NJ Supreme Court to Decide Legality of Non-Disparagement Clauses

NJ Supreme Court to Decide Legality of Non-Disparagement Clauses

The Supreme Court of New Jersey has agreed to decide whether non-disparagement clauses are enforceable in light of 2019 amendments to the New Jersey Law Against Discrimination (NJLAD) prohibiting the use of non-disclosure agreements in employment contracts and settlement agreements. The amendments, set forth in N.J.S.A. 10:5-12.8(a), banned provisions “in any employment contract or settlement agreement which has the purpose or effect of concealing the details relating to a claim of discrimination, retaliation, or harassment.”

Facts of Savage v. Township of Neptune

Plaintiff Christine Savage (Savage or Plaintiff), a former sergeant with defendant Township of Neptune Police Department, filed an employment discrimination suit against the Township of Neptune, Police Director Michael J. Bascom, and Police Chief James M. Hunt (collectively, the Defendants), alleging that the Defendants engaged in continuing sexual discrimination, harassment, and unlawful retaliation, in violation of the LAD, the New Jersey Civil Rights Act, and Article I, Paragraph 6 of the New Jersey Constitution.

On July 23, 2020, the parties settled the employment discrimination action and entered into an agreement, which included a non-disparagement provision, but not a non-disclosure provision. Under the non-disparagement provision, the parties agreed “not to make any statements written or verbal, or cause or encourage others to make any statements, written or verbal regarding the past behavior of the parties, which statements would tend to disparage or impugn the reputation of any party.”

Defendants Michael J. Bascom, the former Police Director for Neptune Township, and James M. Hunt, the Chief of the Neptune Police Department, filed a motion in September 2020, to enforce the settlement, arguing that Savage violated the non-disparagement provision during an interview with a television news reporter that aired on Channel 4, NBC news on August 11, 2020. During the interview, Savage repeated many of the allegations in her suit, remarking that she had abused her for approximately eight years. In response to questions regarding whether the police department had changed, Savage stated that female officers were “oppressed,” adding that they “don’t want women there.” She further stated: “It has not changed, not for a minute. It’s not gonna change, it’s the good ol’ boy system.”

The trial judge granted the Defendants’ motion, finding that N.J.S.A. 10:5- 12.8(a) only barred confidentiality or non-disclosure agreements, and that the Plaintiff violated the non-disparagement provision in the agreement when she commented during the televised interview that the Neptune Police Department had not changed, and it was still a “good old boys club.” The judge subsequently awarded defendants $4,917.50 in counsel fees and costs for breach of the non-disparagement clause.

Appellate Division’s Decision in Savage v. Township of Neptune

The Appellate Division held that the terms of the non-disparagement provision were enforceable. In support of its decision, the appeals court cited the different between non-disparagement agreements and non-disclosure agreements. According to the appeals court, the New Jersey Legislature only intended for the latter to be prohibited.

“The Legislature did not specifically declare such a provision to be against public policy under N.J.S.A. 10:5-12.8(a). In addition, the provision did not have the purpose or effect of barring plaintiff from discussing the details of the settlement agreement or her underlying [state Law Against Discrimination] claims as prohibited under N.J.S.A. 10:5-12.8(a),” the appeals court wrote.

Issues Before NJ Supreme Court

The New Jersey Supreme Court granted certification on September 11, 2023. The justices agreed to consider the following question: “Is the non-disparagement provision in the parties’ settlement agreement enforceable?”

Oral arguments have not yet been scheduled. Please check back for updates.

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