‘Defects Aren’t Trade Secrets': Private Suits Disclosing More

Exceptions to secrecy provisions in motor vehicle product liability suits are improving parties’ abilities to report serious, safety-related defects to the government, according to Bloomberg BNA research.

Similar exceptions are being suggested in consumer product suits.

But judges have had mixed reactions to the agency reporting exceptions when companies challenge them in court, plaintiffs’ attorneys say.

Disclosures to agencies won’t necessarily become public. But companies worry that other confidential information may improperly come to light and exert pressure to settle a case, one company said in a court brief.

Bloomberg BNA research identified eight motor vehicle and consumer product suits where parties have questioned whether protective orders should include the new defect reporting exceptions recommended by the National Highway Traffic Safety Administration and Consumer Product Safety Commission.

Six of those cases involve alleged motor vehicle defects and in all of those suits car makers have agreed to allow at least some defect disclosures to regulators. In the other two suits, involving consumer products, one manufacturer said it is amenable to the plaintiff’s request for a defect reporting exception; the other maker is actively opposing it.

Everyone agrees that public safety is important and that agencies can do their jobs better when they have more information. But confidential information in litigation is still sensitive and remains the subject of disputes over the boundaries of protective orders and exceptions to them.

Protective Orders With Ways Out.

Orders to protect trade secrets and other information have long been common in product liability suits and settlements.

The new push for private litigants to share defect information with safety agencies is driven by the NHTSA and CPSC recommendations, which were backed by plaintiffs’ attorneys and consumer advocates.

The NHTSA issued the first of these in March 2016. The CPSC issued the second, modeled on NHTSA’s, in December.

“The Commission believes the best way to protect public health and safety is to preemptively exclude or exempt the reporting of relevant consumer product safety information to the CPSC (and other government public health and safety agencies) from all confidentiality provisions,” the CPSC said when issuing its guidance document.

“The Litigation Guidance should be reviewed by judges, plaintiffs, and defendants, as well as those parties wishing to submit amicus briefs relating to protective orders and confidentiality agreements in ongoing litigation,” the CPSC said.

Both agencies said that companies don’t always meet their obligations to report defect information, and that private litigation can be an important source of critical safety-related information.

NHTSA even made the argument that current rules and law already prohibit restrictions that keep the parties from reporting to safety agencies.

The push for the defect reporting exceptions may have some teeth because courts usually must approve proposed protective orders.

Regulators Want Info.

Consumer advocates and plaintiffs’ attorneys say the new disclosure recommendations are significant, though they don’t go far enough for their liking.

They could help safety regulators get relevant defect information that can be buried in sealed court filings, they say.

“This is an extraordinarily important development for consumer safety,” Arthur Bryant, chairman of Public Justice, told Bloomberg BNA. Public Justice is a consumer advocacy organization based in Washington.

“The CPSC says itself that protective and secrecy orders throughout the country have been preventing it from learning about unsafe products,” Bryant said. “How can any regulatory agency do its job if it doesn’t have the information it needs to act?”

Several of the product makers involved in the suits—Ford Motor Co., General Motors and General Electric Co.—declined to provide comment to Bloomberg BNA on the protective order exceptions. So did three of the professional associations that frequently represent their interests—the Alliance of Automobile Manufacturers, Inc., the Association of Global Automakers, Inc., and the Product Liability Advisory Council.

The Auto Alliance, however, provided insight into its general position on the issue in a letter the trade group submitted to NHTSA during the public comment period on that agency’s guidance.

The group supports the idea that “NHTSA should have access to all relevant motor vehicle safety information.” And it doesn’t believe “that litigation protective orders should shield such information from NHTSA,” it said.

However, car makers, and not the plaintiffs’ attorneys they face in court or others, should have control over reporting defect related information to regulators under the new exceptions, the trade organization also said.

Fiat Chrysler Automobiles USA agreed to a modified protective order in litigation.

“FCA US incorporates certain language into protective orders and settlement agreements because it is a Consent Order obligation,” spokesman Mike Palese told Bloomberg BNA in an e-mail.

“Further, the provision does not allow other parties to the litigation to provide NHTSA with confidential information or documents,” he said. “Only FCA US is able to provide the required certificate in support of a request for confidential treatment.”

The Auto Alliance and another trade group, the Association of Global Automakers, also said in their comment period letters that they knew of no instances where vehicle manufacturers have used confidentiality provisions as a reason not to report safety defects.

Few Automakers Willing, Plaintiffs Say.

Bloomberg BNA’s analysis of relevant documents found that parties agreed to protective orders containing safety agency exceptions in six of the automotive-related cases, all of which alleged motor vehicle defects. The suits involve three automakers—Ford, General Motors and FCA US LLC—and a parts maker, TRW, now a division of ZF Friedrichshafen AG.

Though those agreements to disclose are positive developments for plaintiffs’ attorneys and consumer advocates, they still aren’t the norm and they still don’t go far enough in ensuring that significant defect information is revealed, one prominent plaintiffs’ attorney working in the area told Bloomberg BNA.

What’s more, both product makers and the courts themselves have pushed back, he said.

In general, “very few are agreed to,” Tab Turner, a motor vehicle plaintiffs’ attorney who was involved in advocating for the NHTSA guidance, told Bloomberg BNA. Turner’s firm is Turner & Associates P.A. in Little Rock, Ark.

“When you push the issue, some courts are permitting it, some courts are not applying it,” and some courts make attorneys “jump through hoops,” Turner said.

“One court advised us we could not give it to the government on our own—we had to first come to the court and explain to the court why we wanted to give it to the government,” he said. That would have resulted in a six-month litigation delay for his clients, he said.

“And then I’ve had situations where courts have told us, ‘We will agree you may add the National Highway Traffic Safety Administration to the terms of the protective order but the government must, just like you did, sign the protective order agreeing to abide by the terms of the protective order.’ And the government has refused to do that,” he said.

The NHTSA guidance has “been better than not having anything but until the court system adopts the viewpoint that I have and that the government has, which is that hiding defect issues is not a trade secret,” nothing will change, he said.

Do They Go Far Enough?

Joan Claybrook, a former head of NHTSA and Public Citizen, said the new guidances are a good step toward federal regulators finding out more about alleged product defects.

“This is something that is welcomed by a lot of people because it means the secrecy, at least as to litigants, would be removed,” she said.

But more still needs to be done to ensure that relevant safety information discovered in court proceedings is made available to the public, Claybrook said.

That’s because even if litigants report defect information to the agencies, requests under the Freedom of Information Act could still result in an agency response that the information isn’t available to the public, she said.

Ensuring the information is publicly available would allow for “public pressure to be exerted if the agency fails to act,” she said.

Specific Language in Cases.

A variety of drafting approaches is evident from an analysis of the six motor vehicle cases found by Bloomberg BNA to contain the safety agency exception.

A protective order in the high-profile GM ignition switch multidistrict litigation has an amendment with two parts, one allowing GM to use confidential information “to assist in identifying, reporting, or resolving any potential safety issue,” the other allowing “any party” to disclose “a potential safety defect to an appropriate government agency.”

But Ford and FCA US, in suits alleging transmission, door latching and restraint system defects, have negotiated more limited disclosures. They’ve both stipulated to agreements that follow the suggestion detailed in the Auto Alliance’s public comment letter.

An approach “in which the manufacturer is the entity submitting confidential information to NHTSA” is the only way to protect confidential business information, the Auto Alliance said. Only carmakers can provide NHTSA with the legally necessary justification and certification for protecting such information, the group said.

Protective orders in the three Ford cases over transmissions and door latching systems say the order doesn’t prohibit Ford’s disclosure of safety related information to a government safety agency. And it says other parties may advise such an agency “that they believe such documents were produced in this case,” but that the actual production should be carried out by Ford.

TRW is a party to one of these protective orders. It leaves the production to its codefendant, Ford.

Under the FCA US language in two protective orders, the automaker may provide information and documents to NHTSA, either voluntarily or as required under motor vehicle safety law.

Results?

NHTSA doesn’t have data on how the new protective orders may have affected defect reporting, agency spokesman Bryan Thomas told Bloomberg BNA. “We do frequently get tips from attorneys” on safety issues, Thomas said. “But none are specifically tied to” the agency’s guidance document, he said.

Turner, the plaintiffs’ attorney, is trying to get a court to allow him to share information with the government in a seat belt case in Florida (Grant v. Ford Motor Co., Fla. Cir. Ct., 2012-CA005890-O).

He discovered the information around the time NHTSA was creating its guidance document, he said. A standard protective order was in place, but after communicating with NHTSA, he asked the court to allow him to provide the materials.

Ford and TRW objected, Turner said. He expects a final ruling soon, he said.

Meanwhile, an amended protective order was issued in August 2016, incorporating language allowing Ford to report safety-related information to NHTSA, according to the online docket.

Ford couldn’t be reached for comment and TRW declined to comment about the case.

Origins.

There wasn’t a specific case that prompted NHTSA to issue the guidance, according to agency spokesman Thomas.

But “in our conversations with attorneys, this had been identified on more than one occasion as an issue they were running into, so we took this action,” he said in an e-mail.

Turner said both he and Claybrook “probably” played a role. He said the two have been “heavily involved” in the issue for a long time. “I have communicated with NHTSA for 30 years about this topic and it’s become more and more prevalent over the last 10 years,” he said.

Recent high profile cases involving Ford Explorer rollovers, Jeep gas tanks, Toyota accelerators and Takata airbags all involved allegations that the companies withheld known defect problems from NHTSA, Turner said.

“Once you get that type of evidence,” it affects the government’s trust “that they’re getting the truth from the manufacturers,” he said.

The CPSC Guidance.

In a would-be class action, Grayson v. General Electric Co., D. Conn., 13-cv-01799, filed 12/4/13, the plaintiffs cited the CPSC guidance in opposition to confidentiality orders they say may prevent reports to the agency of allegedly defective glass doors on some General Electric microwave ovens, according to a Dec. 16 brief.

The CPSC guidance also has arisen in a case over claimed defects in utility task vehicles manufactured by Polaris Industries Inc., Hill v. Polaris Indus. Inc., Utah Dist. Ct., 160904209, filed 7/21/16.

In that case, in which a rider alleges he was injured in a Polaris UTV fire, the CPSC contacted plaintiffs’ counsel “requesting information about Polaris fire cases,” according to a Dec. 22 plaintiffs’ discovery brief.

The plaintiff argues that confidentiality orders with “a provision allowing for the sharing of relevant information with the CPSC should be encouraged.”

Polaris asserted in a brief it would take under advisement the plaintiff’s request for a confidentiality order exception.

Kelly Basgen, a spokeswoman for Polaris, told Bloomberg BNA Jan. 13 the company proposed an agreement incorporating safety related disclosures to the CPSC.

“Polaris has always cooperated with and provided the CPSC with information requested by the agency,” Basgen said in an e-mail. “In the Hill case, Polaris has proposed an agreement that complies with the recent CPSC Guidance Document and allows information to be provided to the CPSC.”

A decision by the Utah state court judge is pending.

Sealing Standards Questioned.

In the GE case, that company has actively resisted a protective order exception allowing defect information to be sent to the CPSC. It also claims a protective order is needed to protect “highly sensitive, confidential business information.”

The plaintiffs assert that the company wrongly insists “that information regarding GE’s microwave ovens spontaneously exploding should remain under seal.”

But GE argued the CPSC guidance isn’t binding, and is superseded by sealing standards set by the Second Circuit that require a showing of good cause, according to a Dec. 23 court filing.

“Plaintiffs are not trying to provide information to the CPSC,” GE wrote in opposing disclosure. Rather, the plaintiffs seek disclosure of confidential business documents “in an unfair attempt to exert pressure on GE instead of having the case decided on the merits.”

Carving out exceptions to blanket protective orders, confidentiality agreements and settlement agreements would “override controlling case law,” GE argues in its brief.

Kim Freeman, a spokeswoman for GE, declined to comment Jan. 13 in an e-mail sent to Bloomberg BNA.

A decision on the issue is pending.

To contact the reporters on this story: Martina Barash in Washington at MBarash@bna.com; Steven M. Sellers in Washington at ssellers@bna.com

To contact the editor responsible for this story: Steven Patrick at spatrick@bna.com