Redacted v. Redacted
Redacted v. Redacted
Opinion of the Court
This breach of contract action arises from two twenty-year-old written settlement agreements in which Defendant [redacted] released Plaintiff [redacted] and others from liability for various claims. According to the settlement agreements, Defendant also agreed to keep certain matters about the released claims and the settlement agreements confidential. Plaintiff alleges that Defendant recently breached *1351the settlement agreements when she, through her lawyer, revealed information about the released claims and the agreements to other lawyers while attempting to obtain another settlement for the previously released claims. Plaintiff seeks monetary damages as well as injunctive relief prohibiting Defendant from further breaching the confidentiality provisions. Defendant moves to dismiss Plaintiff's Complaint. Because Plaintiff's Complaint states a plausible claim for relief, Defendant's motion to dismiss (ECF No. 15) is denied.
MOTION TO DISMISS STANDARD
"To survive a motion to dismiss" under Federal Rule of Civil Procedure 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.' " Ashcroft v. Iqbal ,
FACTUAL ALLEGATIONS
Plaintiff's Complaint, including the exhibits, alleges the following facts, which the Court must accept as true for purposes of the pending motion:
I. The Settlement Agreements
In 1992, Defendant retained counsel to pursue legal claims against Plaintiff. Defendant and Plaintiff eventually entered into an agreement under which Defendant released Plaintiff from liability in exchange for a sum of money (the "1992 Settlement Agreement"). Compl. ¶¶ 5-6, ECF No. 2; Compl. Ex. A, 1992 Settlement Agreement at 1-2, ECF No. 2-1. In 1993, Defendant retained new counsel to pursue additional claims against Plaintiff and others. Compl. ¶ 9. This dispute also resulted in Defendant signing a settlement agreement for which she received an additional sum of money (the "1993 Settlement Agreement"). Id. ¶¶ 10-11; Compl. Ex. B, 1993 Settlement Agreement at 1, 6, ECF No. 2-2. Both the 1992 and the 1993 Settlement Agreements contain confidentiality provisions prohibiting Defendant from disclosing certain matters about the released claims and the agreements to others. 1992 Settlement Agreement at 1-2; 1993 Settlement Agreement at 3.
II. Defendant's Alleged Breaches of the Settlement Agreements
At some point, Defendant became dissatisfied with the settlement agreements and sought legal advice from her current lawyer, [redacted]. [redacted] also represents [redacted] in an unrelated [redacted] suit [redacted] In March, [redacted] sent [redacted]'s lawyers in that matter a demand letter threatening to file suit on behalf of Defendant against [redacted], Plaintiff, and others unless they paid Defendant $50,000,000. Compl. ¶¶ 18, 20; see generally Compl. Ex. C, Letter from [redacted]
*1352to [redacted] et al. (Mar. 16, 2018), ECF No. 2-3 [hereinafter Demand Letter]. [redacted] rejected the demand, and Plaintiff's counsel sent [redacted] copies of the 1992 and 1993 Settlement Agreements. Compl. ¶¶ 22-23. Then, on Saturday, April 14, [redacted] sent an email to [redacted]'s lawyers and Plaintiff's counsel containing a draft of a complaint and threatening to file the complaint on behalf of Defendant "first thing Monday am." Id. ¶ 24; Compl. Ex. D, Email from [redacted] to [redacted] et al. (Apr. 14, 2018), ECF No. 2-4; see generally Compl. Ex. E, Draft Complaint, ECF No. 2-5. [redacted] emailed the lawyers the following day and said, "Your clients have 12 hours left to decide whether they wish to have this dispute resolved in court." Compl. ¶ 27; Compl. Ex. F, Email from [redacted] to [redacted] et al. (Apr. 15, 2018), ECF No. 2-6.
III. Plaintiff's Complaint & Motion for Temporary Injunctive Relief
That same day, before Defendant could file the draft complaint on the public docket, Plaintiff filed his Complaint in this action, alleging that Defendant's demand letter and the draft complaint contained confidential information under the 1992 and 1993 Settlement Agreements and that Defendant breached those agreements when [redacted] sent the demand letter and draft complaint to [redacted]'s lawyers on her behalf. Compl. ¶¶ 19, 21, 25-26. Plaintiff also filed an emergency ex parte motion for a temporary restraining order ("TRO") seeking to prevent the public filing of the draft complaint and related materials. See Pl.'s Mot. TRO at 1-2, ECF No. 1.
Instead of ruling on the motion ex parte, the Court notified [redacted] of the then-pending motion and held a hearing by telephone conference first thing the following Monday morning. Apr. 16, 2018 Order at 1, ECF No. 3. After the hearing and based on a review of the draft complaint and the 1992 and 1993 Settlement Agreements, the Court found that Plaintiff had shown a substantial likelihood that the public filing of the draft complaint would violate the confidentiality provisions of the settlement agreements, that Plaintiff would suffer irreparable injury by the public disclosure of such confidential information, and that the public interest would not be harmed by granting temporary injunctive relief. Id. at 2-3. Noting the presumption in favor of public access to court proceedings and related documents, the Court then balanced the public's interest in disclosure against the legitimate interests of the parties, including the potential loss of part of the parties' bargained-for privacy. Id. at 3. The Court found that requiring Plaintiff to file the draft complaint and related matters under seal and sealing the present action was appropriate because the parties agreed that such matters should remain confidential and because the harm to the public's interest in disclosure was reduced in light of the temporary nature of the access restriction. Id.
The Court entered temporary injunctive relief as follows: (1) restricting access to any documents filed in the present action to the parties to this action, their counsel, and court personnel; (2) requiring Defendant to file any matters related to the draft complaint, including the complaint itself, under seal; and (3) prohibiting Defendant and anyone acting on her behalf from publicly disclosing or discussing the subject matter of the draft complaint and any other documents required to be sealed or restricted by the Court's order. Id. at 3-4.
*1353Defendant subsequently filed her Complaint under seal as directed by the Court. See Compl., [redacted], No. 4:18-CV-83 (M.D. Ga. May 1, 2018), ECF No. 1. The issue currently before the Court is not whether these actions should remain under seal, but whether the present action should be dismissed because Plaintiff failed to state a claim upon which relief may be granted.
DISCUSSION
Defendant argues that Plaintiff's Complaint must be dismissed because (1) the settlement agreements are not valid contracts under Georgia law; (2) the settlement agreements are unenforceable because they violate Georgia public policy and the First Amendment to the United States Constitution; (3) the settlement agreements are unenforceable because they were induced by fraud and duress; and (4) Defendant did not breach the settlement agreements because she did not disclose any information subject to the confidentiality provisions of the agreements.
I. The Settlement Agreements Are Valid Contracts Under Georgia Law
Defendant contends that the settlement agreements are not valid contracts because Plaintiff never signed them. Both settlement agreements provide that they are to be construed and interpreted under Georgia law. 1992 Settlement Agreement at 2; 1993 Settlement Agreement at 5. And under Georgia law, "[s]ettlement agreements must meet the same requirements of formation and enforceablility as other contracts." Stephens v. Castano-Castano ,
Under the 1992 and 1993 Settlement Agreements, Defendant was to receive sums of money from Plaintiff in consideration for her release of Plaintiff and others from liability and her agreement to keep certain matters confidential. 1992 Settlement Agreement at 1; 1993 Settlement Agreement at 1, 3. Plaintiff alleges that he fully performed his obligations under the settlement agreements by tendering the required payments. Compl. ¶ 31. And the 1993 Settlement Agreement contains a copy of a check written to Defendant, which shows Plaintiff at least partially performed under that agreement. 1993 Settlement Agreement at 8. The Court thus finds that the settlement agreements are valid contracts under Georgia law even though Plaintiff did not sign them.
*1354Defendant further points out that the 1992 and 1993 Settlement Agreements only became "effective upon execution by all parties," 1992 Settlement Agreement at 2; 1993 Settlement Agreement at 6, and argues, therefore, that Plaintiff's failure to sign the agreements shows that he is either not a party to the agreements or that they never became effective. To support this argument, Defendant relies on MacDonald v. Whipple ,
II. The Confidentiality Provisions Do Not Violate Georgia Public Policy or the First Amendment
Defendant next argues that the confidentiality provisions of the settlement agreements are unenforceable because they violate Georgia public policy and the First Amendment. Defendant's counsel misunderstands Georgia public policy and the First Amendment. Georgia public policy does not generally prohibit confidentiality agreements. In fact, Georgia courts recognize that such agreements can serve "legitimate purposes." Barger v. Garden Way, Inc. ,
*1355Moreover, Georgia law does not support the proposition that a confidentiality agreement is void in its entirety simply because the agreement does not expressly allow a party to "testify or otherwise comply with a subpoena, court order, or applicable law," Barger ,
Defendant further argues that enforcing the confidentiality provisions would violate her First Amendment right to engage in protected speech. The parties quibble over whether enforcing the provisions would involve "state action" and whether she knowingly waived her First Amendment rights when she signed the settlement agreements. But even assuming that enforcing the provisions involves "state action," Defendant's argument remains unpersuasive. In Cohen v. Cowles Media Co. ,
III. Defendant's Fraud/Duress & Material Breach Defenses Are Premature
Defendant argues that Plaintiff's Complaint should be dismissed because the settlement agreements were procured by fraud and duress and because Plaintiff materially breached the agreements. These arguments rely on matters outside the Complaint, which the Court cannot consider when deciding the pending motion to dismiss. See Grossman v. Nationsbank, N.A. ,
*1356IV. Plaintiff Sufficiently Alleged Breaches of the Settlement Agreements
Lastly, Defendant argues that even if the settlement agreements are enforceable, no breach occurred because neither the demand letter nor the draft complaint revealed any information subject to the confidentiality provisions in those agreements. Defendant is mistaken. For example, the confidentiality provisions of both settlement agreements prohibit Defendant from revealing "the fact or existence of" the settlement agreements, among other matters. 1992 Settlement Agreement at 2; 1993 Settlement Agreement at 3. Both the demand letter and the draft complaint disclose the existence of the 1992 Settlement Agreement. Demand Letter at 4; Draft Compl. ¶ 102. The draft complaint additionally discloses the existence of the 1993 Settlement Agreement. Draft Compl. ¶¶ 120-21. And if [redacted] sent [redacted]'s lawyers the demand letter and draft complaint on Defendant's behalf as Plaintiff alleges, Defendant at a minimum breached her agreement to keep the fact and existence of the settlement agreements confidential.
CONCLUSION
The Georgia courts recognize the near universally accepted principle that "[t]he law ... favors compromise, and when parties have entered into a definite, certain, and unambiguous agreement to settle, it should be enforced." Newton v. Ragland ,
IT IS SO ORDERED, this 7th day of August, 2018.
The temporary injunctive relief does not prohibit Defendant from discussing matters related to the present action or the draft complaint with [redacted] or reporting other specifically identified matters. Apr. 16, 2018 Order at 4.
The Court intends to enter a separate order directing the parties to show cause as to whether these actions should remain restricted from public access.
The 1992 Settlement Agreement actually includes a separate signature page evidencing Plaintiff's signature. 1992 Settlement Agreement at 4. Defendant disputes the authenticity of that signature page, but, as explained above, Plaintiff's performance under the agreement is sufficient to show his assent to the settlement agreement's terms.
The Court does not accept the allegations in the draft complaint attached to Plaintiff's Complaint as true for purposes of the pending motion because Plaintiff clearly disputes the veracity of those allegations. What the Court accepts as true for purposes of this motion is that the attached draft complaint is the draft complaint that [redacted] sent to [redacted]'s and Plaintiff's lawyers and that [redacted] threatened to publicly file on Defendant's behalf.
Having decided today that the agreements are enforceable as alleged, the Court finds that a strong interest exists in honoring the parties' confidentiality agreements by restricting public access to these proceedings. The Court further finds, notwithstanding that interest, that there is a strong public interest in public access to judicial proceedings, particularly orders of the Court. Balancing these competing interests, the Court directs that this case be unsealed such that the existence of this action, the identities of the parties, and today's Order by the Court shall be shown on the public docket. However, until further order of the Court, all previous and future filings in this action shall be maintained and filed in a restricted manner such that they are accessible only by the parties, their counsel, and appropriate court personnel.
Reference
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- [REDACTED] v. [REDACTED]
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