Information for Families and Businesses on the Confidentiality Agreement

Don’t let Slander/Libel Happen to You

This Preventive Law Study was written by:  John Goodson, Colleen Manley and Christine Goodson Forakis.

Summary

The Necessity of a Confidentiality Agreement for
Your Business, Organization, Family, and Associates

We were all devastated when the news came out that Princess Diana had died in an automobile accident. We further wondered whether this accident would have been prevented had the British Tabloid news reporters not contributed to the accident through their never-ending quest to learn and share every detail about her private life with the world. Does this mean that the press can get any information they want about you in the name of Free Speech and the First Amendment? Is there not a way to protect yourself against the possibility of private, secret, and confidential information getting out to the public’s eyes and ears?

While it may be hard to legally stop outsiders from peering into the company if they are standing outside the organization or family gates looking in, there is a way to secure any private, secret, or confidential information that is within your organization or even within your family from being leaked to the hungry news dogs outside. The way this is accomplished is through a confidentiality agreement or policy within your organization, family, and close associates.

If “Bill” had used this agreement at his “House,” he might have avoided all the trouble he got into by having his secrets exposed. At the least, Monica could not have signed a book deal or gone on the talk show circuit. Think how much less scandalous information we would know about countless Presidents.

You do not need Bill’s problems to need the Inter-Organizational/Family Confidentiality And Non-Disclosure Agreement (the White House Agreement). This agreement prevents a baby-sitter, housekeeper, gardener, pool person, or others employed at your home or those you do business with from exposing or acknowledging your secrets. Members of a group need to trust each other and keep open the lines of communication. One of the greatest barriers to open communication is the fear that the information revealed will be spread or used against the speaker. The White House Agreement allows your group to put in writing their commitment to keeping private and confidential information inside the group.

We designed the White House Agreement to help our clients build and maintain their dynasties. When you implement this Agreement in your group everyone who signs it will:

• Understand what is secret or confidential to the organization;
• Keep all secrets acquired before and after signing the agreement;
• Know that the agreement is enforced through negative consequences to violators;
• Be aware that other remedies are provided through the confidentiality agreement than a court of law may be able to offer;
• Feel confident with every member within the group because everyone is bound;
• Never acknowledge a publicly known secret; no one in the group will have immunity just because the public may know the information;
• Abstain from trying to break up the group after he/she leaves the group; and
• Minimize the costs of any dispute under this agreement by discouraging the use of attorneys to resolve the problem.

The Proven Effectiveness Of The Confidentiality Agreement

Oprah Winfrey, known to the public for many reasons, including being a talk-show host, put the power of this agreement to the test when a senior associate producer for her television series left Oprah’s employment and intended to “write or otherwise report about her experiences as an employee of [Oprah Winfrey], matters of legitimate public interest and concern.” The disgruntled employee sued Oprah to be relieved from a restrictive covenant contained in the confidentiality agreement that she had signed, but lost the battle when the Illinois Circuit Court and Appellate Court upheld the confidentiality agreement.

The confidentiality agreement that was so respected by the courts, was entitled, “Business Ethics, Objectivity, and Confidentiality Policy,” and was contained in the plaintiff’s 1996 employee manual. While the plaintiff started her employment in 1993 without a confidentiality agreement in place, a separate agreement signed by her in 1995 and included in the 1996 employee manual was enough, according to the courts, to enforce the policy. It is interesting to note that both the separately signed confidentiality agreement and the employee manual contained a section similar to an Integrity Agreement which purpose was to give direction on how to go about “Resolving Disputes and Controversies Concerning this Policy.” In brief, the parties were to first settle a problem through informal Discussions between the parties, then second, to submit the dispute or controversy to binding arbitration.

Why Do The Courts Uphold Confidentiality Agreements?

The plaintiff, in the Oprah Winfrey case, argued that this confidentiality agreement was restraint on trade, which, of course, the courts hate. However, an equally important consideration that the court gave was the “freedom to contract.” Balancing these two polar lines of legal policy, the court found that a Confidentiality Agreement does not impose any of the typical restrictions commonly found in restrictive covenant cases.

A White House Agreement only restricts an individual’s ability to release confidential information that the individual obtained or learned while in the company’s employ. These agreements do not hinder an individual’s future chances of employment. Outlined in the Oprah Winfrey case was the court’s reasoning why these type of White House Agreements should be upheld:

1. Does not inhibit an employee’s future career choice.
2. Employee may start another firm at any time
3. Employee may work in any location
4. Employee may even work for a competitor.

The Small Amount of Prevention Included in the Employee Manual Goes a Long Way with the Courts

A White House Agreement is easy to add to a family or an organization’s policies, but it is important to make sure that your unique needs are covered. The important language of Oprah’s confidentiality agreement that was included in the employee manual and a separate document was titled “Confidentiality Assurances,” and provided that:

1. During your employment or business relationship with Harpo, and thereafter, to the fullest extent permitted by law, you are obligated to keep confidential and never disclose, use, misappropriate, or confirm or deny the veracity of, any statement or comment concerning Oprah Winfrey¸ Harpo (which, as used herein, included all entities related to Harpo, Inc….) or any of her/its Confidential Information. The phrase ‘Confidential Information’ as used in this policy, includes but is not limited to, any and all information which is not generally known to the public, related to or concerning: (a) Ms. Winfrey and/or her business or private life; (b) the business activities, dealings or interests of Harpo and/or its officers, directors, affiliates, employees or contractors; and/or (c) Harpo’s employment practices or policies applicable to its employees and/or contractors.
2. During your employment or business relationship with Harpo, and thereafter, you are obligated to refrain from giving or participating in any interview(s) regarding or related to Ms. Winfrey, Harpo, your employment or business relationship with Harpo and/or any [sic] matter which concerns, relates to or involves and Confidential Information.” The court also found that a commitment to the stated policies was required as a condition of employment: “Your commitment to the guidelines set forth in this policy is a condition of your employment or business relationship with Harpo.”

The White House Agreement Needs to Be Signed by Every Member of Your Organization/Family with Confidential, Secret Information Identified as Clearly and Concisely as Possible

The White House Agreement is a very useful tool in keeping harmony in your group. We designed the agreement so that any member of the group may sign the agreement, no matter where they are geographically. We provide the form – Acknowledgment of Signing in Counterpart – and instructions in your estate notebook. The agreement may be signed at different times by different people without affecting its validity. It is very easy to get everyone “on board.”

In business organizations it is advisable for the directors and officers to identify what they consider confidential and secret so as to minimize violations. This is accomplished with a corporate resolution which will be posted on the office Bulletin Board and distributed to every agent, employee, and visitor to the business premises, a sample of which is attached.

We recommend that you keep a blank signature form and acknowledgment form so you may make copies easily when you bring new members into the group. The more people who sign the agreement, the better your protection. We also provide you with a cover letter that you give to those whom you want to sign the agreement, along with a copy of the agreement and the Integrity Agreement. We want to make it as easy as possible to get all your family and business associates involved.

For additional information, please call (602) 252-5110.

For additional Preventive Law Studies, visit our website: www.goodsonmanleyforakis.com

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