Confidentiality provisions are standard clauses in settlement agreements. The parties have finally reached a resolution, and either one or both of the parties would prefer that the terms of the agreement not become public – whether it’s an amount paid, a right waived, or some other obligation. But what is the confidentiality provision good for? While it certainly binds the parties to the agreement, does a confidentiality clause shield the agreement from discovery requests by nonparties to the agreement? Florida’s courts have made it clear that it does not.
Our district courts of appeal have uniformly held that while confidentiality agreements may be necessary in some instances to facilitate settlement, they may not be subsequently employed by a litigant to obscure issues or otherwise thwart an opponent’s discovery. See e.g., Smith v. TIB Bank of the Keys, 687 So. 2d. 895, 896 (Fla. 3d. DCA 1997); Neiman v. Naseer, 47 So. 3d 954, 955 (Fla. 4th DCA 2010). One court reasoned that “[w]hile we recognize and respect strong public policy favoring settlement of disputed claims and policy which dictates that confidentiality agreements not be regarded lightly, we find that to prevent any discovery based upon a settlement agreement would result in a defendant being able to buy the silence of witnesses with a settlement agreement when the facts of one controversy may be relevant to another.” Scott v. Nelson, 697 So. 2d 1300, 1301 (Fla. 1st DCA 1997). The court concluded that “an overzealous quest for alternative dispute resolution can distort the proper role of the court" and that "[s]ettlement agreements which suppress evidence violate the greater public policy.” Id. (quoting Kalinauskas v. Wong, 151 F.R.D. 363, 367 (D. Nev. 1993)).
In the context of a plaintiff trying to shield discovery based on the assertion of a privilege, the Florida Supreme Court has similarly held:
It does not follow that the protection of the privilege should be expanded to shield a plaintiff who with one hand seeks affirmative relief in court and with the other refuses to answer otherwise pertinent and proper questions which may have a bearing upon his right to maintain his action. To uphold this inconsistent position would enable the plaintiff to use the privilege as an instrument of attack. Stockham v. Stockham, 168 So. 2d 320 (Fla. 1964).
The court concluded:
Plain justice dictates the view that, regardless of plaintiffs’ intention, plaintiffs must be deemed to have waived their assumed privilege by bringing this action. Id. at 322 (quoting Indep. Prods. Corp. v. Loews, Inc., 22 F.R.D. 266, 276 (S.D. N.Y. 1958)).So what are confidentiality provisions in settlement agreements good for? They are good for preventing the parties to an agreement from disclosing the terms of the agreement. A confidentiality clause will not, however, shield the settlement agreement from discovery requests by nonparties to the agreement.
When faced with a discovery request or subpoena for a confidential settlement agreement, the settling party should: 1) determine whether the request or subpoena falls within Rule 1.280 and, if so, 2) request his or her own confidentiality agreement or order from the requesting party and limit the use and disclosure of the settlement agreement to the pending action.
