The Fight Isn’t Over If You Ignore A Settlement’s Confidentiality Clause
March 3, 2014
Most every legal dispute resolved by agreement of the parties includes a formal settlement agreement which memorializes the terms and obligation of the parties. And, most every settlement agreement contains a confidentiality clause in which the parties (and sometimes the attorneys) agree the terms and provisions of the settlement agreement will be held absolutely confidential and will not be disclosed to anyone other than spouses, corporate officials of the parties, attorneys, or financial advisors. Some settlement agreements go further, stating that the consideration being provided in exchange for the settlement agreement is expressly conditioned on the parties’ agreement to abide by the confidentiality provisions.
These confidentiality clauses are often included towards the end of the agreement, somewhere near the governing law provision or the acknowledgment that the agreement can be executed in multiple counterparts. As a result, and because the obligation is not directly tied to the initial dispute or its resolution, parties to the agreement may be inclined to give the confidentiality obligation less weight. Two stories demonstrate the danger of taking such obligations lightly.
First is Oksana Grigorieva, who received a $750,000 custody settlement from Mel Gibson following their highly publicized falling out. In October 2013, Grigorieva was interviewed by Howard Stern on his radio show. During that interview, Grigorieva comments were relatively brief and vague, and included references to her “painful and dark” experience and her desire to help others. In turn, the court ruled her comments about Gibson during the interview violated the custody settlement’s confidentiality agreement. The result is that Grigorieva forfeited the remaining installments of the original $750,000 settlement, which totaled close to $375,000.
The second story, and one that also highlights social media’s increasing importance in legal matters, involves a daughter’s disclosure of the terms of her father’s age discrimination lawsuit settlement. Patrick Snay had sued his former employer, Gulliver Preparatory School in Miami, for age discrimination following the school’s decision not to renew his contract as headmaster. The settlement of the suit was for $80,000 and contained a standard confidentiality clause. Snay’s daughter, Dana, revealed the terms of the case on Facebook, posting: “Mama and Papa Snay won the case against Gulliver. Gulliver is now officially paying for my vacation to Europe this summer. SUCK IT.”
Many of Dana’s 1,200 Facebook friends were current and former Gulliver students and the post eventually made its way to Gulliver’s lawyers. The result? The court tossed out the $80,000 settlement.
The lesson from these stories is that confidentiality clauses are important, like every other clause in a settlement agreement, and violating such obligations can create as many problems, or more, as the settlement agreement was originally intended to resolve.