Personal injury settlements in civil litigation are anticipated outcomes of meritorious claims. And, freedom of contract principles offer justifiable reasons for plaintiffs and defendants to work towards confidentiality of the settlement agreement. However, after settlement terms have been reached, subsequent confidentiality clauses unilaterally inserted as “material terms” circumvent quid pro quo, mutual assent, and bargained for consideration.
Generally it is the defendants who demand confidentiality,but purchasing plaintiffs' silence must come at cost. Confidentiality clauses in personal injury settlements should be negotiated as arms-length transactions.
Confidentiality cannot be enforced where, for example, it is premised on the same consideration as the damages for pain and suffering. Nor should confidentiality provisions subject plaintiffs to liquidated damages that require reimbursement of the entire settlement amount if breached.
Large corporate defendants do possess leverage, and some use it unjustifiably. These companies and their counsel have the bandwidth and funds to aggressively litigate, engage in costly discovery, and delay reasonable settlement offers to plaintiffs. Such tactics, however, undercut the secrecy that defendants may ultimately request. The risk and breadth of plaintiffs' disclosures increase as time lapses from date of incident. In addition, continued litigation tips the scales in favor of the public’s legitimate interest in accessing court records and judicial transcripts.
A related inquiry is whether settlement agreements should be kept confidential if they relate to significant personal injuries to consumers by entities open to the public. Societal interests support transparency regarding serious incidents involving consumer safety at businesses that customers lawfully enter and use. Under those circumstances, nondisclosure would insulate and protect corporate defendants and hold them unaccountable for wrongful conduct and actions that harm consumers.
Lorianne M. Sainsbury-Wong, Esq., CPCO | MBA Civil Litigation Section Council Member and MBA Health Law Section Council, Former Chairperson