NHTSA Seeks Public Comment on Rules Regarding Auto Defect Confidentiality Provisions

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National Highway Traffic Safety Administration (NHTSA) is charged with a number of automobile safety and defect-related tasks and duties. NHTSA is responsible for devising and promulgating Federal Motor Vehicle Safety Standards (FMVSS), identifying when vehicles fail to meet these standards and identifying and remedying safety-related vehicle defects. However, NHTSA’s ability to perform these tasks is based largely on the automaker’s and other’s cooperation in providing relevant reports, safety information, and consumer reports to NHTSA.

NHTSA Relies on Publicly & Privately Discovered Information to Protect Motorist Safety

When NHTSA does not receive information from the sources enumerated above, the agency’s ability to protect the public from serious safety problems suffers. Unfortunately, and despite a legal obligation to do so, automakers are not always able or willing to release certain defect-related safety information to NHTSA. When automakers and parts manufacturers fail to provide Early Warning reporting (EWR) and other public safety data to NHTSA, the agency cannot identify safety problems and take appropriate action. Additionally, different automakers and parts suppliers are subject to contrasting disclosure duties.

Consider the GM ignition switch defect. Despite having knowledge that problems due to low-torque in ignition switches had existed since the early 2000s, GM declined to take action time and time again through the early to mid 2000s. During that time, the problem was permitted to fester and grow until it became a crisis and a major driver behind the biggest year for recalls in automotive history. Furthermore, 124 people lost their lives in preventable accidents due to GM’s failure to make disclosures. While no action or fine can ever bring these individuals back, GM did pay a $900 million dollar fine and admitted that failed to make proper disclosures regarding its life-threatening ignition switch defect as part of a deferred prosecution agreement.

Important Defect & Safety Information Gleaned Through Private Litigation Does not Always Reach NHTSA

In light of the lack of reliability regarding manufacturer disclosures and further exacerbated by the fact that companies and organizations of different sizes operate under differing disclosure guidelines, NHTSA must supplement the information it receives. One important source of additional information can be gleaned from information uncovered or disclosed through the course of a private lawsuit.

Unfortunately, automakers and parts manufacturers who are sued often, as a condition of settlement, require the injured party to agree to a nondisclosure agreement, the sealing of the case, or a protective order. The nondisclosure provision may be negotiated privately between the parties or it may be sanctioned by the court. However, the effect of these confidentiality provisions can have is to prevent NHTSA and other parties from learning about dangerous defects and important safety information revealed in these proceedings. Without this supplemental data, the agency is less able to identify and address vehicle defects before they develop into crises.

In Some Instances, Confidentiality Provisions Can Have Legitimate Uses

While confidentiality provisions can sometimes have legitimate uses, in most cases the public’s interest in protecting health and safety of all drivers trumps that use. In some cases, however, such an agreement or provision can encourage more frank discussions and disclosures. In other cases, provisions of this type can be used to protect the litigating parties against certain discovery process abuses. In still other circumstances, the confidentiality agreements may be utilized to shield certain proprietary technologies, interests, or trade secrets. Finally, there may be legitimate privacy interests held by one or both of the parties. All of these may, when put forward in good faith, represent a legitimate use of confidentiality provisions.

However, confidentiality provisions should never be used to prevent critical safety or defect-related information from reaching the NHTSA. Provisions that have such an effect are not only in violation of Federal Rules of Civil Procedure (FRCP) Rule 26 and its requirement of  showing of “good cause” for imposition of confidentiality provisions, it also increases the risk that safety issues will remain unidentified by federal regulators, persist, and develop into a major safety crisis. NHTSA takes the position that all confidentiality agreements should be written to include a provision that, despite other terms of the agreement, the parties retain the right to disclose car, truck, SUV, or other vehicle safety information to the NHTSA or other appropriate government agencies.

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NHTSA: Protective Orders & Settlement Agreements Should Not Be Used to Prevent Critical Safety Information from Reaching the Agency

NHTSA’s position regarding the use of confidentiality agreements stems from the basic principle that once a matter has entered into the public courts, entered into the public record, and public resources have been spent adjudicating the measure, “it is no longer solely the parties’ case, but also the public’s case.” Brown v. Advantage Eng’g, Inc., 960 F.2d 1013, 1016 (11th Cir. 1992). As such, the parties are generally required to conduct discovery in public, unless good reasons exist as to why the information should be kept from disclosure. In short, parties that wish to keep certain information confidential should be required to satisfy a significant burden and satisfy that the public interest will not be harmed prior to the granting of such a request.

In general, a party seeking the imposition of a confidentiality or nondisclosure provision must “allege specific prejudice or harm” that will occur provided that the disclosure is permitted. In re Roman Catholic Archbishop of Portland in Oregon, 661 F.3d 417, 424 (9th Cir. 2011), cert. denied, 132 S. Ct. 1867 (2012). Even if the party can make a showing that a specific harm will occur and that good cause exists, the court must still balance the public’s interest against that of the moving party’s. In Glenmede Trust Co. v. Thompson the federal court set forth the factors that should be considered when weighing public and private interests. These interests include:

  • Will the disclosure violate a privacy interest?
  • Is the information being sought for a proper or improper purpose?
  • Will the disclosure of this information cause embarrassment?
  • Will the confidentiality prevent the release of information important to the public health and safety?
  • Will the sharing of this information encourage equity and efficiency among litigants?
  • Does the case involve issues of public importance?

Courts have long held that the public’s interest in access to court records is at its apex when issues of public health or safety are concerned. Brown & Williamson Tobacco Corp. v. F.T.C, 710 F.2d 1165, 1180-81 (6th Cir. 1983).

Disclosure of Safety Information Has Revealed Public Health Concerns in the Past

In Brown & Williamson Tobacco Corp. v. F.T.C, 710 F.2d 1165, 1180-81 (6th Cir. 1983) one of the issues to arise was whether a district’s court decision to seal records discussing the composition of tar and nicotine in cigarettes was proper. On appeal, the district court’s order was vacated finding that the public had a strong public health interest in the release of the information. Since the “litigation potentially involves the health of citizens who have an interest in knowing the accurate ‘tar’ and nicotine content of the various brands of cigarettes on the market” it was found that the sealing of the records was improper.

In light of the benefits that can be derived from the disclosure of safety information gained through private lawsuits, a number of state legislatures have passed laws to encourage or mandate the release of this information. Some states have established a presumption that all records concerning the public health and safety should be open and available for public viewing. The House of Representatives is currently considering a bill that would create a similar presumption against secrecy. Other states forbidding courts from entering orders that would “[conceal] a public hazard or any information concerning a public hazard” or information that “may be useful to members of the public in protecting themselves from injury.” Fla. Stat. Ann. § 69.081.

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Safety Information Should Always Be Release to NHTSA and Other applicable Regulators

In light of the problems regarding publicly sourced reporting data such as EWR and the benefits provided by information gleaned from private lawsuits, protective orders and other confidentiality measures should never be used to prevent critical safety information from reaching the appropriate regulator. However, once that data is in the possession of the federal agency, that agency must perform its due diligence and engage in statistical analysis to make sense of the raw information. Furthermore, in the case of an automaker or parts manufacturer pushback, as seen in the GM and Takata recalls, the agency must be prepared to act in the public interest and hold the company responsible and accountable for the unreported and undisclosed data. Until these steps and measures become standard operating procedure and regulator deference towards regulated businesses ceases, serious defect and safety problems are likely to continue to go unnoticed until the next massive safety crisis develops.

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