to make their claims against a corporate defendant. However, as in the case with Firestone and now GM, sealed settlements make it nearly impossible because the parties are unable to provide information as per the provisions of the settlement agreement.

Attorneys looking to bypass this roadblock end up having to agree to strict protective orders in order to have access to the information. It was only after an extraordinary effort by the public and the press that important court records pertaining to the Firestone tire recall became unsealed and available to the public.

Legislators have begun to take note of the public health and safety concerns sealed settlements raise. "Sunshine laws" exist in many states to make public records and some court documents open to the public. The Sunshine in Litigation Act has been repeatedly introduced in Congress with the hopes of preventing courts from restricting access to records pertinent to the protection of public health and safety.

Typically these laws require a high burden of proof be met before secrecy is granted. Texas has the broadest sunshine rule enacted because it creates a presumption of openness. Rule 76a allows the public to access unfiled settlements and discovery materials. It also allows for third parties to challenge order sealing documents, even after a case has been closed.

While the need to protect trade secrets is justifiable, it should not be at the expense of consumer's public safety and health. Thousands of victims suffer yearly from injuries caused by faulty products and vehicles. The civil justice system should not be a tool in which corporations can hide from the ramifications of their misconduct and dangerous products. Sunshine in Litigation laws can help protect consumers while protecting corporations with legitimate causes for secrecy.

If you or a loved one have suffered from a car or transportation accident, please contact the our Panama City injury lawyer today.


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