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November 17, 2016 Practice Points

Breach of Confidentiality Provision Leads to Loss of Settlement

By Edmund J. Sikorski Jr.

Mediated settlement agreements are governed by contract law. When a material feature of such an agreement is a confidentiality provision and a party breaches that provision, the breaching party can lose its benefits under the settlement agreement. Gulliver Schools, Inc. et al. v. Snay, 137 So.3d 1045 (Fla. 3rd DCA 2014) painfully illustrates this point. For those interested in exploring this subject further, the topic of confidentiality agreements in mediation agreements governed by Florida law is discussed in depth in Act Deux: Confidentiality After the Florida Mediation Confidentiality and Privacy Act, Nova Law Review, Vol. 36, Issue 1, 2011.

In Gulliver Schools, the court found the following confidentiality provision to be central to the parties' mediated settlement agreement:

13. CONFIDENTIALITY … The 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, wherein she stated:

Mama and Papa Snay won the case against Gulliver. Gulliver is now officially paying for my vacation to Europe this summer. SUCK IT.

This Facebook comment went out to approximately 1,200 of the daughter's Facebook friends, many of whom were either current or past Gulliver students.

After a one-page discussion of the law requiring that clear and unambiguous contract language be enforced as written, the appellate court reversed the trial court's order granting Snay's motion to enforce the agreement:

Rather, before the ink was dry on the agreement, and notwithstanding the clear language of section 13 mandating confidentiality, Snay violated the agreement by doing exactly what he had promised not to do. His daughter then did precisely what the confidentiality agreement was designed to prevent…

Gulliver illustrates the point that confidentiality agreements need to be taken seriously and that the consequences of violating them can be serious.

Keywords: alternative dispute resolution, adr, litigation, mediation, settlement agreement, confidentiality, breach

Edmund J. Sikorski Jr. is an approved Washtenaw County, Michigan, mediator and a Florida Supreme Court Certified Circuit civil and appellate mediator, residing in Ann Arbor, Michigan.

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