It is increasingly common for defendants who are sued to take the position that they will only settle a lawsuit if the person suing agrees to keep everything secret, sometimes even including the fact that there was a settlement at all. a recent article by the Kansas City Star, described below, addresses this point and argues that these secrecy provisions are bad public policy, and against the interests of the general public.
At Curran Law Firm, we agree that as a matter of public policy, secrecy provisions in lawsuit settlements should be outlawed, because, among other things, secret settlements but the general public at risk by protecting wrongdoers and enabling future injuries and wrongs to occur.
One of the main situations where this occurs is when someone is injured by a dangerous and defective product, such as a defective car. It is standard operating procedure for car manufacturers to refuse to turn over documents about their product research and product developments unless the court issues an order requiring the person suing to keep all the documents confidential while the lawsuit is pending.
Sometimes those documents will contain a “smoking gun” (for example, strong evidence that the manufacturer new for a long time about a defect, or specifically cut safety corners because making a safe product would cut into profit margins, etc.)
In many of those situations, the manufacturer buys silence from the person suing by making a settlement offer to the injury victim that they can only accept if they agree to keep everything quiet, hiding the dangers and history from an unsuspecting public. The manufacturers do this because they want to keep a lid on their wrongdoing – they know there will be other lawsuits, and they’re playing defense on those other lawsuits before they’re even filed by trying to make sure the other people they injure can never get their hands on the documents they need to help prove their case.
This is exactly what GM did in the recent situation involving its ignition defects. The ignition key slot was defective and could turn the car off accidentally if the key got jostled while driving. If that occurred, the engine turned off and all electrical equipment got shut off – including power steering, power brakes, power to the wheels and, most importantly, to airbags. Many people got killed, and GM knew about it yet hid the defects from the public, simply because it didn’t want the expense and bad press of a recall. It didn’t matter GM that by failing to recall these defective products, other people were going to be killed in the future.
In cases such as these, secrecy provisions work to enable manufacturers to continue to hide long-standing problems, defects in injuries from unsafe products. Legislature should declare these secrecy contracts illegal, in order to protect the public.
Another situation where businesses insist on secrecy provisions is where someone sues claiming employment discrimination. The claims are different, but the idea is the same as with products defects: the company buys the silence from this person who is suing, all in an effort to try to prevent other victims from getting their hands on evidence which they can use to make additional successful claims.
The Kansas City Star has justifiably expressed great concern that secrecy provisions in lawsuit settlement papers are contrary to the public’s interest because, among other things, they enable continuing discrimination, future lawsuits, and allow wrongdoers to escape accountability. It also is a drain on public funds for other purposes.
Here’s an article from the Kansas City Star (retrieved on July 15, 2015), which gives good insight into this area and why these secrecy provisions are bad for us all:
What’s Inside Those Secret Jackson County Employment Discrimination Settlements? Good Luck Finding Out
Jackson County has spent more than $2 million since 2011 settling employment discrimination complaints brought by county employees. Yet county taxpayers are never told the specific nature of the allegations or whether corrective actions were taken to lessen the likelihood of future payouts.
That practice goes beyond a standard refusal by top county officials to comment on employment cases. The county goes to far greater lengths than some other local governments to keep the allegations secret by requiring complainants in many cases to sign confidentiality agreements as one condition of the settlements.
At the county’s insistence, nine former employees spread across county government promised to keep quiet in exchange for $1.8 million in the past 15 months alone. Some of the agreements are stricter than others, settlement documents obtained by The Star through an open records request show.
At the risk of being sued for breach of contract, two recipients of settlement checks aren’t even allowed to acknowledge they have received a monetary settlement despite the fact that the agreements containing the confidentiality clauses are matters of public record and the payments were all approved during open sessions of the Jackson County Legislature.
In one recent case, the county asked that a judge seal the case file of the lawsuit that led up to the $110,000 settlement payment to a former employee of the county assessment department. Today, the public record has been wiped clean to the point that there is nothing on Case.net, the court records index, to show a suit was ever filed.
The attorney who brought the lawsuit said that as much as she wanted to discuss the case, she couldn’t due to the agreement she and her client signed with the county.
Not every local government is as secretive as Jackson County, though.
Kansas City, for example, has settled numerous employment discrimination cases in recent years totaling about $4 million in settlement payments, yet almost never inserts confidentiality clauses.
“I can’t think of when we’ve done one,” City Attorney Bill Geary said.
But five of the last seven Jackson County employment discrimination cases resulting in a five- or six-figure settlement have included confidentiality clauses. County Counselor W. Stephen Nixon said that practice is in the best interest of all involved.
“Cases of this type are settled because both parties are convinced that course of action is the proper outcome,” he said in a prepared statement. “In most cases the facts are still in dispute, but the county may determine that it is in the best interest of taxpayers to settle and avoid the cost of going to court. It is, and has been, a common practice in such cases to protect the interests of both parties, and our current employees, by including a confidentiality agreement.”
But others think such broad secrecy is bad public policy because the public has no way of knowing whether instances of alleged discrimination are isolated or systemic and whether appropriate steps have been taken to protect other employees and the taxpayers’ liability.
“When your employer pays you six figures, they’re not just doing that to get the case to go away,” said J.P. Clubb, a former assistant Missouri attorney general and expert on the state’s Sunshine Law who is now in private practice in Cape Girardeau. “There was a wrong that needed to be remedied … and we should be entitled to know about it.”
Jackson County does not agree and asks taxpayers, instead, to put their trust in the government.
“Every employee complaint is thoroughly investigated,” Nixon said, “and action is taken where needed. The county uses information from such complaints to build our employee training programs. We are responsive to the need to continually update that training.”
A retired judge and former mayor of Lake Lotawana, Nixon has presided over the negotiations in all of the cases involving confidentiality agreements since becoming the county’s chief lawyer in 2011.
In each instance, there is no useful description in any of the settlement documents as to what sort of bad behavior was being alleged. The extent of Nixon’s investigations and their findings are never disclosed. And there is never any mention of what, if any, information was gleaned from those investigations to, as Nixon put it, build upon the county’s employee training programs.
A good example is the largest of those settlements, a $1.4 million payout in March 2014 to five women who were then current or former employees of the county assessment department.
The resolution approving the payments, ranging from $75,000 to $700,000, was more explicit than most. But even then, the description of the underlying causes for action dating to the 1990s was vague.
According to the resolution, “in each case the injuries allegedly suffered by each claimant were alleged to have been caused by acts and/or omissions of former county employees that violated the claimants’ rights secured by federal and state law to be free from harassment and discrimination in the workplace.”
The resolution goes on to say that Nixon and “special employment counsel” investigated the claims and then began settlement negotiations. It makes no mention of any lawsuits being filed, and none is on record at the Jackson County Courthouse.
Nor is there even the slightest hint of what would justify such a large settlement.
Privately, county officials said the women, at least some of whom were black, had been the subjects of sexual and racial harassment that was, according to those officials, “disgusting.” But there is no mention of any of that in the settlement documents.
At least six county employees either engaged in the improper conduct or knew about it and did not report it, a county official said at the time of the settlement. All had left the payroll by that time through resignation, termination or retirement, officials said privately, but there is no way to verify that because those people were never named and the complainants are all bound by confidentiality agreements.
“It was bad, and it was corrected,” said Dan Tarwater, this year’s chairman of the Jackson County Legislature. By settling, he said, “we did the best job we could possibly do to save the taxpayers the most money we could save them.”
The male plaintiff in a more recent case involving the assessment department is also silenced. According to the settlement resolution, the employee filed suit against the county in Jackson County Circuit Court. But none of those allegations is public record due to conditions set forth in the settlement agreement.
A Jackson County employee for 23 years, the man made $69,388 a year as a senior administrative manager in the assessment department, where he had “alleged certain employment claims in the workplace,” the county counselor’s office said.
Whatever those claims, the Jackson County Legislature approved a settlement resolution this month that said it was “in the best interest of the health, safety and welfare of the citizens of Jackson County.” The plaintiff, who is African-American, received $90,000 and his lawyer, Lynne Bratcher, $20,000.
The plaintiff could not be reached for comment, although he couldn’t have said anything without violating the confidentiality agreement. Likewise, Bratcher said she couldn’t comment because of the agreement her client signed.
Two other recent settlements, in 2014 and 2015, were the result of complaints filed by two now-former employees of the Jackson County Sheriff’s Department.
Both women alleged discrimination and received settlements that were twice or three times their annual salaries after signing confidentiality agreements and agreeing not to make disparaging comments about Sheriff Mike Sharp.
While no details were disclosed, a Lee’s Summit police report was filed by one of the women. She alleged that she was sexually assaulted by a female co-worker in the sheriff’s department and the woman’s boyfriend at a motel after a night of drinking in September 2013.
In the police report, she alleges that the woman who stripped her clothes off and held her down on the bed was a friend of Sharp. The complainant said Sharp became angry when she told him about the incident in a private conversation and said she felt resentment afterward because Sharp and the other woman were friends.
The prosecutor did not file charges.
Through a department spokeswoman, Sharp declined to comment about the settlements, which totaled $153,500. As of last week, the woman accused of taking part in the assault was still on the sheriff’s department payroll, according to county records.
When there is no confidentiality agreement, the basis for discrimination claims becomes clearer.
For example, a Shawnee woman received a $30,000 settlement after filing a lawsuit alleging sexual harassment while working as a corrections officer in 2010 at the Jackson County Detention Center.
According to the lawsuit, one of her supervisors made unwelcome comments about her body, asked about her period and sometimes grabbed his crotch in front of her and made sexual comments.
When she complained to higher-ups, they did nothing to discipline the man, she said, and instead built a case against her so they would have reason to fire her.
The lawsuit case file remains open, and there was no confidentiality agreement included in the 2013 settlement.
Reached this past week, the woman’s attorney said he’d understood that the supervisor was fired around the time of the settlement.
The man did not in fact leave the county payroll until this past May 20, a county spokesman said, more than two years after the settlement was announced and the court case closed.
County Executive Mike Sanders declined to comment on any of the cases or how his county counselor handles them.