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Editorial Advisory Board: No NDA can stop participant from dropping a dime

Over the past few years, this board has opined on Baltimore City’s abuse of the settlement process in dealing with cases of alleged police misconduct. By entering into settlements that included nondisclosure agreement terms (NDA), and by rigorously enforcing the provision, the city kept from the public important information necessary to evaluate the effectiveness of civilian government oversight of the police department. The tools for self-government were denied us by a city devoted to the very opposite of the transparency promised.

A corollary to the proposition of openness in administration of the police is that no settlement can prohibit a participant from approaching government authorities for redress. No matter what an NDA might purport to forbid, a signatory can always “drop a dime,” at any time, on any other party to the agreement. Competent counsel know this and so advise their clients: There is nothing that can be done to prevent the other side from filing a criminal complaint. Further, it may raise ethical questions to even include a provision in the NDA that purports to block access to government. It sets up the client to a possible obstruction charge: using the threat of contract breach to keep a person from advising authorities of the existence of a crime. No lawyer should be a party to such a scheme.

Two recently disclosed instances of settlement abuse, proposed and entered into, suggest the willingness of people, abetted by their lawyers in at least one of the cases, to entertain obstruction, if not go over the line in encouraging it. In the dispute between Oberlin College, in Ohio, and Gibson’s Bakery, widely covered in the media, the Wall Street Journal reported in a commentary by William A. Jacobson: “The Gibson family claims [college] administrators told them they’d reinstate the catering contract if they dropped the charges against the three shoplifting students and promised to contact the school, not police, if other students stole from their store in the future.” That proposal, as described and if true, is patently unlawful: an agreement to obstruct justice by placing the catering contract on the line if the police were called to report a crime. No lawyer should have had anything to do with it, and let’s hope that none did. In any event, that claim should be investigated by the Ohio authorities, both criminal and attorney discipline.

Lawyers very much had to do with the other instance as reported, and here the blame is shared by attorneys on both sides. We are referring, of course, to the now-notorious settlement agreements allegedly entered into by Harvey Weinstein and those claiming wrongdoing. As reported by Ronan Farrow in The New Yorker, in one settlement agreement with an NDA, the complainant had to agree to destroy all copies of audio recordings in which Weinstein admitted to groping her and signed an affidavit, attached to the agreement, in which she swore that the behavior Weinstein admits to in the audio never happened. Allegedly, this was a common practice in Weinstein NDAs. What might seem a clever way around the limitation on NDAs, i.e., that they cannot prevent disclosure to the government, is fraught with danger for all parties. The person signing the affidavit opens herself up to criminal charges. If she has already reported the sexual attack to the authorities, her sworn denial that it ever took place subjects her to prosecution for filing a false report. See, e.g., the controversy in Chicago over Jussie Smollett’s report of an assault (the merits of which we do not reach).

That is not all. By signing the affidavit denying that any wrongdoing ever occurred, the complainant is setting herself up for criminal prosecution of making an extortionate threat of charges known to her as false. Michael Avenatti was accused in the Southern District of New York of just such a crime: attempting to extort money from Nike by threatening a lawsuit based upon knowing misrepresentations. No lawyer should let her client take a risk of criminal prosecution in entering into a self-impeaching NDA.

And that is just the lawyer on the alleged victim’s side. The lawyer on the accused side is faced, according to Farrow, with evidence that renders the affidavit false, one that cannot be defended on what the lawyer knows to be true. No lawyer should be a part of such a scheme: to take a lie in hand to protect a client from the truth.

Be aware, Maryland lawyer, of the principle that no settlement, no NDA can ever bar seeking redress from the government. Don’t propose such a term and don’t accept it. And for Pete’s sake, don’t try any cute approaches to avoid the impact of the rule. It may bring ruin to more than just the settlement agreement.

Editorial Advisory Board Chair Jim Astrachan did not take part in this editorial.


James B. Astrachan, Chair

James K. Archibald

Arthur F. Fergenson

Nancy Forster

Susan Francis

Michael Hayes

Ericka King

Stephen Meehan

William Michaels

Angela W. Russell

Debra G. Schubert

Mark Stichel

Vanessa Vescio

The Daily Record Editorial Advisory Board is composed of members of the legal profession who serve voluntarily and are independent of The Daily Record. Through their ongoing exchange of views, members of the board attempt to develop consensus on issues of importance to the bench, bar and public. When their minds meet, unsigned opinions will result. When they differ, or if a conflict exists, majority views and the names of members who do not participate will appear. Members of the community are invited to contribute letters to the editor and/or columns about opinions expressed by the Editorial Advisory Board.