Secrecy Agreements And 1st Amendment: Finding A Balance

By Alan Morrison | July 28, 2019, 8:02 PM EDT

Alan Morrison
Alan Morrison
About seven years ago, Ashley Overbey filed a civil rights complaint against the city of Baltimore seeking damages based on an incident in which police officers physically and verbally abused her and members of her family in their home. The case was moving slowly and her attorney advised Overbey to take a settlement offer of $63,000, which was conditioned on her agreeing not to comment on the case in any way. 

Badly in need of the money, Overbey accepted the deal, including the “nondisparagement” clause which the city insisted on including in all of its settlements. However, before Overbey was paid, she made public statements that Baltimore contended violated the nondisparagement clause, which contained a provision entitling the city to a “refund” of 50% of the settlement if Overbey did not comply with its terms.[1]

Baltimore withheld the 50%, which, after paying her lawyer, left Overbey with approximately $11,000. Overbey filed a lawsuit claiming that the Baltimore’s use of the disparagement clause violated her First Amendment rights.

The district court rejected Overbey’s claim, finding she had properly waived her right to speak by agreeing to the settlement. 

On July 11, 2019, a divided panel of the U.S. Court of Appeals for the Fourth Circuit disagreed, holding that the nondisparagement clause violated the First Amendment and was therefore not enforceable.[2] Beyond whether this case was decided correctly, the decision raises a number of questions that are likely to be the subject of further litigation.

However, there are also a number of facts about the case that may limit its future application, although neither the majority nor the dissent made much of them.

First, the settlement did not prevent Baltimore from disparaging Overbey, and, in fact, the city appeared to have done so by commenting to the media about the case.

Second, Overbey’s alleged breach was in response to what city officials said about her case, and since she had not yet been paid, the city simply sent her a reduced check with no need for a court to decide whether there had in fact been a breach, let alone whether it was justified by the city’s initial comments.

Third, much of the information about the case was in a public court file and the settlement amount was not secret because the city had to have the agreement approved by the Board of Estimate in a public proceeding.

Finally, at oral argument, Baltimore informed the court that it would no longer include these clauses in police-misconduct cases.

Because of the extreme imbalance between the city and the plaintiff and the fact that the city seems to have started the war of words, it does seem quite inequitable for the city to have unilaterally taken half of plaintiff’s settlement.

That said, the proper resolution of the broad First Amendment issue that the court seems to have decided is much less clear to me. This is especially true for cases in which the imbalance is eliminated because the defendant agreed to be bound by the same nondisclosure agreement, including a comparable penalty for talking about the case.

Further, suppose that the amount of the payment was secret and that only a court could order relief for either side. With a level playing field, how should a plaintiff in that situation fare?

Although the court relied on the First Amendment, it is less than clear whether that is because the city was the defendant, or because, if a court enforced the 50% penalty, the court itself would be an agent of the state, and under decisions such as Shelley v. Kraemer,[3] the enforcement of that agreement would be state action, subject to the First Amendment. If the latter, then presumably the decision would apply where the defendant was a private party as well as a government.

Much of the court’s discussion is about the importance of the public being informed about police misconduct. Would that rationale hold if the city were sued because a driver negligently injured a pedestrian, a civil servant was fired for reporting her boss’ sexual harassment or a contractor claimed that the city was at fault for the job not being done on time?

The court seems to conclude that the city should not be allowed to demand silence as part of the price of settlement, referring to that as “hush money,” to which the dissent responded by arguing that the plaintiff wanted to have her cake and eat it, too.

If it is the agreement, not the enforcement, that raises a First Amendment issue, would a lawyer who offered $100,000 in exchange for a secrecy agreement, but only $50,000 without one, be violating the Constitution? The majority suggests that such a scenario is unlikely to take place, but how does it know, and what should happen if the scenario occurs?

And suppose that the city is paying a significant sum in such a case but does not want other potential claimants to know of its generosity because that will make it harder and more expensive to settle other cases, even auto accidents. Is that so unreasonable a position, for the city and impecunious claimants, that the courts must forbid such agreements by making them unenforceable?

Aside from the amount that is being paid to the plaintiff, the defendant may have concerns about what has turned up in discovery, both due to its desire to protect the reputation of the responsible officials and to limit future suits.

If it is willing to pay for such secrecy, should that be forbidden? And suppose that the defendant is a private party — for example the Catholic Church or the maker of an arguably dangerous medical device — and secrecy is likely to result in future harm to individuals who cannot fully protect themselves: Should that matter? And what if all the damaging information is subject to a protective order that the plaintiff is willing to agree to keep in place — for a price?

I confess that I do not have the answers to most of these questions. I am, however, pretty sure that neither does the majority nor the dissent in Overbey. Perhaps a rehearing en banc could shed some more light on these issues.

Alan B. Morrison is the Lerner Family Associate Dean for Public Interest and Public Service Law at George Washington Law School. Lerner teaches civil procedure and constitutional law.

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[1] The clause, including its provisions for attorneys’ fees for the city if it had to sue, is set forth in Overbey’s opening brief on appeal: 2018 WL 2418854, *5-6.

[2] Overbey v. Mayor & City Council of Baltimore, 2019 WL 3022327.

[3] Shelley v. Kraemer, 334 U.S. 1 (1948).