Breaching Confidentiality: Do so At Your Peril

A recent decision of a Florida appellate court presents a valuable cautionary tale regarding the importance and scope of confidentiality provisions that form part of a negotiated settlement agreement.
In Gulliver Schools, Inc. v. Snay, a Florida appellate court overturned a lower court decision on a motion to enforce a settlement agreement in an employment dispute as a result of a breach of a confidentiality provision in the agreement.

Patrick Snay filed a complaint of age discrimination when Gulliver Schools did not renew Snay's contract as headmaster.  Snay was 69 at the time.  The parties reached an out of court settlement with Gulliver to pay $10,000 in back pay, $80,000 in general damages and $60,000 in legal costs.

Significantly, the settlement agreement contained a confidentiality provision, which read:

"13. 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 settlement agreement was signed, Gulliver notified Snay that he had breached the agreement based on the Facebook posting of Snay’s college-age daughter, which read:
"Mama and Papa Snay won the case against Gulliver. Gulliver is now officially paying for my vacation to Europe this summer. SUCK IT."

Gulliver paid the legal fees portion of the settlement but refused to pay the balance, arguing the confidentiality provision had been breached.  In reversing the lower court`s decision to uphold the settlement agreement, the appellate court concluded that Snay had violated the confidentiality provision by doing exactly what he said he wouldn`t do, while his daughter compounded the problem by doing what the provision was intended to prevent, advertising to the Gulliver community that Snay had been successful in his case against the school.

One of the key tenets and attractions of private mediation is confidentiality.  Unlike the courtroom, where the process and outcome are public, parties that attempt mediation have committed to a confidential process.

In my introductory remarks to the parties and counsel at the outset of mediation, I carefully outline the confidential nature of the process and the ongoing commitment to that principle that is expected.  To crystallize this commitment, the parties and counsel sign an Agreement to Mediate at the start of mediation that, among other terms, contains a confidentiality provision.  And, when the parties do reach a resolution during the course of mediation, they invariably double-back on their commitment to confidentiality by addressing the issue in minutes of settlement and/or in a full and final release document.

Thankfully, confidentiality provisions rarely see the light of day after the conclusion of mediation, but times are changing and a big part of the problem may be the increasing use of social media and the careless disregard for its power. 

In a February 19, 2013 blog, Hilary Linton discusses a October 2012 decision of the Ontario Human Rights Tribunal, in which a party to a mediated settlement was hit with a $1000.00 penalty for posting comments on Facebook about the mediation process (while it was ongoing) and the outcome, in breach of a confidentiality clause in the minutes of settlement.

In a September 5, 2013 blog, Andrew Cogswell explores a 2013 Ontario labour arbitration decision, in which a grievor had a monetary settlement rescinded after posting a letter on an employee bulletin board that outlined the terms of the monetary award and his displeasure with his Association’s decision to accept it on his behalf. [Cogswell’s blog came to my attention through a blog posted by Rob Boswell discussing the Gulliver decision.]

Confidentiality is an integral part of the mediation process and critical to the enforceability of a confidential settlement concluded at mediation.  The above recent decisions impart two important lessons:  1. breach the confidential terms of a mediated settlement at your peril - a failure to strictly adhere to the confidentiality terms of a mediated settlement may result in serious sanctions, including loss of all or significant portion of a monetary settlement, and 2. the use of social media to broadcast the confidential terms of a settlement is a sure-fire way to signal a breach.