Most settlement agreements include a nondisclosure provision buried in all the legalese that requires the plaintiff to keep the terms of the settlement a secret. Based on this language, the defendant can rest assured the settlement will not be broadcast and made public, creating bad publicity and inviting more lawsuits. However, the reality is breaches are rarely caught. Whether a plaintiff tells his wife the settlement figure or buys a round of beer at the local bar telling the patrons about the settlement, we rarely ever find out and, if we do, proof of the breach is hard to find. In a recent and very unusual case, a plaintiff found out that a breach of this provision can cost you.
The plaintiff (Patrick Snay), the former head of a preparatory school (Gulliver), filed an age discrimination case and was awarded $10,000 in back pay, $80,000 in settlement, and $60,000 for his attorneys’ fees. He signed a settlement agreement which included a nondisclosure provision providing he could only disclose the existence of the settlement and its terms to his wife, attorneys, and professional advisors, and warning that a breach of the confidentiality provision would cost $80,000.
Following the settlement, the plaintiff’s daughter took to Facebook and posted for her 1,200 “friends” to see: “Mama and Papa Snay won the case against Gulliver. Gulliver is now officially paying for my vacation to Europe this summer. SUCK IT.”
News traveled fast. The school’s attorneys found out and told the plaintiff he was in breach of the settlement agreement. The school ran straight into court arguing the plaintiff had breached the nondisclosure provision. The Third District Court for the State of Florida agreed the plaintiff “[did] exactly what he had promised not to do” and his daughter then did “precisely what the confidentiality agreement was designed to prevent, advertising to the Gulliver community that Snay had been successful in his [claims] . . . .” The Court reversed the lower court’s granting of Snay’s motion to enforce the agreement.
In employment-related settlements, confidentiality is even more imperative because if other employees find out about the settlement they may be encouraged to sue similarly, company culture and morale may suffer, and vendors, clients, and customers may assume the allegations were true and not want to associate with the employer. This case shows there is some hope of enforcing these types of nondisclosure provisions when strong evidence exists that a breach occurred. Employers who hear that the content of a settlement agreement has been shared should investigate and contact their attorney immediately. You may be one of the rare cases where enough evidence exists to enforce this type of clause.
Brody and Associates regularly advises management on complying with state and federal employment laws. If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.965.0560.
