Non-Disparagement Agreements Do Not Violate the New Jersey Law Against Discrimination

Savage v. Township of Neptune, 472 N.J. Super. 291 (App. Div. 2022). Judge Haas issued this opinion of the Appellate Division. Plaintiff, a former sergeant with the Neptune Township police, brought an underlying employment discrimination case, which was settled. The written settlement agreement included a provision under which the parties agreed not to make any statements “regarding the past behavior of the parties, which statements would tend to disparage or impugn the reputation of any party.”

Days after plaintiff received her payment under the settlement agreement, she was interviewed by a television reporter. During the interview, plaintiff said (among other things) that women in the Neptune Police Department were “oppressed,” that the Department did not “want women there,” had “not changed,” would not change, and represented “the good ol’ boy system.” She also said that there had been disciplinary charges against her, that the “harassment and retaliation [that she had alleged in the discrimination case] intensified with [the] bogus disciplinary charges,” and that she had been “put on unpaid leave after being found unfit for duty.” Those latter statements reiterated statements that she had made another interview that had pre-dated the settlement agreement.

Defendants moved to enforce litigant’s rights under the non-disparagement provision. The Law Division granted that motion and awarded defendants counsel fees and costs. Plaintiff appealed, and the Appellate Division reversed.

The biggest argument in the case, and the one that likely resulted in the publication of this opinion, was plaintiff’s contention that non-disparagement provisions were against the public policy of the New Jersey Law Against Discrimination, N.J.S.A. 10:5-1 et seq. (“LAD”), under which her underlying claim had been brought (an amicus argued that it also violated her constitutional right to free speech, but the panel declined to consider that contention since no party had asserted that). She focused on N.J.S.A. 10:5-12.8(a), which prohibits any provision that “has the purpose or effect of concealing the details relating to a claim of discrimination, retaliation, or harassment,” commonly known as a non-disclosure provision. Plaintiff argued that there was no effective difference between a non-disparagement provision and a non-disclosure provision.

Judge Haas did not agree. Though applying de novo review, since the case involved interpretation of both the settlement agreement and the LAD, the panel found that the plain language of N.J.S.A. 10:5-12.8(a) “provides that it applies to a ‘non-disclosure provision.’ the statute does not include or exempt ‘non-disparagement provisions,’ although it specifically exempts non-competition and proprietary information provisions.” The Legislature could have outlawed non-disparagement agreements, but the language of the LAD did not do so, and the legislative history supported the conclusion that only non-disclosure agreements were banned. And the purpose and effect of the non-disparagement agreement was not to prevent plaintiff from revealing “the details of her claims,” as a non-disclosure agreement would have done.

Since the non-disparagement clause was enforceable, the remaining issue was whether what plaintiff said violated that clause. Review of a ruling on a motion for enforcement of litigant’s rights invoked the abuse of discretion standard, Judge Haas said, but the question whether her statements violated the non-disparagement provision, an issue of contract interpretation, called for de novo review. Applying that standard, the panel found no violation of the non-disparagement clause.

Plaintiff’s statements that women in the Neptune Police Department were “oppressed,” that the Department did not “want women there,” had “not changed,” would not change, and represented “the good ol’ boy system” were “statements about present or future behavior, not comments about past behavior prohibited under the plain language of the agreement.” And her remarks about how “harassment and retaliation intensified with bogus disciplinary charges,” and that plaintiff “was put on unpaid leave after being found unfit for duty,” merely repeated statements she had made in a pre-settlement interview, so “it could not be considered disparaging under the agreement.”

Accordingly, the decision in favor of defendants and the accompanying award of fees and costs were reversed. And now we know (unless the Supreme Court intervenes and disagrees) that non-disparagement provisions in employment discrimination settlement agreements are not forbidden by the LAD.