The Psychology of Secret Settlements

Abstract

The #MeToo movement called attention to the use of non-disclosure clauses in settlement agreements as a tool to silence victims of sexual wrongdoing by repeat offenders such as movie mogul Harvey Weinstein and Olympic gymnast doctor Larry Nassar. The exposure of such secret settlements prompted a fierce policy and scholarly debate on the legitimacy and desirability of NDAs. Though the risk of NDAs hindering accountability is hardly new, NDAs are now increasingly the subject of legislative action, in states ranging from California and New York to Nevada and Tennessee. But should all NDAs be banned or limited by sunshine-in-litigation laws? And will such legislation adequately reflect the public’s attitudes regarding what it wishes (and doesn’t wish) to know? Existing legal scholarship on the regulation of sexual harassment NDAs fails to benefit from the theoretical wisdom and empirical methods which psychological research can offer regarding these questions.
This Article is the first to empirically identify psychological factors affecting lay attitudes towards secret settlements. Using a survey experiment conducted with a large representative sample, it brings to light the mechanisms underlying the public’s tendency to seek information or remain in the dark regarding sexual harassment. The findings suggest that, counter to existing psychological theories, lay people actually prefer public disclosure of arguably the most uncomfortable information. Furthermore, according to the findings, the severity of the wrongdoer’s misconduct and the victim’s financial status each have an independent negative effect on lay people’s endorsement of NDAs.
These empirical findings will allow legislatures to regulate secret settlements in a manner that appropriately embodies the scope of the public’s right to know. Such regulation will in turn help preserve both employees’ willingness to come forward about sexual harassment and employers’ inclination to settle. Moreover, these findings should encourage victim advocates to explore ways to maintain disadvantaged victims’ bargaining power under a confidentiality ban regime. Prudent advocacy would help ensure that the choice between settlement and trial remains available to financially unstable victims. The findings further show the potential promise of bipartisan collaboration over sunshine-in-litigation laws, at least when it comes to severe acts of sexual harassment.

Keywords: non-disclosure agreements, sexual harassment, empirical legal studies, law and psychology, #metoo, sunshine-in-litigation laws