Settlement Confidentiality: A 'Fracking' Disaster for Public Health and Safety
13 Pages Posted: 31 Aug 2014 Last revised: 1 May 2015
Date Written: May 1, 2015
Confidentiality clauses in settlement agreements have become so commonplace they seem like benign contractual terms. In reality, confidentiality clauses have formidable power to silence even the most outspoken plaintiffs, including a woman once known in Colorado as the “Erin Brockovich of Garfield County.” Because settlement agreements generally operate as simple contracts, requiring no judicial input or approval, litigants have virtually unbridled power to condition settlement on one or both parties’ silence. As a result, settlement confidentiality has muzzled virtually every plaintiff in hydraulic fracturing (“fracking”) suits, aided the Catholic Church’s alleged child molestation cover-ups, and helped shield manufacturers from public scrutiny of hundreds of deaths and injuries stemming from tire failures.
Despite such risks and a trend in U.S. law and policy toward openness and disclosure of potential public safety dangers, the confidentiality clause remains a staple for civil settlements. Whereas other scholarship focuses on whether to continue permitting settlement confidentiality or proposes changes that restrict court-approved confidentiality clauses, this article (1) explores conventional arguments for and against settlement confidentiality, using fracking claims as a case study; (2) concludes courts must reject the secrecy-as-bargain status quo but accept the reality that confidentiality is sometimes necessary; and (3) proposes a uniform rule courts should adopt to regulate, when public interest requires, confidentiality clauses in both court-approved settlements and private settlements courts are later asked to enforce.
Keywords: settlement, confidentiality, contract, secrecy, confidentiality clause, settle, fracking, frack, hydraulic fracturing, environmental law, environment, EPA, Environmental Protection Agency, First Amendment, policy, transparency, openness, litigation, tort, bargain, natural resources, gas, natural gas
JEL Classification: K12, K13, K32, Q30, Q38, Q48
Suggested Citation: Suggested Citation