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How Confidential are Settlement Agreements?

Most civil litigation ends in settlement. These settlements are usually entered and enforced through a signed settlement agreement. One of the most common (and important) clauses of these agreements is a confidentiality clause. This clause is primarily inserted to ensure the amount of the settlement is prevented from becoming public. However, a confidentiality clause is not enough to protect the settlement agreement from future discovery requests.

In Allegran, Inc. v. Teva Pharm., USA, Inc., 2017 U.S. Dist. LEXIS 4543 (E.D. Tex. 2017) the Court held that a confidentiality clause in a settlement agreement does not prevent a Court from ordering that settlement agreement from being turned over to another party during discovery. The Court stated that "no...confidentiality agreement can bind a court and bar the court from ordering production of the agreement." Id. at *11 Why? The Court in Allegran was concerned that "parties could, by agreement, effectively create new privileges against discovery orders, no matter how relevant the material in question may be." Id.

Public policy is also a concern according to some courts including the Court in In re Continental Ins. Co., 994 S.W.2d 423 (Tex. App.-Waco 1999). Here, the Court stated that "[i]ndividuals cannot protect relevant information from discovery by confidentiality provisions in contracts, even settlement agreements." Id. at 425. The Court further stated that "any provision in a contract, including a confidentiality provision, that requires a party to refuse the production of discoverable information or documents, including the contract, until a court of competent jurisdiction has specifically ordered production, violates public policy." Id. at 426.

This information can affect both clients seeking full discovery and those who have just completed a settlement agreement. Here, at Taylor Dunham and Rodriguez LLP, we are always fighting for our clients and informing them during every step of litigation. If you are in need of legal assistance, do not hesitate to contact Taylor Dunham and Rodriguez LLP today.

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