When The Weinstein Company announced it had filed for bankruptcy this week, the news was somewhat expected. The movie studio has been in a tailspin ever since allegations of sexual harassment and assault brought down the company’s co-founder, Harvey Weinstein. And a recent bid to sell the company fell through.
What came as more of a surprise was the company’s statement that it is releasing all its employees from non-disclosure agreements — or NDAs — effective immediately.
The Frame host John Horn spoke with lawyer Debra Katz about the possible implications of this decision. Katz is a partner in a law firm that represents plaintiffs in sexual harassment cases. She represents Irwin Reiter, a current senior executive at The Weinstein Company who, until now, was bound by an NDA he’d signed with the company.
What's the purpose of a non-disclosure agreement or NDA?
There are two types of agreements that people are referring to broadly as NDAs. In the Weinstein case, for example, many people as a condition of employment were required to sign NDAs, meaning they would never talk about anything that occurred at the company upon penalty of being fired. So that, to me, is a pretty illegitimate form of an NDA. The Trump Organization uses it, many companies that are just more concerned about [the company's] reputation than the rights of their employees do that.
Then there's an NDA as a condition of settlement, which is fairly common and my clients do it all the time. [It's] where the company says, We're buying peace. And if we settle with you and pay you in settlement of your sexual harassment or any other kind of claim, you will agree not to disparage the company and not to disclose the terms and conditions of the settlement. So those are two very different kinds of NDAs.
In the case of Harvey Weinstein, as the company said in its own statement ending NDAs for employees: "It has been reported that Harvey Weinstein used non-disclosure agreements as a secret weapon to silence his accusers.” Is that the effect these agreements had in the case of The Weinstein Company?
Yes, and that's exactly why [Harvey Weinstein] had those NDAs in effect — to silence people and to chill speech and to make people fearful of coming forward. It is an oppressive tool of people like Harvey Weinstein who want to maintain ultimate control to silence employees.
So when The Weinstein Company says that it “expressly releases any confidentiality provision to the extent it has prevented individuals who suffered or witnessed any form of sexual misconduct by Harvey Weinstein from telling their stories,” what does that mean exactly? What happens next?
It means that people who have been fearful of coming forward because they were afraid of being sued can now tell their stories, write their books, give interviews ... without fear of any kind of legal proceeding or breach of contract action being brought against them. Now, as a practical matter, many people in the aftermath of so many people coming forward just said, I'm breaching my NDA. Like Zelda Perkins [Weinstein's former assistant] in England. But there are many other people who have not, and we may hear many more people's stories. Probably not the actresses, many of whom have come forward and weren't under NDAs. But when it comes to the employees who were bound by NDAs who have long suffered, we're probably going to hear some very gruesome stories.
Is anyone left out by this lift on NDAs?
An interesting question here is that Harvey Weinstein entered into private NDAs where he settled privately with individuals. Those aren't agreements with The Weinstein Company. And the question is whether The Weinstein Company could possibly release them from the private deals that Harvey Weinstein struck, and the answer is probably no on that. But as for The Weinstein Company employees who signed these NDAs as a condition of working there, everyone's free now to tell their stories.
What does The Weinstein Company's bankruptcy filing mean for sexual harassment lawsuits currently pending against the company? Are they put on pause as the company goes through bankruptcy proceedings?
Yes, an automatic stay would be instituted and individuals with sexual harassment cases would have to seek leave from the court ... to have their cases adjudicated. Now, as you know, most of the people who brought lawsuits against The Weinstein Company also brought the same claims against individual board members. And the stay for bankruptcy that would apply and protect The Weinstein Company from litigation would not protect the board members and the individuals. So they will be able to proceed with their claims.
Might it be possible that other companies could look at what The Weinstein Company is doing now with NDAs and follow suit?
I hope so. And you see a lot of legislative action in this regard. A number of states are actually considering legislation to prohibit them altogether. Florida, New York and other jurisdictions think that they're very bad public policy. So I do think that there will be efforts to limit them. And I think companies who see how this is playing out and how corrosive this is in terms of creating an environment where people are too scared to speak, they may think twice about asking employees to do it.