Nondisparagement agreements have teeth in Iowa

Nondisparagement agreements, particularly if all parties are represented by legal counsel, have teeth and are enforceable in Iowa via court action. For example, the Iowa Court of Appeals recently issued an opinion about sanctions in a case originally involving a dispute between an employer and an employee. Because of drama unfolding in the court filings over the years, the case has been the subject of several news stories. The lesson for employers, however, can be found not in the drama but rather in the court’s decision.

About the case

The case started as a standard employee termination with the fired individual starting his own company in the same industry. With that, the lawsuits began, including contentious arguments about a noncompete agreement, confidential information, and various trade-secret issues.

To limit the litigation’s scope, the parties entered into a consent agreement before the court. The agreement prohibited them from making disparaging statements “about adverse [p]arties to this case, their services, products, policies or abilities—whether verbally or in writing, including the on-line postings and website, regardless of the truth or the falsity of such statements.”

In other words, the parties entered into an extremely broad nondisparagement agreement. It didn’t matter if the comment was true or not. You weren’t supposed to say it.

What happened next