Making an NDA Cover Past Disclosures

Steven Sholk, director at the Newark, New Jersey office of Gibbons and a longtime source of valuable leads, sent me the Eleventh Circuit’s recent opinion in News America Marketing In-Store, LLC v. Emmel (PDF copy here). It contains an interesting lesson for anyone who drafts confidentiality agreements.

Emmel was an account director for News America. Starting in 2005, the relationship started to sour, and in 2006 Emmel began disclosing confidential News America information to government offices, alleging that News America was engaged in various shenanigans. In November 2006, News America fired Emmel. In December 2006, Emmel was job hunting, and News America agreed to provide him with a letter confirming that he hadn’t entered into a noncompetition agreement with News America, on condition that Emmel promise not to disclose any confidential News American information or disparage the company.

On December 21, 2006, News America and Emmel entered into an agreement that contained the following provision:

Emmel agrees that he will not disparage, denigrate or defame the Company and/or related persons, or any of their respected business products, practices or services. Emmel further agrees that he will maintain in complete confidence, and not discuss, share, reveal, disclose or make available to any third party or entity any “Confidential Information” of the Company.

But the day before signing the agreement, Emmel sent to a staff member of the U.S. Senate’s finance committee a final batch of News America information. Emmel acknowledged that he had timed that final disclosure so that it would take place before he signed the agreement.

In a lawsuit against Emmel, one of News America’s claims was that in disclosing that last batch of information, Emmel had breached the December 21, 2006 agreement. The district court accepted that contention, on the grounds that the package of documents hadn’t reached its destination and Emmel had done nothing to attempt to intercept it.

The Eleventh Circuit reversed, holding as follows:

The December 21, 2006 agreement contains no language that indicates the parties intended for it to apply retroactively or that provides assurance about any past events. The specific promises undertaken were couched in language that applies only prospectively.

The Eleventh Circuit also held that it wouldn’t have been reasonable to expect that Emmel could retrieve the package, and that anyway the contract “does not cover acts of omission or inaction, only acts of commission.”

Here’s what I take from this: I’m revising Koncision’s confidentiality-agreement template so that if you indicate in completing the questionnaire that some confidential information was disclosed before the date of the agreement, the output document will include a representation to the effect that the recipient hasn’t disclosed any of that confidential information, or hasn’t disclosed it in a manner that would have constituted a breach of the NDA if that disclosure had taken place after the NDA was signed. (I’m still working on the wording.)

And I’m contemplating adding guidance regarding the implications of disclosure by a whistleblower of information covered by an NDA.

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.