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The majority of product liability cases, like tort cases in general, ultimately settle out of court. The challenge is to steer shrewdly at every stage of that resolution process towards a deal that is in the client’s best interests. The release should be governed and interpreted by the intent of the parties. [FOOTNOTE 1] When drafting the settlement and release agreement, both sides should consider including the following statements and covenants. (1) Identities of parties and definition of terms. (2) An acknowledgment by the plaintiff, and the plaintiff’s attorney, that the plaintiff is fully aware of the details of the release, and that the attorney has explained the details of the release to the plaintiff, and answered all the plaintiff’s questions. (3) Summary enumeration of the personal injury or property damage claimed, incorporating the allegations of the complaint. (4) Release of defendant, its respective past and present directors, officers, agents, representatives, administrators, employees, and all of its subsidiaries and parent corporations, including its predecessor and successor companies, and their respective past and present directors, officers, agents, representatives, administrators, employees, etc. (5) A release by the plaintiff, his or her heirs, executors, administrators and assigns. (6) A representation that no cause of action that is the subject of the release has been assigned or transferred to another. (7) A statement that the parties agree that there is good and sufficient reason for settlement of all their outstanding disputes, claims, charges and suits. (8) A statement that the agreement does not constitute an admission by any party that the actions taken by any person was unlawful or wrongful. (9) A clause that the settlement and its terms and conditions are confidential, and that confidentiality extends to all entities, employees, agents, representatives, consultants, independent contractors, and experts in any way associated with the case, including attorneys. The parties should agree that the conditions of the settlement, its history, background, negotiations and terms of settlement shall all be considered privileged and remain confidential in all respects. (10) A statement that each person has agreed not to make any statement, either directly or indirectly, by implication or innuendo, to anyone, including the press or media, concerning the facts of the case, the amount of settlement, the nature and substance of the settlement negotiations, or any statement in any way concerning the case or settlement. Each person should further agree that if asked about the settlement, the only statement concerning it that is authorized is, “The matter was disposed of prior to trial, and I have no further comment.” (11) A statement that each person acknowledges that the settlement, and all discussions, or communications concerning it constitute privileged information, confidential business information, and communication between persons owing each other professional, ethical and fiduciary duties. Each should acknowledge that the confidentiality agreement is a material inducement in the settlement of the case. (12) A statement concerning qualified persons who may learn of the amount of the settlement, such as tax or financial advisors, or attorneys, and a further agreement to have them bound by the terms of the confidentiality agreement by having them sign such an agreement and attach it to the settlement agreement. (13) A statement that a violation of any of the terms or conditions contained in the agreement would entitle the aggrieved party to be repaid the sums and benefits received, and acknowledgment of assent to personal jurisdiction by a particular court, should civil or criminal proceedings be instituted in relation to such a breach. (14) A further agreement that any violation of the terms and conditions of the agreement would subject the offending person to further review by the court to determine if such violation was a breach of the agreement, its terms and provisions, and as such contempt of court. (15) A condition requiring review by the court and a finding of good faith or reasonableness. (16) A hold harmless agreement in favor of the party released should a party to the agreement institute suit concerning the terms or conditions of the release. (17) A return of all documents, papers, memoranda, or recordings exchanged during discovery. (18) An agreement to request the court to seal any and all documents or records concerning the case as related to the parties. (19) A statement that each party will bear its own costs and attorney fees. (20) A statement that the agreement constitutes the entire agreement and understanding of each of the signatories. (21) A clause that the release is for all claims, causes of action, damages, of any nature whatsoever, known or unknown, suspected or unsuspected. (22) Acknowledgment that the injuries or damages suffered could get worse, and that this fact is well known to the settling parties, but a settlement is nevertheless desired. (23) A statement that the release should not be considered a general release but relates only to the parties specified. (24) A statement that each party is solely responsible for any lien, of any nature or kind, for unpaid medical bills or other debts, followed by a statement agreeing to indemnify for any expenses, costs, or fees, should a lienholder make a claim against a settling party based solely on the fact of the settlement. (26) A clause providing that if any legal action is brought to enforce the agreement, the successful or prevailing party shall be entitled to attorneys’ fees, and costs. (27) A provision that any challenge to the settlement could be made through binding arbitration. It is also good practice to send a copy of the proposed release and settlement papers to the party with whom settlement negotiations are proceeding. All future settlement communications will be made pursuant to the terms and conditions of the proposed release agreement and confidentiality agreement already in the hands of the opposite party. The law should be carefully reviewed to ascertain if clauses releasing a settlor for un known claims, or barring heirs from future actions, are lawful. [FOOTNOTE 2] In drafting a release, it should not be assumed that the word “costs” automatically includes attorney fees. The two should always be expressed separately. [FOOTNOTE 3] Furthermore, it should not be assumed that a general release of all tortfeasors releases non-signatory tortfeasors. [FOOTNOTE 4] There are always fall-back positions that can be reflected in the release agreement, depending on the circumstances. One such instance would involve a plaintiff refusing to waive liability for risk of future injury. The settlement could be negotiated and consummated on the basis of the present value of the injury, acknowledging and recognizing the plaintiff’s right to bring a second suit should a new and independent injury arise. In the alternative, the release could specify that the plaintiff has the right to bring a later claim for medical costs if unknown related injuries are detected in the future. Medical monitoring funds and payment for future medical surveillance might also be included. [FOOTNOTE 5] Another approach is to enter a stipulated judgment pursuant to the terms of settlement. This stipulated judgment will be enforced pursuant to the law of contracts, and finality of judgments. [FOOTNOTE 6] The terms of the stipulated judgment could avoid problems of res judicata or collateral estoppel or an award of costs or attorneys’ fees by withdrawing certain issues from the judgment. [FOOTNOTE 7] In products cases, defendants sometimes condition settlement on entry of a stipulated judgment of dismissal, whether entered into prior to trial or after a plaintiff’s verdict. This judgment of dismissal may also avoid res judicata or collateral estoppel problems.

FN1 Second Circuit: Locafrance U.S. Corp. v. Intermodal Systems Leasing, Inc., 558 F.2d 1113 (2d Cir. 1977). District of Columbia Circuit: McKenna v. Austin, 134 F.2d 659 (D.C. Cir. 1943). But see, Shebay v. Davis, 717 S.W.2d 678 (Tex. App. 1986) (settlement agreement prohibited plaintiff’s attorney from representing anyone else bringing suit against the defendants; although such a provision violates professional rules of conduct, its inclusion in a settlement agreement did not void the agreement).

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