- Following a Democratic presidential debate in February, Michael Bloomberg announced that he would release three women who signed NDAs related to complaints about comments he had made.
- Although this may appear to be a move toward more transparency, his multi-billion dollar company may be silencing many more accusers with the legal agreements.
A Business Insider investigation found that Bloomberg LP has faced nearly 40 employment lawsuits from 64 people since 1996 - it is unknown how many were settled with NDAs.
- In the wake of #MeToo, NDAs have come under fire for allowing prominent men to commit sexual misconduct, largely with impunity.
- Business Insider talked to several legal experts about why NDAs are so harmful and how they've been used to protect companies and individuals from addressing issues of sexual misconduct and discrimination.
- Visit Business Insider's homepage for more stories.
When Sekiko Sakai Garrison, a former sales executive at Bloomberg LP, informed her boss that she was pregnant, she claimed he told her to "kill it," referring to her unborn child.
The audacious comment, she said, came from the founder and majority-owner Mike Bloomberg himself - and it was the last straw in filing a lawsuit against the multi-billion dollar company in 1997. Garrison claimed Bloomberg LP had a "hostile and discriminatory work environment."
The alleged remark from the company's founder is just one of many from within the organization that have come under fire over the years. Bloomberg has been accused of asking a female employee if she would have sex with a client and insinuated that another was only engaged because she was good in bed. (Garrison's subsequent case against the billionaire provided a laundry list of alleged sexist and racist comments that have plagued Bloomberg for years.)
Since launching his Democratic presidential bid, those very comments and his company's history of sexual harassment and misconduct have come under scrutiny - with several opponents vocally demanding answers.
"I'd like to talk about who we're running against: a billionaire who calls women 'fat broads' and 'horse-faced lesbians,'" Elizabeth Warren said at a recent Democratic debate. "And no, I'm not talking about Donald Trump, I'm talking about Mayor Bloomberg."
Associated Press
Democratic presidential candidates, former New York City Mayor Mike Bloomberg, left, and Sen. Elizabeth Warren, D-Mass., try to answer a question during a Democratic presidential primary debate Wednesday, Feb. 19, 2020, in Las Vegas, hosted by NBC News and MSNBC. (AP Photo/John Locher)
Warren lambasted Bloomberg for using the legal agreements to silence allegations about a litany of sexist and racist comments he's made over the years - many of which he has since written off as bawdy "jokes." And she demanded the former mayor release all the individuals who have entered into non-disclosure agreements with Bloomberg or his company over any complaints of misconduct, so that they could tell their side of the story.
Tweet Embed://twitter.com/mims/statuses/1230679999449124868?ref_src=twsrc%5Etfw
"I used to teach contract law. And I thought I would make this easy."
Elizabeth Warren opened her #cnntownhall by reading aloud a document to release people from Michael Bloomberg's nondisclosure agreements https://t.co/j8nidJ0nTL pic.twitter.com/eHMBjI4qyM
Faced with demands to do away with various legal agreements that have silenced accusers, the former New York mayor announced late last month he would release three women from their NDAs who complained about comments he personally made. But dozens more cases remain off limits.
"If [Bloomberg LP] can hide the fact that there's an ongoing problem, then they don't feel as much pressure to investigate and rid themselves of these problems," Scott Altman, a legal professor at USC's Gould School of Law who has written on the subject told Insider. "They regard paying off the occasional victim is just a cost of doing business rather than a reason to invest in changing cultures monitoring and preventing abuse in the workplace."
The #MeToo movement revealed how NDAs enabled sexual and discriminatory misconduct
While NDAs have rightfully come under scrutiny in the wake of the #MeToo movement, Scott Altman, a legal professor at the University of Southern California's Gould School of Law, told Insider that NDAs are widely used and "are terrifically important for business."
NDAs were first prominently used by burgeoning tech companies such as IBM who wanted to protect important trade secrets that could be leaked by disgruntled current or former employees, according to the Columbia Journalism Review.
These legal agreements elicit silence from the accusing party, typically in exchange for a substantial financial sum and promises of privacy. In cases of sexual misconduct, all the legal experts with whom Business Insider consulted agreed that NDAs can sometimes benefit survivors of sexual misconduct.
When faced with being forced to leave a job and the stigma of making a complaint in the first place, the ability to start fresh with remuneration, the promise of privacy, and an opportunity to leave the offending incident in the past can appear to be a fair deal.
Eduardo Munoz/Reuters
"By the time an NDA is being entered the damage is more than done and one of the few sources of leverage that a person has who has already experienced quite a bit of harm is the promise to be quiet. It's a kind of bargaining chip," Gillian Thomas, a senior staff attorney with the ACLU's Women's Rights Project, told Insider. "NDAs are sometimes the only route to give them some measure of compensation for what's happened."
The real cost of an NDA
But the often insidious nature of these contracts of silence was laid bare by the #MeToo movement.
Jennifer Klein, the chief strategy and policy officer for TIME'S UP, says the long-term costs of these contracts can be hard to recognize for victims in the wake of a traumatizing incident or repeated abuse.
"If they are muzzled, if people are not able to come forward and talk about their experience, it often enables their abusers and lets them avoid consequences for their behavior which allows other people to be victimized - that's the real danger," Klein told Insider.
Thomas said the #MeToo era revealed that companies treat financial settlements for misconduct as "the cost of doing business" and a necessary "expense to be absorbed in favor of protecting men who are seen as high-value assets."
Samuel Estreicher, the director of NYU's Center for Labor and Employment Law, claimed that most employers take allegations of sexual and racial harassment seriously, particularly when there's a credible case of abuse.
However, when it comes to "rainmakers" who control business opportunities, like Mike Bloomberg or former Bloomberg executive Lou Eccleston, who was accused by multiple employees of preying on younger female employees, Estreicher said too many companies sweep allegations under the rug.
"I consider [Mike Bloomberg] to be one of these 'rainmakers' - he personifies the company, even though he's got a lot of people working there," Streicher told Insider. "And there are repeated accusations against him for discriminatory comments. There was a failure on the part of the company."
Under scrutiny as a presidential candidate, Mike Bloomberg announced he would release just three women from their NDAs
A Business Insider investigation was the first to detail a litany of legal complaints against Bloomberg LP, which has faced nearly 40 employment lawsuits from 64 people since 1996. Thomas noted that the true extent of the complaints will never truly be known as these are the only complaints filed in court. There could be countless others who made complaints of misconduct or discrimination and settled before any formal legal action was taken.
Two days after Senator Warren took Bloomberg to task for the NDAs, the former New York mayor turned presidential hopeful announced he would release three women from their NDAs who complained about comments made by Bloomberg himself.
"If any of them want to be released from their NDA so that they can talk about those allegations, they should contact the company and they'll be given a release," the Bloomberg Campaign wrote in a statement.
"I've done a lot of reflecting on this issue over the past few days and I've decided that for as long as I'm running the company, we won't offer confidentiality agreements to resolve claims of sexual harassment or misconduct going forward."
While some have praised the billionaire for what appears to be a move towards more transparency, Thomas said it seemed disingenuous to request the women go to his company first about breaking their silence instead of reaching out to them personally.
"It struck me as odd that even in this glimpse of transparency that the onus was put on the person who had the complaint in the first place, as opposed to reaching out to them and saying, 'I welcome you telling your story,'" Thomas said. "I think he missed the mark if he was trying to appear really eager to have their allegations aired."
George Frey/Stringer/Getty Images
It is still unclear how many NDAs have been signed to settle allegations of misconduct by employees of Bloomberg LP and exactly which women have been released from them. Some have raised questions about why only three individuals are now allowed to speak out while there are likely numerous accusers who remain legally-bound to keep quiet.
Altman speculated that Bloomberg may have been conservative in releasing individuals from their NDAs due to privacy concerns of Bloomberg employees named in the complaints.
"NDAs may be protecting the reputation of other alleged perpetrators in his company and it's either not in his power or reasonable for him to waive their privacy rights in the way that's perfectly reasonable for him to waive his own privacy," Altman said.
However, Altman did point out that it would be possible to get the entire company to waive all of the NDAs they had settled with former employees, as NBCU did in the aftermath of Matt Lauer's alleged sexual misconduct.
"I suspect that the reason he only released three is that he hopes to be able to get away with that for political reasons," Altman said.
Legal experts argue whether NDAs are actually 'enforceable'
Although NDAs have been used to ensure silence from individuals who may have allegations that could damage a company or individuals' reputation, many legal experts debate whether or not they are actually "enforceable" in the cases of alleged misconduct.
Altman and Estreicher argued that it's difficult to actually enforce an NDA - a fact that is not known by many who enter into these agreements. They claimed that people feel bound to follow through with promises they make and that the fear of a legal action keeps them from breaking their silence. However, retaliatory litigation for breaking an NDA is often rare in cases of reputation-damaging conduct.
"If the breach of an NDA caused harm by drawing attention to the bad behavior of the alleged perpetrator, bringing a lawsuit against the other parties is just going to bring more publicity to these very things," Altman said.
Still, NDAs often go hand-in-hand with non-disparagement agreements, which prevent individuals from saying anything that could be damaging towards a company. Breaking NDAs can also have serious financial consequences, she added.
AP Photo/Mark Lennihan
"If someone breaks their NDA, there are consequences for agreements, including something called liquidated damages," Thomas explained. "These can say 'not only will you be required to pay us back the settlement monies, if you breach this, you're going to have to pay twice or three times that amount.'"
While there are real repercussions for publicly breaking an NDA, Thomas clarified that victims of sexual misconduct or discrimination can still report their allegations to government enforcement agencies, like the Equal Employment Opportunity Commission - a fact that is little known by many victims of misconduct.
"It's critical that people understand that they may be barred from recovering money on their own behalf, but they're entitled to tell the government and to be a witness in somebody else's case," Thomas said. "They're not totally silenced."
However, the scare tactics employed by Bloomberg LP were successful in ensuring silence from employees, including those Garrison sought out to corroborate the claims she made about Bloomberg's shocking response to her pregnancy.
Court records and attorney's notes showed that the company and Bloomberg himself often dismissed employee complaints and that active measures were taken to attack and intimidate women who had made legal complaints about sexual harassment - a maneuver that Bloomberg viewed as "extortion."
Garrison, one of the women who may now be released from her NDA, claimed in a statement filed with the New York Division of Human Rights, that many female employees who had complained about the misconduct at Bloomberg LP feared attacks to their professional status in the company and financial retribution. In notes to her attorney at the time, Garrison alleged that "there are threats and high levels of intimidation that are terrifying people and keeping them quiet."
"All women who have complained to me are afraid of retaliation," Garrison said in a statement filed with the New York Division of Human Rights.