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GOSSIP GIRLS: SHUT UP PROVISIONS IN CONTRACTS

Many of us have signed agreements with confidentiality /non-disclosure provisions with little thought.  These clauses are often included as part of a Settlement Agreement in a lawsuit.

Here’s what happened to Patrick Snay, the former headmaster at Gulliver Schools (“Gulliver”), a well-known private school in Miami.

When Gulliver did not renew his 2010-11 contract as headmaster, Mr. Snay filed a lawsuit asserting causes of action for age discrimination and retaliation under the   Florida Civil Rights Act.

Later, the parties entered into a Settlement Agreement that included a confidentiality provision that Mr. Snay “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 Plaintiff’s portion of the settlement Payments.”

It took 4 days for the Agreement to unwind with the help of Snay’s college-age daughter, who was a former student at Gulliver.

Mr. Snay testified that he told his daughter that the “lawsuit was settled and we were happy with the results.”

His daughter then posted a comment to her 1,200 friends on Facebook, some of whom went to Gulliver that said: “Mama and Papa Snay won the case against Gulliver.  Gulliver is now officially paying for my vacation to Europe this summer. SUCK IT.”

Needless to say, when Gulliver found out they did not pay the agreed upon amount of $80,000 to Mr. Snay as he breached the confidentiality provision.

On appeal, the Florida 3rd District Court of Appeal ruled that the provision was clear and unambiguous and should be construed as written. The Court then stated that  the “plain, unambiguous meaning … of the Agreement… is that neither Snay 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.” Mr. Snay lost the $80,000 settlement that he would otherwise would have been paid.  And the daughter did not get to go to Europe.

Our view is the disclosure to the daughter, while technically wrong, was likely not substantial enough to constitute a breach.   What was substantial was the daughter’s use of the Internet to publicly disclose the existence of the settlement, which is exactly what Gulliver sought to avoid by agreeing to settle the dispute.

Nevertheless, this case clearly illustrates that if you enter into an agreement requiring confidentiality, be careful to fully abide by it.

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