Buying Silence: U-M spent over $1.26 million in 6 months on non-disclosure agreements

Sunday, December 8, 2019 - 6:40pm

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Design by Casey Tin

On March 8, 2010, professor Edward P. St. John was removed from his teaching position in the School of Education. He had 24 hours to notify his students and no means to appeal his removal.

St. John believed his removal stemmed from disagreements he had with the policy opinions of his dean, Deborah Ball, in the Provost’s Achievement Gap Task Force, a University-wide advisory panel on diversity in higher education. He had two options going forward: He could accept his removal or challenge it in court.  

On June 4, 2010, St. John sued the University for denial of due process, violation of whistleblower laws and breach of contract among other wrongdoings. 

St. John told The Daily the University began making verbal settlement offers to his lawyer. Each potential settlement contained a confidentiality clause, a non-disparagement clause, a settlement of St. John’s lawsuit and a proposed payment to his bank account. 

This confidentiality or non-disclosure clause would have permanently prevented St. John from speaking of the terms of the settlement. The non-disparagement clause would have further limited St. John’s speech, permanently preventing him from speaking poorly of the University or his experiences there.

After rejecting two offers of increasing monetary value, St. John was offered $500,000. He alleges the University described this amount as the most that could be paid without the Board of Regents being notified. 

This proposed settlement agreement is not unique. An investigation by The Daily into agreements reached between the University and former employees from November 2018 to April 2019 uncovered 10 such agreements across different schools and departments. These settlements do not appear in public University documents. 

These agreements include “gross lump sum” payments by the University totaling more than $1,265,000. Of this sum, approximately $1,016,000 was paid to former employees. $149,000 was paid to law firms representing these employees.

“Any settlement where you get money is going to be money for silence,” St. John said in an interview with The Daily. “(They) are buying silence.”

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Courtesy of FOIA

University spokesman Rick Fitzgerald disputed St. John’s characterization of these agreements as “buying silence.”

 “If you sign an agreement and you still think the University has done something wrong and you wanted to file a complaint … with (the University’s Office for Institutional Equity) or the (federal) Department of Education or the (State of Michigan’s) Department of Civil Rights, there is nothing in that agreement that precludes you from doing that,” Fitzgerald said in an interview with The Daily. “It says disparagement, it doesn’t mean you can’t disagree with University policy. People do that every day around here.” 

In an email to The Daily, a former employee currently in an agreement with the University supported St. John’s characterization of these agreements. This employee declined to be identified for fear of legal damages; their agreement is not part of the ten reported in this article.

“Misconduct by my superiors caused me to seek counsel, and eventually we arrived at a separation agreement including a non-disparagement clause,” the employee wrote. “Coming out of an adversarial situation, such language can only be seen as silencing. There is no way I could recount my experience with my former school, comment on its procedures, or speculate on its motives without risking that the University find it ‘disparaging.’”

In an interview with The Daily, Ann Arbor-based employment lawyer Sarah Prescott of Salvatore Prescott & Porter, PLLC, spoke of her experiences negotiating these agreements with the University and other entities.

“Non-disparagement agreements prevent the public from knowing (of) all kinds of harassment and discrimination,” Prescott said. “These aren’t proved-in-court wrongs, but they are things that the two parties agree may have gone wrong. And usually they exist without the payer agreeing that something has gone wrong.”

Fitzgerald confirmed that these agreements are not routinely disclosed to the Board of Regents or the public.

“We can’t comment on the specifics,” Fitzgerald said. “But again, routinely, I can only tell you what is the pattern. And that is that these kinds of settlements do not require Board approval.”

The 10 agreements obtained by The Daily, furthermore, do not necessarily represent all settlement agreements reached during this period. Nine of these agreements were obtained by The Daily through a Freedom of Information Act request. This request was limited to agreements signed by two Senior Human Resources representatives, Roberta Young and Linda Dabrowski. (Neither Young nor Dabrowski responded to The Daily’s email requesting comment for this article). The 10th has already been publicly reported.

It also remains unclear whether this sum represents the University’s total expenditure on settlement agreements over this period of time. A review of the University’s fiscal year 2018-2019 budget reveals no specific designation for these payments. 

In an interview with The Daily, Fitzgerald said these costs are not specifically designated in the 2018-2019 budget because they are divided by school or unit. He also said these payments are typically listed as salaries.

“The payments themselves are usually borne by the unit where the employee works,” Fitzgerald said. “Depending on the situation, you wouldn’t typically find the money, because it’s a part of that departmental budget.”

As such, the money from these settlement agreements do not show up in public reports on the University’s budget.

“Separation agreements with individual employees are not routinely reported to the Board,” Fitzgerald said.

The Daily contacted all 10 former employees in the agreements reached between November 2018 and April 2019. All declined to comment. The nature of their agreements prevents them from disparaging the University and discussing the terms of the agreements.

The Daily spoke with New Jersey-based employment lawyer Neil Mullin, an outspoken critic of non-disparagement and non-disclosure agreements and Gretchen Carlson’s attorney in her sexual harassment lawsuit against Fox News. He criticized these agreements for promoting a culture of secrecy.

“If you want to eradicate discrimination, harassment and sexual misconduct, you should let the light of day shine,” Mullin said. “Taxpayer money is being used to protect harassers and discriminators. Taxpayers should speak up about this.”

AN ISSUE OF ACADEMIC FREEDOM

Prior to his removal, St. John was celebrated for his successes in education policy while at the University. He had played a pivotal role in establishing partnerships with Detroit Public Schools and aided in the granting of awards and partnerships totaling over $3 million.

St. John has long been considered an expert in higher education policy. By the time he came to the University of Michigan in 2004, St. John’s focus research had moved to diversity in education.

The vice provost placed St. John on the Provost’s Achievement Gap Task Force. His opinion was sought on issues of inequality at the University. He served on this committee with Deborah Ball, his dean, and Stephen L. DesJardins and Annemarie Palincsar, both School of Education colleagues.

The Daily reached out in an email to Ball, DesJardins and Palincsar. All declined to comment for this article.

The Daily obtained a copy of St. John’s court filing. In this document, St. John details a meeting he had with Dean Ball on March 8, 2010, about his teaching. The filing claims Ball said she was removing him from his teaching position — meaning he would still be employed by the University, but not allowed to teach — based on “new information” she’d acquired. As St. John’s filing notes, he was given “no warning, no ability to prepare to notify his students, teacher assistants, or staff about the modifications to his employment.”

He also noted his teaching evaluations had been “consistently higher than the (School of Education) average.” After contacting his former students, he “received strong support that his teaching style … was engaging and to the highest level.”

Disagreements around diversity strategies in these meetings underlie St. John’s lawsuit. He describes them as issues of “academic freedom.”

“I ran into a problem with respect to an academic freedom question,” St. John said. “The new dean got involved in some similar committees and so forth and they began taking it in a direction that I felt was inappropriate … It was an infringement on my teaching.”

St. John knew it would be difficult to win a lawsuit against such a large institution, but he saw this as the only way to get his teaching rights back.

“When someone brings a case, you go from the area of public discourse to closed litigation,” St. John said. “You know before you do it that you can’t exactly sue your institution. I just felt that there was a bigger problem in my department.”

St. John said the only way to continue to speak publicly about his experiences at the University was to reject this settlement offer.

“I refused to take money if it meant not speaking as I am now,” St. John said. “Universities just calculate what they think the value of something is and then they make you stay quiet.”

These settlement packages are similar to those in the corporate sector, St. John explained. While this might have offered him a more profitable and swift resolution to his case, he was uncomfortable sacrificing his rights to speech.

“In the private sector we used to call them blowout packages,” St. John said. “I just could not see ending my career that way. Money wasn’t an issue.”

These potential agreements are essentially an admittance of guilt, St. John said. Such settlements are an easy way for any institution — especially a large university with an $11.9 billion dollar budget — to keep these wrongdoings private. 

“In a general sense, once they start making offers, they are admitting they’re wrong. But you can’t speak to it,” St. John said. “Corporations — and universities are now corporate entities, even public institutions like Michigan — do what they can to cover their tracks.”

THE AGREEMENTS

The terms of the 10 agreements The Daily obtained through a FOIA request are nearly identical. The employee agrees, “to the extent allowed by law, not to make unfavorable or disparaging communications” regarding the University.

Fitzgerald characterized these agreements as a mutual understanding between the University and a former employee to “be civil” about their potential disagreements.

“It’s … a way of being nice to each other, sort of being civil about this,” Fitzgerald said. “It’s not meant to silence people; it’s meant to not get in a fight with people once they settle.”

Mullin, however, spoke of the silencing effects of these agreements.

“They conceal from the public a public danger and wrong,” Mullin said. “Non-disclosure agreements — or NDAs as we call them — allow bad actors to remain in the workplace because people don’t know about them.”

In her work representing clients alleging harassment and discrimination, Prescott frequently learns the identities of alleged perpetrators, but the rest of the public stays in the dark. She questioned the balance between the public’s right to know about wrongdoing and the University’s rights to keep complaints confidential.

“How do we balance those interests around individuals’ ability to resolve something and the public’s interest to know what is going on?” Prescott said. “I drive around Michigan, and I look left, and I look right, and I see a company who has harassed some racially or sexually, and I can’t talk about it. And I kind of think to myself, ‘That place, I’ll never do business with them.’ But nobody else ever knows.”

The agreements also contain a non-disclosure provision: The employee and University “will not disclose (the agreement’s) contents to third parties except as required by law.”

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Courtesy of FOIA

Fitzgerald disputed the idea that this clause is meant to limit the disclosure of this provision. Its intent, he explained, is to allow for the release of the settlement under the Freedom of Information Act.

“We use (FOIA) as the process to release information, so we see that as a way to provide information through an orderly process that is … consistently applied to similar documents,” Fitzgerald said. “It’s actually not uncommon for employees to actually want more confidentiality, but the University always includes that phrase in these separations agreements.”

Ally Coll is the president of the post-#MeToo advocacy organization the Purple Campaign and the author of a Washington Post editorial about sexual harassment law. In an interview with The Daily, Coll spoke of the detrimental effect non-disparagement and non-disclosure provisions can have on an employee’s ability to explain their previous employment history.

“When you use those two practices together, it has the effect of keeping people silent about this misconduct and underlying treatment,” Coll said. “A lot of times non-disclosure agreements keeps them (from) … speaking out about how their agreements get resolved.”

These agreements were negotiated either when employees agreed to retire from the University or when they sought to pursue employment elsewhere. If employees sought work elsewhere, the University included a commitment to neutral references. The meaning of “neutral reference” remains unclear. 

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Courtesy of FOIA

Coll explained that with this clause, these agreements would leave a hole in an employee’s resume as they sought employment elsewhere.

“They can’t explain the circumstances under which they left their previous job,” Coll said. “It creates a hole in their resumes and … with a non-disparagement clause on top of it, it is really difficult in a job interview.”

Some of these agreements, particularly those to lower-level employees who previously drew smaller salaries, contain a provision commonly referred to as a “no-rehire” clause. This clause prevents the employee from any future employment at the University of Michigan.

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Courtesy of FOIA

“There may be circumstances, with whatever is leading to this separation, that would say, ‘This is a person that we should not rehire in another position,’” Fitzgerald said. “It doesn’t mean you can’t be rehired somewhere else, (it) just means you won’t be rehired at the University of Michigan.”

Coll described no-rehire provisions as problematic, particularly with lower-income workers in lower-level positions.

“I think no-rehire clauses are particularly nefarious,” Coll said. “It basically removes all of these future potential employers who are the types of employers where your experience is going to be more relevant … We see people get locked out of entire industries that way.”

In the context of the University, Coll noted that these would prevent these employees from working in another school or unit.

“Where are they going to find another job? If you’ve moved your whole family there and it’s not really an option to move to another city, then you might be interested in finding a position in a different department where your harasser doesn’t work,” Coll said. “If (the University) is taking that away in these agreements, that’s further limiting (the employee’s) ability to move on.”

The agreements also contain a provision ensuring that employees cannot take future legal action against the University. 

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Courtesy of FOIA

To make sure employees do not break their agreements, Coll said organizations often times send cease-and-desist letter. 

“Often times, what you’ll see is organizations will use cease-and-desist letters as a first step if they just have a rumor that somebody is speaking about it,” Coll explained. “A cease-and-desist letter is a warning shot — a legal letter saying, ‘If you don’t stop speaking … we will take legal action.’”

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Courtesy of FOIA

Should the University claim the employee has broken this portion of the agreement, the forced arbitration clause prevents resolution of this claim in the court system. Arbitration is sealed, meaning these disputes would never become public.

In some agreements, the University’s obligations to uphold the non-disclosure and non-disparagement portions of the agreement, unlike the employee, fall under neither potential monetary penalties nor forced arbitration.

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Courtesy of FOIA

THE EFFECTS

Non-disparagement and non-disclosure agreements have garnered public criticism in the wake of the #MeToo movement, as reporters have revealed how famous men such as Harvey Weinstein, Matt Lauer and Bill O’Reilly used these legal devices to prevent the disclosure of their alleged sexual harassment and misconduct.

Coll spoke of the scrutiny these sorts of agreements have faced over the past two years.

 “In the wake of #MeToo, we’ve seen companies and state legislators and lawmakers take action to stop the use of these types of agreements,” Coll said. “That has been effective in a number of settings, but it obviously hasn’t reached every industry or workplace.”

New York, California, Arizona, Vermont and Washington have all recently banned the use of non-disclosure agreements, which includes non-disparagement clauses, in settlements involving sexual harassment or misconduct.

Recently, New Jersey banned non-disclosure in settlements involving any kind of harassment or discrimination, not just limited to sexual misconduct. 

Maryland’s new law requires employers with 50 or more employees to publicly disclose how many of their settlements include a non-disclosure provision, among other requirements. 

Tennessee prevented all employers from asking their employees to sign non-disclosure provisions relating to sexual harassment as a condition for employment or from renewing NDAs.

It is the taxpayer’s right, local lawyer Sarah Prescott said, to know how funds are being spent by public universities.

“State laws around freedom of information prevents state actors, including the University, from shielding payments,” Prescott said. “If there’s a payment of money, those can’t be concealed because it is the taxpayer’s dime, and taxpayers and other citizens have a right to know where the money is going.”

Prescott cautioned that these agreements can be effective in shielding both taxpayers and the University from huge legal fees.

“How much was the exposure for the taxpayer that was resolved with that $1 million in payouts? There might have been $8 million in exposure … The University might have … managed that liability in a very effective and efficient way,” Prescott said. “I can make a good case that the University has examined potential wrongs and potential damages and has made a good case to right the wrongs and address it.”

When asked why an employee in an agreement might not be willing to speak to The Daily, Coll noted the power balance between the University and former employees when it comes to legal resources.

“An institution that has many lawyers at its disposal, that’s the power disposal that’s at (play),” Coll said. “There’s a huge power differential at play here, both legally and financially, on both sides.”

Should the University seek to recover damages for an alleged breach of this agreement, Coll suggested the University would be able to easily recover money paid to employees.

“The most common situation you see is someone (being offered) a settlement of their salary for a year (paid) out in 4 payments,” Coll said. “If they break their non-disparagement agreement, and they already got two payments, they would almost certainly not get any further payments, and they could bring an action to recover the money that was already paid.”

Coll remains concerned these agreements suppress allegations of wrongdoing. She suggested they allow companies to avoid addressing potential issues of harassment and discrimination.

“The harassment has remained in the shadows and has kept people silent about those issues,” Coll said. “They have allowed organizations and leadership at organizations to avoid actually addressing the underlying issue.”

Though the University is a public institution, Coll compared these practices to those of a private corporation.

“I’m not surprised to hear that large organizations, especially big schools … operate in many ways similar to large corporations,” Coll said. “I do continue to be surprised to learn that organizations are continuing to use that practice today, two years after #MeToo went viral.”

This problem is not unique to the University of Michigan, St. John said. Attempts at “buying silence” happen across the public and private sectors every day. 

“It’s hard to find a university where this hasn’t happened,” St. John said. “If you believe in students, if you believe in society, it’s really hard to tolerate what they are doing.”

Samantha Small can be reached at sdsmall@michigandaily.com. Sammy Sussman can be reached at sbsu@michigandaily.com. Zayna Syed can be reached at zasyed@michigandaily.com.