Bill Seeks to Eliminate Confidentiality Terms in Settlements
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Bill Seeks to Eliminate Confidentiality Terms in Settlements

Tuesday, May 08, 2018By Richard Alexander

There are many reasons that parties opt to settle disputes outside of court. One of the major advantages of settlement is that the parties are required to keep the terms of the settlement confidential. This is desirable to both defendants and plaintiffs for a number of reasons including avoiding admissions of liability, preventing future litigation, the desire for privacy, and possibly a higher payout in the settlement. But maintaining confidentiality after a settlement can pose a risk when the settlement contains information that can be potentially harmful to the public.

This concern has prompted a California Assemblyman to introduce a bill prohibiting confidentiality terms in settlements if the information pertains to a defective product or environmental hazard. Supporters of the bill believe that imposing confidentiality terms in a settlement that concern matters of health and welfare creates an unacceptable danger to the public and prevents regulators from properly performing their jobs.

These presumptions are not unfounded. It is common for corporations to attempt to conceal information about product defects in order to ward off a financial and public image crisis. Most defendants in such litigations view confidentiality provisions as critical to protecting their businesses. Demands for mandatory confidentiality clauses exist across a number of industries including medical products and automobiles. In many cases, revealing the terms of a settlement may do more than simply inform consumers- it may also serve as the basis for a regulatory response to address dangerous conditions.

In a well-known example of this practice, Bridgestone/Firestone tires were recalled in 2000 due to defective construction. The defect led to the deaths of over 150 people, but hundreds of cases were confidentially settled out of court before a recall was issued. The confidentiality provisions in these settlements prevented vital information about the tire’s safety record to be released to the general public.

Proponents of AB 889 contend that the passage of this legislation is a necessary to prevent injuries or deaths. It would preclude parties from keeping information obtained in the course of litigation secret with necessary exceptions made for trade secrets or other discretionary information.

If you or a member of your family suffered injury or death as a result of negligence or a defective automobile, contact the attorneys Alexander Law Group, LLP. Our exceptional personal injury lawyers will answer your questions and get you the maximum compensation that is possible. Call 888.777.1776 or contact us online.

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