Individuals in the entertainment industry have started coming forward to reveal harassment they have faced throughout their careers. In response to these revelations, filmmakers and showrunners have started depicting such harassment on screen. For example, the web television series The Morning Show explores the backlash that a network faces after a popular anchor on its news and morning talk show program is involved in a sexual misconduct scandal. While fictional, The Morning Show mirrors real-life occurrences. To tell such stories as accurately as possible, filmmakers and showrunners continue to seek firsthand accounts from the individuals involved in these real-life scandals. The problem: many of these individuals signed non-disclosure agreements (NDAs) as part of a settlement.
NDAs are descriptively named—an NDA is an agreement not to disclose certain information. In the settlement context, one party usually pays the other to stay silent, and many NDAs include a “liquidated damages” provision, which sets monetary consequences of improper disclosure of the applicable information. Despite having signed NDAs, many of the individuals who choose to share their stories do so knowing their disclosures could subject them to significant financial costs.
Breaching an NDA to Set the Record Straight
A trickier issue confronts those who are unwilling to breach their NDAs in order to speak out, but who may disagree with the way their stories are being depicted on screen. These individuals want to set the record straight but do not want to risk violating their NDAs. This raises the question: If a third party publicly misrepresents facts covered by an NDA, does a party bound by the NDA have the right to correct the record?
Typically, an NDA does not include any exception for when third parties misrepresent facts, but NDA parties can negotiate such exceptions. For example, the parties might include a provision that allows for “limited disclosure only to the extent necessary to correct public factual misrepresentations of information covered by” the NDA. From the perspective of the party seeking to enforce the NDA, it is important that any permitted disclosures be as limited as possible, and additional language should be considered on a case-by-case basis to ensure that the exception does not swallow the rule.
Some states have begun changing NDA enforceability rules for cases involving sexual and other specific forms of harassment. For instance, California has enacted laws to prevent victims of sexual harassment, workplace harassment, and sex discrimination from being silenced as part of a settlement. California Code of Civil Procedure §1001 invalidates and renders void “a provision within a settlement agreement that prevents the disclosure of factual information related to a claim filed in a civil action or complaint filed in an administrative action,” including those regarding sexual harassment, workplace harassment, or sex discrimination.
However, for §1001 to apply, the parties must have entered into the agreement on or after January 1, 2019. Additionally, based on the statute’s plain language and the lack of substantive guidance on how courts will apply it, the law arguably applies only to a settlement agreement in which a party has already filed a civil or administrative action. Based on the foregoing California statute, NDA parties would be wise to negotiate contractual carve-outs specifying events or circumstances permitting limited disclosure in harassment matters.