Facebook Post Leads to Costly Breach of Settlement Agreement

A daughter’s ill-advised Facebook post recently cost her father $80,000 of his settlement in an age-discrimination case.

As has been widely reported in the media, Gulliver Preparatory School agreed to pay Patrick Snay, 69, an $80,000 lump-sum payment to resolve alleged violations of the Age Discrimination in Employment Act (ADEA) and retaliation. However, four days after the settlement, Gulliver informed Snay that he had violated the settlement’s confidentiality agreement when his daughter posted the following message to her 1,200 followers: “Mama and Papa Snay won the case against Gulliver…Gulliver is now officially paying for my vacation to Europe this summer. SUCK IT.”

Earlier this month, a Florida judge refused to enforce the settlement agreement. Judge Linda Ann Wells found that Snay violated the settlement agreement by discussing its terms with his daughter. “His daughter then did precisely what the confidentiality agreement was designed to prevent,” she wrote.

Settlement agreements routinely contain a confidentiality provision that prevents both sides from discussing the terms of the settlement with outside third parties.

From a defendant’s perspective, the appearance of a lucrative settlement may increase the chances of future litigation or be used against the company in future settlement negotiations. Plaintiffs also value privacy and may not want the facts of their case to become public knowledge. Even plaintiffs who are not overly wary of confidentiality can use it as a bargaining chip during negotiations.

So what should an effective confidentiality clause contain? Below are a few key tips:

• Explicitly state that the terms of the settlement along with the facts of the underlying dispute and the negotiation process are strictly confidential.
• Identify any situations in which either party may divulge the terms of the settlement, i.e. disclosure to attorneys and accountants, disclosure to government regulators, disclosure in court filings to enforce the terms of the settlement agreement.
• Clearly state that violating the confidentiality provision constitutes a material breach of the settlement agreement;
• Set forth the penalty for breaching the settlement agreement, which typically involves the payment of liquidated damages; and
• Specifically outline the appropriate response that the parties should give when asked about the resolution of the lawsuit.

 If you have any questions about this case or would like to discuss the use of settlement agreements, please contact me, Robert Levy, or the Scarinci Hollenbeck attorney with whom you work.