Many class settlement agreements contain confidentiality clauses. How seriously should we take them?
Thornton v. Morgan Stanley Smith Barney, LLC, No.12-CV-298-JED-FHM, 2013 U.S. Dist. LEXIS 151211 (N.D. Okla. Oct. 22, 2013), answers the question: seriously indeed.
Thornton itself was not a class action. It was a sex discrimination case. In Thornton, the defendant identified a number of female employees as witnesses that there had not been any sex-based discrimination in its Oklahoma offices. The plaintiff decided to challenge this story by subpoenaing records from the claims administrator for the settlement in Amochaev, a sex discrimination class action involving the same defendant. The plaintiff reasoned that if any of the witnesses had participated in the settlement, then they were not telling the truth in this individual lawsuit.
The court disagreed. It held that:
The Amochaev claim forms have no relevancy to this case. The Amochaev case involved entirely different types of allegations over a time frame that ended before the first allegedly discriminatory action in this case took place. Further, the claims forms were completed by people who are not parties to this lawsuit and the forms were completed in connection with a court approved settlement agreement that provided for the anonymity of the claimants and confidentiality concerning their claims.
In other words, confidentiality agreements exist for a reason. Particularly in employment class actions, they protect the class members as much as they might the defendant. It’s reassuring to know that one is on solid legal as well as strategic ground when including them in a settlement agreement.