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WARDEN v. E.R. SQUIBB & SONS

December 30, 1993

LOUIS P. WARDEN, Plaintiff,
v.
E.R. SQUIBB & SONS, INC., Defendant.



The opinion of the court was delivered by: RAYMOND J. DEARIE

 DEARIE, District Judge.

 Plaintiff Louis P. Warden initiated this action against his former employer, defendant E.R. Squibb & Sons, Inc., alleging discrimination on the basis of race in violation of Title VII of the Civil Rights Act of 1964 and tortious interference with prospective contractual relations. Defendant has moved for summary judgment dismissing plaintiff's complaint on the grounds that a written settlement agreement between the parties bars this action in its entirety. For the reasons set forth below, defendant's motion is granted in part and denied in part.

 Background

 Plaintiff was employed by defendant E.R. Squibb & Sons, Inc. as a pharmaceutical sales representative from June 22, 1977, through July 10, 1990. Prior to his termination, plaintiff, represented by counsel, and defendant began negotiating the terms of plaintiff's separation from the company. On August 28, 1990, the parties executed a Separation Agreement and General Release (the "settlement agreement"). Under the terms of the settlement agreement, plaintiff released defendant from all claims, including claims of racial discrimination and claims growing out of his employment and its termination. Plaintiff also agreed to withdraw any pending claims of discrimination and retaliation against Squibb. In consideration, plaintiff received $ 56,581.24 plus continued medical, hospital, and dental insurance benefits for one year.

 Contrary to the agreement, plaintiff did not dismiss a charge pending before the New York State Division of Human Rights. On October 19, 1992, the Commissioner of Human Rights dismissed the claim based on the express terms of the settlement agreement. Plaintiff continued to pursue that claim by commencing a special proceeding in New York State Supreme Court.

 In addition, plaintiff filed a discrimination claim with the State of New York Workers' Compensation Board in November of 1990. Two months later, on January 15, 1991, plaintiff initiated this action in the Supreme Court of the State of New York seeking money damages for discrimination on the basis of race and tortious interference with prospective contractual relations. The action was timely removed to federal court, and defendant filed a counterclaim seeking, among other things, to enforce the terms of the settlement agreement. By order dated September 17, 1992, this Court stayed all proceedings pending the resolution of the issue of the enforceability of the settlement agreement. In addition, by consent order dated February 16, 1993, plaintiff agreed to adjourn the special proceeding in New York State Supreme Court and agreed not to file any new charges against Squibb pending the Court's ruling. Defendant now moves for summary judgment dismissing plaintiff's complaint in its entirety on the grounds that the agreement is enforceable and bars plaintiff's claims. Defendant further moves for an award, in accordance with the settlement agreement, of costs, attorney's fees, and other expenses incurred as a result of plaintiff's failure to abide by the agreement's terms.

 Terms of the Settlement Agreement

 Under the settlement agreement, plaintiff represented "that except for the charges filed against the Equal Employment Opportunity Commission ("EEOC") in August of 1989, June of 1990 and August of 1990 . . . and the charge filed against Bristol-Myers Squibb Company with the New York State Division of Human Rights, he ha[d] not filed any complaints or charges or lawsuits alleging race or age or national origin discrimination against [defendant] . . . and that he [would] not do so at any time [in the future]." (Separation Agreement and General Release, Ex. G to Feinblatt Aff., P 3.) Plaintiff agreed to "withdraw the [filed] race discrimination, retaliation and national origin charges with prejudice." (Id.) In addition, he released defendant from any claims he had or claimed to have based on "rights under federal, state or local laws prohibiting age or race or other forms of discrimination" and "claims growing out of his employment and its termination or any other legal restrictions on [defendant's] right to terminate its employees." (Id. at P 13.) Plaintiff also waived "any reinstatement to any position with [defendant]." (Id. at P 6.)

 As consideration for plaintiff's settlement of his claims, defendant paid plaintiff $ 56,581.24. (Id. at P 4.) Under the agreement, the payment was allocated to the settlement of plaintiff's claims against the company "based in tort, including those for pain and suffering and for infliction of emotional distress, as consideration for the waiver of rights of employment . . . and the execution of [the settlement agreement]." (Id.) The agreement further provides that "it is expressly understood that [plaintiff] is waiving all claims to severance payments, bonus payments, back pay, vacation pay, and any other past compensation or past payments of any kind." (Id.) Plaintiff was to continue to receive medical, hospital and insurance benefits for one year, or until July 31, 1991. (Id. at P 5.) According to its terms, the agreement is to be construed under New Jersey law. (Id. at P 16.)

 Discussion

 
Legality of Contract

 Plaintiff contends that the settlement agreement is an "illegal" contract on three grounds: it constitutes a waiver of plaintiff's right to receive workers' compensation, it constitutes an attempt to "cover-up" defendant's violation of the workers' compensation law prohibiting discrimination against an employee who has filed or attempted to file a workers' compensation claim, and it constitutes an attempt to "cover-up" defendant's violation of the labor laws prohibiting retaliation against an employee who reports unlawful activities of his employer. Essentially, plaintiff argues that the release of certain claims pursuant to the settlement agreement is contrary to public policy and renders the agreement unenforceable. "A promise or other term of an agreement is unenforceable on grounds of public policy if legislation provides ...


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