SEALED v. SEALED
Filing
25
Redacted ORDER on motion to dismiss. Ordered by US DISTRICT JUDGE CLAY D. LAND on 8/10/2018 (tlf).
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
COLUMBUS DIVISION
,
*
Plaintiff,
*
vs.
*
,
CASE NO. 4:18-CV-68 (CDL)
*
Defendant.
*
O R D E R
This breach of contract action arises from two twenty-yearold written settlement agreements in which Defendant
released Plaintiff
and others
from liability for various claims.
According to the settlement
agreements, Defendant also agreed to keep certain matters about
the released claims and the settlement agreements confidential.
Plaintiff alleges that Defendant recently breached the settlement
agreements when she, through her lawyer, revealed information
about the released claims and the agreements to other lawyers while
attempting
to
obtain
released claims.
another
settlement
for
the
previously
Plaintiff seeks monetary damages as well as
injunctive relief prohibiting Defendant from further breaching the
confidentiality
provisions.
Plaintiff’s Complaint.
Defendant
moves
to
dismiss
Because Plaintiff’s Complaint states a
plausible
claim
for
relief,
Defendant’s
motion
to
dismiss
(ECF No. 15) is denied.
MOTION TO DISMISS STANDARD
“To survive a motion to dismiss” under Federal Rule of Civil
Procedure 12(b)(6), “a complaint must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief that is
plausible on its face.’”
Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)).
The complaint must include enough factual allegations
“to raise a right to relief above the speculative level.” Twombly,
550 U.S. at 555.
“raise
a
In other words, the factual allegations must
reasonable
expectation
that
evidence of” the plaintiff’s claims.
discovery
Id. at 556.
will
reveal
The Court may
also consider documents that that are attached to a complaint
because they are part of the complaint for all purposes.
GSW,
Inc. v. Long Cty., 999 F.2d 1508, 1510 n.2 (11th Cir. 1993) (citing
Fed. R. Civ. P. 10(c)).
But “Rule 12(b)(6) does not permit
dismissal of a well-pleaded complaint simply because ‘it strikes
a savvy judge that actual proof of those facts is improbable.’”
Watts v. Fla. Int’l Univ., 495 F.3d 1289, 1295 (11th Cir. 2007)
(quoting Twombly, 550 U.S. at 556).
2
FACTUAL ALLEGATIONS
Plaintiff’s Complaint, including the exhibits, alleges the
following facts, which the Court must accept as true for purposes
of the pending motion:
I.
The Settlement Agreements
In 1992, Defendant retained counsel to pursue legal claims
against Plaintiff.
Defendant and Plaintiff eventually entered
into an agreement under which Defendant released Plaintiff from
liability in exchange for a sum of money (the “1992 Settlement
Agreement”).
Compl.
¶¶ 5–6,
ECF
No.
2;
Compl.
Settlement Agreement at 1–2, ECF No. 2-1.
Ex.
A,
1992
In 1993, Defendant
retained new counsel to pursue additional claims against Plaintiff
and others.
Compl. ¶ 9.
This dispute also resulted in Defendant
signing a settlement agreement for which she received an additional
sum of money (the “1993 Settlement Agreement”).
Id. ¶¶ 10–11;
Compl. Ex. B, 1993 Settlement Agreement at 1, 6, ECF No. 2-2.
the
1992
and
the
1993
Settlement
Agreements
Both
contain
confidentiality provisions prohibiting Defendant from disclosing
certain matters about the released claims and the agreements to
others.
1992
Settlement
Agreement
at
1–2;
1993
Settlement
Agreement at 3.
II.
Defendant’s Alleged Breaches of the Settlement Agreements
At
some
point,
Defendant
became
dissatisfied
with
the
settlement agreements and sought legal advice from her current
3
lawyer,
.
also represents
unrelated
in an
suit
In March,
sent
’s lawyers in that matter a demand letter threatening to file
suit on behalf of Defendant against
, Plaintiff, and others
unless they paid Defendant $50,000,000.
Compl. ¶¶ 18, 20; see
generally Compl. Ex. C, Letter from
to
et al.
(Mar. 16, 2018), ECF No. 2-3 [hereinafter Demand Letter].
rejected the demand, and Plaintiff’s counsel sent
the 1992 and 1993 Settlement Agreements.
on Saturday, April 14,
Plaintiff’s
counsel
Compl. ¶¶ 22–23.
sent an email to
containing
a
copies of
draft
of
Then,
’s lawyers and
a
complaint
and
threatening to file the complaint on behalf of Defendant “first
thing Monday am.”
Id. ¶ 24; Compl. Ex. D, Email from
to
et al. (Apr. 14, 2018), ECF No. 2-4; see generally
Compl. Ex. E, Draft Complaint, ECF No. 2-5.
emailed the
lawyers the following day and said, “Your clients have 12 hours
left to decide whether they wish to have this dispute resolved in
court.”
Compl. ¶ 27; Compl. Ex. F, Email from
to
et al. (Apr. 15, 2018), ECF No. 2-6.
III. Plaintiff’s
Relief
Complaint
&
Motion
for
Temporary
Injunctive
That same day, before Defendant could file the draft complaint
on the public docket, Plaintiff filed his Complaint in this action,
4
alleging that Defendant’s demand letter and the draft complaint
contained
confidential
information
under
the
1992
and
1993
Settlement Agreements and that Defendant breached those agreements
when
sent the demand letter and draft complaint to
lawyers on her behalf.
Compl. ¶¶ 19, 21, 25–26.
’s
Plaintiff also
filed an emergency ex parte motion for a temporary restraining
order (“TRO”) seeking to prevent the public filing of the draft
complaint and related materials.
See Pl.’s Mot. TRO at 1–2, ECF
No. 1.
Instead of ruling on the motion ex parte, the Court notified
of the then-pending motion and held a hearing by telephone
conference first thing the following Monday morning.
2018 Order at 1, ECF No. 3.
Apr. 16,
After the hearing and based on a
review of the draft complaint and the 1992 and 1993 Settlement
Agreements, the Court found that Plaintiff had shown a substantial
likelihood that the public filing of the draft complaint would
violate
the
confidentiality
provisions
of
the
settlement
agreements, that Plaintiff would suffer irreparable injury by the
public disclosure of such confidential information, and that the
public
interest
would
injunctive relief.
not
be
harmed
Id. at 2–3.
by
granting
temporary
Noting the presumption in favor
of public access to court proceedings and related documents, the
Court then balanced the public’s interest in disclosure against
the legitimate interests of the parties, including the potential
5
loss of part of the parties’ bargained-for privacy.
Id. at 3.
The
the
Court
found
that
requiring
Plaintiff
to
file
draft
complaint and related matters under seal and sealing the present
action was appropriate because the parties agreed that such matters
should remain confidential and because the harm to the public’s
interest in disclosure was reduced in light of the temporary nature
of the access restriction.
Id.
The Court entered temporary injunctive relief as follows:
(1) restricting access to any documents filed in the present action
to the parties to this action, their counsel, and court personnel;
(2) requiring Defendant to file any matters related to the draft
complaint,
including
the
complaint
itself,
under
seal;
and
(3) prohibiting Defendant and anyone acting on her behalf from
publicly disclosing or discussing the subject matter of the draft
complaint
restricted
and
any
other
documents
by
the
Court’s
order.
required
Id.
at
to
be
3–4. 1
sealed
or
Defendant
subsequently filed her Complaint under seal as directed by the
Court.
See Compl.,
, No. 4:18-CV-
83 (M.D. Ga. May 1, 2018), ECF No. 1.
The issue currently before
the Court is not whether these actions should remain under seal,
1
The temporary injunctive relief does not prohibit Defendant from
discussing matters related to the present action or the draft complaint
with
or reporting other specifically identified matters. Apr. 16,
2018 Order at 4.
6
but
whether
the
present
action
should
be
dismissed
because
Plaintiff failed to state a claim upon which relief may be granted. 2
DISCUSSION
Defendant argues that Plaintiff’s Complaint must be dismissed
because (1) the settlement agreements are not valid contracts
under Georgia law; (2) the settlement agreements are unenforceable
because they violate Georgia public policy and the First Amendment
to the United States Constitution; (3) the settlement agreements
are unenforceable because they were induced by fraud and duress;
and (4) Defendant did not breach the settlement agreements because
she did not disclose any information subject to the confidentiality
provisions of the agreements.
I.
The Settlement Agreements Are Valid Contracts Under Georgia
Law
Defendant contends that the settlement agreements are not
valid
contracts
because
Plaintiff
never
signed
them.
Both
settlement agreements provide that they are to be construed and
interpreted under Georgia law.
1992 Settlement Agreement at 2;
1993
5.
Settlement
“[s]ettlement
Agreement
agreements
at
must
meet
And
the
under
same
Georgia
law,
requirements
formation and enforceablility as other contracts.”
of
Stephens v.
Castano-Castano, 814 S.E.2d 434, 438 n.3 (Ga. Ct. App. 2018)
2
The Court intends to enter a separate order directing the parties to
show cause as to whether these actions should remain restricted from
public access.
7
(quoting Turner v. Williamson, 738 S.E.2d 712, 715 (Ga. Ct. App.
2013)).
party
Moreover, it is well settled under Georgia law that a
who
signs
a
contract
may
be
bound
by
her
contractual
agreement even if the other party did not sign the contract but
performed his obligations under it.
See Comput. Maint. Corp. v.
Tilley, 322 S.E.2d 533, 537 (Ga. Ct. App. 1984) (“If one of the
parties has not signed [a contract], his acceptance is inferred
from a performance under the contract, in part or in full, and he
becomes bound.”
(quoting Cooper v. G.E. Constr. Co., 158 S.E.2d
305, 308 (Ga. Ct. App. 1967))); see also Gruber v. Wilner, 443
S.E.2d 673, 676–77 (Ga. Ct. App. 1994) (finding party’s partial
performance of consulting and profit sharing agreements bound the
party to those agreements even though the party had not signed
them).
Under the 1992 and 1993 Settlement Agreements, Defendant was
to receive sums of money from Plaintiff in consideration for her
release of Plaintiff and others from liability and her agreement
to keep certain matters confidential.
1992 Settlement Agreement
at 1; 1993 Settlement Agreement at 1, 3.
Plaintiff alleges that
he fully performed his obligations under the settlement agreements
by tendering the required payments.
Settlement
Agreement
contains
a
Compl. ¶ 31.
copy
of
a
And the 1993
check
written
to
Defendant, which shows Plaintiff at least partially performed
under that agreement.
1993 Settlement Agreement at 8.
8
The Court
thus finds that the settlement agreements are valid contracts under
Georgia law even though Plaintiff did not sign them. 3
Defendant further points out that the 1992 and 1993 Settlement
Agreements only became “effective upon execution by all parties,”
1992 Settlement Agreement at 2; 1993 Settlement Agreement at 6,
and
argues,
therefore,
that
Plaintiff’s
failure
to
sign
the
agreements shows that he is either not a party to the agreements
or that they never became effective.
To support this argument,
Defendant relies on MacDonald v. Whipple, 615 S.E.2d 150 (Ga. Ct.
App. 2005), in which the court stated that a contract is invalid
“[w]hen the intent is manifest that the contract is to be executed
by others than those who actually signed it” and those others do
not sign it.
Id. at 151 (quoting Harris v. Distinctive Builders,
549 S.E.2d 496, 499 (Ga. Ct. App. 2001)).
Under MacDonald and
related cases, the absence of a counterparty’s signature prevents
the formation of a valid contract when the other party’s acceptance
is conditioned on that signature, see Harris, 549 S.E.2d at 499,
or when the contract involves the sale of the counterparty’s
interest in real property, see MacDonald, 615 S.E.2d at 151; see
also Peacock v. Horne, 126 S.E. 813, 821 (Ga. 1925) (explaining
that it is manifest that a contract to convey a party’s interest
3
The 1992 Settlement Agreement actually includes a separate signature
page evidencing Plaintiff’s signature. 1992 Settlement Agreement at 4.
Defendant disputes the authenticity of that signature page, but, as
explained above, Plaintiff’s performance under the agreement is
sufficient to show his assent to the settlement agreement’s terms.
9
in timber requires that party’s signature).
Neither of those
situations is present here, and the law generally allows for a
party to execute an agreement by partial or full performance.
See
Langford v. Milwaukee Ins. Co., 113 S.E.2d 165, 168 (Ga. Ct. App.
1960)
(finding
that
a
party’s
“execution” of the contract).
part
performance
constituted
And it is not otherwise manifest
from the settlement agreements that the only way Plaintiff could
“execute” the agreements was by signing them. The Court thus finds
that the settlement agreements constitute valid contracts that
became enforceable by Plaintiff when he paid Defendant the stated
consideration as alleged in the Complaint.
II.
The Confidentiality Provisions Do Not Violate Georgia Public
Policy or the First Amendment
Defendant next argues that the confidentiality provisions of
the settlement agreements are unenforceable because they violate
Georgia public policy and the First Amendment. Defendant’s counsel
misunderstands Georgia public policy and the First Amendment.
Georgia public policy does not generally prohibit confidentiality
agreements. In fact, Georgia courts recognize that such agreements
can serve “legitimate purposes.”
Barger v. Garden Way, Inc., 499
S.E.2d 737, 741 (Ga. Ct. App. 1998).
But see Unami v. Roshan, 659
S.E.2d 724, 727 (Ga. Ct. App. 2008) (finding confidentiality
agreement entered into for the primary purpose of concealing a
party’s debt from another unenforceable because the party owed a
10
pre-existing contractual duty to inform the other of such a debt).
Defendant accurately notes that “the public policy of Georgia does
not
permit
parties
to
contract
to
keep
embarrassing-but-
discoverable matter secret” and that Georgia “public policy does
not permit parties to enter into an enforceable agreement to keep
arguably
criminal
investigation.”
Ct. App. 2000).
matters
secret
in
the
face
of
an
official
Camp v. Eichelkraut, 539 S.E.2d 588, 597–98 (Ga.
But the circumstances of the present case are
clearly distinguishable from the situations where Georgia courts
prohibit confidentiality agreements.
that
Defendant
breached
the
Plaintiff does not contend
confidentiality
provisions
by
disclosing covered matters in civil discovery or pursuant to an
ongoing criminal investigation.
Thus, Georgia’s public policy
against prohibitions on such disclosure simply does not save
Defendant
under
the
circumstances
alleged
in
Plaintiff’s
Complaint.
Moreover, Georgia law does not support the proposition that
a confidentiality agreement is void in its entirety simply because
the agreement does not expressly allow a party to “testify or
otherwise comply with a subpoena, court order, or applicable law,”
Barger, 499 S.E.2d at 741.
In those cases, the courts have instead
found that the confidentiality agreements implicitly allow for
such disclosure.
See id. (implying term allowing disclosure
pursuant to subpoena in the agreement and holding the trial court
11
erred
when
prohibited
it
a
concluded
party
from
that
a
confidentiality
disclosing
matters
agreement
during
civil
discovery); Camp, 539 S.E.2d at 598 (holding that trial court erred
in
directing
breached
the
permission
implied
to
term
verdict
that
party
to
agreement
by
cooperate
with
of
agreement).
the
confidentiality
cooperating
with
investigative
It
agreement
police
authorities
follows
because
is
that
an
the
confidentiality provisions in the settlement agreements here are
not void just because they fail to express what Georgia courts
would imply under well-established law.
Defendant further argues that enforcing the confidentiality
provisions would violate her First Amendment right to engage in
protected speech.
The parties quibble over whether enforcing the
provisions would involve “state action” and whether she knowingly
waived her First Amendment rights when she signed the settlement
agreements.
involves
But even assuming that enforcing the provisions
“state
unpersuasive.
action,”
Defendant’s
argument
remains
In Cohen v. Cowles Media Co., 501 U.S. 663 (1991),
the Supreme Court addressed whether enforcement of a newspaper’s
promise to keep an informant’s identity a secret under a statelaw promissory estoppel theory would violate the newspaper’s First
Amendment rights.
Id. at 667.
The Court decided that “the First
Amendment does not confer on the press a constitutional right to
disregard promises that would otherwise be enforced under state
12
law.”
Id. at 672.
Similarly, the First Amendment does not confer
on a private party a constitutional right to disregard promises
that
are
otherwise
enforceable
under
Georgia
contract
law.
Accordingly, the Court finds that enforcing the confidentiality
provisions under the circumstances alleged in the Complaint would
not violate Defendant’s First Amendment rights.
III. Defendant’s
Premature
Defendant
Fraud/Duress
argues
that
&
Material
Plaintiff’s
Breach
Defenses
Complaint
should
Are
be
dismissed because the settlement agreements were procured by fraud
and
duress
and
because
Plaintiff
materially
breached
the
agreements. These arguments rely on matters outside the Complaint,
which the Court cannot consider when deciding the pending motion
to dismiss.
See Grossman v. Nationsbank, N.A., 225 F.3d 1228,
1231 (11th Cir. 2000) (explaining that on a motion to dismiss a
Court’s review is generally cabined to the complaint and the
documents attached to it). 4
Thus, these arguments, which are more
suitable for summary judgment, are rejected as grounds for granting
Defendant’s presently pending motion to dismiss.
4
The Court does not accept the allegations in the draft complaint
attached to Plaintiff’s Complaint as true for purposes of the pending
motion because Plaintiff clearly disputes the veracity of those
allegations. What the Court accepts as true for purposes of this motion
is that the attached draft complaint is the draft complaint that
sent
to
’s and Plaintiff’s lawyers and that
threatened to publicly
file on Defendant’s behalf.
13
IV.
Plaintiff Sufficiently Alleged Breaches of the Settlement
Agreements
Lastly,
Defendant
argues
that
even
if
the
settlement
agreements are enforceable, no breach occurred because neither the
demand letter nor the draft complaint revealed any information
subject to the confidentiality provisions in those agreements.
Defendant
is
mistaken.
For
example,
the
confidentiality
provisions of both settlement agreements prohibit Defendant from
revealing “the fact or existence of” the settlement agreements,
among
other
matters.
1992
Settlement Agreement at 3.
Settlement
Agreement
at 2;
1993
Both the demand letter and the draft
complaint disclose the existence of the 1992 Settlement Agreement.
Demand Letter at 4; Draft Compl. ¶ 102.
additionally
Agreement.
discloses
the
existence
Draft Compl. ¶¶ 120–21.
of
The draft complaint
the
And if
1993
Settlement
sent
’s
lawyers the demand letter and draft complaint on Defendant’s behalf
as Plaintiff alleges, Defendant at a minimum breached her agreement
to
keep
the
fact
and
existence
of
the
settlement
agreements
confidential.
CONCLUSION
The Georgia courts recognize the near universally accepted
principle that “[t]he law . . . favors compromise, and when parties
have entered into a definite, certain, and unambiguous agreement
to settle, it should be enforced.”
14
Newton v. Ragland, 750 S.E.2d
768, 770 (Ga. Ct. App. 2013) (quoting Greenwald v. Kersh, 621
S.E.2d 465, 467 (Ga. Ct. App. 2005)).
Plaintiff’s
Complaint,
contracts,
and
provisions.
The demand letter and the draft complaint contain at
they
the
Based on the allegations in
settlement
contain
agreements
enforceable
are
valid
confidentiality
least some information that Defendant unambiguously agreed to keep
confidential pursuant to those provisions.
that
Defendant
Defendant’s
breached
lawyer
sent
Defendant’s behalf.
plausible
claim
for
the
And Plaintiff alleges
confidentiality
those
documents
to
provisions
third
when
parties
on
Accordingly, Plaintiff’s Complaint states a
breach
of
contract
under
Georgia
law.
Defendant’s motion to dismiss (ECF No. 15) is therefore denied. 5
IT IS SO ORDERED, this 7th day of August, 2018.
S/Clay D. Land
CLAY D. LAND
CHIEF U.S. DISTRICT COURT JUDGE
MIDDLE DISTRICT OF GEORGIA
5
Having decided today that the agreements are enforceable as alleged,
the Court finds that a strong interest exists in honoring the parties’
confidentiality agreements by restricting public access to these
proceedings. The Court further finds, notwithstanding that interest,
that there is a strong public interest in public access to judicial
proceedings, particularly orders of the Court. Balancing these competing
interests, the Court directs that this case be unsealed such that the
existence of this action, the identities of the parties, and today’s
Order by the Court shall be shown on the public docket. However, until
further order of the Court, all previous and future filings in this
action shall be maintained and filed in a restricted manner such that
they are accessible only by the parties, their counsel, and appropriate
court personnel.
15
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