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When sharing is not caring: The high cost of breaching confidentiality

confidentiality

Only a very small percentage of disputes proceed all the way to a hearing or trial. The vast majority settle at some point, for reasons that are fairly well known. One of the key reasons in many cases is confidentiality; often, the parties want to avoid a public hearing and a published judgment that sets out all of the intimate details of the case, as well as the findings of the judge with respect to fault and blameworthiness. That is particularly true for defendants in most cases.

Without that promise of confidentiality, employers would likely be very reluctant to provide payment to an employee, because that would suggest an admission of wrongdoing on the part of the employer. This is contrary to the very nature of settlement, which is almost always entered into “without admission of any liability”.

As a result, a confidentiality provision is often a key term of any settlement agreement. So what happens when that clause is breached?

The answer: often the settlement falls apart. The defendant may be relieved of some or all of their obligations, and/or the plaintiff may have to repay the settlement funds.

We have seen this happen a few times over the last several years. For example, in Tremblay v 1168531 Ontario Inc., an employee posted several status updates to her public Facebook account during and after a mediation with her former employer at the Human Rights Tribunal of Ontario. Although the employee did not specify the amount of the settlement, her posts made it clear that there had been some payout by the employer. As a result, the employer refused to pay out the settlement funds. Ultimately the HRTO did order the employer to pay out the settlement funds – but with a $1,000.00 discount for the breach of confidentiality.

In Jan Wong v The Globe and Mail Inc., the Ontario Divisional Court upheld an arbitrator’s decision ordering a former employee to repay the full amount of a settlement (over $200,000.00) to her employer when she breached the confidentiality provision in the settlement agreement. In this case, the employee had published a book several years after the settlement in which she made numerous statements alluding to the fact that the employer had made a (significant) payment to her. Unlike in Tremblay, however, the settlement agreement in question specifically included a provision stating that if the confidentiality provision was breached, the employee would be required to repay the full amount of the settlement.

One would hope that a decision like Wong, which received a significant amount of media attention, would be enough to ensure that employees were very careful about preserving the confidentiality of settlements going forward. Unfortunately, it appears that professor Rick Mehta did not get the memo.

Acadia University v Acadia University Faculty Association

Dr. Mehta’s employment was terminated with cause by Acadia University in August, 2018. His union pursued grievances contesting the termination, but ultimately the parties were able to reach a settlement at a case management meeting on April 1, 2019. The parties executed Minutes of Settlement which contained the following undertaking with respect to confidentiality:

“If asked, the parties will indicate that the matters in dispute proceeded to mediation and were resolved, and they will confine their remarks to this statement. Stated somewhat differently, it is an absolute condition of these Minutes that no term of these Minutes will be publicly disclosed.”

Almost immediately, Dr. Mehta began tweeting about the settlement. His first tweet, made only days after the Minutes were signed, read: “Vindicated former professor! Advocate for free speech and institutional transparency in universities.” When one of his followers congratulated him and said “Hope you got a nice sum monz”, Dr. Mehta replied with: “All I will say is that I left with a big grin on my face.” A few days later, he tweeted: “Because I got the vindication that I was seeking. In other words, I have left the university on my term, as opposed to the administration’s or union’s terms. The NDA that I was required to sign by law is not for my protection.”

Acadia University reached out to Dr. Mehta immediately to ask him to remove the tweets. When Dr. Mehta failed to do so, the matter proceeded to a conference call hearing on May 1, 2019. Dr. Mehta was ordered to delete all references to being “vindicated” from his Twitter account and to comply with the requirements of the Minutes with respect to communications related to the settlement.

Dr. Mehta did remove the offending tweets, but continued to tweet about the settlement, making repeated references to a “severance payment” to be paid to him by the University. Finally, Dr. Mehta wrote to the President of Acadia University and threatened to release the Minutes to the media unless certain conditions were met. A further hearing by conference call was scheduled for May 22, 2019.

Arbitrator Kaplan had no hesitation concluding that Dr. Mehta had breached the Minutes of Settlement. Not only were his tweets misleading, suggesting that he had been “vindicated” when there was clearly no admission of liability by the University or affirmation that he was owed severance pay as a result of being terminated “without cause”, but he had expressly violated the confidentiality provisions in the Minutes. In this regard, the arbitrator stated:

“the Minutes were carefully calibrated to restrict, as much as possible, limitations on what the parties could say. Put another way, and by deliberate design, Dr. Mehta’s academic freedom remained virtually unfettered: Dr. Mehta could not disclose any of the terms of the Minutes, including the payment provision, and could only say that the matters had been resolved. Otherwise he was completely free to speak and write about his experiences at Acadia University. Nevertheless, his tweets provide ample evidence of repeated breaches even after he was directed to cease.”

As a result, Arbitrator Kaplan concluded that the University was no longer obligated to honour the payment provision in the Minutes.

Dr. Mehta continues to tweet about his (now defunct) settlement with the University, including disclosing the details of the payment provision (what would have amounted to a $50,000.00 settlement).

Key takeaways

In many negotiations, confidentiality is simply taken for granted as part of the settlement. However, parties should turn their minds to what is appropriate in the circumstances, including whether specific penalties for breach should be included.

Particularly on the Plaintiff side, counsel must ensure that their client understands the confidentiality provisions and the consequences of a breach. When the Plaintiff is sitting there with a smartphone, they have the capability of breaching their confidentiality obligations without even standing up. It is therefore critical that they be advised properly. Even a small breach – a passing reference to a payout or mention of how “pleased” they are with the outcome – can destroy the agreement entirely.

Employees should also remember that settlements are voluntary. There is no obligation to settle with your employer if the terms of settlement, including confidentiality restrictions, are untenable to you. If being publically “vindicated” or having unfettered freedom to talk about your experiences are of the highest importance to you, then proceeding to a hearing may be your best option.

By Brittany A. Taylor and Stuart Rudner

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Stuart Rudner, Rudner Law

Employment Lawyer and Mediator at Rudner Law
Stuart Rudner is a leading HR Lawyer, mediator and a founding partner of Rudner Law, a firm specializing in Canadian Employment Law. At Rudner Law, their approach is simple. They want to understand your circumstances, your concerns, and your goals. They will then ensure that you understand the legal regime along with your rights and obligations. Once that is done, they work with you to design a cost-effective strategy that meets your needs. They want to be your trusted advisor.Read more
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