Against Secret Settlements

The New Yorker has a fascinating new article by Ronan Farrow providing more information about some of the settlement structures used by Harvey Weinstein and his company. It is worth reading in full, but I’m including a few excerpts from the article below to give you a sense of the piece.

The short version is that in the hands of the rich and powerful, settlements can be an incredibly destructive tool — exactly in the way that Fiss described more than thirty years ago. Secret settlements of the kind that Weinstein used for years highlight the potential and substantial downsides of settlement coming from power imbalances, the lack of informed/authoritative consent, the inherent difficulties (impossibilities?) of monitoring future behavior, and the apparent prioritization of peace (by way of resolving a discrete complaint) over justice.

The story starts with Ana Gutierrez, the woman who went to the police after being groped by Weinstein. Gutierrez’s case was ultimately dropped by the district attorney.

Gutierrez said that the decision not to press charges shocked her. “We had so much proof of everything,” she recalled. “Everyone was telling me, ‘Congratulations, we stopped a monster.’ ” She began to worry about her future. “I couldn’t sleep, I couldn’t eat,” she told me. New York tabloids, including the New York Post, to which Weinstein had fed stories in the past, had been publishing lurid reports about Gutierrez that mirrored the information in K2 [a private investigation firm]’s dossier. “What did I do wrong?” Gutierrez said. “The only thing I did was exposing something bad that happened to me.”

Gutierrez spoke with attorneys, who advised her to settle. She felt “pressured” to do so and initially refused, but given that she could not take on Weinstein herself (no support from the authorities, no power/money, disparaging publicity, etc.), in 2015 she signed a settlement agreement. The non-disclosure provisions on the settlement were extensive.

Gutierrez’s settlement … bears Weinstein’s signature and orders the destruction of all copies of audio recordings of Weinstein admitting to the groping. Gutierrez agreed to give her phone and any other devices that might have contained copies of the recording to Kroll, another private-security firm retained by Weinstein. She also agreed to surrender the passwords to her e-mail account and other forms of digital communication that could have been used to spirit out copies. A sworn statement, pre-signed by Gutierrez, is attached to the agreement, to be released in the event of any breach. It states that the behavior Weinstein admits to in the audio tape never happened. “The Weinstein confidentiality agreement is perhaps the most usurious one I have seen in decades of practice,” an attorney familiar with the agreement told me.

Next, Farrow tells the settlement story of Weinstein’s former assistant, Zelda Perkins. Perkins settled with Weinstein twenty years ago and has only now started talking about the process and the substance of that agreement. Regarding the process, Perkins and her assistant (who had also been assaulted by Weinstein) first consulted with lawyers about her options.

Perkins and the assistant hired lawyers from the London-based firm Simons Muirhead & Burton. Perkins said that, in hindsight, the attorneys seemed intent on foreclosing any outcome except a settlement. The lawyers told the women that because neither had gone to the police immediately after the incident, reporting the attack at that time was “very clearly not an option.” Perkins said that she asked about reporting the incidents to Michael Eisner, the C.E.O. of Disney, which at the time owned Miramax, because she knew that Weinstein’s relationship with Eisner was under strain. The lawyers dissuaded her from that, too. “They just said, ‘No way. Disney will crush you. Miramax will crush you. They will drag you, your family, your friends, your pets through the mud and show that you are unreliable, insane. Whatever they need to do to silence you.’ ” Perkins said that she felt trapped. “I was, like, ‘Right. O.K. So, we can’t go to police because it’s too late. We can’t go to Disney ’cause they don’t give a shit. So who do we tell? Where’s the grownup? Where’s the law?’ ”

Ultimately Perkins settled. Not only did she have to sign an NDA, but anyone who might have found out about the settlement (lawyers, accountants, therapists) also had to sign one. In addition, under the agreement, she was not allowed to keep her own full copy of the settlement, so she has been piecing it together as she can.

These contract provisions sound draconian, but according to the article, this level of secrecy is typical for Weinstein, whose employees were forbidden under the NDAs in their employment contracts to talk about any of Weinstein’s “personal, social, or business activities.” Even business partners were subject to the same extensive restrictions in their contracts with Weinstein. Such far-reaching confidentiality provisions serve to stymie those who worked with Weinstein from sharing information about dysfunctional behavior.

Perkins tried to build some creative options into her settlement agreement that addressed her interests in protecting others from harassment.

The agreement mandated the appointment of three “handlers,” one an attorney, to respond to sexual-harassment allegations at Miramax. Miramax was obligated to provide proof that Weinstein was receiving counselling for three years or “as long as his therapist deems necessary.” Perkins had to approve the therapist and attend the first session. The agreement also required Miramax to report Weinstein’s behavior to Disney and fire him if a subsequent sexual-harassment settlement was reached in the following two years.

But Miramax, Perkins said, “stalled and stalled and stalled.” The company implemented the human-resources changes, but other parts of the agreement were not enforced. She pressed for months, then gave up. “I was exhausted. I was humiliated. I couldn’t work in the industry in the U.K. because the stories that were going around about what had happened made it impossible,” she said. In the end, Perkins moved to Central America. “I’d had enough,” she said.

Secret settlement creates moral hazards and ethical problems, but are legal. That said, there have been calls for reform.

[Professor] Estreicher has proposed that the Equal Employment Opportunity Commission, the government body that oversees workplace discrimination, track sexual-misconduct-related settlements and investigate employers who use them repeatedly. In addition to Congresswoman Jackie Speier’s legislation regarding congressional employees, state lawmakers in New York and California are pushing legislation to curtail the use of nondisclosure agreements in sexual-abuse cases.

Allred noted that these reforms could “limit victims’ options.” Certainly true — but when does the principle of self-determination yield to the needs of society? And how well can we assess options without fuller information?

Gutierrez, Perkins, and other women who signed agreements with Weinstein told me that they felt their consent was far from informed. Gutierrez said that she wished she had been aware that Weinstein had faced similar allegations in the past. When, after the fact, she learned that his behavior with her was part of a pattern, she was filled with guilt.

One takeaway from the article is that it’s hard to exercise your self-determination in a vacuum — what you want, vis-a-vis settlement, may be shaped by context in ways that the current settlement regime does not appreciate.

7 thoughts on “Against Secret Settlements”

  1. As more and more stories come out about the morality or the justification for secret settlements such as these, the more the already darkened space of secrecy somehow gets darker. The principle behind settlements is a good one but unfortunately, in the world today, these settlements have been used to skirt the law and prevent criminals from being held responsible for their actions.

    A settlement can be a good thing. If the matter is trivial or clearly one-sided in how a court would likely rule and the matter would only waste time for either side, then a settlement can be a great solution to give the harmed a quick resolution to their problem. The whole point of a settlement is to keep things quiet and avoid public knowledge of the incident. And for small matters, that’s all fine and good, but in the case of Weinstein and many others, these settlements and the NDA’s that come with them are merely tools that they use to cover up serious crimes that have been committed. Is there a solution? Is there a way to determine what matters are capable of settled and what matters the public must be informed about? I would be willing to bet that the public would like to know of these heinous crimes that Weinstein or whatever politician is committing crimes this week. But is there a solution?

    Most of the victims in the articles about Weinstein made it apparent that Weinstein was too powerful and that these settlements were their only way for recovering any shred of their dignity. I personally found great issue that Zelda Perkins was not even allowed to have a copy of the settlement agreement, which seems like a clear violation of her rights. NDA’s are great for preserving secrets, such as business practices for example, but the extent that Weinstein went to to cover up his crimes seem to go beyond the pale and exploit these people more than he already has.

    I’m not sure what the proper course of action is. Settlements can do great things and the secrecy of these settlements has done good. But preventing the public from knowing about car defects until over 100 people have died or that a sleazy Hollywood producer has been sexually assaulting women for years does not seem to fulfill the desired outcome of a settlement. I’ll be interested to see if the people want a more open world or if these NDA’s and settlements will still be viable down the road because that’s just the way that the law works. Only time will tell I guess.

  2. It is disappointing that an individual like Weinstein was able to manipulate a multitude of women to secretly settle under the guise of mediation. It is obvious that the secret settlement is being abused by monsters like Weinstein and that there is a need for reform in the area. As disappointing as it is, attempting to regulate secret settlements would be difficult. A cavalcade of questions would need to be answered such as, what is in need of regulation, how can it be regulated, and would regulation effectively usurp any benefits a secret settlement is supposed to procure?
    The most important question that would need to be addressed is whether the regulation of secret settlements would end the practice all together.

  3. I agree with the above that it is sad and disappointing that these processes to settle, that can be extremely beneficial and helpful in some circumstances, are also able to be used in situations that are considered harmful. It would be interesting to see how some sort of regulation would affect the use of these processes, and I agree with Professor Estreicher that tracking those Employers that use them for the same reason repeatedly and stepping in at a certain point may be a good way to regulate. This way, the victim would still have have the option to pursue one of these quieter avenues. However, there would be many aspects that would need to be considered before this could be considered as a possibility. For example, how would the use of mediation be tracked and would it affect the overall use of this method because it’s being tracked? For what types of infractions would tracking occur, and at what point would the agency tracking step in and what are the options at that point?

    It’s definitely something that’s interesting to think about especially as more and more of these stories come out in the news.

  4. What Weinstein was doing was clearly wrong. Not only the sexual harassment, but the fact that the NDA’s and other documents that were included in the settlement with the tactic of just waiting the victim out, is other-worldly disgusting. What really surprised me, that was mentioned in the article, was that Weinstein was doing this type of non-disclosure for seemingly every business deal that he was involved with. I can understand for certain projects that this type of secrecy may be important, but I have a hard time believing that every type of business move (movie dealings, or otherwise) needs to have this much contractual requirement of silence among those involved with his business dealings. It almost strikes me as a “red flag” that he would have this much secrecy involved in his professional life, which leads to the foundation that he needs to have that type of secrecy just in case something happens and someone wants to talk about what is happening in his private life. He lays this foundation so that those involved are already “in business” with him, can’t easily expose him because they already have these secret agreements that hold them back. I side with Congresswoman Speier and the fact that state government should be more involved with sexual harassment, and companies/people should not be able to agree to sexual harassment suits in secret–especially with power imbalances like the one mentioned in this article.

  5. Without going into what everyone seems to agree was despicable behavior on the part of Weinstein, NDAs have substantial weight beyond what they’re even legally allowed to cover, as most people don’t know how to identify what can and cannot be included. It must have been awful being one of his employees and being under such a thumb.

    While there is certainly a place for them in our society, it seems like people’s ignorance regarding them plays a heavy factor. Perhaps if these people knew that Weinstein couldn’t forbid disclosure of a crime, we may have had a whistleblower? Hard to tell since that wasn’t his only form of leverage.

  6. In my ADR class, we often read about hypothetical examples of agreements in dispute resolution. Many are severely imbalanced to show unconscionability, misrepresentation, etc. As disturbing as some of these examples are, in my opinion this article shows an even darker and more concerning aspect of negotiation and settlement. It is apparent that Weinstein has used his extensive resources to silence the women who were his victims through settlement that was “consented” to. It seems obvious that there must be changes in the area of sexual abuse settlement. The kind of tactics detailed above are simply unacceptable. I was particularly shocked to read that Ms. Perkins was not allowed to keep her own full copy of the settlement. I was also alarmed by the attorneys’ unwillingness to look into any options for their clients besides settlement. The article made it sound like the attorneys were not being being the best advocates for their clients and did not fully address their interests. In any case, I imagine these firms have extensive experience and limited options as well. They realize that Weinstein and Miramax can put so much pressure on the client and drag her publicly so that their clients will tire out and it simply is not worth it. In my opinion, a victim not even having access to her own settlement agreement and having to piece it together from her notes is a clear sign that there needs to be reform in sexual abuse secret settlements. Moreover, these types of agreements only allow for the abuser to keep abusing, seemingly brushing off consequences for his past actions with the knowledge that the victim “consented” to keeping these encounters private. This prospect that there is no choice but to settle and be silent in is simply unacceptable.

  7. This was an interesting read for me, because you really have to analyze the pros and cons of settlement agreements before you can render a conclusion. Here, I would have to agree with the writer, namely because of the power imbalance that often exists in settled sexual harassment matters. For instance, in this particular case it appeared as if the women had no say in their desired course of action. To make matters even worse, their own attorneys undermined their desires by driving home this powerless notion. Thus, these women had no choice but to settle, and there needs to be more protection for individuals placed in situations such as this. Especially here, where it was a repeat offender. Professor Estreicher proposal would be helpful, and the EEOC should strongly consider tracking sexual-misconduct-related settlements. Because there is no justice in allowing an individual or company to buy their way out of immoral and harmful acts.

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