I don’t care for Eugene Volokh’s politics but he is a lawyer and did all of us a favor today by laying out the details and legal considerations concerning one particular settlement agreement–which of course can be extrapolated to all settlement agreements with non-disclosure clauses–and how the settlee breached it.
Maybe more interesting than usual because the settler was Mel Gibson. (But never mind: it could be you. Oh, and Howard Stern is featured here, too.) (Got to tell you, as a lay expert in Scottish history, I can’t confirm that William Wallace woaded his face, i.e., painted half of it blue. I mean, I was there! I would’ve seen it.)
In the piece Volokh mentions that oh-no case when a teenager burbling on Facebook breached her father’s non-disclosure agreement and Dad had to give back more than half of the money.
Posted: 11 Aug 2016 03:13 PM PDT
Tuesday’s decision in M.G. v. O.G. (Cal. Ct. App. Aug. 9, 2016) involved Mel Gibson’s settlement agreement with Oksana Grigorieva, the mother of Gibson’s child. Gibson had brought an action “to establish his paternity of the couple’s daughter,” and Grigorieva in turn sued “asserting civil claims for battery and defamation.” The parties settled the claims, declaring that Gibson was the child’s father, agreeing that Gibson would pay Grigorieva “a total of $750,000 in three equal installments spread over the course of five years,” and agreeing that Grigorieva would “keep confidential ‘any and all information and facts related to the asserted claims and events underlying this Agreement.’” The deal provided that, if Grigorieva breached the confidentiality agreement, she would forfeit “all outstanding installments of the $750,000 settlement payment.”
But after Gibson paid the first $250,000, Grigorieva went on the Howard Stern radio show, and said, among other things:
[Grigorieva]: I wanted to thank you so much for support when I had so much criticism. I really appreciated you for what you were saying.
[Stern]: I want to thank you for saying that because I will support you to the end. I don’t care what the circumstances are. You do not treat a woman that way, especially the mother of your child.
[Grigorieva]: Thank you….
[Stern]: Anyone who’s been through what you’ve been through with [Gibson], you got to be full of hope, because it’s the only way to be. You got to look ahead.
[Grigorieva]: You know what? [Y]ou have to embrace your experience and even — it doesn’t matter how painful it might be at the time, and that darker experience, learn from it, hopefully, lessons and . . . there’s light and definitely . . . follow what you had in you as a child, that dream. That is awesome.
[Stern]: Well, you’re making a lot of sense.
[Grigorieva]: It’s good. [Y]ou know, in a way, I realize that experience that I went through, I’m going to have to help others. That’s — I’m ready to help and I’d really like to make a difference.
[Stern]: How do you plan on doing that?
[Grigorieva]: I’m going to open domestic violence charity.
Gibson asked the court to discharge him from having to pay the rest of the $500,000, on the grounds that Grigorieva’s statements violated the settlement agreement; the trial court agreed, and the California Court of Appeal agreed as well (paragraph break added):
Construing the “related to” language according to its popular meaning and in the context of the larger instrument’s purpose, it is reasonable to infer that the parties intended the confidentiality clause to encompass not only express statements about [Grigorieva]’s domestic violence claims against [Gibson], but also implicit assertions about those claims made through reference to what others [here, Stern] might say.
Thus, even accepting [Grigorieva]’s premise that she was not required to control what others would say, nor prohibited from speaking about domestic violence generally, it still follows from the language of the confidentiality clause that she could not insinuate [Gibson] committed domestic violence on her by piggybacking on Stern’s comments about what she had “been through with [Gibson].”
Given the proper interpretation of the confidentiality clause, the court’s breach of contract finding was plainly supported by substantial evidence. . . . When Stern referred to what [Grigorieva] had “been through with [Gibson],” [Grigorieva] responded by talking about the “experience that I went through,” which was “painful” and compelled her to “help others” by opening a “domestic violence charity.” The court found this exchange, taken in context with the “interview as a whole,” “clearly implie[d] that [Grigorieva] suffered domestic violence at the hands of [Gibson].” This was a reasonable inference to draw from the evidence.
And the court concluded that enforcing the agreement wouldn’t violate the First Amendment — parties have a right to promise not to speak, and to agree that they would forfeit certain benefits if they violate that promise. That, I think, is quite correct. In Cohen v. Cowles Media Co. (1991), the Supreme Court held that a court can even award damages based on the breach of a promise not to speak (including when the speech deals with a political controversy). Given that, a court can certainly rescind an agreement based on the breach of such a promise. For a similar settlement agreement case, see Gulliver Schools, Inc. v. Snay (Fla. Ct. App. 2014), where a family lost an $80,000 settlement when the parents told their daughter about the settlement — in violation of the agreement — and the daughter then posted a Facebook post saying, “Mama and Papa Snay won the case against Gulliver. Gulliver is now officially paying for my vacation to Europe this summer. SUCK IT.”
The matter may sometimes be different when one of the parties is a government agency: The First Amendment may limit government agencies’ power to extract promises not to speak as a condition of government benefits, perhaps including as a condition of a settlement agreement. But here both parties were private individuals, as they were in Cohen v. Cowles Media.
Now, state law may sometimes make some promises not to speak unenforceable, for instance if they are unexpected provisions buried deep in a consumer contract, or to the extent that the provisions seek to bar people from testifying in court. And sometimes such contracts might not be enforceable through an injunction, though sometimes they might be (see this post for an interesting example).
But a clear promise not to speak, entered into in exchange for a substantial financial settlement, that is then breached by a person’s speaking to the media can indeed be enforced (here, by canceling the obligation for which the confidentiality promise was exchanged). I’m not fond of what I know of Mel Gibson as a person, and if he was indeed guilty of beating Grigorieva, he should be rightly excoriated for that. In this instance, though, he seems to have been legally in the right.