NYSTLA Reports
SECRETS KILL: Why New York Should Enact the Sunshine In Litigation Act
A report by the New York State Trial Lawyers Association
May 2004
Since the early 1970s, the use of secrecy agreements in litigation has expanded dramatically. These agreements often can hide information about a defective product or a person's negligence and even prohibit the parties from disclosing that there was a lawsuit.
Litigation secrecy has kept information hidden from the public that could have prevented injuries and deaths to thousands of people. Bjork-Shiley heart valves, General Motors pickup trucks, the A.H. Robins Dalkon Shield – defects in these and innumerable other products were known yet kept killing and injuring people because secrecy agreements kept the public and regulators from learning about their dangers.
In January 2004, while walking her dogs on E. 11th Street in Manhattan, Jodie Lane slipped and fell on an electrified Con Edison cable cover and was electrocuted. Assembly Member Ryan Karben (Rockland) recently learned as a result of his inquiry to Con Ed officials that, since January 2000, the utility has settled 11 cases involving injuries due to leaking electricity, all with secrecy agreements. If knowledge of these settlements had been made public, Con Ed might have been forced to take remedial action sooner and Jodie Lane might not have been killed.
More dangers may still be hiding.
Secrecy agreements also have kept knowledge of environmental contamination, unfair business practices, professional malpractice and sexual abuse of minors by clergymen from the public and government safety regulators. And according to a four part series of investigative articles on secrecy agreements published in the Washington Post in 1988, secrecy agreements have caused a broader harm to society because they are "increasingly being used to prevent debate about critical problems of public safety and policy".
To give the public access to crucial information that could save lives and prevent injury, New York should enact the Sunshine in Litigation Act (A. 7017-A, Weinstein / S. 2995, DeFrancisco). At least 16 other states have now enacted laws or adopted court rules that substantially restrict the use of secrecy agreements.
The oft-cited admonition of Justice Louis Brandeis, "Sunlight is the best of disinfectants," surely should apply to litigation in which public hazards become known to the parties but are kept secret. Focusing sunlight on public hazards will make it possible to stop them from harming others and, with the benefit of public debate, to help lawmakers and government officials address any underlying statutory and regulatory deficiencies that allowed the hazards to occur in the first place.
In 2002, South Carolina's U.S. District Court became the first federal court to eliminate secret settlement orders. Before the judges voted on the ban, Chief Judge Joseph F. Anderson wrote to his colleagues: "Here is a rare opportunity to do the right thing.... in a time when the Arthur Anderson/Enron/Catholic-priest controversies are undermining public confidence in our institutions and causing a growing suspicion of things that are kept secret by public bodies." New York should "do the right thing" and help restore public trust in our institutions by enacting the Sunshine in Litigation Act.
How Secrecy Agreements Operate and How They Harm
Secrecy agreements are used in a wide variety of civil actions for personal injury and wrongful death compensation. Among these are claims for compensation for injury resulting from defective consumer products, sexual abuse, toxic contamination, employment discrimination and medical malpractice.
Parties to a lawsuit can enter into a secrecy agreement at almost any point during the proceedings.
• During the pre-trial discovery phase, a judge may be asked to issue a protective order which forbids the plaintiff from sharing information disclosed during the case with anyone, even government regulators. Corporate defendants sometimes require such an order before they will disclose sensitive information that could be publicly embarrassing or expose the company to further lawsuits.
• At the conclusion of a trial, a defendant can request the plaintiff to agree to an order to seal all records in a case, including all exhibits and transcripts. Sealing orders can go so far as to remove all trace that a lawsuit even existed.
• After a trial, a defendant can ask for a confidentiality agreement that prohibits victims from saying or revealing anything publicly about the case. A confidentiality agreement can prohibit a victim from cooperating with government safety regulators and even law enforcement agencies.
Secrecy agreements were not nearly as common three or four decades ago as they are today. A series of investigative articles on secrecy agreements in the Washington Post in 1988 found, "The broad use of confidentiality provisions has emerged only in the last 15 years..." and their use is "burgeoning". It has now become the normal practice in cases alleging a defective product or improper conduct for the defense to ask plaintiffs to sign a secrecy agreement. In fact, many corporations refuse to settle a claim without the plaintiff signing such an agreement, even where a product is designed defectively or is hazardous and continues to be sold. Plaintiffs may put aside any misgivings they have about keeping dangers under wraps and agree to secrecy in order to avoid years of litigation or simply to remove doubt that they will be compensated for their injuries.
The following table prepared by the Coalition for Consumer Rights shows the numbers of deaths and injuries in six of the most serious examples of the use of secrecy agreements to keep the public uninformed about hazards. The Appendix more fully explains these and several additional examples of secrecy agreements that jeopardized the health and safety of Americans.
The dangers of secrecy agreements to New Yorkers were illustrated after Jodie Lane was electrocuted this January. Lane, a 30-year old Columbia University doctoral student, was walking her two dogs on 11th Street in Manhattan when suddenly the dogs appeared to be in pain and frightened and began fighting each other. As she tried to separate them, Lane fell on an electrified Con Edison cable cover and was electrocuted.
Her death appeared to be a freak accident and totally unexpected. On January 21st, a Con Ed spokesperson said of Lane's death, "This is a tragic, unique event that has never happened before." But Assembly Member Ryan Karben (Rockland County) suspected that there had been previous incidents and, at a public hearing, he asked Con Edison if the company had been sued by people who were shocked by electricity leaks. In a letter to Karben this April, Con Ed President Kevin Burke revealed that, since January 2000, the company had been sued 19 times for accidental shock – 17 times in Manhattan, once in Staten Island and once in Queens -- and that the company had settled 11 of the claims. Con Ed refused to give Karben any information about the cases or the settlements. As the Daily News reported, "A Con Ed spokesman said the company and the other parties in the lawsuits had a confidentiality agreement."
It was only after Jodie Lane's death and the ensuing public outcry that Con Ed took concerted action to prevent more electrocutions. The company began a crash program to test 260,000 manhole and service box covers, street light poles and construction plates. Within a month, Con Ed had corrected 110 locations where voltage was leaking. Had information about the 11 previous settlements not been kept secret, public pressure might have forced the utility to take remedial action much sooner than it did. Some of the injuries and Jodie Lane's death could have been prevented.
Secrecy agreements can also help a manufacturer of a defective drug, medical device, auto, or other consumer product to "hide" information from a federal regulator with the authority to ban or recall the product. Federal laws like the Food and Drug Act, Motor Vehicle Safety Act, and the Consumer Product Safety Act require a company to report to the relevant federal regulatory agency a known or suspected product hazard. In essence, secrecy agreements facilitate evasion of laws designed to protect consumers.
The New York Times reported that this is exactly what occurred when the U.S. Food and Drug Administration tried to find out about the dangers of the Bjork-Shiley Convexo-Concave prosthetic heart valve, which had a propensity to crack and has been linked to nearly 250 deaths. The Times reported:
"Documents that reveal the dangers of a heart valve that is prone to sudden, deadly failure were kept from the public and the Food and Drug Administration, according to the agency and lawyers whose clients are suing the company... F.D.A. officials, consumer advocates and lawyers involved in the cases say the secrecy has hindered the agency in making safety judgments about the valve."
The Times also quoted Ronald Johnson, director of compliance and surveillance at the FDA. According to Johnson, the protective orders "`did prevent us from knowing the facts of the matter as soon as we would like to'" and "the delay resulted in `physical and emotional harm' to patients."
How the Sunshine in Litigation Act Would Benefit New Yorkers
The Sunshine in Litigation Act would enable journalists, lawyers and government investigators to learn promptly about public hazards that are revealed during litigation. Knowledge of such hazards could then be widely disseminated, possibly leading to government action that removes a defective product from the market. When hazards are reported in the media, the public can be warned not to use or purchase a defective product.
Had knowledge of the dangers of the six products in the table above been widely known, thousands of deaths and injuries and extraordinary economic costs could have been avoided. Doctors would not have implanted the problematic Convexo-Concave heart valve in thousands more patients and Pfizer would have avoided paying tens of millions of dollars in claims settlements to those who sued. Hundreds of thousands of cases of asbestos-related disease and tens of billions of dollars in compensation payments to asbestos victims would have been avoided.
The weakening of federal oversight and regulatory enforcement in key consumer and environmental areas in recent years – from the Consumer Product Safety Commission to the Environmental Protection Agency – makes it even more critical for public hazards that are uncovered during litigation to come to public attention.
The Sunshine in Litigation Act would provide many important benefits in addition to avoiding deaths and injuries. For one, it would help ensure that truthful and complete testimony is given in court. When secrecy agreements are in effect, corporations, manufacturers, and other defendants can offer testimony in one case that is entirely inconsistent with testimony in another case concerning the same defective product and no one is the wiser for it. The Act would make it more difficult for unscrupulous defendants to keep their inconsistent-and possibly untrue-statements secret.
The Sunshine in Litigation Act would also advance justice by making it possible for injured parties and their counsel to pool information and compare notes about a defective product. Large corporations with virtually unlimited funds to spend on lawyers and experts already possess a significant advantage over a lone injured party seeking redress, particularly when the injured party is represented by a small law office or solo practitioner with limited resources. Pooling data from similar cases can help injured parties level a playing field that is now tilted in favor of corporate wrongdoers.
The Sunshine in Litigation Act would save taxpayers money. Bringing every case involving the same product in a vacuum wastes judicial system and claimants' resources on duplicative discovery and motion practice that could be avoided if the injured party simply had access to key materials and testimony from previous cases. These transactional costs benefit no one and unnecessarily run up huge expenses for plaintiffs, defendants, and insurers.
Ultimately, the Sunshine in Litigation Act would restore some of the deterrent effect of civil lawsuits on corporate and individual wrongdoing that has been eroded through the increasing use of secrecy agreements. Fear of adverse publicity and legal liability can be a powerful motivator for manufacturers to design and test their products properly. Corporations that know that they can keep damaging information about a product's safety secret have less incentive to take all steps necessary to ensure that their products are safe in the future. It is not surprising that the Pharmaceutical Manufacturers Association opposes measures such as the Sunshine in Litigation Act that would enable the Food and Drug Administration to be guaranteed access to company data, even when it has been sealed.
Arguments that have been raised against the Sunshine it Litigation Act by insurance companies, drug manufacturers, insurers and other opponents do not stand up to scrutiny:
• There is not even anecdotal evidence to support the claim that the Act will have a chilling effect on parties who might otherwise wish to settle.
• The Act would not result in an influx of cases into an already overburdened judicial system, as opponents predict. States that have enacted similar measures have not experienced a surge in litigation. On the contrary, secrecy agreements make repeated lawsuits involving the same dangerous product unnecessary.
• The Sunshine in Litigation Act would not allow sensitive trade secrets to be revealed to competitors, thereby hurting businesses and New York's business climate. The Act specifically responds to this concern by incorporating the Florida Sunshine in Litigation law's explicit exemption of trade secrets that are not pertinent to public health hazards. Even if the Act did not exempt trade secrets, it is unlikely that any business would be harmed since trade secrets are usually not a part of the product that makes it a public hazard.
• The argument that secrecy agreements are private matters ignores the American tradition of open courts, the legal presumption of judicial system openness, and the public's overriding right to know. The taxpayer pays for the judicial system, and litigants who avail themselves of it should not be permitted to tell the public that information about a hazard that comes to light in a legal action is none of their business.
Other States Are Ending the Misuse of Secrecy Agreements
Arkansas, Florida, Louisiana and Washington have enacted laws that void agreements that conceal public hazards. Other states that have enacted anti-secrecy laws or where courts have promulgated regulations that substantially restrict the use of secrecy agreements include Delaware, Georgia, Virginia, North Carolina, Oregon, Idaho, Michigan, and Virginia.
In California, the sealing of court-filed documents is discouraged unless there is an overriding interest that outweighs the public right to access. In 1990, the Texas Supreme Court promulgated what is perhaps the most far-reaching court-written anti-secrecy regulation in the nation, Sec. 76a of the Texas Rules of Civil Procedure. This rule creates a "presumption of openness" applying to public access to all court records. Court records include pretrial discovery documents.
In November 2002, South Carolina's U.S. District Court judges implemented a broad secrecy agreement limitation, the first federal court to do so. The new rule provides, "No settlement agreement filed with the court shall be sealed pursuant to the terms of this rule." Florida's federal court judges are now considering the same provision.
Return Secrecy Agreements to Their Intended Purpose
In 1988, the Washington Post reported how secrecy agreements, "once used almost exclusively in cases involving business trade secrets, national security and personal privacy", have rapidly expanded into many other areas where they do not belong. The Sunshine in Litigation Act would return secrecy agreements to their originally intended function of protecting trade secrets, highly personal information and national security.
If the Act becomes law, secrecy agreements could no longer be used to prevent New Yorkers from learning about products that could harm and kill them, about professionals who should no longer be licensed to practice their professions, about instances of sexual harassment and abuse in the workplace, and about instances of toxic contamination of their communities. Corporations would no longer be able to pay victims what amounts to "hush money" as an alternative to removing a dangerous product from the market and losing sales.
Plaintiff's lawyers would welcome enactment of the Sunshine in Litigation Act not only because it would save lives and prevent injuries, but because they would finally be relieved of the sometimes wrenching dilemma of choosing between the needs of an individual client and the good of the many. According to the legal profession's Code of Ethics, lawyers must do what is in the best interest of their clients. A lawyer who is asked by the defense as a settlement condition to keep information about a public hazard secret is put in a quandary between agreeing and obtaining a good settlement for their client and saying no and living with the knowledge that more people could die or be injured.
In an article on the use of secrecy agreements to settle claims against McNeil Pharmaceuticals for injuries linked to its painkiller Zomax, the Washington Post quoted an attorney for one of the patients candidly summing up the dilemma lawyers confront: "The problem is that they have a gun to your head. The client is concerned about being compensated in full. The lawyer must abide by the concerns and wishes of his client....not the fact that [information will remain secret or] other victims may be injured." Another attorney told the Post, "What they [McNeil Pharmaceuticals] are trying to do is not be accountable to the vast majority of the public for what they've done.... They paid my clients a ton of money for me to shut up."
Confidentiality in litigation has its place. But ultimately, the public interest must prevail. The Sunshine in Litigation Act would set the right balance between the defense's legitimate interest in keeping some matters secret and the public's right to know about imminent hazards. What could possibly be the overriding public benefit in protecting clergymen who molest children? In protecting incompetent physicians who repeatedly commit serious treatment and procedure errors?
In a broader sense, the Act would facilitate public oversight of the judicial system and ensure that private-sector wrongdoers can be held publicly accountable. Stephen Gillers, Vice-Dean and Professor of Legal Ethics at New York University Law School, summed up what may be the most important reason for enacting the Sunshine in Litigation Act when he wrote, "A judge should not suppress information that enables the public to evaluate the performance of the courts, government officials, the electoral process and powerful private organizations."
APPENDIX
Examples of How Secrecy Agreements Jeopardize Safety and Health
Asbestos
Perhaps the oldest example of secrecy agreements contributing to harm and injury is from 1933, when asbestos manufacturer Johns-Manville entered into a settlement agreement with an attorney for 11 former company employees who had sued the company for asbestos-related disease injuries.
The agreement, which was kept secret for 45 years, prohibited the injured employees' attorney from bringing any new lawsuits against Johns-Manville and prevented disclosure of studies that established a link between asbestos and asbestosis.
Additional lawsuits brought against Johns-Manville in the 1930 and 1940s also included secrecy agreements. Since then, hundreds of thousands of Americans who have worked directly with asbestos or with products containing asbestos have been injured and many have died from asbestos-related cancer.
Asbestos – once known as the "miracle mineral " because it is incombustible, light and strong and its fibers can easily be woven into fabric or poured into concrete -- was used in myriad applications until the 1960s. If knowledge of the early studies had been widely disseminated, its use could have been curbed or stopped and thousands of lives could have saved.
Medical devices/implants
Bjork-Shiley heart valves. Pfizer secretly settled dozens of lawsuits brought by victims of defects in its Bjork-Shiley Convexo-Concave heart valve, introduced in 1979. The defect -- the struts that hold a disk that opens and closes with each heartbeat can crack and fail -- has been linked to some 250 deaths. The valve was implanted in more than 50,000 patients before it was recalled in 1985.
A Congressional report in 1990 concluded that Pfizer had "aggressively marketed the device despite internal knowledge of serious problems in the manufacturing and quality assurance procedure." An internal memorandum written by a supervisor at the heart valve manufacturing plant complained of a company policy of disguising cracked valves as intact. Despite Pfizer's insistence on confidentiality agreements and protective orders during early lawsuits, it eventually came out that employees in the facility where the valves were made falsely filled out paperwork to disguise their practice of polishing over cracks. As a result of the secrecy agreements, this and other crucial information about the valves was not revealed to doctors or the Food and Drug Administration and patients continued to receive the Convex-Concave valve.
Dalkon shield. For 15 years, A.H. Robins received thousands of complaints that its intrauterine birth control device, the Dalkon Shield, caused Pelvic Inflammatory Disease. Yet the Dalkon Shield was not taken off the market until it was recalled in 1984. By then, 17 deaths and 209 spontaneous abortions had been linked to the device. The Dalkon Shield's potential to cause infection, sterility and spontaneous abortions had been kept from public view through secrecy agreements the company reached with injured plaintiffs out of court.
Pharmaceuticals
Zomax. When it was withdrawn from the market in 1983, Zomax had been sold for only 28 months, yet its manufacturer, McNeil Pharmaceutical, had received hundreds of reports of severe allergic reactions from this prescription painkiller. The FDA believes that Zomax was probably a factor in 14 deaths. Seniors who were suffering from arthritis were the main users of this drug.
The company used protective orders and confidentiality agreements to prevent disclosure of information the company had given during numerous lawsuits filed by Zomax victims. A Washington Post article published several years after the recall noted that documents that were still being kept secret included "indications during pre-marketing that Zomax might cause a severe allergic reaction...which can lead to seizures and respiratory failure." The Post reported that, while notice about the danger was included nine months after the drug went on the market, "one internal memorandum to the company's president criticized the company for not acting sooner". The wife of one person who died said she had settled her case without knowing about a meeting where McNeil doctors had "declared their lack of confidence in Zomax's safety".
Halcion. A British investigation that made the case against Halcion, an anti-anxiety drug that has been blamed for depression and hallucinations in some patients.
Out of-court settlements contained strict secrecy clauses helped Upjohn Co., Halcion's manufacturer, delay dissemination of knowledge of the drug's potential for psychotic side effects.
Metabolife 356. There have been nearly 15,000 consumer complaints about Metabolife 356, an ephedra-based diet pill that that is alleged to cause serious side effects including heart attacks and stokes. The FDA has linked ephedra products to at least 80 deaths. Yet the existence of these complaints was kept secret because of confidentiality agreements written into the settlements in the numerous lawsuits brought by injured patients against Metabolife. As a result, the public kept buying and using the product. In December, 2003, the FDA banned all products containing ephedra.
Automotive-related
Firestone tires. In the early 1990's a potentially lethal tread separation problem with Firestone tires mounted on Ford Explorer SUVs led to a rash of lawsuits brought by victims of accidents linked to the defect. The tires have been implicated in over 100 deaths and hundreds of injuries.
Dozens of lawsuits were settled out of court, with Firestone obtaining secrecy agreements that prevented the public from being alerted to the possible dangers of this product. Meanwhile, Firestone took no action to correct the chronic defect even though tests conducted by the company in 1996 revealed a high failure rate. Deaths and injuries continued until 2000, when the National Highway Traffic Safety Administration ordered the tires recalled.
GM fuel tanks. Between 1973 and 1987, General Motors made almost ten million pickup trucks with fire-prone side-mounted fuel tanks. In 1973, GM Engineer Edward Evey analyzed the cost to GM of expected "burned deaths" caused by these tanks. This analysis was discovered during subsequent lawsuits brought by burn victims, but was systematically sealed in settlement agreements. It wasn't until 15 years after the tank was first introduced that the public finally discovered the dangers of the design. According to the Center for Auto Safety there have been more than 750 fire deaths in accidents with these vehicles. The National Highway Traffic Safety Administration did not learn of the defect because GM never reported it.
Ford Pinto. In 1978, the case of Grimshaw v. Ford Motor Company prompted Ford Motor Company to recall its Pinto compact car. Unfortunately, by this time, the Pinto had already been linked to 27 deaths. Richard Grimshaw, himself, was burned over 90 percent of his body when the Pinto in which he was riding was in a collision.
Grimshaw alleged that Ford installed poorly designed gas tanks the Pinto in order to save as little as $10 per car. Specifically, the Pinto had a propensity to explode in rear end crashes because the gas tank was located behind the rear axle rather than above it, bolts were positioned in a manner that threatened the tank's integrity, and the filler pipe design made it likely to disconnect in such an accident. According to internal Ford documents, the company had chosen, through the use of a risk-benefit analysis, not to improve the gas tank design even after learning of its dangers.
Mother Jones magazine first exposed the problems with the Pinto in 1977, accusing the company of producing and selling the car in spite of the analysis and company crash tests that showed how easily its gas tank would rupture if the car was hit from the rear. Ford used secrecy agreements as part of its effort to keep these design flaws out of public view.
Chevrolet Corvair. Among the serious design defects in the rear-engine Corvair, introduced in 1959 by GM's Chevrolet Division, was that the air that cooled the engine, which could contain poisonous carbon monoxide, also warmed the passenger compartment.
In a deposition in a case brought in 1962 by a Corvair driver who suffered brain damage from carbon monoxide, a company engineer acknowledged that GM knew about this problem but continued to sell the car. GM settled the case, conditioned on secrecy. As part of the settlement, the driver had to return not only the case file, but to ensure that no information about the lawsuit leaked out, he was required to return the car. The secrecy agreement kept the public essentially uninformed about the risks inherent in the Corvair's heating system for ten years.
Goodyear Tires. Goodyear Wrangler AT tires allegedly had a defect that could lead to tread separation. These tires that have been linked to accidents resulting in at least 19 deaths and 160 injuries and accident victims brought more than 40 lawsuits against the manufacturer.
Consumers for Auto Reliability and Safety (CARS), a national advocacy organization, claims that people were needlessly killed and injured because Goodyear kept producing the tires even after it knew of the defect. CARS has been fighting Goodyear to unseal critical documents introduced in Frankl v. Goodyear Tire and Rubber Company, a wrongful death lawsuit brought in 1997 after a Wrangler-equipped Chevrolet Suburban carrying Air Force personnel to a base in Saudi Arabia was in a a roll-over accident. CARS and their attorneys, Trial Lawyers for Public Justice, believe that unsealing the records is, in the words of one of the attorneys who is handling the issue, "a matter of public life and death since it involve[s], potentially, the safety of possibly millions of Americans riding on these Goodyear tires." CARS also alleges that Goodyear knew about the defect years before the National Highway Traffic Safety Administration began to investigate in 2000, and that it hid information about the problem through secrecy agreements.
Other consumer products
Kolcraft car seats. Kolraft Enterprises told purchasers of its child car seats that they were appropriate for children weighing 22 pounds. The National Transportation Safety Administration had in fact recommended a minimum child weight of 30 pounds for this type of seat. In 1989, 16 month-old Michael Wright was in a car accident that left him paralyzed from the waist down even though he was secured in a Kolcraft seat. Michael weighed less than 30 pounds. The settlement agreement, under which the Wright family received substantial compensation, included a confidentiality provision.
Bic lighters. In the early 1980s, the Bic Corporation was sued because some of its lighters allegedly blew up and killed or maimed their users. Bic agreed to pay injured users millions of dollars, but lawsuit settlements required that they return to the company all documents produced during discovery. The media did not begin to report on the danger until 1987, when it was revealed that the lighters were linked to ten deaths.
Clergy sexual abuse
According to the Boston Globe, from 1992 to 2002 the Archdiocese of Boston secretly settled child molestation claims involving 70 priests and at least 200 abuse victims. The settlements allowed some priests to move to another diocese and molest again.
The Boston Globe's investigation prompted hundreds more victims from around the country to come forward and a nationwide scandal to erupt. An investigation by Chicago Lawyer estimated that that the Catholic Church's Chicago diocese had settled 400 molestation-related lawsuits, almost all secretly.
There may have been far fewer victims had the lawsuits not been secret, had there been widespread media attention to the problem of pedophile priests far earlier than the 1990s, and had necessary reforms been made. Judges continued to approve secrecy agreements involving priests because even they were unaware of the scope of the problem. Priests who molested were allowed to transfer to other dioceses, which were unaware of their full backgrounds.