It’s quite common for personal injury lawsuits, among others, to be settled with a confidentiality agreement. The precise terms vary, but usually, the plaintiff is required to keep the financial terms, and sometimes even the existence, of a settlement confidential. The usual provisions include permission for disclosure to family, financial advisors, courts and government agencies.
For many people, the confidentiality agreement isn’t that big a deal. Most of our clients who receive a significant financial settlement have no desire to spread the news beyond immediate family members. The confidentiality clause provides an easy excuse not to answer prying and personal questions. The clause generally doesn’t prohibit them from talking about what happened to them–just that the case was settled, and more importantly, the amount of the settlement. It’s generally the lawyers who–selfishly–hate these agreements, because they can’t brag to the media about their success.
But even though confidentiality clauses usually have little impact on the clients’ post-settlement lives, they need to be taken seriously. A Boston College student and her family found out the hard way that indiscriminate blabbing can be extremely costly.
Patrick Snay, a former headmaster at a Florida private school, brought an age discrimination lawsuit against Gulliver Academy, the school where he’d worked for many years. When he reached a successful settlement with the school, he signed a settlement agreement that included a confidentiality clause, prohibiting him from discussing the existence or terms of the agreement with anyone except his wife and his advisors. Understandably, he wanted to tell his daughter Dana, who’d been a student at the school. And so he did.
But Mr. Snay either didn’t impress upon his daughter the seriousness of the confidentiality clause, or she didn’t listen. Because within a few days, she’d posted this rather snarky comment on her Facebook page: “Mama and Papa Snay won the case against Gulliver. Gulliver is now officially paying for my vacation to Europe this summer. SUCK IT.” The school’s attorneys got wind of the post, probably through one of Dana’s 1200 Facebook friends, many of whom were students or former students at the school, and refused to pay Patrick Snay $80,000 he was supposed to receive under the agreement.
A Florida appellate court held last week that the school was entirely within its rights to withhold the payment. The court noted that the agreement specifically prohibited the type of disclosure that both Patrick and Dana Snay had made. Key to the court’s decision was a somewhat unusual provision in the confidentiality clause setting the penalty for unauthorized disclosure as the sum paid to Mr. Snay. This type of penalty, called a liquidated damages clause, is rarely a part of confidentiality clauses, but it usually enforceable.
The Snays’ experience serves as a reminder to families who receive settlements that all members must be told about any confidentiality requirements, and must understand and comply with their obligations. Even though the agreement technically precluded Patrick Snay from telling his daughter about the settlement, it was the ill-advised and widespread Facebook posting that truly caused the problem.
Read the Florida court’s opinion in Snay v. Gulliver Schools here.