There Is No Absolute Bar To Discovery Of Information Designated Confidential In A Settlement Agreement.
In 2007, Younan Properties entered into a settlement agreement with its CFO Thompson requiring confidentiality. Thompson had claimed that Younan Properties had engaged in unfair business practices, and wrongfully discharged him. In 2014, investors sued Younan Properties for fraud in Texas, and commenced to depose Thompson in Texas.
Younan Properties sought a preliminary injunction in California to prevent Thompson from violating the confidentiality provisions of the parties’ 2007 settlement agreement. After the trial court denied the request, Younan Properties appealed.
Younan Properties, Inc. v. Thompson, B266507 (2/4 11/21/16) (Epstein, Manella, Collins) (unpublished) affirms the order of the California trial court declining to interfere with Texas discovery orders, based on comity and the lack of a showing appellants were likely to prevail on the merits.
COMMENT: By the time the California Court of Appeal ruled, Thompson had already been deposed in Texas. Therefore, the Court of Appeal invoked the principle that it “may review moot issues if they are of broad public interest and likely to recur or cause another controversy among the parties.” Yet the opinion is unpublished.
An important lesson from this case should be that a confidentiality provision in a settlement agreement cannot absolutely bar court-ordered discovery of relevant information. Information might be relevant in another lawsuit, there may be compelling reasons that override the right to privacy, and principles of comity may even be involved – as they were here.
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