---  Typical confidentiality agreements prohibit parties from publicly elaborating on the settled matter, thus hampering a defendant’s ability to combat reputational harm caused by the online publication of a complaint that contains unproven allegations.---

New Jersey Law Journal     June 17, 2021

Jonathan Bick is counsel at Brach Eichler in Roseland. He is also an adjunct professor at Pace and Rutgers law schools, and the author of “101 Things You Need to Know About Internet Law” (Random House 2000).

The internet has expanded the public’s access to litigation documents, including the bad act allegation(s) disclosed in a complaint. Most litigations are amicably settled using confidential agreements. However, typical confidentiality agreements prohibit parties from publicly elaborating on the settled matter, thus hampering a defendant’s ability to combat reputational harm caused by the online publication of the complaint. An additional settlement clause may be justified to ameliorate this difficulty.  

The preponderance of civil litigation filed are settled. Cornell University’s Theodore Eisenberg examined data gathered from about 3,300 federal cases in the Eastern District of Pennsylvania  and the Northern District of Georgia and found that the aggregate settlement rate across case categories were as high as 87%. Other sources claim settlement ranges from 80% to 97% depending upon if a settlement is a measure of plaintiffs’ litigation success, or as a measure of litigated disputes resolved without final adjudication.

Legal complaints are court filings and are characteristically public documents. Since these filings are available for public inspection, litigation aggregation websites may gather and easily publish complaints that include allegations of defendants’ bad acts. 

While allegations of bad acts may be the basis of a complaint, they are merely accusations. As found by the court in Lipsky v. Commonwealth United Corp., 551 F.2d 887 (2d Cir. 1976), the bad acts in a complaint have not been tested or factually confirmed, thus precluding reliance. 

The information contained in the republished complaints may directly or indirectly harm the reputation of the defendant, regardless of the accuracy of the published complaint. 

Such harm may be reduced if the defendant is permitted to initiate steps to post information related to the complaint. More specifically, a defendant who takes action to communicate with internet users as to the nature of litigation complaints generally may help diminish the harms associated with the republication of a complaint containing inaccurate information.

The difficulties associated with the online publication (and associated accessibility) of bad acts disclosed in a complaint may be ameliorated by allowing the defendant to take action to put the complaint allegations in context. For example, the party accused of the bad acts may be able to eliminate or lessen certain difficulties by providing a statement to the website that published the complaint, that the litigation was settled amicably.

Alternatively, the defendant can state that the bad acts in a complaint have not been tested or factually confirmed, and that many courts have interpreted the Lipsky ruling as a “bright line” rule that precludes litigants from relying on others’ unproven assertions. The defendant’s statement may also be followed by a warning to the website where the complaint appears, that certain complaint allegations may prove to be defamatory. 

Proving prima facie defamation requires a showing of a false statement purporting to be fact, the communication of that statement to a third person with negligence or actual intent, and harm to the person who is the subject of the statement. Though, some types of false statements are considered so damaging that they are deemed defamatory on their face.

It should be noted that litigation settlements often limit the actions of the parties. For example, the confidentiality clause might state that: “The terms and conditions of this Agreement are  confidential between the parties and shall not be disclosed to anyone else, except as shall be necessary to effectuate its terms. Any disclosure in violation of this section shall be deemed a material breach of this Agreement.”

This type of a clause, while typical in the past when litigation complaints were relatively inaccessible to the general public, fails to consider the resulting harm to the defendant of the internet publication (and associated accessibility) of bad acts disclosed in aomplaint. Consequently, a good case may be made to add an additional clause to the confidentiality section of the settlement agreement which allows a defendant to take mutually agreed upon action to provide information to internet site litigation aggregators or others to help diminish the harms associated with the online republication of a complaint containing inaccurate information.

Such mutually agreed upon action might be an authorization for the defendant to send a generic statement, approved by both plaintiff and defendant, to websites that republish litigation documents (such as complaints). For example, “Litigation documents may contain allegations of bad acts which have not been tested or factually confirmed; please do not assume the allegations are correct.” 

It is reasonable for internet site litigation aggregators to post such statements to avoid defamation claims. The courts may find it reasonable to require these sites to post such statements if they find that the harm from a failure to post such a statement would otherwise clearly outweigh the harm to the defendant and the public interest in avoiding deceptive online content. 

In sum, the typical reason the defendant settles with the plaintiff is because it is more economical to do so. Failure to consider the internet republication of bad acts disclosed in the complaint may result in a suboptimal settlement agreement. Consequently, an additional element in the settlement agreement may be justified.