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Nondisparagement clause applied only to employee, so supervisor’s comments did not invalidate release

By Kathleen Kapusta, J.D.

Although a pro se employee’s former supervisor, whom she accused of sexually harassing her, purportedly made disparaging comments about her character and work ethic after she left the company, this did not invalidate the separation agreement and release she had signed prior to her departure, a federal district court in New York ruled, finding that the confidentiality and nondisparagement terms applied only to her. And because the agreement and release were enforceable, the employee waived any claims she accrued before she signed the release, said the court, dismissing all but one of her employment discrimination claims. As to her final claim for intentional infliction of emotion distress, the court found that the supervisor’s alleged statements, in and of themselves, did not plausibly suggest extreme and outrageous conduct and thus this claim also failed (Chandler v. Houghton Mifflin Harcourt Publ’g Co., January 10, 2018, Suddaby, G.).

The account executive for a publisher of educational textbooks and digital programs alleged that her supervisor on more than one occasion looked her up and down, made comments about her outfits, hugged her, and slid his hand down her backside. Because the company’s sexual harassment policy required reporting sexual harassment to an employee’s immediate supervisor, she never filed a complaint. She did, however, tell him his behavior was inappropriate and when he subsequently gave her a poor performance rating, she refused to sign off on it.

Hope you treat me better. Not long after that, she was assigned a new supervisor, who spent several days with her accompanying her on school visits. While sitting in her car after the first visit, he purportedly told the employee he was good friends with her former supervisor, he did not like the way she had treated him, and he hoped she would treat him better. He then allegedly took her hand and held it. Later, while she was driving, he rubbed her forearm and again told her he hoped she would treat him better than she had treated her former supervisor.

Put on PIP. The next day, the employee told her new supervisor about the old supervisor’s inappropriate behavior. In response, he purportedly said “Well, he’s Italian.” The following morning, the employee was placed on a performance improvement plan. For the next three weeks, her supervisor allegedly became increasingly hostile toward her, telling her to perform numerous impossible expectations not written into the original PIP.

Sexual harassment complaint. During that time period, the employee filed a sexual harassment complaint with the company’s HR administrators. Shortly after that, her supervisor told her he wanted to call her at 5 p.m. on Friday. Because it was purportedly well know that managers set up telephone meetings for Friday at 5 p.m. when they intended to fire someone, the employee negotiated an exit from the company, signing a severance agreement and release.

Post-release conduct. After signing the agreement, however, her supervisor purportedly made comments to at least two other managers disparaging the employee’s work ethic and character. He also allegedly made disparaging comments to her former employer and spread information related to her complaint to other publishers, which, she claimed, prevented her from obtaining employment in the textbook industry. In response to an EEOC investigation, the company’s attorney submitted a position paper that demonstrated that the supervisor had knowingly perjured and disparaged her character.

Lawsuit. The employee then sued, asserting 15 claims against the company, including that it failed to take effective action in response to her complaints of sexual harassment. She also sued both of her former supervisors.

Agreement enforceable. Moving to dismiss, the company argued that the employee waived her first 14 claims (all but the IIED claim) because they accrued before she left her employment and thus were waived by the release. The employee, however, claimed the separation agreement and release had been invalidated because the supervisor violated the release’s nondisparagement clause. Concluding that the agreement and release were enforceable, the court found that the employee did not allege facts plausibly suggesting it was the product of fraud, undue influence, or that she lacked the sophistication to understand the clearly worded agreement.

Although she claimed she believed her supervisor was going to fire her and that this forced her to negotiate an exit, this did not plausibly suggest duress because she did not allege the company used the possibility of firing her as leverage during the negotiations. Nor did she revoke her acceptance during the required time period and thus she ratified the agreement by keeping the severance payment, said the court.

As to her claim that the agreement and release were invalidated by her supervisor’s actions following the execution of the documents, the court pointed out that the release’s confidentiality and nondisparagement provisions applied only to her. Specifically, they stated “You shall refrain from all conduct, verbal or otherwise, that disparages or damages or could disparage or damage the reputation, goodwill, or standing in the community of the Company or any of the other Released parties” and “you shall not disclose the existence or terms of this Agreement to any third parties ….” The fact that the release defined the term “Released Parties” as both defendants and their “past [and] present … employees” did not mean that the other provisions of the release that expressly applied only to her prohibited the defendants from engaging in disparagement, said the court, dismissing her first 14 claims.

IIED claim. Dismissing her final claim for IIED, the court agreed with the company that any statements made to the EEOC in defense of her EEOC complaint were absolutely privileged. It also pointed out that because it found the release enforceable, any allegations concerning the defendants’ conduct that occurred before it was executed, such as the alleged sexual harassment, could not be considered because the employee waived those claims. This, noted the court, was important because courts in the Circuit have found that allegations of sexual harassment may, under certain circumstances, serve as the basis for an IIED claim.

Similarly, because the release did not preclude the defendants from discussing the contents of the separation agreement or from disparaging the employee, the court found it need only consider whether the supervisor’s alleged statements about the employee plausibly suggested extreme and outrageous conduct. Here, the court found that in and of themselves, they did not.