Pierce v. St. Vrain Valley School Dist. RE-1J, RE-1

• Decision Date: 17 May 1999
• Docket Number: RE-1,D,No. 97SC355,97SC355
• Parties: 136 Ed. Law Rep. 1055, 1999 CJ C.A.R. 2626 Dr. Fred PIERCE, Petitioner, v. ST. VRAIN VALLEY SCHOOL DISTRICTr. Milton Etter, Kathy Hall, Martin Block, Sandra Manly, Michael Shaw and Jim Martinsen, Respondents.
• Court: Colorado Supreme Court

Page 600

981 P.2d 600

136 Ed. Law Rep. 1055, 1999 CJ C.A.R. 2626

Dr. Fred PIERCE, Petitioner, v. ST. VRAIN VALLEY SCHOOL DISTRICT RE-1J, Dr. Milton Etter, Kathy Hall, Martin Block, Sandra Manly, Michael

Shaw and Jim Martinsen, Respondents.

No. 97SC355.

Supreme Court of Colorado,

En Banc.

May 17, 1999.

Overton & Feeley, P.C., Jane G. Ebisch, Vinton, Nissler, Allen & Vellone, P.C. Kristen L. Mix Denver, Colorado, Attorneys for Petitioner.

Semple, Miller, DeLay & Mooney, P.C., Martin Semple, Patrick B. Mooney, Denver, Colorado, Attorneys for Respondents.

Justice KOURLIS delivered the Opinion of the Court.

In this case, a former school district superintendent seeks review of the court of appeals' decision in Pierce v. St. Vrain Valley School District RE-1J, 944 P.2d 646 (Colo.App.1997), affirming the trial court's dismissal of his claims against the school district for breach of a settlement agreement entered into by the school district and the superintendent at the time of his resignation. We conclude that the terms in the agreement providing for confidentiality regarding certain allegations against the superintendent and precluding disparaging public remarks are enforceable against the parties to that agreement. ¹ We therefore reverse the decision of the court of appeals and remand this case for further proceedings.

I.

Petitioner Dr. Fred Pierce was employed as the Superintendent of the St. Vrain Valley School District RE-1J (District) from August 1990 until August 1994. In mid-1994, the District's Board of Education (Board) ² initiated an investigation into complaints of sexual harassment that female employees of the District had made against Dr. Pierce. The independent investigator who conducted the investigation provided the Board with a detailed report in which she concluded that there was a basis for the complaints. In response to the report, the Board asked Dr. Pierce for his resignation.

Dr. Pierce agreed to resign his position pursuant to the terms and conditions of a written settlement agreement he entered into with the Board on August 7, 1994. ³ The terms of the agreement relevant to this action are the following:

Dr. Pierce will announce that he is resigning for "personal reasons."

The District shall not make any public statements that are inconsistent with or contradict [that announcement].

[T]he fact of and details of a recent investigation by the School Board into certain allegations made by certain persons will be and will remain confidential, unless agreed in writing by the parties or subject to court order.

The District and Dr. Pierce mutually agree that there will be no disparaging public comments or remarks made by either party to this Agreement.

The parties also agreed that the District would provide Dr. Pierce with a good recommendation and would pay him the sum of approximately $160,000, which included benefits and unused vacation pay, as well as $118,850 as consideration for his release of any age discrimination or other potential claims against the District in connection with his employment.

On August 31, 1994, an article in The Denver Post detailed the financial aspects of the agreement and reported that "[o]ne source close to the matter said there were allegations of sexual harassment against the superintendent." See Mary George, Schools Chief Is Paid to Leave, The Denver Post, Aug. 31, 1994, at 1B. The article also quoted an unnamed source as saying that the allegations of harassment "were flying around back in May." Id. The source continued: "We found basis for the rumors. That's why he resigned for personal reasons. I'm very glad we let him go. In order to get rid of him, that's what we had to do." Id. The article quoted Board President Mike Shaw as saying that he was frustrated that he could not be forthright about answering questions that people had regarding Dr. Pierce's resignation. It also attributed to one current and one former school board member comments regarding the fact that the District might face lawsuits because of Dr. Pierce's conduct.

After the publication of that article, Dr. Pierce filed this action. As relevant to this appeal, Dr. Pierce contended that the settlement agreement he entered into with the District was a valid and enforceable contract, and that the District and individual Board members breached that contract by making the public statements reported in the article.

The District and the individual Board members moved for summary judgment, arguing that the statements attributed to Board President Mike Shaw did not violate the agreement; that the District could not be liable for other comments that were made by people who were not parties to the agreement; and that the portion of the agreement prohibiting disparaging statements was unenforceable because it violated public policy. The trial court granted summary judgment in favor of the District and the Board members.

The court of appeals affirmed, concluding that the provisions of the agreement prohibiting comment on the circumstances surrounding Dr. Pierce's resignation and forbidding disparaging comments were void because they violated public policy as expressed in Colorado Constitution article II, section 10, and in the Open Records Act, sections 24-72-101 to -402, 7 C.R.S. (1998). See Pierce, 944 P.2d at 651. We now reverse.

II.

This case comes to us in an unusual posture. We are neither dealing with a request by the news media for access to information that they contend should be available to the public, nor addressing a claim against a non-Board member District employee who did not sign the agreement but who is nevertheless being sued for speaking freely about what he or she knew. Rather, we are being asked to determine whether the parties to a contract may escape its terms upon some later assertion that they never should have entered into the agreement at all because it was contrary to the First Amendment or to the public interest.

Fundamentally, then, this is a contract case. We must decide whether the contract between these parties is enforceable as written, or whether constitutional or public policy concerns render it unenforceable.

A.

The agreement provided that the circumstances surrounding Dr. Pierce's resignation would remain confidential and that neither party would make disparaging public remarks. ⁴ Specifically, the District and the Board members promised that they would not reveal anything about the sexual harassment allegations against Dr. Pierce or make comments inconsistent with the announcement that Dr. Pierce was resigning for personal reasons.

The parties do not dispute that the agreement satisfied the basic elements of contract formation. It specifically identified the consideration for which the parties bargained, and the parties' signatures indicated their mutual assent to those terms. See I.M.A., Inc. v. Rocky Mountain Airways, 713 P.2d 882, 888 (Colo.1986); Restatement (Second) of Contracts § 17(1) (1981) ("[T]he formation of a contract requires a bargain in which there is a manifestation of mutual assent to the exchange and a consideration."). In addition, we note that both parties had the benefit of representation by counsel, who presumably offered advice as to the ramifications of the agreement. We thus begin from the presumption that this was a valid and legally enforceable contract. We must next determine whether some countervailing concern dictates that parties to a presumptively valid agreement like the one at issue may not legally bind themselves in such a manner.

B.

As a threshold matter, the Board members argue that because these provisions restricted the parties' freedom of speech, the agreement is unenforceable as violative of the First Amendment. ⁵ Essentially, the Board members argue that they could not legally have given up their right to speak freely about the terms of the agreement, the underlying circumstances, and their opinions of Dr. Pierce. We reject this contention.

The Board members rely heavily on the notion that the agreement impinges upon their free speech rights to comment on a matter of public concern. Indeed, it does, but only by operation of the specific provisions of a contract to which they agreed.

Most frequently, the protections of the First Amendment are invoked in circumstances that have little relationship to contract law. For example, in Pickering v. Board of Education, a teacher was dismissed from his position for authoring and sending a letter to the local newspaper critical of the local school board's allocation and use of funds. See Pickering v. Board of Educ., 391 U.S. 563, 564-65, 88 S.Ct. 1731, 20 L.Ed.2d 811 (1968). The Court held that statements on matters of public concern must be accorded First Amendment protection, and that under the facts of that case, the teacher's exercise of his right to speak on those issues could not furnish the basis for his dismissal. See id. at 574, 88 S.Ct. 1731. Certainly in Pickering, the teacher did not contract to limit his right to speak about a particular issue in exchange for some consideration to him.

The only case in which the Supreme Court has specifically addressed the interrelationship between contract law or quasi-contract law and the First Amendment is Cohen v. Cowles Media Co., 501 U.S. 663, 669, 111 S.Ct. 2513, 115 L.Ed.2d 586 (1991). In Cohen, the Court addressed a situation in which a prominent political figure named Dan Cohen offered, on the condition of confidentiality, to provide local newspapers with damaging information regarding a candidate of a rival political party. Despite the promise of confidentiality, the newspapers published Cohen's name as the source of the damaging information. Cohen was fired by his employer on the day that the stories appeared, and as a result, he sued the publishers of the newspapers. ⁶

The Supreme Court held that the First Amendment did not bar Cohen from recovering on a theory of promissory estoppel for the damages he...