A Daughter’s Facebook Post Exposes the Father’s Violation of the Confidentiality provision of a Settlement Agreement resulting in his loss of $80,000.00 in settlement proceeds.
Patrick Snay sued Gulliver Schools, Inc after Snay’s 2010-2011 contract as the school’s headmaster was not renewed. He asserted age discrimination and retaliation. As in many lawsuits, the parties settled. The school was to pay him $10,000.00 in back pay, plus another check for $80,000.00. His attorneys were to receive a check for $60,000.00 for attorney fees.
The Settlement Agreement that was executed by the parties contained the following confidentiality clause:
Confidentiality. . . [T]he plaintiff shall not either directly or
indirectly, disclose, discuss or communicate to any entity or person,
except his attorneys or other professional advisors or spouse any
information whatsoever regarding the existence or terms of this
Agreement … A breach … will result in disgorgement of the
Plaintiffs portion of the settlement Payments.
Four days after the agreement was signed, Gulliver notified Snay that he had breached the Agreement based on the Facebook posting of his college-age daughter:
Mama and Papa Snay won the case against Gulliver. Gulliver is now
officially paying for my vacation to Europe this summer. SUCK IT
The comment went out to 1200 of the daughter’s Facebook friends, many of whom were Gulliver alumni or students. Patrick Snay denied that he told his daughter that he had won the case, and denied that he ever intended to send her to Europe.
Gulliver sent a letter to Snay’s counsel stating that it was tendering the attorney’s fees portion of the Settlement but was not going to tender Snay’s portion because of his breach of the confidentiality provision. Snay filed his motion to enforce the Settlement Agreement arguing that his daughter’s comment on Facebook did not constitute a breach. The trial court held a hearing on the issue and agreed with Snay that his daughter’s Facebook comments did not constitute a breach.
The Court of Appeals disagreed, and reversed the trial court. The Appellate Court pointed out that the plain, unambiguous meaning of the confidentiality clause in the Settlement Agreement stated that neither he, nor his wife would “either directly or indirectly” disclose to anyone (other than their lawyers or other professionals) “any information” regarding the existence or the terms of the parties’ agreement. Patrick Snay in his deposition testified that his conversation with his daughter was that “it was settled” and that they “were happy with the results.” The Appellate Court stated that Snay violated the agreement by doing exactly what he had promised not to do. His daughter then did precisely what the confidentiality provision was designed to prevent, advertising to the Gulliver community that Snay had been successful in his age discrimination and retaliation case against the school.
The hard lesson learned from this case is that every term of a settlement agreement needs to be scrutinized and special attention needs to be paid to a confidentiality clause. Sometimes a confidentiality provisions will be thoughtlessly included in a settlement agreement. This can create havoc for the party subject to it. In this case what was thought to be an innocent comment to a family member resulted in exposing the terms of the Settlement Agreement. Just as the father in the Snay Case had problems controlling the comments of his teenage daughter, a corporation that is subject to such a clause can have a near impossible task of controlling its employees from exposing the terms.
onfidentiality can be a key ingredient for settlement for one of the parties, but the party subject to it must take great precautions to prevent dissemination of the terms of the settlement.