Key Findings of the Federal Judicial Center's Study on Sealed Settlement Agreements

"Sealed Settlement Agreements in Federal District Court" by Robert Timothy Reagan, Shannon R. Wheatman, Marie Leary, Natacha Blain, Steven S. Gensler, George Cort & Dean Miletich [Federal Judicial Center (June 2004)]

The Federal Judicial Center conducted a study, at the request of the Judicial Conference of the U.S. Advisory Committee on Civil Rules, which examined sealed settlement agreements filed in federal court. The study examined 288,846 civil cases filed in a sample of 52 federal districts. Key findings include:

• Approximately 40% of cases with sealed settlement agreements have at least one of the features that might make them important to the public interest. The features looked at included environmental, product liability, professional malpractice, public party defendant, death or permanent disability and sexual abuse.
  
  
• Of the cases with sealed settlement agreements, 22% were actions typically requiring court approval. Such cases involved minors or others in need of special protection (13%), actions under the Fair Labor Standards Act (7%) and class actions (6%).
  
  
• Sealed settlement agreements appeared in a variety of cases including: personal injury (30%); employment (27%); contract (11%); civil rights cases (10%); and intellectual property (11%).
  
  
• Settlement agreements, sealed or otherwise, generally contained four elements: (1) denial of liability; (2) release of liability; (3) amount of settlement; and (4) requirement of confidentiality.

Below are a few of the 1,270 cases cited in this study that would have a public interest impact:

Middle District of Florida
Scarborough v. Medical Engineering Corp. (FL-M 8:97-cv-02266 filed 09/18/1997)
Personal injury case involving aluminum poisoning by breast implants.

Hemphill v. Helmtech Inc. (FL-M 5:00-cv-00045 filed 01/18/2000)
Product liability action in which the plaintiff suffered severe head injuries in a motorcycle accident while wearing a helmet manufactured by the defendant. The court denied the plaintiff's motion to enforce the sealed settlement agreement and for sanctions, because payment of $2.3 million had been received.

Russell v. Baxter Healthcare Corp. (FL-M 6:00-cv-01134 filed 08/28/2000)
Product liability action involving a minor who contracted Hepatitis C from the defendant's intravenous immunoglobulin product.

Northern District of Illinois
Erickson v. Baxter Healthcare Inc. (IL-N 1:99-cv-00426 filed 01/26/1999)
Product liability action on behalf of a hemophiliac against manufacturers of blood products for failure to screen and test for AIDS virus and Hepatitis C, which resulted in his contracting the viruses and dying.

Eastern District of Missouri
Perez v. Ford Motor Co. (MO-E 4:98-cv-01973 filed 11/25/1998)
Motor vehicle product liability action by a wife and two children for their injuries and for the husband's wrongful death in an automobile accident. The plaintiffs and decedent were passengers in an Aerostar minivan, which was driven by the defendant driver, and manufactured by the defendant automaker. The van hit a patch of ice, rolled down an embankment, and lost its side door, causing the decedent to be thrown from the van and killed when his seatbelt, manufactured by the defendant seatbelt manufacturer, failed.

Western District of Missouri
Wilson v. Goody Products Inc. (MO-W 2:01-cv-06152 filed 12/21/2001)
Product liability action on behalf of a six-year-old girl for blindness to one eye caused by a springy metal headband manufactured by the defendant.

Southern District of New York
Koh v. Premier Equity Funds Inc. (NY-S 1:98-cv-04318 filed 06/19/1998)
Securities class action alleging that class members suffered millions of dollars in damages by purchasing overpriced shares.

Middle District of North Carolina
Parks v. Alteon Inc. (NC-M 1:00-cv-00657 filed 07/13/2000)
Product liability case in which the plaintiff sued drug companies, alleging that their experimental diabetes drug caused kidney failure.

Eastern District of Pennsylvania
Talus v. D&L Co. (PA-E 2:99-cv-03386 filed 07/02/1999)
Product liability action by the parents of an eight-year-old boy who suffered an eye injury while playing with a "stomp rocket" toy.

Mahoney v. Daisy Manufacturing Co. (PA-E 2:99-cv-04286 filed 08/25/1999)
Product liability action by the parents of a 16-year-old boy who suffered severe brain injury when he was shot in the head with an air gun by a friend. The plaintiffs alleged that the air gun was defective because a BB became lodged in the internal parts of the gun and allowed numerous rounds of air to be fired, which caused the user to erroneously believe the gun was empty.

To read the complete study and other cases, please visit the Federal Judicial Center Web site.

June 2004