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Are Confidentiality Agreements Enforceable? Carol M William Mitchell Law Review Volume 25 | Issue 2 Article 14 1999 At What Price Silence: Are Confidentiality Agreements Enforceable? Carol M. Bast Follow this and additional works at: http://open.mitchellhamline.edu/wmlr Recommended Citation Bast, Carol M. (1999) "At What Price Silence: Are Confidentiality Agreements Enforceable?," William Mitchell Law Review: Vol. 25: Iss. 2, Article 14. Available at: http://open.mitchellhamline.edu/wmlr/vol25/iss2/14 This Article is brought to you for free and open access by the Law Reviews and Journals at Mitchell Hamline Open Access. It has been accepted for inclusion in William Mitchell Law Review by an authorized administrator of Mitchell Hamline Open Access. For more information, please contact [email protected]. © Mitchell Hamline School of Law Bast: At What Price Silence: Are Confidentiality Agreements Enforceable AT WHAT PRICE SILENCE: ARE CONFIDENTIALITY AGREEMENTS ENFORCEABLE? Carol M. Bastt I. INTRODUCTION ......................................................................627 II. CONFIDENT IALITY ..................................................................633 A. ConfidentialInformation ............................................... 633 B. Limitations on Enforcement of Confidentiality Agreements ........................................................................643 C. Analogous State Cases................................................... 647 D. FederalCases ............................................................... 654 III. W HISTLEBLOWING ..................................................................661 A . Introduction................................................................ 661 B. Whistleblowing under State Law ..................................... 668 C. Wigand as Whistleblower ............................................... 682 D. Wigand and the "Typical" Whistleblower: How Does Wigand Compare to the "Typical" Whistleblower?.............. 691 IV. PUBLIC POLICY EXCEPTION TO CONFIDENTIALITY A GREEM ENTS .................................................................... 694 A. Unconscionabilityand Public Policy................................ 694 B. A Proposed Test for Determining the Enforceability of Confidentiality Agreements ............................................. 699 C. Application of the Test .................................................. 710 V . CONCLUSION .................................................................... 713 I. INTRODUCTION Employees routinely sign confidentiality agreements, promising not to disclose employer confidential information. The ostensible purpose of a confidentiality agreement is to prevent unfair competition from the employer's competitors. The employer may have legitimately relied on a confidentiality agreement to safeguard its market share. Often the employer has t Carol M. Bast is an associate professor of legal studies in the Department of Criminal Justice and Legal Studies at the University of Central Florida. Published by Mitchell Hamline Open Access, 1999 1 WilliamWILLIAM Mitchell Law MITCHELL Review, Vol. 25,LAW Iss. 2REVIEW [1999], Art. 14 [Vol. 25 expended significant time and money in developing the information; however, the nature of confidential information is that once the information is leaked, confidentiality is forever lost. By the same token, an umbrella confidentiality agreement may very well safeguard information crucial to public health or safety. The silence of the employee is bought without review of the agreement by a neutral third party.' A confidentiality agreement purporting to cover public health or safety risks or illegal acts may satisfy the employer's needs, but not the needs of the employee nor the needs of society. To whom does the employee/citizen owe allegiance in that situation? When is the employee's and society's interest in revealing information superior to the employer's interest in confidentiality? Should the employee blow the whistle or remain silent? Jeffrey Wigand ("Wigand") served as Brown and Williamson Tobacco Corporation's ("B&W") vice president for research and development from January 1989 until March 24, 1993, when B&Wa fired him.' From 1994 to 1996, Wigand blew the whistle on B&W, thereby allegedly violating5 a number of confidentiality agreements he had with B&W. The decision that Wigand made to blow the whistle on B&W could have far-reaching consequences. Wigand was the highest ranking tobacco executive to blow the whistle on the tobacco industry, and his former status with B&W lent credibility to his 1. See Barbara Carton & Ross Kerber, EEOC Battles Pacts That Buy Worker Silence, WALL ST.J.,June 13, 1996, at BI. A confidentiality agreement is sometimes nicknamed a "golden gag." See id. 2. See Brown & Williamson Tobacco Corp. v. Wigand, 913 F. Supp. 530, 531 (W.D. Ky. 1996). Brown & Williamson ("B&W'), the third largest United States tobacco company, is owned by BAT Industries (formerly known as "British American Tobacco"), a worldwide conglomerate with a number of tobacco subsidiaries. See Marie Brenner, The Man Who Knew Too Much, VANrY FAIR, May 1996, at 171, 176-77. 3. See 60 Minutes-Profile: Jeffrey Wigand, Ph.D.; Jeffrey Wigand Discloses Information on Brown & Williamson and Attempts are Made to Rebut the Claims (CBS television broadcast, Feb. 4, 1996), available in 1996 WL 8064777. Wigand did not find another job until he began teaching in a public high school in Louisville, Kentucky in January 1995 at $30,000 annually. See id. 4. See Alix M. Freedman & Suein L. Hwang, Leaders of the Pact: How Seven Individuals with Diverse Motives Halted Tobacco's Wars; One Tailored the Lawsuits, Another Woke the FDA; Dick Morris Came to Play, WALL ST.J., July 11, 1997, at Al. 5. See infra notes 400-02 and accompanying text. 6. See Chip Jones & Peter Hardin, His Public Stand Has Private Consequences, RICHMOND TIMES-DISPATCH, Mar. 31, 1996, at Al. Other lesser-ranking former tobacco company employees have also come forward. See id. These whistle http://open.mitchellhamline.edu/wmlr/vol25/iss2/14 2 1999] Bast: At What PriceAT Silence:WHAT Are PRICE ConfidentialitySILENCE Agreements Enforceable disclosures.7 He used his expertise to analyze leaked documents blowers include Dr. Ian L. Uydess, former research scientist and associate senior scientist, Dr. William A. Farone, former director of applied research, Jerome Rivers, former plant shift supervisor, and Dr. Victor DeNoble, a behavioral psychologist, all formerly from Philip Morris. See id. Merrell Williams, a former paralegal who worked at a law firm representing B&W previously leaked numerous B&W documents. See id. On May 12, 1994, University of California at San Francisco Professor of Medicine Stanton Glantz received a Federal Express package containing 4,000 pages of confidential B&W documents from "Mr. Butts." See Sheryl Stolberg, Tobacco Tactics-How an Anti-Tobacco Activist Became a Target-The Saga of Stan Glantz is Emblematic of How Tobacco Giants Try to Squelch Their Opponents, STAR TRIB. (Minneapolis-St. Paul), Apr. 16, 1996, at 9A. Glantz delivered the papers to the tobacco archive of the UCSF library. See id. On February 3, 1995, the UCSF librarian received a letter from a B&W attorney requesting the return of the papers. See id. B&W posted individuals outside the tobacco archive "to keep watch on our papers because our view was the documents were stolen and we didn't want them disappearing from the library the same way they disappeared from our building." Id. B&W filed suit against the university requesting the return of the papers and requesting the names of persons who had viewed them. See id. The documents began to be posted on the Internet on July 1, 1995 after the California Supreme Court ruled that they should be open to the public. SeeJoe Ward, Internet Users Getting a Look at B&W's Papers,COURIER-J. (Louisville),July 6, 1995, at 8B. B&W believes the documents Glantz received came directly or indirectly from Williams. See Greg Otolski, Papers in B&W Flap Available in California, COURIER-J. (Louisville), Feb. 8, 1995, at 8B. Williams made copies of B&W documents and provided the copies to Richard Scruggs in April 1994. See Andrew Wolfson, Judge Will Try to Clear Smoke Surrounding Stolen Legal Papers, COURIER-J. (Louisville), Dec. 1, 1993, at IA. Scruggs, special counsel to the state of Mississippi in its lawsuit against the tobacco companies, and Mississippi Attorney General Mike Moore provided the documents to Representative Henry Waxman. See Chris Burritt &Jim Yardley, Around the South: Tobacco Company Attacks Ethics of 2 Whistleblowers, ATLANTAJ. & CONST., May 1, 1996, at Cl. In April 1994, Waxman chaired the House of Representatives Health and Environment Subcommittee that held hearings on the tobacco industry. See Mike Brown, Companies "Lied" About Nicotine, Lawmaker Says; Cigarette Firms Identify Additives, COURIER-J. (Louisville), Apr. 14, 1994, at IA. Waxman claimed that cigarettes are drugs which should be regulated by the FDA. See id. 7. See Greg Otolski, Teacher at Manual Called "Explosive" Anti-Tobacco Witness, COURIER-J. (Louisville), Nov. 18, 1995, at IA. Richard Daynard, a Northeastern University professor of law who heads of The Tobacco Products Liability Project, commented: Jeff Wigand is different from other witnesses in past tobacco cases, because he is highly respected, he worked directly on sensitive projects, his memory is recent and the work was done in the United States.... The only thing I can compare this to is the first time high-ranking
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