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UNDERSTANDING MASS TORT DEFENDANT INCENTIVES FOR SEEKING CONFIDENTIAL SETTLEMENTS: LESSONS FROM BAYER’S CERIVASTATIN LITIGATION STRATEGY 1

James M. Anderson

2

ABSTRACT:

Settlement agreements that require a plaintiff not to

disclose or publicize any information about her claim are both common

and controversial.

Under

defendant

will

rationally

some conditions, however, choose to discourage such

a mass tort

secrecy.

A

defendant can use publicity to act as a commitment device akin most-favored-nation agreement to increase its bargaining power

to a with

plaintiffs. cerivastatin practice and

The paper uses the real world example of Bayer’s litigation as a case study to illustrate this theory in to explore the public policy implications of this finding.

Transparency seems a self-evident aid -- if not a necessary

precondition

-- to an

effective

result there

has been

extensive

and just civil justice system. concern over one of the least

As

a

transparent practices of the agreements that require both

civil justice system: private settlement parties to maintain confidentiality about

the the

settlement and the nature of the underlying dispute. press and other parties can learn almost nothing from

The the

or its public

outcome, and important public dangers can be concealed

view

indefinitely.

Environmental

dangers,

auto

safety

public, litigation from issues and

the widespread sexual abuse of children by some priests have arguably

been concealed and perpetuated by the use of these

1995;

Drahozal,

2006).

Critics

of

confidentiality

agreements agreements

(Luban, suggest

that

parties

owe

an

informational

duty

to

the

public

if

they

employ

the

____________

1 A version of this paper will be included as a chapter in a forthcoming UCLA-RAND book based on the November 2007 conference, “Transparency in the Civil Justice System” at the UCLA School of Law.

2

Associate Behavioral/Social Scientist, RAND Institute for Civil

Justice. comments

I on

thank Laurie Dore, Steve Garber, earlier drafts of this paper.

and

Laura

Zakaras

for

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