View source for Overbey v. Baltimore (2019) Nondisclosure Agreements

[https://cases.justia.com/federal/appellate-courts/ca4/17-2444/17-2444-2019-07-11.pdf?ts=1562869823 Overbey] (4th Circuit 2019) (cleaned up): 

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.”  

Incidentally, from the $31,500 disbursed by the City, Overbey’s attorney took a cut of
approximately $20,500—one-third of the $63,000 that Overbey would have received if
the City had not determined that she had violated the non-disparagement clause. Once her
attorney took his cut, Overbey was left with about $11,000 in settlement funds.

Thoughts:  
*(1) Something special about this case is that the breach was before the agreement was agreed to by both parties, apparently--- the City Board of Estimates had not approved it yet. She could have sued on that ground, too, but apparently did not plead that argument. 
*(2) I wonder if all $63,000 was taxable income? If the liquidated damages had been 100% rather than 50%, would she owe taxes on all $63,000? A good question for tax twitter. 
*(3) In Overbey's case, she was too poor to pay income tax, though this settlement was probably taxable income and would raise her high enough to do it. Being poor, though, she had been eligible for housing aid, food stamps, etc. Do winning legal damage for defamation, civil rights, etc. kick plaintiffs off of welfare? Should this be changed?  Again, ask tax twitter.