Why Alabama Needs a Contractual Non-disparagement Act
| Publication year | 2020 |
| Pages | 0445 |
Alabama needs an act that provides guidance and a reasonable path forward for "non-disparagement obligations ("NDOs") in contracts. Here is why:
Contractual NDOs have become increasingly more prevalent. NDOs routinely are a part of settlement agreements, executive separation agreements, and employment agreements. (Some Internet-based businesses are including them in their terms of use in an effort to shield themselves from false negative product reviews.)
Nonetheless, NDOs are frequently the least negotiated provisions. That means that altogether too often the parties have little or no understanding of the scope of their obligation. Indeed, in our experience, the parties to NDOs may not know what "disparagement" means, and they may not understand the impact of complete and truthful information that already exists in the public domain.
For example, what if a dean of a major university and the university parted company after stories about alleged comments made by the dean were published in the national media? Assume that the matter did not devolve into litigation, but, instead, was negotiated by the parties. Also assume that the separation agreement gave the dean received a substantial (six-figure) structured set of payments. Finally, assume that the parties agreed to the following NDO:
The dean further agrees that he will not directly or indirectly make, communicate, post, or otherwise publish any disparaging, degrading, critical, or otherwise negative remark, comment, opinion, or statement regarding any of the Released Entities, unless compelled to do so by a court of competent jurisdiction.
As NDOs go, this one is more robust than many which say no more than, "The parties shall not disparage one another."
Still, there are many gaps that it would have been helpful to fill with this NDO:
• Is the dean restricted from "communicating" complete, truthful, and widely known information about the university?...
• What recourse does the dean have to seek judicial clarification of this NDO without arguably violating the NDO?
• What recourse does the university have to seek judicial enforcement of the NDO without making things worse? What if the court holds that sealing the pleadings is not appropriate given the press coverage associated with the separation of the dean and the university.
• Is the dean restricted from speaking negatively about the university to law enforcement or regulators?
• If the dean inadvertently violates the NDO, what are his defenses or opportunities for a cure? Indeed, what is his incentive to do effect a
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