How do Non Disclosure Agreements Work?

Shannon Bond and Jane Croft in FT


Many of the women who have spoken about sexual harassment by Harvey Weinstein, the Hollywood film producer, signed non-disclosure agreements. Such agreements have been criticised for being a tool used by the wealthy and powerful to silence victims. 

What is an NDA? 

An NDA is a legal agreement signed between two parties to share confidential information or to keep trade secrets private. They are widely used in the business world, such as in mergers and acquisitions, where one company receives sensitive financial information about a business it wants to buy. 

“The original legitimate point of a non-disclosure agreement is for people to talk about business ideas together and make sure someone does not run off and start their own venture,” says Robert Ottinger, founder of the Ottinger Firm, a US employment law practice. 

NDAs are also used in employment settlements so that workers cannot speak about events that happened during their employment, such as sexual harassment. 

“What is absolutely de rigueur in our business these days is the employer pays you money and you will never say anything about it again,” says Kathleen Peratis, head of the sex discrimination and sexual harassment practice group at the New York law firm Outten & Golden. 

“They’ve been used more lately to hide people’s dirty secrets. The consequence is the public never knows,” Mr Ottinger says. “We sign settlement agreements every week, and you can’t tell anyone but your spouse, your accountant and your lawyer.” 

How secure are NDAs? 

NDAs are legally binding. However, once confidential information enters the public domain, there is a question as to how an NDA could be enforced. 

“If the information is something very, very bad, such as allegations of sexual harassment against an employer, there is a public interest argument that this should not be covered up,” says one UK employment lawyer. “If other women who have not signed NDAs suddenly start speaking out then there is a question of whether the information is still confidential or has now entered the public domain. If it is now deemed as public, an employer would be unlikely to succeed in the courts if they sought damages against someone who has breached an NDA.” 

Ms Peratis says clients have recently asked about the consequences of breaking their confidentiality agreements. “What I say is, you made a deal. If you choose to violate that deal, you are at risk of having this guy demand what the contract allows him to demand. But I also tell them, if you’re the first to come out with this your risk is high. If you’re the third or fourth, your risk is not so high.” 

In the UK, lawyers reject the idea that there will be a flood of parties breaching NDAs in light of the Weinstein case. However, there is a possibility that the use of gagging clauses may be curbed, particularly in the UK public sector, which have historically been used to stop workers flagging safety concerns. 

What is the legal position for an employee who breaks an NDA? 

In both the UK and US, an ex-employee can be sued for breaching a confidentiality agreement. A company can seek damages from the former staff member and can try to claw back all or part of any financial settlement. In the UK, they can also seek an injunction preventing the former employee from speaking out again. 

Paul Quain, partner at GQ Employment Law, says UK employment settlement agreements usually have a clause in the agreement that allows ex-employees to speak out about confidential information if they are “required by law, HMRC [HM Revenue & Customs], any regulatory body”. 

This means that an ex-employee would be able to speak to UK lawmakers at a parliamentary select committee hearing, to UK tax investigators or to the UK financial regulator despite having signed such an NDA. 

In the US, NDAs cannot lawfully prevent people from reporting claims to law enforcement and government agencies, such as the Equal Employment Opportunity Commission, or responding to a subpoena. 

US federal law does stop “employers from preventing employees from their right to engage in what are called ‘concerted activities’,” says Maya Raghu, director of workplace equality at the National Women’s Law Center in Washington. “That can include restraining or preventing employees from discussing sexual harassment complaints among themselves. That can be an unfair labour practice.” 

How does an NDA differ from a non-disparagement agreement? 

Non-disparagement agreements are more specific than NDAs and mean that both parties (such as an employer and employee) agree not to make derogatory or adverse statements about each other. 

Are the numbers of NDAs increasing? 

Mr Quain says the number of NDAs has been increasing since the 1970s and 1980s as companies have become more concerned that sensitive information could be leaked. “It may be that companies started to get their fingers burnt and confidential information was made public. They are now pretty standard in employment settlement agreements,” he says. 

Ms Peratis recalls the first time she saw such an agreement mooted, about 40 years ago. “I said to the lawyer on the other side, ‘Ah, you want silence. That’s going to cost you a little more.’” 

Today, she says, “no conversation like that ever occurs any more because it is absolutely expected that with every single employment settlement agreement there will be a confidentiality agreement . . . Anybody who says these days I am not going to agree to confidentiality is not going to get a deal.”

When The Gods Laugh - A short biography of Shimon Peres

If the life of Shimon Peres was a play, it would be difficult to classify. A tragedy? A comedy? A tragicomedy?

URI AVNERY

IF THE life of Shimon Peres was a play, it would be difficult to classify. A tragedy? A comedy? A tragicomedy?

For sixty years it looked as if he was under a curse of the Gods, much like the curse of Sisyphus, who was condemned to roll an immense boulder up a hill, and every time he approached his goal the rock would roll down again to the bottom.

Disclosure: our lives have run somehow on parallel lines. He is one month older than I. We both came to Palestine as boys. We have both been in political life from our teens. But there the similarity ends.

We met for the first time 60 years ago, when we were 30 years old. He was the Director General of Israel’s most important ministry, I was the publisher and editor of Israel’s most aggressive news magazine. We disliked each other on sight.

He was David Ben-Gurion’s main assistant, I was Ben-Gurion’s main enemy (so defined by his security chief.) From there our paths crossed many times, but we did not become bosom friends.

ALREADY IN his early childhood in Poland, Peres (still Persky) complained that his mates in (Jewish) school beat him up for no reason. His younger brother had to defend him.

When he came to Palestine with his family, he was sent to the legendary children’s village Ben Shemen, and joined a kibbutz. But already as a teenager his political acumen was evident. He was an instructor in a socialist youth movement. It split and most of his comrades joined the left-wing faction, which looked more young and dynamic. Peres was one of the few who remained with the ruling party, Mapai, and thereby drew the attention of the senior leaders.

He had to make a much more momentous choice in the 1948 war, a war all of us considered a life-and-death struggle. It was the decisive event in the life of our generation. Almost all the young people hastened to join the fighting units. Not Peres. Ben-Gurion sent him abroad to buy arms – a very important task, but one that could have been carried out by an older person. Peres was considered a shirker at the supreme test and was never forgiven by the 1948ers. Their contempt plagued him for decades.

At the early age of 30 Ben-Gurion appointed him director of the Defense Ministry – a huge advancement, which assured him a rapid rise to the top. And indeed, he played a major role in pushing Ben-Gurion into the 1956 Suez war, in collusion with France and Britain.

The French were struggling with the Algerian war for independence and believed that their real enemy was the Egyptian leader, Gamal Abd-al-Nasser. They got Israel to spearhead an attack to topple him. It was a complete failure.

In my opinion, the war was a political disaster for Israel. It dug the abyss separating our new state from the Arab world. But the French showed their gratitude – they rewarded Peres with the atomic reactor in Dimona.

Throughout this period, Peres was the ultimate hawk, and a central member of a group which my magazine, Haolam Hazeh, branded as “Ben-Gurion’s youth gang” – a group we suspected of plotting to assume power by undemocratic means. But before this could happen, Ben-Gurion was kicked out by the old party veterans, and Peres had no choice but to join him in political exile. They formed a new party, Rafi, Peres worked like mad, but in the end they garnered only 10 Knesset seats. Peres and the boulder were back at the bottom.

Redemption came with the Six-day War. On its eve, Rafi was invited to join a National Unity government. But the big prize was snatched by Moshe Dayan, who became Minister of Defense and a world idol. Peres remained in the shadows.

The next opportunity arose after the 1973 Yom Kippur war. Golda Meir and Dayan were pushed out by an incensed public. Peres was the obvious candidate for Prime Minister. But lo and behold, at the last minute Yitzhak Rabin appeared from nowhere and snatched the crown. Peres was left with the Defence Ministry.

The next three years were a continuous story of subversion, with Peres trying by all available means to undermine Rabin. As a part of this effort, he allowed right-wing extremists to establish the first settlement in the heart of the West Bank – Kedumim. He has rightly been called the father of the settlement movement, as he was earlier called the father of the atom bomb.

Rabin coined a phrase that stuck to him: “Tireless Backstabber”.

This chapter ended with the “dollar account”. Upon leaving his former job as ambassador in Washington, Rabin had left an open account in an American bank. At the time, that was a criminal offense, generally settled with a fine, but Rabin resigned in order to protect his wife.

It was never proved that Peres had a hand in the disclosure, though many suspected it.

AT LONG last, the way was clear. Peres assumed the leadership of the party and ran for elections. The Labor Party was bound to win, as it always had before.

But the Gods only laughed. After 44 years of continuous Labour Party dominance, in the Yishuv and the state, Peres managed to achieve the unthinkable: he lost.

Menachem Begin made peace with Egypt, with Moshe Dayan, Peres’ competitor, at his side. Soon afterwards, Begin invaded Lebanon. On the eve of that war, Peres and Rabin visited him and urged him to attack. After the war went wrong, Peres appeared at a huge peace rally and condemned the war.

In the election before that, Peres had a shattering experience. In the evening, after the ballots were closed, Peres was crowned on camera as the next Prime Minister. On the following morning, Israel woke up with Prime Minister Menachem Begin again.

The elections after that ended in a draw. For the first time Peres became Prime Minister, but only under a rotation agreement. When Shamir assumed power, Peres tried to unseat him in a dubious political plot. It failed. Rabin, caustic as ever, called it “the Dirty Exercise”.

Peres’ unpopularity reached new depths. At election rallies, people cursed him and threw tomatoes. When, at a party event, he posed the rhetorical question: “Am I a loser?” the audience shouted in unison: “Yes!”
To change his luck, he underwent a cosmetic operation to alter his hangdog look. But his lack of grace could not be remedied by a surgeon. Neither could his oratorical skills – this man, who has delivered many tens of thousands of speeches, has never expressed a truly original idea. His speeches consist entirely of political platitudes, helped along by a deep voice, the dream of every politician. 

(This, by the way, disproves to me his pretence of having read thousands of books. You cannot really read so many books without a trace of it showing up in your writing and speeches. One of his assistants once confided to me that he prepared resumes of fashionable books for him, to save him the trouble of actually reading before quoting them.) 

IN THE meantime, Peres the hawk turned into Peres the peacenik. He had a part to play in achieving the Oslo accord, but it was Rabin who garnered the glory. The same, by the way, had happened before with the daring Entebbe raid, when Peres was Minister of Defence and Rabin Prime Minister.

After Oslo, the Nobel committee was about to award the Peace Prize to Rabin and Arafat. However, immense world-wide pressure was exerted on the committee to include Peres. Since no more than three persons can share the prize, Mahmoud Abbas, who had signed the agreement with Peres, was left out.

The assassination of Rabin was a turning point for Peres. He had been standing near Rabin when the “peace song” was sung. He came down the stairs, when Yigal Amir was waiting below, the loaded pistol in his hand. The murderer let Peres pass and waited for Rabin – another crowning insult.

But, at long last, Peres had achieved his goal. He was Prime Minister. The obvious thing to do was to call immediate elections, posing as the heir of the martyred leader. He would have won by a landslide. But Peres wanted to be elected on his own merit. He postponed the elections.

The results were disastrous. Peres gave the order to assassinate Yahya Ayyash, the “engineer” who had prepared the Hamas bombs. In retaliation, the entire country blew up in a tsunami of suicide bombings. Then Peres invaded South Lebanon, a sure means to gain popularity. But something went wrong, artillery fire caused a massacre of civilians in a UN camp, and the operation came to an inglorious end. Peres lost the elections, Netanyahu came to power.

Later, when the feared Ariel Sharon was elected, Peres offered him his services. He successfully whitewashed Sharon’s bloody image in the world.

IN ALL his long political life, Peres never won an election. So he decided to give up party politics and run for president. His victory was assured, certainly against a nondescript Likud functionary like Moshe Katzav. The outcome was again a crowning insult: little Katzav won against the great Peres. (Causing some people to say: “If an election cannot be lost, Peres will lose it anyway!”)

But this time the Gods seem to have decided that enough was enough. Katzav was accused of raping his secretaries, the way was clear for Peres. He was elected.

Since then he has been celebrating. The remorseful Gods shower him with favors. The public, which detested him for decades, enveloped him with their love. International celebrities anointed him as one of the world’s great.

He could not get enough of it. Hungry for love all his life, he swallowed flattery like a barrel without a bottom. He talked endlessly about “Peace” and the “New Middle East” while doing absolutely nothing to further it. Even TV announcers smiled when they repeated his edifying phrases. In reality he served as a fig leaf for Netanyahu’s endless exercises in expansion and sabotaging peace.

The culmination came this Tuesday. Sitting alongside Netanyahu, Peres celebrated his 90th birthday (two months before the real date), surrounded by a plethora of national and international celebrities, basking in their glamour like a teenager. It cost a lot – Bill Clinton alone got half a million dollars for attending.

After all the cruelties they had inflicted on him all his life, the Gods laughed benignly.

Big Pharma buying their way out of criminal charges

Rema Nagarajan in Times of India

05 July 2012, 04:19 PM IST

The record-setting settlement has raised several questions about the system of justice. What can the $3 billion fine for GSK mean to people who have been affected adversely or have even lost loved ones because of the side effects of drugs, which GSK failed to report? Is justice served in allowing offenders to buy their way out? 

What about the people in GSK who took the decisions to not report safety concerns or to bribe doctors to push the drugs for uses not approved by the regulating agency, the Food and Drug Administration (FDA)?

The hefty fine settles criminal and civil charges of unlawful promotion of certain drugs including failure to report safety data and concerns about side effects, and for alleged false price reporting practices.

While $3 billion might be a record settlement, is it that hefty? Is it really hard on the company? Take the case of Avandia, an oral anti-diabetic, one of the drugs GSK is charged with marketing illegally. Avandia marketed since 1999 raked in over $2 billion annually. GSK is also charged with unlawful promotion of Paxil, an anti-depressant. On the market since 1994, Paxil too brought in over $2 billion annually. These two drugs alone helped GSK rake in several billions every year for over a decade. This is not even counting all the other drugs that are part of this settlement such as Wellbutrin, Advair, Imitrex, Lotronex, Flovent and Valtrex and the billions they must have earned for GSK. For being able to net sales worth so many billions, a one-time settlement of $3 billion does seem like a small price to pay to do big business.

Most major pharma companies have been accused of bribing doctors, hiding side effects of drugs and promoting drugs for uses not approved by the FDA, called off-label marketing. In 2009, Pfizer had set the record paying $2.3 billion fines for illegal marketing of 13 different drugs. In the same year, Eli Lily had to pay $1.4 billion over the marketing of Zyprexa, an anti-psychotic. Astra Zeneca and Novartis too have had to settle charges with huge fines. Over 180 pharmaceutical fraud cases, covering more than 500 drugs, are now under investigation by the U.S. Department of Justice.

Obviously, the continuing violations by pharmaceutical companies, despite such huge fines, shows that these fines are no deterrent to the companies. It is said that, to the industry, the hefty fines have simplybecome  a cost of doing business.

Director of the Public Citizen’s Health Research Group, Dr Sidney Wolfe pointed out that the settlement was nothing new for GSK, which like many pharma companies has been a repeat offender. “Until more meaningful penalties and the prospect of jail time for company heads who are responsible for such activity become commonplace, companies will continue defrauding the government and putting patients’ lives in danger.”

In this context, unctuous statements by the US administration about the “historic” multi-billion dollar settlement being “a sign of the US government’s firm commitment to protecting the American people and holding accountable those who commit health care fraud ” merely masks the fact that companies and the executives are being allowed to buy their way out of punishment for willful and deliberate harm they cause to people.