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Court Orders Often Keep Companies' Darkest Secrets Hidden

Sep 8, 2002 | The San Diego Union Tribune

For desperate dieters, recent revelations that Metabolife International received thousands of previously undisclosed consumer health complaints about its controversial herbal diet pills proved a troubling surprise.

But it wasn't a surprise for many plaintiffs who have filed personal injury lawsuits against the San Diego company. And that is even more troubling, some legal experts say.

The existence of 14,700 consumer complaints about Metabolife's flagship product, Metabolife 356, along with other documents relating to potential safety risks posed by ephedra products, has been an open secret in San Diego courtrooms for at least two years – though the general Metabolife-consuming public never had a clue.

That's because Metabolife won strict protective orders, citing in part trade secret protection, that keeps evidence obtained in scores of product liability and personal injury lawsuits confidential.

And once a case is settled – more than 80 have been filed in the United States, including 30 in San Diego – the terms and many of the facts involved are sealed, keeping them from public scrutiny.

Critics say such secrecy agreements are overused and sometimes abused, allowing companies to keep potentially hazardous products or damaging scandals under wraps while making the court system complicit in hiding public safety issues.

"This is information that is presumptively public but perverted into private," said Gregory Keating, a University of Southern California law professor who specializes in product liability and personal injury law. Only when a lawsuit makes it to a jury trial does some of the evidence under seal get a public airing, but no product liability or personal injury lawsuit filed against Metabolife has made it to trial.

One lawsuit that came close, the case of a Missouri farmer who alleged that his use of Metabolife 356 triggered a cardiac arrest in 1999, was settled last week, days before it was to be heard in San Diego Superior Court. Now the terms and circumstances of the settlement are also likely to be shrouded in secrecy agreements.

Ephedra-based diet supplement manufacturers have been hit with a steady stream of lawsuits in recent years from consumers who allege that they suffered serious side effects from the products.

Metabolife, a leader in the field, says its pills, a combination of the herbal stimulant ephedra and caffeine, are safe when consumers abide by dosage recommendations and follow the label directions. Though the private company does not give out sales figures, an industry trade magazine, Nutrition Business Journal, estimates that Metabolife generated $270 million in revenue last year from retailers who sold $500 million worth of Metabolife products.

Ephedra, a chemical cousin to the illegal street drug methamphetamine, suppresses appetite and stimulates the heart and central nervous system. The FDA has implicated ephedra products in at least 80 deaths and 1,400 cases of side effects, including arrhythmia, heart attacks, seizures and strokes.

On Aug. 15, the Justice Department disclosed it is investigating whether Metabolife lied to the FDA about the existence of its consumer complaints, known as adverse event reports, which the agency learned about from references made in several consumer lawsuits.

Last year, the FDA tried unsuccessfully to intervene in a consumer lawsuit to gain access to the complaints, which were sealed under a protective order.

Robert L. Rabin, professor of tort law at Stanford University's School of Law, said corporate America's pursuit of secrecy agreements is nothing new – the tobacco industry and tire maker Firestone have used them to advantage.

Years before Firestone issued a national recall of faulty tires in August 2000, dozens of people had been killed in wrecks blamed on the tires and millions of dollars had been paid in settlements. But the problems with the tires did not become widely known, in part because of gag orders imposed in consumer lawsuits.

Firestone was able to settle cases confidentiality, one at a time, making it difficult for consumer watchdogs or government regulators to discern a pattern that could have pointed to a broad public safety issue, Rabin said.

Metabolife's legal course adds a "new twist" to concerns about the use of protective orders and sealed documents, said Rabin.

"Unlike prescription drugs, dietary supplements are really not comprehensively regulated by the FDA, and that means there are potentially very serious public health problems that wouldn't come to light until pretty far down the road," said Rabin. "So there is a very strong argument for making public these settlements, not necessarily the money paid out, but the number of settlements and the circumstances surrounding them."

Some courts are beginning to take heed. Last week, South Carolina's 10 federal trial judges unanimously voted to ban the use of secret legal settlements, citing recent hazardous product cases and the sexual abuse scandal surrounding many Catholic priests.

The proposed ban, which could go into effect after a public comment period that ends Sept. 30, might prompt other federal and state courts to adopt similar measurements.

San Diego's Superior Court adopted a local policy last year to limit protective orders, sealed documents and confidentiality agreements. The policy, known as Rule 2.48, says such secrecy agreements are "disfavored" and should be approved only when there is a genuine trade secret or privilege to be protected. Agreements are not supposed to be approved by the court without a document-by-document explanation of why secrecy is in the public interest.

But some legal experts say limits are hard to enforce when both parties in a lawsuit support a gag order or confidentiality agreement, usually in the name of expediency.

"Judges could crack down and refuse to give protective orders, but in cases where both sides want it or no one opposes it, it becomes a matter of 'why fight it,' " Keating said.

Even in cases where plaintiffs vigorously oppose broad protective orders, it can be an uphill battle, said one consumer who is suing Metabolife.

Michaela Curren, a San Diego management consultant and attorney who filed a lawsuit against Metabolife early last year alleging the ephedra-based pills induced a stroke, has declined to sign secrecy agreements while pursuing her case against Metabolife – though it has bogged down the process of obtaining evidence, her attorney says.

"Metabolife's insistence on a protective order has been so burdensome that in over 11/2 years of litigation, we have been refused access to any Metabolife documents because we have yet to sign the order," said R. Craig Clark, who represents Curren.

Jan Stode, a spokeswoman for Metabolife, said the company does not comment on litigation.

Curren, 41, says she won't sign the confidentiality agreements because "cases litigated in secret may make us complicit in hiding or delaying a deadly truth."

"Each lawsuit becomes like an island, separated from other lawsuits and preventing litigants and consumers' rights attorneys from sharing knowledge and information," said Curren. "It makes it impossible to illuminate any potential pattern of dangerous product or wrongful conduct – and each of us must wage a difficult, costly, lengthy, individual David vs. Goliath battle against this mega-million-dollar corporation."

Once a protective order is granted or a document sealed, it can be difficult to get it reversed or to gain access to the information in other ways – as federal regulators learned last year.

In the case of Bloom vs. Metabolife, the FDA sought to become a third party to the lawsuit in order to challenge "overbroad protective orders that conceal important health and safety information," according to court documents filed by the FDA.

In particular, the FDA wanted to get its hands on the consumer health complaints gathered by Metabolife through a toll-free consumer hotline.

Those complaints were part of the evidence collected in the case of Kristie Bloom, a 37-year-old California woman who died suddenly on July 12, 1998, of a cardiac arrhythmia. Bloom's husband alleged his wife's death was caused by her use of Metabolife and another diet supplement, Herbalife.

Without admitting fault, Metabolife eventually paid $700,000 to settle the case, according to court documents.

In seeking to join the case, the FDA argued that the protective order issued by the court in May 2000 was meant to protect proprietary information, not to conceal the existence of consumer health complaints.

"The FDA relies on dietary supplement manufacturers to voluntarily submit their customer reports. Some have submitted them, but Metabolife has refused," the FDA said in documents filed in the Bloom case. "Given Metabolife's large share of the dietary supplement market, Metabolife's consumer reports will provide a large amount of data for the FDA to study."

The FDA has proposed to more strictly regulate ephedra products, but since the passage of a 1994 law that treats dietary supplements as foods, it is up to the agency to prove a product poses a health risk before it can intervene.

The agency has historically relied on consumer health complaints as a crucial surveillance tool for spotting potential problem products. Drug manufacturers must report consumer health complaints to the FDA, but dietary supplement companies, whose products may contain potent herbs with druglike actions, do so on a voluntary basis.

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