Coercive Settlements

Can civil settlements be coercive? Conventional wisdom suggests they generally cannot, as the inherent power dynamic of private law is accepted as inevitable. The media fuels this perception by publishing stories of lucrative bargained-for settlements and ignoring those offered on a take-it-or-leave-it basis by disproportionately powerful defendants. Courts have done the same. Despite the lack of judicial oversight of the settlement process and disadvantaged parties’ limited access to legal representation, courts generally refuse to reopen settlement agreements except in cases of fraud or mutual mistake. And although scholars have extensively addressed coercion in plea bargains, they have not paid much attention to their civil, presumably choice-driven, counterparts.

This Article challenges these conventions, arguing that some private settlements—which it labels “high-risk civil settlements”—might be coercive. Using confidential settlements as an example, this Article contends that acquiescence to a defendant’s demand for silence in exchange for forgoing a legal claim can reflect coercion when additional factors are present. These factors include position of authority or power, information asymmetry, the context of the dispute, and time pressure. The Article builds on psychological research to show how a plaintiff’s voluntariness can be negated by using subtle methods of social influence. Further, this Article draws an analogy between the role of coercion in high-risk civil settlements and in criminal plea bargains. It then leverages this analogy to suggest recommendations for reform. Recognizing the coercive power that stronger parties wield in some private disputes, this Article urges the legal system to step up to assure that civil settlement agreements are in fact mutually desirable deals.