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.

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