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Bill Introduced to Limit Secret Settlements in Product Liability Cases

May 23, 2014

Two U.S. senators have introduced legislation that would force federal judges to consider the public interest before sealing court records in personal injury and product liability lawsuits.

This bill comes in response to actions in the General Motors ignition switch recall, the Detroit Free Press reports. The Sunshine in Litigation Act would discourage secret settlements that senators say GM entered into with owners of some of the 2.6 million cars equipped with defective ignition switches. The defective switch is linked to 13 deaths and 42 crashes. The defective switches can unexpectedly move from the “run” position, shutting off the car’s engine and electrical system and disabling the air bags.

The bill was introduced by Sens. Richard Blumenthal (D-Conn.), and Lindsey Graham (R-S.C.), who said that the “concealment prevented the public, and future GM car owners, from learning about the dangers posed by these faulty ignition switches,” according to the Free Press. Last week, GM was fined $35 million, the maximum fine, for failing to disclose the defect sooner. The automaker is under investigation by Congress, the Justice Department, and federal safety regulators over the defect and the delayed recall.

Under this bill, there would be a legal presumption against protective orders shielding liability settlements from public view until a judge finds that secrecy outweighs the safety concerns of the general public. A court could not restrict a party in such a settlement from disclosing public health or safety information to federal or state agencies. The bill would require that information discovered in one case be shared with like cases, the Free Press reports. Similar legislation in 2011 never reached the Senate floor for a vote.

Records indicate that GM engineers were aware of the switch problem before the end of 2004, but rejected proposed solutions in 2004 and 2005, according to the New York Times. Despite continuing reports of accidents, a number involving fatalities, GM did not initiate a recall of the affected Chevrolet Cobalts, Saturn Ions, and other small cars until early this year.

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