Somervell v. Baxter Healthcare Corp.

• Citation: 966 F.Supp. 18
• Decision Date: 04 June 1997
• Docket Number: Civil Action No. 96-2207 (AER).
• Parties: Margaret G. SOMERVELL, Plaintiff, v. BAXTER HEALTHCARE CORPORATION, Defendant.
• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)

966 F.Supp. 18

Margaret G. SOMERVELL, Plaintiff, v. BAXTER HEALTHCARE CORPORATION, Defendant.

Civil Action No. 96-2207 (AER).

United States District Court, D. Columbia.

June 4, 1997.

Walter H. Fleisher, Washington, DC, for Plaintiff.

Jana Howard Carey, Todd J. Horn, Venable, Baetjer, Howard & Civiletti, Baltimore, MD, Patrick J. Stewart, Venable, Baetjer, Howard & Civiletti, Washington, DC, for Defendant.

MEMORANDUM OPINION AND ORDER

AUBREY E. ROBINSON, Jr., District Judge.

This matter is before the Court on Defendant Baxter Healthcare Corporation's Motion to Dismiss or, in the alternative, for Summary Judgment. The Court has carefully considered the pleadings of the parties, the entire record contained herein, and the arguments made by counsel at a hearing held in this action on January 22, 1997. For the reasons set forth herein, the Court grants Baxter's motion and dismisses the case.

I. BACKGROUND

In October 1995, Defendant Baxter Healthcare Corporation fired Plaintiff Margaret Somervell from her employment with Baxter. Somervell contends her firing violated the Americans with Disabilities Act ("ADA"), 42 U.S.C. §§ 12112, 12132, and the District of Columbia's Human Rights law, D.C.Code § 1-2501 et seq. In addition, Somervell asserts that Baxter's behavior surrounding her firing constituted illegal coercion and intentional infliction of emotional harm. Baxter has moved to dismiss the complaint or alternatively for summary judgment because of a settlement and release agreement allegedly entered into by the parties.

The release states:

In exchange for the benefits under this agreement, you waive your right to file or participate as a class member in any claims or lawsuits (whether or not you now know the basis for the claims or lawsuits) with federal or state agencies or courts against the Company and its employee benefit plans, including their present and former director, officers, employees, agents and fiduciaries. This waiver of release includes, but is not limited to, all claims of unlawful discrimination in regard to age, race, sex, color, religion, national origin and disability under Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, or any other federal or state statutes, all claims for wrongful employment termination or breach of contract and any other claims relating to your employment or termination of employment with the Company.

Appendix 1 to Defendant's Memorandum at 4 (the "release"). The Court is convinced, and Somervell has not argued otherwise, that if the release is binding on Somervell, her lawsuit against Baxter is barred. It is undisputed that Somervell did not sign the release. However, Baxter argues that although Somervell did not sign the release, Somervell's receipt of the monetary consideration paid by Baxter to Somervell in exchange for the release binds her to its terms.

On October 9, 1995, Baxter representatives met with Somervell and fired her because of performance and behavioral problems. Baxter presented Somervell with the release, which was titled an "Employment Termination and General Release Agreement." The agreement specified that in "consideration for signing this agreement, you will receive three months salary totaling $9,100.20 less applicable taxes." It also specified that Somervell's "accrued and unused vacation time will be paid to [her] in a lump sum totaling $3,033.40." Further, the agreement outlined the parties' respective obligations in a number of areas relating to insurance, disability, 401(k), stock purchase, education assistance, and the credit union. The release also contained the language quoted above.

The release required the employee to "acknowledge[s] that the benefits provided in this agreement exceed the benefits you would normally receive and that those extra benefits are provided by the Company in exchange for your signing this agreement." During the October 9 meeting, Baxter told Somervell that the payment of the three months salary was in exchange for Somervell's waiver of her right to sue. Conversely, Baxter told Somervell that the accrued vacation and leave time payment was not in exchange for signing the release agreement, but was, instead, something that Baxter owed Somervell regardless of her signature on the release agreement.

Somervell did not sign the agreement. Nonetheless, on October 20, 1995, Baxter made two direct deposits into Somervell's bank account in the amounts of $5,368.96 and $1,949.04. The payments represented the three months salary, minus taxes, and Somervell's accrued leave time, minus taxes. Baxter admitted that it made the $5,368.96 deposit in error; Baxter's payroll department should not have made the payment until Somervell signed and returned the release. Accordingly, on November 6, 1995, Baxter wrote to Somervell. The letter mentioned the $5,368.96 payment, and said that Baxter deposited that amount due to a payroll error. The letter restated that the three months salary payment was in exchange for signing the release, and requested that Somervell either return the signed agreement or the $5,368.96.

In response, on December 18, 1995, Somervell wrote back to Baxter. Somervell stated that she was confused as to the contents of the letter, and questioned what the $5,368.96 payment was for. Somervell also stated that she never received the payment for her accrued and unused vacation time. To date, Somervell has refused to return the money paid to her.

II. DISCUSSION

A. Overview

Pursuant to Federal Rule of Civil Procedure 12(b), the Court, because it must rely on matters outside of the pleadings to resolve this motion, will treat Baxter's motion as a motion for Summary Judgment under Federal Rule of Civil Procedure 56. Federal Rule of Civil Procedure 56(c) provides that the Court should enter summary judgment in favor of a party if "there is no genuine issue as to any material fact and [] the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). To defeat a motion for summary judgment, Plaintiff may not rest on her pleadings, but must set forth specific facts that are in dispute. Fed. F.Civ.P. 56(e). The disputed facts must be sufficient to allow a reasonable jury to find for Plaintiff. Washington Post Co. v. HHS, 865 F.2d 320, 325 (D.C.Cir.1989); Laningham v. United States Navy, 813 F.2d 1236, 1242 (D.C.Cir.1987). When evaluating a summary judgment motion, the Court must view the evidence in favor of the nonmoving party, and believe and give the benefit of all reasonable inferences drawn from the nonmoving party's evidence. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 2513-14, 91 L.Ed.2d 202 (1986); Washington Post, 865 F.2d at 325.

This case requires the Court to determine as a legal issue whether Somervell's release of Baxter is effective because of her receipt and retention of the consideration paid pursuant to an unsigned agreement. To resolve this issue, the Court must consider two related contract law doctrines — releases of liability and ratification of contracts by conduct. The Court then must apply those general contract principles in the context of an employment discrimination suit.

B. Knowing and Voluntary Release

In general, a release is an ordinary contract. Wolcott v. Ginsburg, 697 F.Supp. 540, 544 (D.D.C.1988). In the District of Columbia, a valid release, like any other contract, requires consideration. Id.; Wiggins v. Hitchens, 853 F.Supp. 505, 514 (D.D.C. 1994) ("A covenant not to sue is a contract under which one party promises never to sue the other party or third person to enforce a claim. The District of Columbia requires such contracts to be supported by consideration."). In the employment law context, courts generally have required that the employee knowingly and voluntarily release her claims. Rivera-Flores v. Bristol-Myers Squibb Caribbean, 112 F.3d 9, 11-12 (1st. Cir.1997) (requiring voluntary and knowing release of ADA claims); Puentes v. UPS, Inc., 86 F.3d 196, 198 (11th Cir.1996) (noting that an employment discrimination waiver "must be closely scrutinized" and applying a totality of the circumstances test to determine if the waiver is valid); Pierce v. Atchison, Topeka & Santa Fe Ry. Co., 65 F.3d 562, 571 (7th Cir.1995) (applying a stricter totality of the circumstances rule instead of common law contract principles to evaluate the validity of a waiver in the employment discrimination context); Blistein v. St. John's College, 74 F.3d 1459, 1465 (4th Cir.1996) (discussing ADEA releases); Nicholas v. NYNEX, Inc., 929 F.Supp. 727 (S.D.N.Y. 1996) (discussing ADEA and Title VII releases).

In this case, the Court has no difficulty in determining that, had Somervell signed the release, it would be supported by sufficient consideration and be knowing and voluntary. Baxter's offer of increased severance benefits clearly provides sufficient consideration for the release. Rivera-Flores v. Bristol-Myers Squibb Caribbean, 112 F.3d 9, 11 ("Courts have, in the employment law context, commonly upheld releases given in exchange for additional benefits."). Moreover, it is undisputed that Somervell knew the subject matter of the agreement. Somervell's own declaration indicated her knowledge that consummation of the release would waive her rights. (Somervell Declaration Paragraph 4.) Accordingly, there is no doubt that the release, if consummated, would be supported by sufficient consideration and be knowing and voluntary.¹

C. Ratification

The more difficult issue, and one not squarely answered by any precedent, is whether Somervell's receipt and retention of the consideration paid under a release of employment related claims can substitute for her signature on the release. Because the release is an ordinary contract, the logical starting point is ordinary contract law. In Davis v. Winfield, 664 A.2d 836, 837 (D.C. 1995), the District of Columbia Court of Appeals discussed the exact issue here: is a contract...