I did not get the impression that the Town's motion to dismiss was on good footing. In fact it read more like a motion to strike names and events. Based on my reading of the motion to dismiss and the plaintiff's response I believe the motion to dismiss was going to be denied. Whether or not the complaint would of survived a motion for summary judgment I have no idea.
I believe there is more than the job transfer/reinstatement otherwise there is no purpose behind the confidentiality agreement regardless of who wanted it. I would also like to see a copy of the confidentiality agreement and see if it covers more than just the settlement terms.
I believe the Town was motivated to settle at this stage because if the motion to dismiss was denied there would have been depositions surrounding the allegation which may be unfavorable to the town.