Perez v. Uline, Inc.

• Decision Date: 06 December 2007
• Docket Number: No. G036939.,G036939.
• Citation: 68 Cal.Rptr.3d 872,157 Cal.App.4th 953
• Court: California Court of Appeals Court of Appeals
• Parties: Brian PEREZ, Plaintiff and Appellant, v. ULINE, INC., et al., Defendants and Respondents.

68 Cal.Rptr.3d 872

157 Cal.App.4th 953

Brian PEREZ, Plaintiff and Appellant, v. ULINE, INC., et al., Defendants and Respondents.

No. G036939.

Court of Appeal, Fourth District, Division 3.

December 6, 2007.

Stanley M. Becker; Shuff Law Firm and John J. Gulino, Santa Ana, for Plaintiff and Appellant.

David G. Freedman, for Defendants and Respondents.

OPINION

RYLAARSDAM, J.

Plaintiff Brian Perez appeals from a judgment on his complaint against defendants Uline, Inc., Patrick Shea, Mike Donaghy, and Salvador Alcaraz for wrongful termination, breach of oral contract, failure to pay overtime wages in violation of the statute, and defamation, claiming the court erred in enforcing a severance agreement that was against public policy contained in, among other things, the Uniformed Services Employment and Reemployment Rights Act of 1994 (38 U.S.C. § 4301 et seq.; USERRA), and obtained under duress. We determine that because USERA directs that its provisions may not be eliminated by a contract, the release of rights in the severance agreement may not be enforced to the extent it deals with the claims of termination based on plaintiffs membership in the military or his military service. As to plaintiffs other claims for defamation and overtime payments, there is no basis to invalidate the release and we affirm.

FACTS AND PROCEDURAL HISTORY

Defendant employed plaintiff, a captain in the United States Marine Corps Reserves. In March 2003, on the day he returned to work after duty with the Reserves, plaintiff was told defendant no longer needed his services. Defendant presented him with a one and a half page "Severance Agreement and Release." (Capitalization and underscoring omitted.) It provided that defendant would pay plaintiff six weeks' salary in exchange for plaintiff releasing defendant from all claims, which were set out in a comprehensive but nonexclusive laundry list of named federal and state laws, and "any other federal or state law, statute, decision, order, policy or regulation establishing or relating to claims or rights of employees ..., and any and all claims in tort or contract, based upon public policy, and any and all claims alleging ... defamation, ... or wrongful discharge."

The agreement stated that defendant had advised plaintiff "to consult with an advisor of [his] choice prior to executing" it. It gave plaintiff seven days to decide whether or not to accept the terms and provided that if he did not, the offer was "null and void." (Bold omitted.)

Plaintiff, a college graduate who reads and speaks English fluently, read the agreement more than once. He believed it was "entirely up to [him]" whether to execute the agreement. He knew that if he did not sign it within the time limit he would not receive severance pay; he unsuccessfully negotiated with defendant to obtain more money. Although he did not understand the meaning of "advisor," he assumed it might have been a lawyer. He thought about talking to a lawyer before he signed the agreement but did not remember if he actually did. On the last day of the offer, plaintiff signed the agreement and was paid according to its terms.

Subsequently, he sued defendant and three of its employees. He claimed pretextual wrongful termination based on false negative performance evaluations, alleging he "was removed from a position which he had obviously earned solely because he was apt to be called to active duty and was, in fact, absent for one week due to a military obligation." He pleaded that his termination was in violation of federal and state statutes prohibiting termination of members of the armed services. These included sections of USERRA. The complaint also asserted a cause of action for breach of oral employment contract based on his military service.

In addition he sued for defamation based on negative performance evaluations and failure to pay overtime in violation of the Labor Code. Defendant filed a general denial and several affirmative defenses, including a claim of release based on plaintiffs execution of the severance agreement.

The parties stipulated to try the affirmative defense based on the release first. Thereafter, the court ruled in favor of defendants, finding the agreement was a release of all of plaintiffs claims. Its statement of decision provided that plaintiff "knew that by signing the [agreement] he was giving up, all claims related to his employment and all the laws recit[ed] in the agreement." The court also found plaintiff had sufficient time to "make a reasoned decision" whether he wanted to accept the offer and that there was no evidence of "fraud, deception, duress, or undue influence ..." causing him to sign the release. Although the individual defendants apparently did not answer the complaint, the court found in their favor and included them in the judgment.

DISCUSSION

1. Wrongful Termination Based on Alleged Violation of USERRA

In support of his second cause of action for common law wrongful termination based on violation of public policy and his third cause of action for breach of oral employment contract plaintiff relied on 38 U.S.C. 4301. It provides, "(a) The purposes of this chapter are—[1\1] ... [11] (2) to minimize the disruption to the lives of persons performing service in the uniformed services as well as to their employers, their fellow employees, and their communities, by providing for the prompt reemployment of such persons upon their completion of such service; and [U] (3) to prohibit discrimination against persons because of their service in the uniformed services." (38 U.S.C. § 4301(a).) Section 4311(a) requires that "[a] person who is a member of ... a uniformed service shall not be denied ... reemployment [or] retention in employment ... on the basis of that membership ... [or] performance of service...."

Plaintiff contends he was terminated "because he was apt to be called to active duty and was, in fact, absent for one week due to a military obligation." He argues the waiver of all claims in the release violated 38 U.S.C. section 4302(b), which states: "This chapter supersedes any State law ... contract, agreement, ... or other matter that reduces, limits, or eliminates in any manner any right or benefit provided by this chapter...." We agree as far as it applies to the causes of action for wrongful termination and breach of oral employment contract

The statute plainly states that a contract may not limit the protections of USERRA, which prohibits termination of employment based on membership in the military or performance of military service. Thus, defendant's assertion that the agreement waived the protections of USERRA cannot be sustained. We decide this without making any determination as to whether plaintiff was actually terminated because of his military service. This was not a question presented to the court during the trial of the issue of the release.

In his supplemental brief, plaintiff points out that in an employee's action against a private employer under USERRA the United States district courts have jurisdiction. (38 U.S.C. § 4323(b)(3).) He argues defendants never objected to jurisdiction in the superior court. This is another issue we do not decide.

2. Civil Code Section 15-2

Plaintiff maintains that the agreement cannot be enforced because it did not contain a waiver of Civil Code section 1542. That section provides that "[a] general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor."

The agreement stated that plaintiff waived "all claims existing as of the date [he] signs this [a]greement arising from or relating to [his] employment or the termination of his[ ] employment and any claims which arise under the common law of contract, implied contract, tort, public policy, or statute, such-as [claims under specified legislative enactments], ... or any other federal or state law, statute, decision, order, policy or regulation establishing or relating to claims or rights of employees, including, but not limited to, ... any and all claims in tort or contract, based upon public policy, and any and all claims alleging breach of an express or implied, or oral or written, contract, ... or alleging misrepresentation, defamation, interference with contract, ... or wrongful discharge."

In Skrbina v. Fleming Companies (1996) 45 Cal.App.4th 1353, 53 Cal.Rptr .2d 481, the plaintiff, laid off by the defendant, signed a release in exchange for severance pay. In the document the plaintiff agreed he was releasing the defendant from all claims, known or unknown, that he had currently or in the past, or that he may have in the future. The agreement did not refer to Civil Code section 1542. In upholding the validity of the release the court held that "`[r]elease, indemnity and similar exculpatory provisions are binding on the signatories...