It is common to find confidentiality provisions in settlement agreements, where a wrongdoer seeks to keep all harmful information from getting out to the public. Confidentiality provisions are often accepted because the risks of passing up a settlement (the proverbial bird in the hand) are too great to warrant being left without any compensation for one’s injuries.
Confidentiality provisions are especially common where a wrongdoer is alleged to have injured multiple victims, because if one person settles, any information they have can be kept from being used by other victims. For example, in the fracking business, drilling companies seek to prevent people from speaking ill of the industry, and do not want the general public to know the extent of the risks of pollution or contamination. Fracking is a method of fracturing rock with pressurized liquid to stimulate oil, natural gas, or water wells, and raises serious public health concerns. Potential side effects include ground water contamination, air pollution, hazardous waste, or migration of gases and fracturing chemicals to the surface.
On August 1, 2013, the Post-Gazette reported about one family near Pittsburgh who had been forced to relocate from their home due to health issues connected to a nearby fracking enterprise. They filed a lawsuit against the drilling companies (Range Resources, Mark West Energy Partners, and Williams Gas/Laurel Mountain Midstream Partners) and eventually settled the case in October of 2011. The settlement agreement included a confidentiality provision.
While documents filed in court, such as civil complaints, are for the most part open to the public, settlement agreements are not. Therefore the injured parties could file a complaint alleging they were injured by fracking, but after the settlement, the drilling company could publicly state that the claims were unfounded and the confidential settlement would prevent the plaintiff from saying otherwise. And if the attorneys found damaging documents, they may be prevented from using them in a subsequent case.
The Post-Gazette fought for almost two years since the settlement to obtain a copy of the settlement agreement, but was only able to get a transcript of the court hearing at which the agreement was signed. The settlement agreement included a confidentiality clause that not only forbade the plaintiffs from ever speaking about the fracking case or the settlement, but also banned the plaintiffs’ two minor children — ages 7 and 10 — from ever speaking about the experience for the rest of their lives. Confidentiality provisions are contractual in nature, and the laws of most jurisdictions are that children — that is, those under the age of 18 — cannot legally enter into contracts. Therefore it is troubling when parents attempt to enter into contracts on behalf of their children; parents cannot bind their children to a contractual agreement. Even when the child turns 18, the contractual agreement does not automatically become enforceable against the child. Those kinds of contracts could still be enforceable against the parents, depending on how they are written, so a confidentiality agreement can provide adverse consequences for the parents if word gets out, regardless of the source.
Confidentiality agreements are often incorrectly referred to as “gag orders”, but a gag order can only be imposed by a court. The wild card in the aforementioned case is that the settlement agreement was approved by the court, raising questions of whether it can be considered a court order that can be enforced against the children.
Lopez McHugh has dealt with confidentiality requests by defendants in the past, and has been known to negotiate them down or oppose motions in court where the provisions are excessive in terms of scope or proposed penalty. Quite often, it is just as important to scrutinize the contents of a confidentiality provision as it is to achieve the settlement it accompanies. Otherwise, a plaintiff can wind up victimized a second time if their rights are not protected, and publicity about a danger may be kept out of the public eye.