August 19, 2019

The California Supreme Court has decided that if a lawyer signs a settlement agreement approving "as to form and content", that lawyer may be bound by that agreement's confidentiality provisions. The case is Monster Energy Co. v. Schechter, 7 Cal. 5th 781 (2019).

In 2012, Wendy Crossland and Richard Fournier sued Monster Energy for products liability and wrongful death following the death of their 14-year-old daughter after she drank two of Monster's energy drinks. Bruce L. Schechter and his law firm represented Crossland and Fournier. In 2015 the two parties entered into a confidential settlement agreement which stated that it was made "on behalf of the settling Parties, individually, as well as on the behalf of their, without limitation, respective beneficiaries, trustees, principals, attorneys. . . " The agreement included a confidentiality clause which stated "the parties understand and acknowledge that all terms, conditions and details of this Settlement Agreement, including it's existence, are to remain confidential. Plaintiffs and their counsel agree that they will keep completely confidential all of the terms and contents of this Settlement Agreement, and the negotiations leading thereto, and will not publicize or disclose the amounts, conditions, terms, or contents of this Settlement Agreement in any manner. . ." After this confidential wrongful death settlement was concluded, Schechter published information on the facts of the settlement, stating that he was barred from disclosing the exact amount settled for due to the fact that "Monster wanted the amount to be sealed." He further publicized other cases that he had filed against the energy drink company.

Monster discovered the disclosure of certain specifics about the settlement and sued Schechter for breach of contract, breach of the implied covenant of good faith, unjust enrichment, and promissory estoppel.

Schechter filed an "anti-SLAPP' motion seeking an immediate dismissal of the suit against him, arguing that that the suit implicated his constitutional free speech rights. The court denied the motion as to the breach of contract claim but granted as to the other three causes of action finding that the settlement clearly considered the attorney to be subject to the agreement, and because Schechter signed the agreement,  that the idea that Schechter is not a party to the contract because he only approved the contract as to form and content is "beyond reason." The Court of Appeal reversed the trial court's denial of the anti-SLAPP motion as to the breach of contract claim.

The Supreme Court reversed again, finding that a factfinder could reasonably conclude that the confidentiality provisions of the settlement agreement might be intended to bind the attorneys as well as the parties.

Editors Note: Attorneys and their clients should make note of how the confidentiality agreements are written, and not sign something that could potentially be binding to them. Because the confidentiality agreement in this case specifically listed attorneys and counsel several times, the attorney found himself bound to a confidentiality agreement he wouldn't otherwise have had to comply with.

This premium content is locked for FC&S Coverage Interpretation Subscribers

Enjoy unlimited access to the trusted solution for successful interpretation and analyses of complex insurance policies.

  • Quality content from industry experts with over 60 years insurance experience, combined
  • Customizable alerts of changes in relevant policies and trends
  • Search and navigate Q&As to find answers to your specific questions
  • Filter by article, discussion, analysis and more to find the exact information you’re looking for
  • Continually updated to bring you the latest reports, trending topics, and coverage analysis