Breach of Settlement Agreement

Plaintiff settled his sexual harassment and retaliation  lawsuit against defendants and this provision was included in the settlement agreement:  "The parties agree that the terms of this settlement shall be held confidential and that no disclosure of the terms of the settlement, other than the fact of the settlement itself, shall be disclosed or disseminated to anyone who is not a party to this Release, except to the extent required by law. Further, the parties agree that neither shall disparage or discredit the other."

Plaintiff then alleged that certain of the Defendants made statements to the press in violation of this provision.  Some samples:  one defendant said "’he thought they “had a really good case,’and ‘had beaten this guy all the way through’”; and that  he "’was very frustrated that he did not get a chance to fight the lawsuit in court. He  . . . felt the county had a strong case, but the risk pool did not want to spend the money to go through the court process’” .  Another defendant allegedly said "that she did not know the exact amount of the settlement, but “’it wasn’t very much.’”

Plaintiff sued for violation of the terms of the non-disclosure and anti-disparagement clause.

The Maine Supreme Judicial Court reversed the trial court’s dismissal of the case on the breach of contract claim.  The highest court in Maine held that the complaint stated a cause of action for breach of the the settlement agreements "terms" and the non-disparagement provision.  The dismissal of the tort claims was affirmed.

Practice point:  These provisions in settlement agreements are enforceable.  Although I am not really sure what damages Plaintiff can prove here,  we need to remember to counsel our clients that, at a minimum, violation of these provisions can result in more litigation.

 The case is Halco v. Davey, Kno-06-428 (Maine SJC April 3, 2007).  Read the entire decision here.