Burying It Doesn’t End It : New legislation to encourage disclosure of harmful or defective products
No business wants to make public its proprietary trade secrets. No business wants to encourage meritless lawsuits against itself. Legislation that promoted either would deserve to fail. But SB 711, which has been unfairly painted as anti-business, is actually pro-business and pro-consumer legislation that deserves support.
The bill, authored by state Sen. Bill Lockyer (D-Hayward), would bar agreements to keep confidential most information discovered during lawsuits based on allegations of product defect, environmental hazard or fraud. This bill narrowly passed the Senate and is now before the Assembly Judiciary Committee, where hearings will be held this month. The going could be tough, for the formidable California Manufacturers Assn. strongly opposes the bill.
Product liability, environmental hazard and consumer fraud cases are frequently settled by agreements that defendants--particularly manufacturers--bind plaintiffs to keep secret. Those secrecy agreements can cover the technical details of the product defects that led to the lawsuit in the first place. In the short run, burying them may discourage others from filing similar lawsuits and keep a lid on the compensation that defendants pay to victims.
But in the long run, these agreements may have precisely the opposite effect: For example, if an automobile is equipped with poorly engineered seat belts that fail to restrain passengers during a collision, that engineering defect will likely cause injury not just to one person but to many. In the same way, an environmental hazard, such as a toxic dump or chemical leak, may, unfortunately, cause demonstrable harm to an entire neighborhood, not just to one resident. There is no evidence that burying evidence of such defects or hazards will discourage valid personal injury or wrongful-death claims.
Instead, such agreements only make injured plaintiffs wait longer for compensation as their attorneys scramble to rediscover evidence other lawyers had previously unearthed and then agreed to seal. Such secret agreements can also raise the legal costs of companies trying to fend off redundant legal-document requests without reducing what they may ultimately have to pay.
Lockyer’s bill will require a judge to approve agreements that keep proprietary information secret. Judges can continue to protect trade secrets that are not at issue in litigation. That’s appropriate. But protecting evidence of fraud or consumer hazard under the guise of trade secrets or maintaining economic competitiveness is not in best interests of California business.
SB 711 has the support of consumer, health, press and environmental groups. The Assembly should pass this reasonable bill and the governor should sign it.
