Multiple gavels

With the overwhelming majority of disputes resolved using settlement agreements, they have a unique and prominent place in the litigation setting. They are generally anti-climactic. The sparring of litigation is over, and the parties have decided to move on from their dispute. Yet, I’m seeing a new era in settlement agreements in the employee benefits context, and it’s one I find unsettling.

Earlier in my legal career, if a benefit plan wanted to keep the terms of a settlement confidential, that request came with a cost – and rightly so. Each party understood the financial value of non-disclosure, and it was agreed that their extra compensation was the correct approach to cover this new and continuing obligation. It seems almost quaint to reflect on that time when it was chiefly the dollar amount of the settlement that was confidential. For the most part, the fear that the party paying the settlement would open itself up to payment demands by other plan members with similar claims should the amount be disclosed was acknowledged and understood.

An evolution from confidentiality clauses to more expansive settlement language has taken root in recent years, with the releasing party facing not only limits on sharing the settlement amount, but also preventing further discussion of the underlying facts of the case at all. And of course, such restrictions come with no additional compensation – despite the fact that the new and ongoing obligation is now much greater than the monetary restriction alone. So that’s where we are on the settlement continuum; where unless somehow unlawful, no major organization settles cases without them. But it doesn’t end there.

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