So the Fourth Circuit held (by a 2-to-1 vote) Thursday. The case involved a stock provision in settlements with Baltimore, under which settling plaintiffs "promise not to speak to the media about either their underlying allegations or the settlement process itself" on pain of losing half the settlement.

First, the underlying allegations, from Overbey v. Mayor & City Council of Baltimore (as usual in my posts, I note moved text with braces, { and }):

Ashley Overbey sued three officers of the Baltimore Police Department (BPD), alleging that the officers had beaten, tased, verbally abused, and needlessly arrested her in her own home after she called 911 to report a burglary…. Her case ground through the system for about two years, during which [Overbey alleges] she and her children became homeless—partly because Overbey's arrest record made it difficult for her to find work. Eventually, following her attorney's advice, Overbey agreed to settle her suit for $63,000. The parties to the settlement agreement included both the officers named in Overbey's complaint and the City itself. The City was a party to the agreement because, pursuant to Maryland law, it represents the BPD's interests in settling claims against BPD officers. As in 95% of settlement agreements between the City and persons alleging police misconduct, Overbey's settlement agreement included what we will call a "non- disparagement clause." This clause required Overbey to "limit [her] public comments" regarding her lawsuit "to the fact that a satisfactory settlement occurred involving the Parties." It prohibited her from "discussing [with the news media] any opinions, facts or allegations in any way connected to" her case, her underlying allegations, or the settlement process. And it provided that if Overbey were to ever make a prohibited comment regarding her lawsuit, the City would be entitled to a refund of half of her settlement. The clause placed no restriction on the City's freedom to speak about the case. After Overbey signed the settlement agreement, the agreement went before the City's Board of Estimates for approval. While approval was pending, a local newspaper, the Baltimore Sun, published Overbey's name, her photograph, her address, and the amount of her proposed settlement in a report on payouts planned for police-misconduct claimants. The Sun's report quoted a statement made by the then-City Solicitor to the Board of Estimates in which the Solicitor characterized Overbey as "hostile" during her encounter with police—insinuating that Overbey, not the officers, had been at fault. The Sun's story accumulated several anonymous, race-inflected comments implying that Overbey had initiated a confrontation with the police in hopes of getting a payout from the City. Overbey posted responses to several such comments, insisting that the police had been in the wrong and describing some of the injuries she had suffered. The City determined that Overbey's online comments on the Sun article violated the non-disparagement clause of the settlement agreement. Consequently, once Overbey's settlement was approved, the City remitted only half of the agreed payment—$31,500— to Overbey's attorney. It retained the other half as "liquidated damages." …

Unconstitutional, the panel majority held, in an opinion by Judge Henry Franklin, joined by Judge Stephanie Thacker; here's an excerpt:

It is well-settled that a person may choose to waive certain constitutional rights pursuant to a contract with the government. Yet … the waiver of a constitutional right—even one that appears in an otherwise valid contract with the government—is enforceable … [only if,] under the circumstances, the interest in enforcing the waiver is not outweighed by a relevant public policy that would be harmed by enforcement…. [Here,] the City's asserted interests in enforcing Overbey's waiver of her First Amendment rights are outweighed by strong policy interests that are rooted in the First Amendment and counsel against the waiver's enforcement…. [E]nforcing the non-disparagement clause, which subjected Overbey to contractual liability for speaking about the allegations giving rise to her complaint and the circumstances under which she settled with the City, was contrary to the public's well-established First Amendment interest in "uninhibited, robust, and wide-open" debate on "public issues." … Standing shoulder to shoulder with the citizenry's interest in uninhibited, robust debate on public issues is this nation's cautious "mistrust of governmental power." This mistrust is one of the "premise[s]" of the First Amendment, and we think it well-warranted here, because the non-disparagement clause is a government-defined and government-enforced restriction on government-critical speech. Indeed, when the government (1) makes a police-misconduct claimant's silence about her claims a condition of settlement; (2) obtains the claimant's promise of silence; (3) retains for itself the unilateral ability to determine whether the claimant has broken her promise; and (4) enforces the claimant's promise by, in essence, holding her civilly liable to itself, there can be no serious doubt that the government has used its power in an effort to curb speech that is not to its liking….

[None of] the City's asserted interests in enforcing the non-disparagement clause … are strong enough for the City to prevail. {We note that this is not a case in which the government seeks to hold a private speaker liable for the unauthorized disclosure of confidential or sensitive information that was held by the government and to which the speaker would not have had access but for a promise of confidentiality or other fiduciary obligation to the government. Cf. Snepp v. United States, 444 U.S. 507, 510 (1980).} Initially, the City points out that it has an interest in using settlement agreements to reduce the time and money that it devotes to litigation, and that this interest favors enforcement of the non-disparagement clause. But as the Ninth Circuit has aptly explained, when a settlement agreement contains a waiver of a constitutional right, the government's general interest in using settlement agreements to expedite litigation is not enough to make the waiver enforceable—otherwise, no balance-of-interests test would be required. The City cannot succeed merely by invoking its general interest in settling lawsuits. It must point to additional interests that, under the circumstances, justify enforcing Overbey's waiver of her First Amendment rights. To that end, the City … [argues] that one of the private interests protected by the First Amendment is the right not to speak. According to the City, the "individual autonomy" embodied by the right not to speak would be undermined if plaintiffs like Overbey could not use their right to silence as a bargaining chip during settlement negotiations. Thus, in the City's view, enforcement of the non-disparagement clause is consonant with, and essential to, individual First Amendment interests. We think not…. [T]he right to refrain from speaking has generally been construed as preventing the government from requiring private persons to speak in support of policies, causes, or ideas that they find objectionable. It is simply not implicated here: a limitation on the government's ability to purchase citizens' silence does not meaningfully compromise the "individual freedom of mind" protected by the right not to speak. The City goes on to invoke the interests of the three police officers who were named as defendants in Overbey's first lawsuit, asserting that the officers have a personal interest "in clearing their names." We are not unsympathetic to this interest, but it does little to help the City's cause. The settlement agreement neither admits wrongdoing nor vindicates any of the parties involved. That is, neither the settlement agreement as a whole nor the non-disparagement clause in particular has the effect of proving that the officers did not act as Overbey alleges. Thus, to the extent that the officers have an interest in clearing their names, enforcing the non-disparagement clause will not help them. We conclude that the officers' interest in clearing their names does not weigh in favor of enforcement. Additionally, the City urges that both it and the officers involved have an interest in avoiding "harmful publicity." It is well-established that "vehement, caustic, and sometimes unpleasantly sharp attacks on government and public officials" can play a valuable role in civic life and therefore enjoy the protections of the First Amendment. Enforcing a waiver of First Amendment rights for the very purpose of insulating public officials from unpleasant attacks would plainly undermine that core First Amendment principle…. {[T]he City asserts that if Overbey were to prevail in the instant case, the City would "almost certainly" offer less money to similar police-misconduct claimants in the future, since such claimants would have less value to offer in return for settlement; that is, claimants would be unable to sell their own silence as part of a settlement agreement, making their agreement to settle less valuable. This, according to the City, would "reduce the number and mutual value of settlements." We are troubled by the underlying logic of this assertion: police- misconduct claimants get money to keep quiet, the City gets silence and a speedy end to litigation, and everybody wins—except, presumably, members of the public who are interested in transparency surrounding police-misconduct suits. Aside from that concern, there are two factors that make the City's assertion unconvincing. First, the assertion is overly simple: the outcome of settlement negotiations in a police-misconduct suit is likely to be driven by a complex interaction of case-specific factors, such as the defendants' risk of exposure to high damages awards following a jury trial, the claimant's financial resources, and each side's appetite for litigation. Accordingly, we will not assume that the financial terms of all future settlements will be appreciably affected by the enforceability of the non-disparagement clause in this settlement. Second, during oral argument, the City represented that it had already stopped using non-disparagement clauses like Overbey's in settlement agreements with police-misconduct claimants. Thus, we are left with no reason to think that the enforceability of the non-disparagement clause in Overbey's settlement agreement has anything other than a conjectural and attenuated relationship to "the number and mutual value of [future, hypothetical] settlements."} Finally, the City appeals to "fairness." As the City would have it, Overbey "sold her [speech] rights, with an option to buy them back, which she exercised, and now she has [her rights] again." Essentially, the City argues that half of Overbey's settlement sum was earmarked for her silence, and that it would be unfair for Overbey to collect that half of her money when she was not, in fact, silent. When the second half of Overbey's settlement sum is viewed in this light, it is difficult to see what distinguishes it from hush money. Needless to say, this does not work in the City's favor. We have never ratified the government's purchase of a potential critic's silence merely because it would be unfair to deprive the government of the full value of its hush money. We are not eager to get into that business now….

Judge A. Marvin Quattlebaum Jr. dissented; here's an excerpt: