Attorneys’ “Professional Thumbs-Up” to Settlement Agreement by Approving as to “Form and Content” is Insufficient to Impose Confidentiality Obligations in Agreement

In Monster Energy Co. v. Schechter, et al. (No. E066267 – 8/13/2018), the Fourth Appellate District reversed the trial court’s partial denial of the attorney defendants’ (“Attorneys”) underlying special motion to strike (“anti-SLAPP motion”) (Code of Civil Procedure §425.16) on the grounds that Attorneys had shown that plaintiff Monster Energy Co. (“Monster”) could not establish a probability of prevailing on its cause of action for breach of contract based upon Attorneys’ alleged violation of the terms of a settlement agreement’s confidentiality provisions because Attorneys were not themselves parties to the agreement.

In the underlying wrongful death action against Monster, the plaintiffs and Monster entered into a settlement agreement containing a confidentiality provision. The agreement confirmed that it was between plaintiffs and Monster and also stated that “Plaintiffs and their counsel agree that they will keep completely confidential” its terms. Plaintiffs, Monster, and their respective attorneys, all signed the settlement agreement; above the attorneys’ signatures were the words “Approved as to form and content.”

Approximately one month later, Attorneys disclosed terms of the settlement agreement to a reporter for, which, in turn, published an article revealing the terms. Monster then sued Attorneys for multiple causes of action, including breach of contract, claiming Attorneys violated the confidentiality provisions of the settlement agreement. Attorneys filed an anti-SLAPP motion, arguing in part that Monster could not establish a probability of prevailing on the breach of contract claim because Attorneys were not parties to the settlement agreement. The trial court granted Attorneys’ motion with respect to all causes of action except the breach of contract claim, rejecting Attorneys’ argument that their approval of the settlement document as to form and content did not render them parties to the agreement.

In reversing this decision, the appellate court concluded that Attorneys had not, in fact, consented to be bound by the settlement agreement. As an initial issue, it considered whether the plaintiffs could bind Attorneys to the settlement agreement without Attorneys’ express consent. In answering this question in the negative, the court explained that Attorneys needed to have manifested their consent in order to be bound and that the plaintiffs could not bind them without such consent because clients are not the agents of their attorneys (although, of course, attorneys act as agents for their clients for matters within the scope of their engagement).

Next, the court considered whether Attorneys had manifested consent to be bound by the agreement by signing it under the words, “Approved as to form and content.” The court explained, “The only reasonable construction of this wording is that [Attorneys] were signing solely in the capacity of attorneys who had reviewed the settlement agreement and had given their clients their professional approval to sign it.” Without the benefit of a California precedent directly on point, the court held that this language did not impose obligations on Attorneys, but rather merely constituted, as the court aptly described it, “a professional thumbs-up.” As such, the court ruled that Attorneys were not bound by the subject confidentiality provision.

The Monster court’s interpretation of the effect of the phrase “Approved as to form and content” is significant due to the common use of this language above the parties’ attorneys’ signatures in most settlement agreements. However, in dicta following its ruling, the court recognized that public policy considerations should allow for a means of requiring attorneys to maintain the confidentiality of settlement agreements. On one hand, it suggested explicitly making the attorneys parties to such agreements at least with respect to confidentiality provisions, and requiring attorneys to expressly consent to be bound by their signatures to the agreement. It also suggested that a party in Monster’s shoes may have a claim against the underlying plaintiffs for their attorneys’ failure to keep the agreement confidential, or as a third-party beneficiary of the attorney-client contract between the plaintiffs and their attorneys. While the latter suggestion would open up thorny public policy issues involving threats to the sanctity of the attorney-client relationship and the protections of the attorney-client privilege, not to mention inviting the imposition of a questionable legal duty upon attorneys to the client’s adversaries, related ethical implications warrant consideration of such an approach. Ultimately, and pending further guidance on these issues from courts actually confronting the foregoing matters, it would behoove attorneys to abide by settlement confidentiality provisions to avoid running creating a potential basis for litigation against his or her client.

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