In Snay v. Gulliver Schools, Inc., 2014 WL 769030 (Fla. 3d Dist. February 26, 2014), the court held the former headmaster plaintiff could not recover an $80,000 payment under his settlement agreement because he had violated the non-disclosure clause by telling his daughter about the settlement, who then posted it on her Facebook account. This case serves as a good reminder of the importance of including appropriate confidentiality provisions in settlement agreements.
The Miami school decided not to renew Snay's 2010-2011 contract, and Snay filed an age and retaliation lawsuit. In November 2011, the parties settled the claims, executing a general release and settlement agreement with the school making three payments: (1) $10,000 in back pay to Snay, (2) $80,000 as a "1099," and (3) $60,000 to Snay's attorney. Central to this agreement was a detailed confidentiality provision stating the following:
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.
Snay and his wife told their daughter that Snay's case against the school settled and they were happy with the result. Shortly thereafter, Snay's college-age daughter posted the following message to her Facebook account (consisting of around 1,200 friends): "Mama and Papa Snay won the case against Gulliver. Gulliver is now officially paying for my vacation to Europe this summer. SUCK IT."
As a result of the post, the school issued the check for the $60,000 attorneys' fees (and eventually the $10,000 for backpay) but did not pay Snay the remaining $80,000 portion of the settlement on the grounds that he had violated the agreement’s confidentiality provision. Snay filed a motion to enforce the settlement agreement. After depositions of the Snays and their daughter, the trial court found that neither Snay's comments to his daughter nor his daughter's Facebook post breached the confidentiality provision.
The appeals court reversed based upon the unambiguous language of the confidentiality provision that neither Snay nor his wife would "either directly or indirectly" disclose "any information" regarding even the existence of the agreement. Because Snay testified at his deposition that he told his daughter "it was settled and we were happy with the results," the court concluded he had breached the non-disclosure provision.
As damages for the breach, which effectively communicated to the school community that Snay had been successful in his age and retaliation claims against the school, the court enforced the liquidated damages provision, holding that the school did not need to pay the $80,000 to Snay.
Employers frequently include non-disclosure provisions in separation agreements; however, proving a breach of such a provision and consequential damages can be difficult. This case demonstrates that such provisions can be effectively enforced, especially where they are material to the deal and include a reasonable liquidated damages provision. Nonetheless, employers need to carefully consider the scope of such provisions to ensure that they do not prevent an employee from making otherwise lawful disclosures and that the liquidated damages bear a reasonable relationship to the employer’s anticipated damages and, as a result, cannot be voided as a penalty.