Loose lips sink ships and destroy settlement agreements

One of the increasingly common provisions of a settlement agreement is a confidentiality provision. A typical confidentiality provision requires the parties to refrain from the disclosing the fact of settlement and the amount of settlement. In my opinion, you should resist including a confidentiality provision in settlement agreements. Confidentiality provisions lead only to further litigation to enforce them and could possibly cause the loss of the settlement amount.

Thierry Roge/Reuters

Thierry Roge/Reuters

The link leads to news report about a Florida lawsuit about a breach of a confidentiality agreement. In the account, a school principal (Snay) sued the school district (Gulliver) for age discrimination. The parties reach a settlement agreement at mediation that included a confidentiality provision. Snay's daughter published a Facebook message about the settlement. She posted, "Mama and Papa Snay won the case against Gulliver. Gulliver is now officially paying for my vacation to Europe this summer. SUCK IT." The Facebook post was seen by up to 1,200 of her friends, many of whom were current or former students at Gulliver. Word of the post got back to Gulliver officials, who then refused to pay the settlement amount to Snay.

Next, there was a hearing, a trial court ruling and an appeal. Ultimately, the Florida court of appeals held that Snay violated the agreement by doing exactly what he had promised not to do. 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 age discrimination and retaliation case against the school. Snay's breach of the confidentiality provision cost him the entire settlement amount he had sued to recover in his age discrimination suit.