Non-Disclosure Agreements: Are Mediators Unwittingly Perpetuating Abuse?

Non-Disclosure Agreements (NDAs) are contracts binding parties to keep quiet, often to keep quiet about their dispute and its settlement. NDAs have come under increasing scrutiny of late, because they have permitted wrongdoers to go on to harm others. One famous example is Hollywood producer Harvey Weinstein, who was sued several times for his sexual abuse, paid off his accusers privately in exchange for an NDA, then went on to abuse other women.

Of special concern is how NDAs have been used in the church to protect abusers, sexual and otherwise. The most famous are the cases in the Catholic church involving clergy abuse of minors, where families who sued had to sign an NDA in order to receive any monetary settlement from the church. Then, in many cases, the offender was re-assigned to another parish where he abused other children. The victims’ families were not permitted to complain or warn anyone, because they had signed an NDA; often, the NDA requires forfeiture of funds received if that party reveals anything. The role of NDAs in Christian cases will be addressed in a future blog post.

Also of special concern is the role that mediators play in facilitating an NDA as part of the settlement agreement. Do parties really know what they are agreeing to do? This post examines NDAs, then considers the role of mediators in facilitating them.

NDAs were developed by lawyers a few decades ago to protect trade secrets when an employee left a technology company. But now they’ve expanded into just about all employment separations and other legal settlements (“outcome NDAs”), and are often expected at the start of employment as well (“entry” or “preemptive” NDAs). An NDA is a confidentiality agreement; both parties mutually promise not to tell anyone else about information related to the dispute or its settlement. Plaintiffs agree to them because they don’t want a reputation as a troublemaker (whistleblower, accuser, etc.) while employers agree to them in order to protect valuable employees that may or may not be wrongdoers (sexual harasser, bully, racist, etc.).

NDAs can be very broad. They typically address:

  • Whom can be told – NDAs may prohibit disclosure to family members, to clergy, to therapists, as well as to former colleagues
  • What can be told – NDAs may prohibit disclosure of any information related to the other party (including information that had nothing to do with the dispute). They may prohibit disclosure of the existence of an NDA.
  • When it can be told – Some NDAs have no end date – they continue into perpetuity.
  • Consequences of disclosure — They may have a penalty clause, requiring payment if the party breaches the NDA, as a way to ensure that the party adheres to it.

NDAs help settle lawsuits, so they may be beneficial in some cases. But critics argue they are being used to protect abusers, hide wrongdoing, and hinder healing and reconciliation.

Criticism of NDAs

Protect Abusers: One obvious concern about NDAs is that they permit wrongdoers to abuse others. This has been revealed in the cases of Harvey Weinstein, of entertainer Bill Cosby, of ministry leader Ravi Zacharias, and in numerous cases involving Catholic priests. Employers argue that, unlike these cases, employers don’t always know whether the accused really is a problem or whether the claimant is truthful, so they need the NDA to protect them.

Re-victimize Victims: Lawyers sometimes encourage NDAs as a way for the plaintiff to get “closure” and move on. Dr. Julie Macfarlane, law professor at University of Windsor, vigorously rejects this, noting that “the threat of legal consequences of breaching the gag order hanging over the victim forever continuously revictimiz[es] them.” (“Buying Silence with a Bluff: How NDAs Exploit Litigants, With and Without Counsel,” Slaw online legal magazine, June 2021). This is especially true in cases where the NDA prohibits disclosure even to a spouse, minister or counselor, and when it extends into perpetuity.

Lack of Informed Consent: There may be a power imbalance in these cases, that leads to plaintiffs agreeing to an NDA without fully appreciating its ramifications. Even when parties are represented by lawyers, they are not always offered alternatives to an NDA, such as a one-sided confidentiality agreement that would protect the claimant but not the wrongdoer, or negotiating the terms of the NDA. Claimants who are not represented may believe the employer’s insistence that an NDA is the “only” way to settle their case; many claimants report feeling pressured into agreeing to the NDA.

Are NDAs enforceable? No one seems to know of a case where a court enforced an NDA in a settlement, beyond trade secrets. Like non-compete agreements, NDAs are more likely to be enforced if a court deems them “reasonable,” i.e., appropriately restrictive in time, geography and content. Not waiting for court decisions, several states have passed statutes in the last couple years prohibiting NDAs in cases involving sex harassment and discrimination, including California, Oregon, New York and New Jersey. Not willing to wait for a court determination or a statute, Prof. Macfarlane is encouraging a ban on NDAs with a campaign called “Can’t Buy My Silence.”

While Prof. Macfarlane maintains that the threat of having to sign an NDA inhibits victims from filing complaints, others suggest that they benefit complainants. Attorney Deborah Katz, who has represented “thousands” of sex harassment complainants, believes that because NDAs protect the privacy of companies, companies are more willing to negotiate with complainants and not force them to litigate.

 

Mediators facilitating NDAs

Are mediators unwittingly perpetuating abuse or its cover-up by facilitating NDAs? I know a mediator who facilitated an NDA in a whistleblower case, only to learn a couple years later that the whistleblower was indeed telling the truth about the CEO, who continued to inflict misery on people inside and outside the company. While mediators do not decide whether parties are being truthful, we are responsible for ensuring that each party has sufficient information to make good decisions. The first Standard of Conduct is for mediators to conduct the mediation “based on the principle of party self-determination, … in which each party makes free and informed choices…” (Standard I, Model Standards of Conduct for Mediators) This is especially important when a party is unrepresented. Claimants frequently report that they did not realize the implications or extent of the NDA, and/or did not know they had alternatives, even when they were represented. So, when an NDA is on the table, mediators may want to pay close attention to the client, to ensure they understand the full ramifications of all the terms of the NDA. Mediators unfamiliar with NDAs might accept attorneys’ insistence that this is the “only” or “standard” way to settle a case, so mediators need to do thorough reality-testing with the attorneys. Mediators can ask questions of both parties and counsel to elicit concerns and help negotiate terms, including considering confidentiality provisions less onerous than a full-fledged NDA. Mediators can caucus with both attorneys separate from the parties to reality-test the enforceability of NDAs.

Conclusion

NDAs, like other legal remedies, can be helpful but can also cause further damage. Mediators may want to take extra steps to ensure that the claimant personally understands all the long-term ramifications of an NDA, and possible alternatives, before agreeing to one.

The role of NDAs in Christian cases will be addressed in a future blog post.

Kentucky Court of Appeals Enforces ICC Clause

The Kentucky Court of Appeals has ordered enforcement of a clause compelling the parties to med/arb through the Institute for Christian Conciliation. The case (Whitefield Academy, et al v Alford, et al, Case No. 2021-DA-0678-I, issued November 4, 2021) involves a Christian school in Louisville, Ky. When the parents enrolled their daughter in the school in 2016, the mother signed the school’s standard enrollment agreement, which included an ICC clause. Both mother and daughter signed the form for each subsequent school year until the daughter was expelled in early 2020. The parents believe the school discriminated against their daughter in expelling her, and sued the school in state court for breach of contract, negligence, intentional infliction of emotional distress, defamation, and invasion of privacy. The school asked the court to refer the case to the ICC pursuant to the contract clause.

The trial court determined that there was not a valid agreement to arbitrate, because the clause referred to the Rules of Procedure for Christian Conciliation, but the family did not receive a copy of the Rules.

On interlocutory appeal, the Court of Appeals reversed. The court construed the clause under the Federal Arbitration Act, and determined that the ICC Rules of Procedure were incorporated by reference, just as procedural rules of an agreement to arbitrate “are routinely incorporated by reference, and subsequently enforced by courts.” The Court noted, “Here, the plain terms of the enrollment agreement manifest a clear intent that the parties will arbitrate disputes.” (p. 18)

In addition to naming the school as a defendant, the parents also sued two school officials individually. The Court of Appeals ruled that the arbitration clause was generally applicable to the school officials as well, even though they did not personally sign the enrollment agreement.

Left unanswered were the questions of whether the student herself, who is a minor, as well as her father, who never signed the agreement, are also bound by the arbitration clause. The appellate court remanded those issues to the trial court. Two additional defendants, who allegedly published a story about the expulsion, were determined to be outside of the arbitration agreement, and the case against them can continue in the circuit court.

The Kentucky Court of Appeals reached the correct decision. The family offered no reason why the ICC clause should not be enforced. It is interesting that the Court treated the clause as if it referred only to arbitration, whereas it specifically requires that the parties first seek “biblically based mediation,” and proceed to arbitration only if “resolution and reconciliation do not result” from mediation.

Whoever drafted the ICC clause in the School’s enrollment agreement did not strictly adhere to the “Model Med/Arb Clause” long promoted by the ICC. Had they done so, they would have removed the basis for the trial court’s decision. The model clause states, “We have received and read” the ICC Rules “which are incorporated into this agreement by reference…” Since the enrollment agreement is completed online, the School could simply have hyperlinked the Rules to it, as the Court noted. This is what the ICC General Conciliation Clause now recommends.

The Whitefield version of the med/arb clause includes some other problematic departures from the model clause recommended by the ICC. For example, as the Court noted, the Whitefield version inter-changes the words “arbitrator” and “arbiter,” and in one place refers to “a panel of the arbitrator.” Selection of the arbitrators includes two partisan arbitrators who select the neutral – not a process preferred by the ICC.

This family may have some legitimate claims against the school, but there is no reason why they cannot find justice in a private Christian process. And they already agreed to it.

Apology Makes Things Worse

Here’s an example of an offender’s well-meaning apology just making matters worse.

Professor Bright Sheng, a long-time professor of music and composition at the University of Michigan, is teaching an undergrad composition seminar on Shakespeare this semester, and on September 10 he showed the 1965 film “Othello,” in which Laurence Olivier appears in blackface. As reported in the Michigan Daily, Prof. Sheng sent an apology that day, noting that the casting and portrayal “was racially insensitive and outdated.” Five days later, the dean of the School of Music sent a department-wide email acknowledging the incident and apologizing for what the students experienced. He also reported the incident to the Title IX office.

On September 16, Prof. Sheng sent a formal apology to the department, and this is the one that caused more harm. In the letter, Prof. Sheng – who was raised in China during the Cultural Revolution and came to the US as a graduate student in 1982 – acknowledges that showing that movie was “offensive and has made you angry,” and that he should have thought about it more carefully. Had he stopped there, it might have been fine.

But his apology letter goes on to defend himself. He says he has “never thought (of himself as) being discriminating against any race,” citing examples of how he has worked with people of color in the past. One of the students who was offended by the movie was also offended by this apology. She viewed it as “shallow” and making excuses. “Instead of just apologizing for it, he tried to downplay the fact that the entire situation happened in the first place.” Graduate music students weighed in, calling the apology “inflammatory.”

Professor Sheng now realizes his mistake. In an interview with the Michigan Daily, he noted, “In my formal apology letter to the whole composition department … I simply try to say that I do not discriminate. In retrospect, perhaps I should have apologized for my mistake only.”

When it comes to apologies – especially ones that are written – less is often more. What the offender views as explanation is viewed by the audience as excuse. The offender is trying to put this in context and reassure his audience that he’s not really a bad person – but this should come later, after the “victim” accepts the apology. If you’re apologizing and hear yourself getting to a “but” – I’m sorry for this BUT I am not really racist / I made a mistake this time BUT I’m overall a good person – stop! As Ken Sande notes in his book, The Peacemaker, the “but” acts as an eraser, wiping out the apology that preceded it. All the recipient hears is what sounds like an excuse. Professor Sheng’s letter may not have included an actual “but,” yet there was a component that turned the corner from apology into what sounded to some like self-serving statements.

Better to stick to the four R’s: Take Responsibility. Express Remorse. Offer Restitution. Make Reforms so it won’t happen again.

Mediating the Presence of a Bible

Should a Bible be included in a display honoring missing veterans near the entrance of a veterans’ hospital? A veterans hospital in Manchester, New Hampshire, thought so, but two U.S. Air Force veterans objected. Somehow the dispute ended up in federal court, but now the parties have agreed to mediation. Too bad they didn’t try mediation when the dispute first arose, but let’s hope this gets settled amicably in mediation.

Update to 9/2/21 Post

An update to my post of 2 September 2021, “Mediator Standards of Conduct Could Have Helped Here”: the mediator’s law firm has decided to withdraw from representing the one party in that case, thus removing the appearance of a conflict of interest. This means an appellate court decision on mediator conflicts of interest will have to wait for another day.

This case raises another interesting question: the guidance regarding a possible post-mediation conflict of interest applies to the mediator, but does it also apply to the mediator’s law firm? In this case, the subsequent professional relationship was between a mediation party and the mediator’s law firm, not with the mediator himself. It still smells like a conflict of interest to me, but it’s not so specified in the Mediator Standards of Conduct.

Follow

Get every new post on this blog delivered to your Inbox.

Join other followers: