By: Marissa Ditkowsky
Content Warning: Sexual assault
In December 2016, McKayla Maroney signed a non-disclosure agreement (NDA) as a stipulation to receive a monetary settlement from USA Gymnastics regarding abuse she experienced at the hands of team doctor Larry Nassar.[1] The agreement allegedly stated that she would have to remain quiet about the abuse, which began when she was thirteen, unless subpoenaed.[2] In exchange, Maroney received $1.25 million, part of which was used for psychological treatment.[3]
As a result of the agreement, there were concerns that that Maroney would be fined $100,000 if she provided a victim impact statement during Nassar’s sentencing proceedings.[4] Public figures such as actress Kristen Bell and swimsuit model and television host Chrissy Teigen offered to pay the fine so that Maroney could speak without the fear that USA Gymnastics would seek to enforce the gag order.[5] After public outcry, USA Gymnastics finally stated that it would not seek to enforce the gag order if Maroney made a victim impact statement.
Following this situation, two questions arise regarding the enforceability of such NDAs. First, are these agreements legal in scenarios of sexual abuse, harassment, or assault? Second, if these agreements are enforceable, what is the likelihood of enforcement based on societal norms and backlash?
Is such an agreement legally enforceable?
With breach of an NDA, the typical affirmative defenses for breach of contract would seemingly apply: minority, lack of capacity, physical or economic duress, undue influence, misrepresentation, non-disclosures, or unconscionability.[6] Public policy arguments might also be made, and are particularly important in Maroney’s case.[7]
Maroney filed suit against USA Gymnastics, Michigan State University, the United States Olympic Committee, and Larry Nassar in the Superior Court of Los Angeles County.[8] Maroney seeks declaratory relief against USA Gymnastics to void the NDA, notwithstanding whether USA Gymnastics actively enforced the agreement.[9]
Maroney claims the NDA was in violation of public policy and California law.[10] California law states that a provision within a settlement agreement that prevents the disclosure of information is prohibited when the factual foundation of the settled matter establishes a cause of action for civil damages for 1) an act that may be prosecuted as a felony sex offense and 2) an act of childhood sexual abuse, which applies in Maroney’s case.[11] However, the law was not in effect at the time the agreement was executed.
Maroney further claims that she entered into the agreement “to obtain funds for lifesaving psychological treatment and care” as her condition continued to worsen.[12] Maroney alleges that USA Gymnastics coerced and pressured Maroney into signing this agreement despite Maroney’s desperation.[13] This argument 1) explains why Maroney might have agreed to a settlement in violation of California law and 2) potentially lays the groundwork for an argument claiming undue influence or economic duress, particularly since USA Gymnastics created the need for economic assistance through its continued employment of Nassar. Maroney was clearly emotionally and mentally vulnerable, as evidenced by her desperate need for psychological care and the circumstances themselves.
Finally, Maroney’s claim states that USA Gymnastics held “a six-figure liquidated damages clause, over the head of McKayla Maroney and her parents.”[14] Liquidated damages for breach may only be “an amount that is reasonable in the light of the anticipated or actual loss caused by the breach and the difficulties of proof of loss. A term fixing unreasonably large liquidated damages is unenforceable on grounds of public policy as a penalty.”[15] It is not clear how Maroney’s breach of the agreement would reasonably warrant $100,000 in damages for USA Gymnastics.
Maroney was between nineteen and twenty when she signed the NDA, preventing any claims on the basis of minority.
Maroney is certainly not the only survivor of sexual and abuse, assault, or harassment who has been silenced by an NDA. Complaints against Harvey Weinstein, Bill O’Reilly, and Roger Ailes, for example, were hidden for years as a result of NDAs.[16] Colleges and universities have incorporated gag orders into sexual assault disciplinary proceedings.[17] The Catholic Church even used confidential settlements to silence victims of abuse.[18]
Although no other state currently has a law such as California’s, a public policy-driven justification against the enforcement of such an agreement can be derived simply from the “need to protect some aspect of public welfare.”[19] Arguably, protection of the freedom of speech, particularly in cases of sexual assault or abuse, is an important public policy interest. First, deeming these contracts void would ensure accountability and protection against sexual predators. Second, survivors of sexual assault and abuse are particularly vulnerable to unfair agreements, coercion, and duress. The California law could be cited as persuasive authority to indicate the existence of such a public policy interest in cases of first impression in any given state, even though the statute only applies to particularly severe cases, such as with minors and felonies. There is also precedent, at least, for termination of the impoundment of such settlements due to First Amendment and public access concerns.[20]
What is the likelihood of enforcement based on societal backlash?
It is unclear what the result of similar cases will be, but social pressure should not be underestimated as an important factor. Social pressure likely affected the enforcement of Maroney’s NDA, and could also lead to legislative action such as California’s.[21] Survivors’ lawyers certainly have valid public policy arguments to invalidate NDAs.
Conclusion
Enforceability depends upon the facts of the case, state statutes, arguments made, and judges overseeing these cases. However, there is a strong argument that such agreements are unenforceable, and it is increasingly possible that, due to public backlash, parties will not seek to include or enforce such agreements.
[1] Tom Schad, McKayla Maroney’s Lawyer: USA Gymnastics relented only when others offered to pay fine, USA Today (Jan. 17, 2018, 5:14 p.m.), https://www.usatoday.com/story/sports/olympics/2018/01/17/mckayla-maroney-lawyer-usa-gymnastics-relented-only-when-others-offered-pay-fine/1041971001/.
[2] Id.
[3] Tom Schad, Lawsuit claims USA Gymnastics paid to quiet Olympic gold medalist McKayla Maroney, USA Today (Dec. 20, 2017, 1:10 p.m.), https://www.usatoday.com/story/sports/olympics/2017/12/20/lawsuit-usa-gymnastics-paid-quiet-olympic-gold-medalist-mckayla-maroney/969843001/.
[4] Schad, McKayla Maroney’s Lawyer, USA Today (Jan. 17, 2018, 5:14 p.m.), https://www.usatoday.com/story/sports/olympics/2018/01/17/mckayla-maroney-lawyer-usa-gymnastics-relented-only-when-others-offered-pay-fine/1041971001/.
[5] Scott Gleeson, Chrissy Teigen offers to pay $100,000 fine for McKayl Maroney to speak out against Nassar, USA Today (Jan. 16, 2018, 4:01 p.m.), https://www.usatoday.com/story/sports/olympics/2018/01/16/chrissy-teigen-offers-pay-100000-fine-mckayla-maroney-larry-nassar/1036339001/.
[6] See Restatement (Second) of Contracts §§ 161, 164, 175, 177, 208 (Am. Law Inst. 1981).
[7] See Restatement (Second) of Contracts §§ 178-79.
[8] See Maroney v. Mich. State Univ., No. BC687396 (Cal. Super. Ct. Dec. 20, 2017).
[9] See Maroney at 13.
[10] See Comp. at 27.
[11] See Cal. Civ. Proc. Code § 1002(a)(1)-(2) (West 2017); Cal. Fam. Code §6500 (West 2017) (setting the age of majority at sixteen in California); Comp. at 4.
[12] See Comp. at 28.
[13] See id.
[14] See Comp. at 29.
[15] See Restatement (Second) of Contracts § 356.
[16] Michelle Fabio, The Harvey Weinstein Effect: The End of Nondisclosure Agreements in Sexual Assault Cases?, Forbes (Oct. 26, 2017, 1:00 p.m.), https://www.forbes.com/sites/michellefabio/2017/10/26/the-harvey-weinstein-effect-the-end-of-nondisclosure-agreements-in-sexual-assault-cases/#1beb7b072c11.
[17] Sheila Liming, The Silencing of Sexual Violence Survivors, Inside Higher Ed (March 24, 2017), https://www.insidehighered.com/advice/2017/03/24/trouble-nondisclosure-agreements-sexual-assault-cases-essay.
[18] See Laurie Goodstein, Albany Diocese Settled Abuse Case for Almost $1Million, N.Y. TIMES, June 27, 2002, at B1.
[19] Restatement (Second) of Contracts § 179.
[20] See Globe Newspaper Co. v. Clerk of Suffolk County Super. Ct., No. 01-5588-F, 2002 Mass. Super. LEXIS 6, at *26, 30-32 (holding “sexual abuse of children by members of the clergy is … a matter of immense public concern and of enormous community interest,” and adding that the public has a valid interest in knowing which members of the clergy have been accused of sexual abuse).
[21] Schad, McKayla Maroney’s Lawyer, USA Today (Jan. 17, 2018, 5:14 p.m.), https://www.usatoday.com/story/sports/olympics/2018/01/17/mckayla-maroney-lawyer-usa-gymnastics-relented-only-when-others-offered-pay-fine/1041971001/ (quoting Maroney’s lawyer as stating, “They have no choice to relent because the cleansing sunlight of truth is shining upon them and they can no longer hide their misdeeds.”).