September 19, 2018

Determining the validity of an employee's "release of claims" against an employer

Determining the validity of an employee's "release of claims" against an employer
Charlery v New York City Department of Education, USCA, Second Circuit, Docket No. 17-1888

Jacqueline Charlery filed an action against the City of New York Department of Education, Board of Education of the City School District of the City of New York [Education] alleging claims for unlawful discrimination and retaliation in violation of the Americans with Disabilities Act and the Rehabilitation Act. Education filed a motion for judgment on the pleadings, converted by the district court, after giving notice to the parties, into a motion for summary judgment.

The court then found that Charlery had released her federal discrimination and retaliation claims in an agreement settling an earlier personal injury lawsuit against Education, granted Education's motion and entered judgment in Education's favor. Charlery appealed the district court's action.

With respect to the effect of a "release" entered into in the course of judicial proceeding, the Circuit Court, citing Livingston v Adirondack Beverage Co., 141 F.3d 434, explained that “[T]he validity of a release is a peculiarly fact-sensitive inquiry.”

Noting that in Charlery's alleged release appearing directly above the signature line is language stating “THE UNDERSIGNED HAS READ THE FOREGOING RELEASE AND FULLY UNDERSTANDS IT”, the Circuit Court said that “[w]e employ a ‘totality of the circumstances’ test to determine whether a release of . . . claims is knowing and voluntary,” explaining that the relevant factors courts should consider include:

(1) the plaintiff’s education and business experience,
(2) the amount of time the plaintiff had possession of or access to the agreement before signing it,
(3) the role of plaintiff in deciding the terms of the agreement,
(4) the clarity of the agreement,
(5) whether the plaintiff was represented by or consulted with an attorney, and
(6) whether the consideration given in exchange for the waiver exceeds employee benefits to which the employee was already entitled by contract or law.

The Circuit Court opined that "The district court did not err when assessing these factors and concluding that Charlery’s waiver was knowing and voluntary."

Analyzing the first five factors listed above, the court noted that "Charlery, being a teacher, is a well-educated, trained professional." However, said the court, the time and role she played in deciding its terms - weigh in favor of a finding that the waiver was not knowing and voluntary. Although Charlery stated that she had read the agreement and signed the release the same day she received it and although she was represented by counsel in the settlement of the lawsuit, she played no role in negotiating the terms of the release.

However, continued the Circuit Court, the clarity of the agreement favors a finding that the waiver was knowing and voluntary as the agreement stated that Charlery was releasing Education from “any and all claims” for “any matter, cause or thing whatsoever that occurred through the date” the release was executed as Charlery was represented by counsel in that lawsuit.

The sixth factor, said the court, was inapplicable to this case because Charlery had not claimed that she was entitled by contract or law to receive "benefits" and  the issues involved alleged federal discrimination and retaliation claims.

Balancing the totality of the circumstances, the Circuit Court concluded "as the district court did," that in executing the release Charlery knowingly and voluntary waived her federal discrimination and retaliation claims and held that the district court did not err when it entered summary judgment in favor of Education on Charlery's federal claims.

The decision is posted on the Internet at:

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