The Third District Court of Appeal has recently confirmed the serious consequences of violating a settlement agreement’s confidentiality provision. These provisions have become fairly routine in settlement documents, but their impact is material. Attorneys should exercise caution in negotiating these terms and ensuring their clients understand them.
In Gulliver Schools, Inc. v. Snay, 137 So. 3d 1045 (Fla. 3d DCA 2014), a former
headmaster sued a school for age discrimination and retaliation. The parties
settled, and the school agreed, among other things, to pay the plaintiff $80,000.
The agreement contained a detailed confidentiality provision prohibiting the plaintiff
from, directly or indirectly, disclosing or discussing the existence or terms
of the settlement with anyone other than the plaintiff’s attorneys or spouse.
Breach of the provision would result in disgorgement of payments to the
plaintiff.
Several
days later, the plaintiff’s adult daughter posted a comment on her Facebook
page stating “Mama and Papa Snay won the case against Gulliver. Gulliver is now
officially paying for my vacation to Europe this summer. SUCK IT.” Id. at 1046. This post went out to
approximately 1,200 of the daughter’s Facebook friends, many of whom were
former students of the school.
The
daughter’s post apparently was false ―
the plaintiff never told her he won the case, nor did she plan to or go to
Europe. At the evidentiary hearing, the trial court heard the plaintiff’s
testimony that he felt he needed to tell his daughter something about the case
due to her interest and involvement. He merely told her, however, that the case
“was
settled and we were happy with the results.” Id. at 1048. The trial court ruled that the plaintiff
did not breach the confidentiality agreement.
The Third
DCA reversed. Using standard contract principles, the appellate court found the
confidentiality provision unambiguous. By telling his daughter that the case
settled and he was happy with the result, the plaintiff violated the plain
terms of the agreement by directly or indirectly disclosing information about
the existence or terms of the settlement to an unauthorized person. The
appellate court noted that the plaintiff never informed the school of any need
to tell his daughter about the settlement, which might have led the parties to
include a mutually acceptable arrangement in their agreement. 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.” Id.
Ultimately,
the plaintiff’s comment to his daughter cost him $80,000 in settlement proceeds,
as well as liability for the school’s appellate attorney’s fees. The Third DCA also
denied the plaintiff’s motion for rehearing.
The moral
of the story is that if your client’s settlement agreement contains a confidentiality
provision, you may want to take extra care to ensure your client understands
what it prohibits and the potential consequences for violating it. As always,
be careful what you post on Facebook!
