When parties enter into a confidential settlement agreement can they actually count on the agreement remaining confidential? As it turns out, probably not. New York state court rulings with respect to discovery by nonsettling parties confirm that the confidential settlement agreement is not so confidential after all. This, along with the 2003 amendment to the CPLR, which is widely understood to have been made to generate revenues,1 requiring the terms of the settlement to be filed with the county clerk, all but ensures that strict confidentiality cannot be achieved in New York. In New York federal courts the confidentiality of settlement agreements fares no better. The only issue there is exactly what standard courts use in determining whether to allow disclosure of a confidential settlement agreement.

New York State

CPLR §3101(a) requires “full disclosure of all matter material and necessary in the prosecution or defense of an action.” The Court of Appeals in Allen v. Crowlee-Collier Publishing2 interpreted “material and necessary” to mean simply “relevant,” stating that the “test is one of usefulness and reason.”3 “Thus, disclosure of the terms of a settlement agreement by a settling party to a nonsettling party may be appropriate, despite the presence of a confidentiality clause in the agreement, where the terms of the agreement are ‘material and necessary’ to the nonsettling party’s case.”4

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]