Breach Of Confidentiality Clause In Settlement Agreements
Congratulations! After months of hard fought litigation you and your attorney have settled your case and as part of the settlement the other side has agreed to pay you “six-figures.” You may be tempted to boast to your friends and family members that you brought the other side to its knees and forced a settlement. Think again. If the other side was represented by an attorney you more than likely signed a settlement agreement and that agreement may well contain a “confidentiality” clause which bars you from telling anyone (except your attorney and other designated persons such as your accountant and perhaps your spouse) about the existence and terms of the settlement. Your failure to abide by the confidentiality clause could result in you forfeiting the “six figure” settlement you and your attorney worked so hard for.
Recently, a former headmaster at the Gulliver School who brought an age discrimination lawsuit against the school, learned this lesson the hard way. In Gulliver School v. Snay, 3D13-1952, 2014 WL 769030 (Fla. Dist. Ct. App. Feb. 26, 2014) the parties reached a confidential settlement agreement whereby Mr. Snay was paid back pay and his attorney’s fees. The settlement agreement, however, contained a specific clause which provided that the existence and terms of the agreement between Snay and the school were to be kept strictly confidential and that should Snay or his wife breach the confidentiality provision, a portion of the settlement proceeds (i.e., $80,000) would be disgorged. Four days after the settlement agreement was signed Gulliver notified Snay that he had breached the settlement agreement because Snay’s college-age daughter posted the following comment to her approximately 12000 friends on Facebook: “Mama and Papa Snay won the case against Gulliver. Gulliver is now officially paying for my vacation to Europe this summer. SUCK IT.”
Although the trial court sided with Snay following a hearing on the motion to enforce the settlement agreement, the Third District Court of Appeal reversed and found in favor of Gulliver. The court pointed out that a settlement agreement must generally be interpreted like any other contract and that “absent any evidence that the parties intended to endow a special meaning in the terms used in the agreement, the unambiguous language is to be given a realistic interpretation based on the plain everyday meaning conveyed by the words.” id. at 3 (citation omitted). The court found that there was nothing ambiguous about the terms of the settlement agreement between Mr. Snay and Gulliver and that once Snay told his daughter that “the case was settled and we were happy with the results” Snay had breached the settlement contract. id.
This latter comment by the court is interesting because it shows that while Snay breached the agreement by merely telling his daughter that the case had settled, Gulliver was none the wiser about the breach. It was not until the daughter blabbed about the settlement to her Facebook friends that turned the breach of the agreement into a matter that had to be dealt with legally.