Can You Break an NDA to Report a Crime?
Non-Disclosure Agreements (NDAs) are legal contracts that prohibit one or both parties from discussing certain information. While the purpose of an NDA is to protect confidential information, it may raise an important question: Can an NDA be broken to report a crime?
Non-Disclosure Agreements and Confidentiality
What is a Non-Disclosure Agreement?
An NDA is a contract between two or more parties that outlines the purpose and scope of the disclosure, as well as the confidentiality obligations of each party. The agreement typically contains specific language that prohibits disclosing sensitive information, such as trade secrets, business secrets, or personal information. The purpose of an NDA is to protect confidentiality and prevent unauthorized disclosure.
Confidentiality Language
| Confidential Information |
|---|
| Commercial secrets |
| Trade secrets |
| Business strategies |
| Financial information |
| Personal information |
Break an NDA to Report a Crime?
Report a crime?
Scenario:
John signs a confidentiality agreement with his previous employer, XYZ Inc. As part of the agreement, John agrees not to disclose any confidential information to anyone. However, 5 years later, John discovers that XYZ Inc. has been involved in illegal activities, such as money laundering and fraud.
Question: Can John break the NDA and report the crime to authorities?
Legal Considerations:
- Law Enforcement Exemption
The USA Patriot Act (2001):
"Any person who intends to disclose information to federal, state, or local law enforcement agencies, auditors, or attorneys retained to conduct an investigation regarding any suspected illegal activity…
can disclose the information [protected by the NDA] without violating the prohibition in this paragraph."
(Emergency Supplemental Appropriations Act for Defense and Advance Appropriations for Military Technology (2008))
The Law Enforcement Exemption allows individuals to breach their NDA obligations in good faith to report suspicious activity or illegal conduct. However, this does not mean that individuals have carte blanche to share any information they want to. The exemption only allows reporting of information related to law enforcement investigations or suspicious activity.
Criminal Law and Procedural Protections:
- Protestations of Innocence: In the United States, individuals have the Constitutional right to remain silent under the Fifth Amendment. This means John, as the whistleblower, has the right to deny any involvement in the crimes he is reporting.
- Immunity Proceedings: If John reports a crime and is subsequently brought under investigation, he can apply for immunity under the Justice Department’s Immunity Process. This process seeks to protect individuals who voluntarily come forward with information regarding a crime from being forced to testify against themselves in a criminal proceeding.
Civil Law and Contractual Remedies:
- Breach of Contract: If John violates the NDA by reporting the crime, XYZ Inc. could potentially sue him for breach of contract. This would depend on the language and scope of the agreement, as well as jurisdiction and applicable laws.
- Equitable Relief: Courts may grant temporary restraining orders or injunctions to prevent John from disclosing protected information, pending a breach of contract lawsuit.
Conclusion
While an NDA can restrict an individual’s ability to disclose certain information, there are limited circumstances where breaking an NDA to report a crime is permissible. The law enforcement exemption, criminal procedural protections, and contractual remedies should be considered when balancing the need to report wrongdoing against the obligation to keep confidential information confidential.
Remember that each situation is unique, and it is critical to consult legal counsel before reporting a crime under an NDA or making any disclosures that might breach confidentiality obligations.
Summary:
If you have signed a non-disclosure agreement, reporting a crime may allow you to break the contract, but only under very specific circumstances. Consult a lawyer to understand your options and potential consequences before deciding what to do. Remember, the law enforcement exemption and criminal procedural protections provide protections for individuals who act in good faith to report suspected illegal activity.
