Four years ago, I wrote a blog criticizing secret lawsuit settlements.
Here’s one of the criticisms I made at the time:
If a case settles confidentially, lawyers may lose the ability to share
what they’ve learned with others. Lawyers handling the same type
of cases may have to start from scratch, fighting tooth and nail to get
the same incriminating documents that have already been used in other
lawsuits. A wealthy defendant with greater resources may be able to successfully
thwart those efforts, even with arguments that have been previously rejected
by other courts.
This is probably the single biggest reason why defendants often try to
get their opposition to agree to confidentiality in the first place. It
makes it much harder for their opponents to benefit from the work of others.
The recent revelations about the sexual misconduct of Harvey Weinstein
illustrate this point to the world. Weinstein apparently used confidential
settlements for years to cover up, and continue, a pattern of brazen sexual
harassment and other misconduct. It took some women bravely coming forward
to open the floodgates and end decades of silence.
However, Weinstein is by no means the only one. To give just a few examples,
Bill Cosby, Bill O’Reilly, and the Catholic Church have all used
confidential settlements to cover up allegations of misconduct and thwart
subsequent investigations. Financial institutions use them too, to prevent
consumers from banding together in class actions or using incriminating
information discovered by previous investigators.
The law does put some limits on confidential settlements. For example,
confidentiality agreements generally do not allow people to cover up criminal
conduct. When a person who alleged Bill Cosby sexually assaulted her spoke
to the police, Cosby sued her for breaching a secrecy agreement. Fortunately,
a federal judge rejected Cosby’s claim on that point. The judge
correctly found the confidentiality agreement could not be used to bar
someone from talking to the police.
The problem, however, is that people made to sign these agreements typically
don’t know the boundaries. Many are understandably intimidated by
“liquidated damages” clauses which spell out draconian punishments
for any violation. Rather than test the limits of what they can or can’t
say, many people will clam up completely to avoid any possibility of trouble.
It’s no surprise that an individual faced with this dilemma would
choose not to rock the boat at all. The problem, though, is that this
fosters a collective silence which allows a lot of deeply troubling behavior
People are now reasonably asking whether the time has come to get rid of
confidential settlements completely. The time is right to be asking that
question, particularly with the parade of horribles we’ve seen in
the last few years.
Here’s a possible place to start: anything which would qualify as
a crime - sexual, economic, violent, or otherwise - should be exempted
from secrecy agreements. Once they’re made illegal, it should be
unethical for lawyers to write, or ask unwitting people to sign, these
types of agreements. Another possibility is to require people who want
to enforce secrecy agreements to prove there is a compelling reason for
confidentiality which outweighs the public’s right to know.
As the Weinstein scandal shows us, it’s just too easy to use secrecy
to perpetuate abuse. We really need to have a national discussion about
whether the marginal benefit of this type of secrecy is worth what it’s
costing us. If recent sexual misconduct scandals don’t make that
clear, nothing ever will.