United States: Loose Lips Sink Ships — And Settlements

Last Updated: March 4 2014
Article by Christina A. Stoneburner

A man in Florida is learning the hard way that this old adage is true. 

Patrick Snay, the ex-headmaster of Gulliver Schools Inc. settled an age discrimination and retaliation suit he brought when his contract was not renewed.  The settlement agreement contained a rather standard confidentiality agreement that prohibited the disclosure of the existence or terms of the agreement to anyone besides Snay's wife and attorneys. Despite the strict confidentiality clause, Snay told his daughter that the case was resolved and they were happy with the settlement.

The $150,000 settlement was split up as $10,000 for back pay, $60,000 for attorneys' fees and another $80,000 that would be 1099′d.  Gulliver Schools paid the back pay and attorneys' fees but before they could issue the $80,000 check, Snay's daughter did what college-age kids sometimes do best — post to Facebook without thinking. Snay's daughter posted to her 1200 friends the following on Facebook:

"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 Gulliver Schools was not amused and refused to pay the remaining $80,000.  The Third District Court of Appeal for the State of Florida just held that Gulliver Schools does not have to pay that $80,000 due to Snay's breach of the confidentiality provision.  I guess the trip to Europe is off.

Although it is often difficult to prove if there was a breach of the confidentiality provision, employers resolving cases should not only think about including one in the settlement, but also specifically whether there are particular individuals in the plaintiff's life who you know will blab about the settlement. 

I once had a case where the plaintiff's fiance had already been bad-mouthing my client to anyone who would listen and had tried to get the press involved in the case.  In that case, when negotiating the settlement I required a standard confidentiality clause in the settlement agreement but also specifically stated that plaintiff could not tell her fiance any details about the settlement.  Plaintiff's attorney objected as the plaintiff and her fiance were due to get married that tax year and argued that the fiance would have to see the tax return.  At the end of the day, the Plaintiff was more interested in a settlement than getting a tax break and agreed that if she did get married that tax year, she would file as married filing separately so as not to breach the settlement agreement.

This was an unusual case and I doubt a lot of plaintiff's would agree to that, but something to think about when you are negotiating  settlements.

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