On the surface, it’s one of those laws that has surface appeal to people who have neither a functional understanding of the nature of litigation nor a firm appreciation that not all disputes fit into their simplistic mold of one side good, the other evil. The Speak Out Act has now been signed into law by President Biden.
On Wednesday the President signed the “Speak Out Act,” now Public Law 117-224. The law exempts disputes over sexual assault or harassment from pre-signed nondisclosure or nondisparagement agreements, in the hopes of encouraging survivors to come forward without fear of being sued.
What could possibly be wrong about freeing the “survivors” of sexual assault and harassment from being silenced by being “forced” to sign NDAs, non-disclosure ageements? For one thing, disclosure is the foremost tool available to accusers to compel their accused to settle claims. These days, the mere public accusation is sufficient to ruin a career since many “believe the woman” without concern for evidence or the patience to await the outcome of a trial.
Whether the accused is innocent or guilty, and whether the claim reflects a serious act of sexual assault or harassment or some trivial act, an ordinary greetings kiss on the cheek for example, an accuser can reach a financial settlement swiftly and painlessly by making a demand and threat to publicly destroy someone and obtain a chunk of change without ever having her credibility or claim challenged. The giveback is that she doesn’t get to grab the loot and then do the damage anyway.
Now that’s gone, so if the accused is going to have his life ruined regardless, why settle? When there’s nothing to be gained by a quick settlement, there’s no reason not to fight, whether it means putting the accuser through the wringer or doing everything possible to demonstrate that she’s a money-grubbing liar.*
And, of course, if she didn’t want to sign an NDA in exchange for a settlement, she didn’t have to accept the settlement or sign the NDA. Nothing prevented her from taking her accusations all the way to trial and proving that her claim was true and her harm was real. That was her choice.
But the egregiously simplistic policy mistake aside, by what authority does the United States get to decide that state contracts are void, both past, present and future?
Putting the policy virtues to one side, I’m wondering: what’s the source of congressional authority here? A state might decide to void new NDA contracts in this way, as a matter of public policy. But if state law would enforce them, can Congress tell them not to?
There is no attempt to hook this law into the Interstate Commerce Clause, which is generally used and abused by the feds to dictate control over things that would be none of their business but for the gymnastics of claiming a screw in a widget could possible come from Idaho and end up in Michigan.
Congress found that workplace harassment forces many women out of their jobs or industries, but it’s not clear how far that finding would go as a Commerce Clause matter under Lopez and Morrison. (Is the claim that entering an NDA is an economic activity, which substantially affects interstate commerce in the aggregate? Would the same be true of all of contract law?) And it found that enforcing NDAs can help shield illegal conduct, but it doesn’t really make the kind of equal protection findings that Morrison might require. (If Congress can do this, why can’t it just provide a federal cause of action directly?)
There is already a cause of action under Title VII for sex discrimination, but this isn’t about sex discrimination in employment, but about nullifying NDAs as a component of all settlement of any sex claims without any connection to employment.
And if that wasn’t bad enough, it gets worse.
An aside: the Act applies to existing contracts as well as future ones, extending to any contract claim to enforce an NDA that’s filed from Wednesday on. If a state adopted a similarly backwards-looking provision, it might well violate Article I, § 10, which among other things bans state laws “impairing the Obligation of Contracts.”
Perhaps the best way to appreciate the nature of this misbegotten law is the codification of MeToo as some pop human right to make extrajudicial accusations of sexual grievances real or imagined with impunity. The recourse to the accused might be to bring a defamation action for false accusations, but then defamation is an extremely difficult cause of action to prove, particularly if the accused is a public figure, and the efficacy is often lacking since the accuser is judgment proof.
In settlements with NDAs, the accused can always go after the accuser for money she was paid, but since this law provides an incentive not to settle any case, there may well be no money to return at the end of the case even if the accused can surmount the hurdles of a defamation suit.
So what authority does the federal government possess to enact such a law that controls state contract law with no impact on interstate commerce beyond the adoration of flapping butterfly wings? And if the feds can void the right to contract an NDA, even forgetting nullifying extant contracts, what conctracts are immune from federal reimagination should a cohort complain that their volitional choices and deposit of monies not suffice to wipe away their sad tears?
*Not all women are money-grubbing liars. Not all women aren’t.