Are Confidentiality Contracts Enforceable? Tiger Woods, Elin Nordegren, and Paying for Silence
The NY Daily News reports on rumors of a potential $750 million divorce settlement proposal in the impending divorce of Tiger Woods and Elin Nordegren:
Woods hasn’t agreed yet, but if he does he wants total silence from his soon-to-be ex about the collapse of their marriage – forever, according to the Chicago Sun-Times.
Nordegren has so far said no to signing a lifetime “confidentiality clause” that would prevent her from writing a book or doing any interviews about the split.
Would such a lifetime confidentiality agreement be enforceable under the First Amendment? Should it be?
Professor Neil Richards and I tackled this very issue in a recent article, Rethinking Free Speech and Civil Liability, 109 Columbia Law Review 1650 (2009).
As we noted, the law provides two very different approaches toward the First Amendment and civil liability. When tort law is involved (defamation, public disclosure of private facts), the First Amendment generally demands heightened scrutiny and imposes severe limitations on liability. When contract law is involved (contract, promissory estoppel), the First Amendment barely provides any protection at all. We demonstrated that the U.S. Supreme Court as well as lower courts had not developed a coherent way of determining when and why these different approaches should be used.
Our conclusion: “[T]he First Amendment should apply to civil liability when government power shapes the content of public discourse, but not when government power merely serves as a backstop to private ordering.”
Under our approach would such a confidentiality contract between Woods and Nordegren be enforceable?
The troublesome form of power that the First Amendment should restrict is what we call “duty-defining power.” A duty-defining power is when “the government defines the content of the civil duty” and “the speaker cannot avoid accepting the duty, or the government exercises undue power in procuring the speaker’s acceptance.” A duty-defining power is problematic because the government is using the civil liability system as a way to infringe upon free speech in a manner speakers cannot avoid.
But nondisclosure agreements involve “non-duty-defining power” because the government isn’t defining the duty — the private parties to the agreement are. As we observe:
When private parties enforce nondisclosure agreements, the non-duty-defining power is being exercised. . . .
Any government enforcement of these rules is incidental to the private speech restriction. . . . First Amendment scrutiny in the ordinary contract case would thus be unnecessary.
We should be clear at this stage that many contracts between private parties can be highly coercive or unconscionable. Nothing in our approach would prevent courts from invalidating such contracts based on duress, unconscionability, or contravention of public policy. The free speech effects of contracts could certainly be a valid public policy reason to render them unenforceable. This would be an issue for contract law, not the First Amendment. But by marking a clearer boundary between First Amendment law and contract law for private-sector speech restrictions, our approach would focus the First Amendment on government-defined civil duties, and make clear that it would be inapplicable to privately defined duties. And where such duties would be threatening to free discussion, our approach would represent an invitation to contract law to fix the problem itself. First Amendment law should focus on resolving problems between the individual and the state. Contract law is better at resolving conflicts between individuals, even when they involve speech.