Bill Summary – FastDemocracy

 SB176
 209084-1
 By Senator Smitherman
 RFD: Judiciary
 First Read: 03-FEB-21
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  SYNOPSIS:           This bill would create the Alabama
               Non-Disparagement Obligations Act to provide for
              the creation and enforcement of non-disparagement
              obligations in contracts.
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                               A BILL
                           TO BE ENTITLED
                               AN ACT
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             Relating to contracts; to establish the Alabama
 Non-Disparagement Obligations Act; to provide for the creation
 and enforcement of non-disparagement obligations in contracts.
 BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
             Section 1. This bill shall be known and may be cited
 as the Alabama Non-Disparagement Obligations Act.
             Section 2. As used in this act, the following terms
 shall have the following meanings:
             (1) INJURIOUS STATEMENT. Any statement that does any
 of the following:
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              a. Falsely discredits or detracts from the
  reputation of another's character, property, product, or
  business.
              b. Discredits or detracts from the reputation of
  another's character, property, product, or business by
  disclosing truthful but private information.
              c. Discredits or detracts from the reputation of
  another's character, property, product, or business by
  disclosing truthful but proprietary information or information
 gained within the context of a fiduciary relationship between
 the parties not otherwise protected by a trade secret statute.
             d. Is knowingly or recklessly made by a party that
 has clear and direct information that the statement was
 plainly false or misleading by its unreasonable incompleteness
 and that the communication of the misleading information would
 cause specific loss.
             (2) PERSON. An individual, corporation, business
 trust, estate, trust, partnership, limited liability company,
 association, joint venture, public corporation, government,
 government subdivision, agency, or instrumentality, or any
 other legal or commercial entity.
             (3) PRIVATE INFORMATION. Any information of such a
 personal or private nature that the parties to the contract
 would reasonably expect the information not to be made public.
             (4) PROPRIETARY INFORMATION. Non-public information
 that is described with reasonable specificity in the contract
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  such that the parties to the contract would be on reasonable
  notice of the scope of the contract provision.
             Section 3. (a) Except as otherwise prohibited by
  law, any contract or provision of a contract between two or
  more persons not to disparage each other is only enforceable
  by a civil action where all of the following elements are
  present:
             (1) The contract between the persons contains
  language prohibiting the parties from disparaging one or more
 persons, including specifically named third parties.
            (2) An objectively injurious statement is made that,
 based on objective facts, is reasonably expected to cause
 harm.
            (3) The communication of the objectively injurious
 statement results in specific loss to the plaintiff.
            (b) Nothing in this act creates any cause of action
 for disparagement at law or equity absent a contractual
 obligation between the parties.
            Section 4. In order to be valid, a contract governed
 by this act shall be reduced to writing, signed by all
 parties, and supported by adequate consideration.
            Section 5. In order to be enforceable, a contract
 governed by this act shall put the parties on reasonable
 notice that a party may not be held liable for breaching a
 contract governed by this act if a disclosure is made for any
 of the following purposes:
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            (1) Communicating with a law enforcement officer
  acting within the line and scope of the officer's law
  enforcement duties.
            (2) Communicating with a government regulator acting
  within the line and scope of his or her regulatory duties.
            (3) Responding to a grand jury subpoena.
            (4) Testifying in a judicial or administrative
  proceeding.
            (5) Conferring with an attorney for the purposes of
 obtaining legal advice or representation.
           (6) Responding to discovery in a judicial or
 administrative action; provided, the disclosure is either
 ordered or made in compliance with a protective order entered
 in the action.
           (7) Prosecuting or defending a civil lawsuit between
 or among parties to a contract governed by this act; provided,
 the disclosing party seeks to make any filing containing the
 disclosure under seal or in compliance with a protective order
 entered in the civil lawsuit.
           Section 6. (a) A contract governed by this act may
 require the parties to the contract to file under seal initial
 or responsive pleadings and motions under Alabama Rule of
 Civil Procedure 65 regarding the enforcement of a contract
 governed by this act.
           (b) Nothing in this section prohibits a court of
 competent jurisdiction from making its own judgment regarding
 what, if any, filings filed under seal pursuant to this
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  section should be made public. In making this judgment, the
  court shall consider the extent to which unsealing parts of
  the record would cause, perpetuate, or increase injury to any
  of the litigants or related third parties.
            (c) To the extent allowed by law, the parties may
  include in a contract governed by this act a requirement that
  notice be provided prior to providing to third parties
  information protected under this act.
            Section 7. In the event any portions of an agreement
 or contract governed by this act are found by a court to be
 unenforceable, those provisions shall be severable from the
 remainder of the agreement or contract.
           Section 8. (a) Nothing in this act affects any
 defense or immunity otherwise available under applicable law.
           (b) Nothing in this act shall reduce, void, or
 diminish any obligations or contractual obligations of any
 kind or nature between shareholders, owners, members, and
 officers of any entity that is governed by Title 10A, Code of
 Alabama 1975.
           (c) Parties to an agreement or contract containing a
 provision governed by this act may disclaim the applicability
 of this act to their agreement or contract, provided such
 disclaimer expressly and plainly states that the parties to
 the agreement or contract are aware they are waiving the act.
           Section 9. A defendant in an action for breach of a
 contract governed by this act may mitigate damages by proving
 either of the following:
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            (1) The injurious statement was made in good faith
  or by mistake.
            (2) The injurious statement was retracted in such a
  way as to eliminate or reduce the harm to the plaintiff.
            Section 10. Upon a finding as to whether or not
  there has been a breach of a contract governed by this act,
  the court may order any of the following:
            (1) Injunctive and other equitable relief as may be
  appropriate with respect to any actual or threatened breach.
           (2) The actual damages recoverable under existing
 law for breach of contract disputes that are suffered as a
 result of the breach.
           (3) Attorneys' fees and costs, if provided for in
 the contract or otherwise provided for by law.
           Section 11. This act shall apply to all contracts
 entered into on or after January 1, 2022.
           Section 12. This act shall become effective on
 January 1, 2022, following its passage and approval by the
 Governor, or its otherwise becoming law.
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