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An Incomplete Compilation of Laws Governing Confidentiality or Non- Disclosure Provisions in Settlement Agreements and Contracts

George W. Wolff 26 October 2019

“(1) A promise or other term of an agreement is unenforceable on grounds of public policy if legislation provides that it is unenforceable or the interest in its enforcement is clearly outweighed in the circumstances by a public policy against the enforcement of such terms.” (All emphasis added)

Restatement (2nd) of Contracts, § 178(1).

“Where a contract has several distinct objects, of which one at least is lawful, and one at least is unlawful, in whole or in part, the contract is void as to the latter and valid as to the rest.”

Calif. Civil Code, § 1599.

“That is not lawful which is:

  1. Contrary to an express provision of law;
  2. Contrary to the policy of express law, though not expressly prohibited; or,
  3. Otherwise contrary to good morals.” Calif. Civil Code, § 1667.

“Paragraph 18 of the agreement provided as follows: "The terms and conditions of this Forbearance Agreement and Mutual Release and each and all of the underlying events resulting in the negotiation of this Agreement shall remain private and confidential in all respects and shall not be disclosed by any party hereto, . . . for any reason whatsoever, to any public or private person or entity, or to any administrative, law enforcement or regulatory agency.". (Emphasis added)

Cariveau v. Halferty (2000) 83 Cal.App.4th 126, 129.

“ '[E]very case from every court recognizes that when a statute has been made for the protection of the public, a contract in violation of its provisions is void.' ” (Emphasis added)

Cariveau v. Halferty (2000) 83 Cal.App.4th 126, 134.

“(a) No licensee who is regulated by a board, bureau, or program within the Department of Consumer Affairs, nor an entity or person acting as an authorized agent of a licensee, shall include or permit to be included a provision in an agreement to settle a civil dispute, whether the agreement is made before or after the commencement of a civil action, that prohibits the other party in that dispute from contacting, filing a complaint with, or cooperating with the department, board, bureau, or program within the Department of Consumer Affairs that regulates the licensee or that requires the other party to withdraw a complaint from the department, board, bureau, or program within the Department of Consumer Affairs that regulates the licensee. A provision of that nature is void as against public policy . . .” (All emphasis added)

Bus. & Prof. Code § 143.5(a).
  • “(a) A physician and surgeon shall not include or permit to be included any of the following provisions in an agreement to settle a civil dispute arising from his or her practice, whether the agreement is made before or after filing the action:
    1. A provision that prohibits another party to the dispute from contacting or cooperating with the board.
    2. A provision that prohibits another party to the dispute from filing a complaint with the board.
    3. A provision that requires another party to the dispute to withdraw a complaint he or she has filed with the board.
  • A provision described in subdivision (a) is void as against public policy.
  • A physician and surgeon who violates this section is subject to disciplinary action by the board.” (All emphasis added)
Bus. & Prof. Code § 2220.7.

“Notwithstanding any other law, a provision in a contract or settlement agreement entered into on or after January 1, 2019, that waives a party’s right to testify in an administrative, legislative, or judicial proceeding concerning alleged criminal conduct or alleged sexual harassment on the part of the other party to the contract or settlement agreement, or on the part of the agents or employees of the other party, when the party has been required or requested to attend the proceeding pursuant to a court order, subpoena, or written request from an administrative agency or the legislature, is void and unenforceable.” (All emphasis added).

Civil Code § 1670.11.
  • Notwithstanding any other law, a provision within a settlement agreement that prevents the disclosure of factual information related to a claim filed in a civil action or a complaint filed in an administrative action, regarding any of the following, is prohibited:
    1. An act of sexual assault that is not governed by subdivision (a) of Section 1002.
    2. An act of sexual harassment, as defined in Section 51.9 of the Civil Code.
    3. An act of workplace harassment or discrimination based on sex, or failure to prevent an act of workplace harassment or discrimination based on sex or an act of retaliation against a person for reporting harassment or discrimination based on sex, as described in subdivisions (h), (i), (j), and (k) of Section 12940 of the Government Code.
    4. An act of harassment or discrimination based on sex, or an act of retaliation against a person for reporting harassment or discrimination based on sex, by the owner of a housing accommodation, as described in Section 12955 of the Government Code.
  • Notwithstanding any other law, in a civil matter described in paragraphs (1) to (4), inclusive, of subdivision (a), a court shall not enter, by stipulation or otherwise, an order that restricts the disclosure of information in a manner that conflicts with subdivision (a).
  • Notwithstanding subdivision (a) and (b), a provision that shields the identity of the claimant and all facts that could lead to the discovery of his or her identity, including pleadings filed in court, may be included within a settlement agreement at the request of the claimant. This subdivision does not apply if a government agency or public official is a party to the settlement agreement.
  • Except as authorized by subdivision (c), a provision within a settlement agreement that prevents the disclosure of factual information related to the claim described in subdivision (a) that is entered into on or after January 1, 2019, is void as a matter of law and against public policy.
  • This section does not prohibit the entry or enforcement of a provision in any agreement that precludes the disclosure of the amount paid in settlement of a claim.
  • In determining the factual foundation of a cause of action for civil damages under subdivision (a), a court may consider the pleadings and other papers in the record, or any other findings of the court.” (Emphasis added).
Code Civil Proc. § 1001.
  • “Notwithstanding any other law, a provision within a settlement agreement that prevents the disclosure of factual information related to the action is prohibited in any civil action the factual foundation for which establishes a cause of action for civil damages for any of the following:
    • An act that may be prosecuted as a felony sex offense.
    • An act of childhood sexual abuse, as defined in Section 340.1.
    • An act of sexual exploitation of a minor, as defined in Section 11165.1 of the Penal Code, or conduct prohibited with respect to a minor pursuant to Section 311.1, 311.5, or
    • 311.6 of the Penal Code.
    • An act of sexual assault, as defined in paragraphs (1) to (9), inclusive, of subdivision (e) of Section 15610.63 of the Welfare and Institutions Code, against an elder or dependent adult, as defined in Sections 15610.23 and 15610.27 of the Welfare and Institutions Code.
  • Notwithstanding any other law, in a civil action described in paragraphs (1) to (4), inclusive, of subdivision (a), a court shall not enter, by stipulation or otherwise, an order that restricts the disclosure of information in a manner that conflicts with subdivision (a).
  • Subdivisions (a) and (b) do not preclude an agreement preventing the disclosure of any medical information or personal identifying information, as defined in subdivision (b) of Section 530.55 of the Penal Code, regarding the victim of the offense listed in subdivision
  • or of any information revealing the nature of the relationship between the victim and the defendant. This subdivision shall not be construed to limit the right of a crime victim to disclose this information.
  • Except as authorized by subdivision (c), a provision within a settlement agreement that prevents the disclosure of factual information related to the action described in subdivision (a) that is entered into on or after January 1, 2017, is void as a matter of law and against public policy.
  • An attorney’s failure to comply with the requirements of this section by demanding that a provision be included in a settlement agreement that prevents the disclosure of factual information related to the action described in subdivision (a) that is not otherwise authorized by subdivision (c) as a condition of settlement, or advising a client to sign an agreement that includes such a provision, may be grounds for professional discipline and the State Bar of California shall investigate and take appropriate action in any such case brought to its attention.” (All emphasis added).
Code Civil Proc. § 1002.

“(a) It is an unlawful employment practice for an employer, in exchange for a raise or bonus, or as a condition of employment or continued employment, to do either of the following:

1.-

  • For an employer to require an employee to sign a release of a claim or right under this part.
  • As used in this section, “release of claim or right” includes requiring an individual to execute a statement that he or she does not possess any claim or injury against the employer or other covered entity, and includes the release of a right to file and pursue a civil action or complaint with, or otherwise notify, a state agency, other public prosecutor, law enforcement agency, or any court or other governmental entity.

2.-

  • For an employer to require an employee to sign a nondisparagement agreement or other document that purports to deny the employee the right to disclose information about unlawful acts in the workplace, including, but not limited to, sexual harassment.
  • For purposes of this paragraph, “information about unlawful acts in the workplace” includes, but is not limited to, information pertaining to sexual harassment or any other unlawful or potentially unlawful conduct.

(b) Any agreement or document in violation of this section is contrary to public policy and shall be unenforceable.

(c)

  1. This section does not apply to a negotiated settlement agreement to resolve an underlying claim under this part that has been filed by an employee in court, before an administrative agency, alternative dispute resolution forum, or through an employer’s internal complaint process.
  2. As used in this section, “negotiated” means that the agreement is voluntary, deliberate, and informed, provides consideration of value to the employee, and that the employee is given notice and an opportunity to retain an attorney or is represented by an attorney.”(All emphasis added).
Gov. Code § 12964.5.
  • “An employer shall not require the execution of a release of a claim or right on account of wages due, or to become due, or made as an advance on wages to be earned, unless payment of those wages has been made. A release required or executed in violation of the provisions of this section shall be null and void as between the employer and the employee. Violation of this section by the employer is a misdemeanor.
  • For purposes of this section, “execution of a release” includes requiring an employee, as a condition of being paid, to execute a statement of the hours he or she worked during a pay period which the employer knows to be false.” (All emphasis added)
Calif. Labor Code § 206.5.

“(a) An employer, or any person acting on behalf of the employer, shall not make, adopt, or enforce any rule, regulation, or policy preventing an employee from disclosing information to a government or law enforcement agency, to a person with authority over the employee, or to another employee who has authority to investigate, discover, or correct the violation or noncompliance, or from providing information to, or testifying before, any public body conducting an investigation, hearing, or inquiry, if the employee has reasonable cause to believe that the information discloses a violation of state or federal statute, or a violation of or noncompliance with a local, state, or federal rule or regulation, regardless of whether disclosing the information is part of the employee’s job duties ” (All emphasis added)

Labor Code § 1102.5.

“Agreements to suppress evidence have long been held void as against public policy, both in California and in most common law jurisdictions. ” Williamson v. Superior Court of Los Angeles County (1978) 21 Cal.3d 829, 836-837(contract paying witness to suppress evidence and not testify in civil case is void); Smith v. Superior Court (1996) 41 Cal.App.4th 1014,1025-1028 (citing Penal Code § 138). See also, 15

Corbin on Contracts (Rev.Ed. 2003), Part VIII, Ch. 83, Bargains Harmful to the Administration of Justice, § 83.1.

Any agreement to cover up or not report or to help conceal a crime is void, and constitutes the separate crime of compounding a crime.

“(b) Except as provided in subdivision (c), every person who attempts to prevent or dissuade another person who has been the victim of a crime or who is witness to a crime from doing any of the following is guilty of a public offense and shall be punished by imprisonment in a county jail for not more than one year or in the state prison:

(1) Making any report of that victimization to any peace officer or state or local law enforcement officer or probation or parole or correctional officer or prosecuting agency or to any judge ”

(d) Every person attempting the commission of any act described in subdivisions (a), (b), and (c) is guilty of the offense attempted without regard to success or failure of the attempt. The fact that no person was injured physically, or in fact intimidated, shall be no defense against any prosecution under this section.” (Emphasis added)

Penal Code § 136.1 (b) & (d).

“Every person who, having knowledge of the actual commission of a crime, takes money or property of another, or any gratuity or reward, or any engagement, or promise thereof, upon any agreement or understanding to compound or conceal that crime, or to abstain from any prosecution thereof, or to withhold any evidence thereof, except in the cases provided for by law, in which crimes may be compromised by leave of court, is punishable as follows: . . .” (Emphasis added)

Pen. Code § 153.

“It is a crime for any person "having knowledge of the actual commission of a crime" to enter into an "agreement or understanding to compound or conceal such crime, or to abstain from any prosecution thereof . . ." ( Pen. Code, § 153) and an agreement not to prosecute a person for a crime is illegal and void ( Ogden v. Ford, 179 Cal. 243 [176 P. 165]; Thom v. Stewart, 162 Cal. 413 [122 P. 1069]). The trial court's finding on conflicting evidence that the only consideration for the contract was the promise not to prosecute Burgess for the crime of taking money is conclusive on appeal.” (Emphasis added).

Bowyer v. Burgess (1960) 54 Cal.2d 97, 100.

Also, Federal Obstruction of Justice Statutes, 18 U.S.C. §§ 1505, 1512(b) & (d), 1519, have similar or broader prohibitions and penalties; Harrington & Schiffelbein, “Obstruction of Justice” (2014) 51 Am. Crim. L. Rev. 1477, 1494-1496, 1502-1506, 1509, 1514-1517.

See also other Whistleblower laws, other Labor Code provisions, and laws re the reporting of settlements by licensed professionals.

N.B. The contents of this Compilation are not complete or exhaustive and do not constitute legal advice or create an attorney-client relationship, and you may NOT rely on it without seeking legal advice regarding your particular situation from a competent California lawyer or attorney with appropriate expertise.

Please also note that factual situations vary, and statutes, regulations and case law as well are frequently and constantly changing and evolving, and these written materials thus also may now be or may become outdated or incorrect.

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