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KNOLL v. MERRILL CORPORATION

July 3, 2003

PAUL KNOLL, PLAINTIFF,
v.
MERRILL CORPORATION, MERRILL COMMUNICATIONS LLC, LISA DADY, ALLEN MCNEE, JULIE KOCH, AND NANCEE RONING.



The opinion of the court was delivered by: Charles Haight, United States District Judge

MEMORANDUM OPINION AND ORDER

Plaintiff Paul Knoll brings suit against Merrill Corporation ("Merrill") and Merrill Communications LLC (collectively "Merrill") and certain of Merrill's officers to recover damages arising out of the allegedly unlawful termination of his employment. Knoll alleges that he suffered from depression and anxiety, and that when he made this condition known to the defendants, he was terminated. This case is currently before the Court on a motion by the defendants for partial summary judgment dismissing plaintiff's first four claims, and a cross-motion by the plaintiff to strike defendants' third affirmative defense.

I. INTRODUCTION

The complaint adequately alleges subject matter jurisdiction based on diversity of citizenship under 28 U.S.C. § 1332.*fn1

Plaintiff asserts eight claims for relief, the first four being the targets of defendants' motion for partial summary judgment. Those claims allege that by discriminating against him based upon his disability and his membership in a protected class, defendants contravened (1) N.Y.C. Admin. Code § 8-107 and (2) N.Y. Exec. Law § 290 et seq.; and individually and in consort contravened (3) N.Y. Exec. Law § 296(6) and (4) N.Y. Exec. Law § 290 et seq. Complaint 28-65. The defendants answer with twelve affirmative defenses, only the third of which is relevant for the purposes of this motion. This third affirmative defense is comprised of a release agreement (the "Release") executed on March 23, 2001, Answer ¶ 97, in which plaintiff agreed to "give up and unconditionally release Merrill from" any rights plaintiff had arising out of his employment and termination of employment,

including, but not limited to, claims for violation of the Age Discrimination in Employment Act ("ADEA"); violation of The Americans with Disabilities Act; violation of Title VII; violation of any other federal, state or local laws, including civil rights laws, based on any protected class status; breach of contract; fraud or misrepresentation; defamation; intentional or negligent infliction of emotional distress; breach of the covenant of good faith and fair dealing; promissory estoppel; negligence or any other breach of duty; wrongful termination of employment; retaliation; harassment; my conduct as a "whistleblower"; violation of the Family and Medical Leave Act; violation of the Worker Adjustment and Retraining Notification Act; attorneys' fees; breach of public policy; failure to pay wages or benefits; or any other claims for unlawful employment practices whether legal or equitable.
Release at 1.*fn2 Defendants contend that the Release was entered into knowingly and voluntarily, and constitutes a valid of waiver of the enumerated claims. Defendants' Memorandum of Law in Support of the Motion for Partial Summary Judgment at 14 ("Defendant's Support Memorandum").

Plaintiff advances four arguments in response to the preclusive use of the Release. First, plaintiff relies upon a Minnesota statute that requires a releasee to give a releasor written notice of the releasor's right to rescind the release within 15 days of its execution. Merrill did not give that notice to Knoll, and Knoll contends that this failure renders the Release unenforceable. Second, plaintiff contends that defendants breached a "No Defamation" provision, which states that the "parties agree that neither shall speak of the other party in a derogatory or defamatory way," Release at 2, and that this breach renders the Release unenforceable and void. Third, plaintiff states that because he did not have the requisite capacity to enter into the Release and that his lack of capacity was known to the defendants at the time of contracting, the Release is unenforceable. Fourth, plaintiff argues he did not knowingly and voluntarily enter the Release, also rendering it unenforceable. Plaintiff's Memorandum of Law in Opposition to the Motion at 1-2 ("Plaintiff's Opposition Memorandum"). Based on these four arguments, plaintiff not only defends the first four claims he makes in his Complaint, but moves to strike the affirmative defense involving the Release.

Before turning to a discussion of the legal arguments made by counsel, it is useful to give a brief account of the facts, particularly those that pertain to plaintiff's termination and his signing of the Release.

II. FACTUAL BACKGROUND

Merrill is a national and international document and communications services company, providing a range of services to the financial, legal and corporate sectors. Paul Knoll was hired by Merrill Corporation in December 1998 to serve as the General Manager of Document Management Services for the New York/New Jersey region at an annual salary of $150,000. Defendants' Statement of Undisputed Facts ¶ 3; Complaint ¶ 14. At all times during his employment with Merrill, Lisa Dady was plaintiff's supervisor.*fn3 Complaint ¶¶ 7 & 13. Knoll's client base was located primarily in New York County, and so during the course of his employment he used Merrill's New York City office, located at 225 Varick Street. Id. ¶ 15. The complaint alleges at ¶ 15 that "[w]hile at Merrill, right up to the termination of [Knoll's] employment, [he had] built and developed the North East Region unit to be Merrill's most profitable business unit in the entire country," and that under his supervision his unit "out-performed any other unit in the company." Id. ¶ 14.

Knoll alleges that in or about October 2000 he started experiencing psychological and mental problems arising out of stress and anxiety. He began taking the herb kava to reduce his stress and informed Dady that he was doing so, after which she "[o]n numerous occasions [] both while alone, and while on conference calls with peers and superiors at Merrill, [] would state to plaintiff to `take another Kava.'" Complaint ¶¶ 16-17. In March 2001, Knoll sought treatment from a mental health professional, at which time he was diagnosed with depression and anxiety. He notified Koch and Dady within one week of his diagnosis, and Dady responded by offering to arrange mental health services for him by a Merrill-paid psychologist. Id. ¶ 18.

Notwithstanding that seeming indication of support, on or about March 12, 2001 Dady notified Knoll that he was being terminated from Merrill. "At that time Mr. Knoll inquired as to what had happened to the offer to procure mental health treatment for him, to which Defendant Dady responded that it was no longer an option." Complaint ¶ 19. The plaintiff alleges he was provided with no substantive or work related reason for his termination, and that prior to the March 2001 meeting when he informed the defendants of his mental condition, he was in good standing with the company. He concludes that the sole reason he was terminated from his position was his disability. Complaint ¶¶ 19-20.

Aware of his disability, or at a minimum aware that he was seeking treatment for some problems, Answer ¶ 18, sometime during March 2001 defendants had the plaintiff execute a termination of employment release agreement they prepared. Complaint ¶ 21. The circumstances surrounding the Release and the extent of the parties' negotiations about the terms of plaintiff's termination are the subject of some dispute. What is clear is that between the beginning of March 2001 and the signing of the Release on March 23, 2001, some discussions between Knoll and Merrill took place; Knoll was not at that time represented by counsel. Complaint ¶ 22; Declaration of Brian Gardner (Nov. 5, 2002) ("Gardner Declaration"), Ex. 3. The initial severance offer made by defendants consisted of three months' salary, amounting to $37,500; a subsequent offer was made for three months salary plus unpaid vacation time of $22,613. Plaintiff's Opposition Memorandum at 3. These initial offers also included forgiveness for a loan Knoll received on February 2, 2000 to purchase Merrill stock in the gross amount of $26,000 (net amount of $15,068).

In response to this set of offers, plaintiff sent Dady an email on March 13, 2001 requesting he be paid three additional months of salary (another $37,500). His email stated in relevant part:

Given the fact that my Dr. care for my current medical/mental condition may be for an extended term I think that a 6 month severance package is appropriate and would be appreciated. It may be some time before I am able to focus on a new career or job search efforts.
Gardner Declaration, Ex. 3. He also requested that his email account and office phone number remain active to ensure the continuity of his communications during his employment search. Id. In an email dated March 16, 2001, Dady responded and said she was prepared to provide Knoll a lump sum for his vacation, and cover six months of COBRA, valued at $5,000 for the six months. Id.

The final release contained the following payment provision:

In consideration of the obligations imposed upon me by this Release, Merrill will pay me a lump sum payment of $54,950.00, less applicable authorized withholdings ($4,950 of this amount represents the grossed up cost of six months of COBRA [family medical/dental] expenses). . . . In addition, Merrill agrees to release me from any obligation to repay all or any part of the loan I received on February 2, 2000, in the gross amount of $26,000 (net amount of $15,046.68) that I used to purchase stock in Merrill. I acknowledge the receipt of all compensation earned while an employee, including bonuses and accrued vacation pay owed to me.
Release at 1. The last sentence of the provision quoted supra, the email from Dady, and an affidavit of Dady that states the plaintiff was paid for his vacation time by a separate check from Merrill, Affidavit of Lisa Dady ¶ 8 (December 9, 2002) ("Dady Reply Affidavit"), make clear that Knoll did receive compensation for his unused vacation time. Consideration for the Release thus increased from the initial offer by a total of $17,450: $12,500 representing additional severance compensation, and $4,950 for COBRA coverage.

After the execution of the Release, plaintiff alleges that in or about October 2001 and at other times during this period, defendants made slanderous statements concerning him to members of his business community. He states that "a specifically identified former employee of Merrill and a current employee of Merrill, along with others yet to be identified, were told by Defendant Roning with the knowledge and consent of all of the Defendants that the reason Mr. Knoll was terminated was due to `very illegal activities' on his part." Complaint ¶ 23. Not only does plaintiff allege these statements are untrue, he argues that their impact was significant, since he was trying to reestablish himself in a small business community. Id. ¶¶ 24-25.

These circumstances give rise to plaintiff's action against the defendants, corporate and individual, and to the present cross-motions.

III. DISCUSSION

A. Standard of Review

Defendants move for partial summary judgment on the first four of plaintiff s claims. Plaintiff cross-moves to dismiss defendants' third affirmative defense. That cross-motion is the functional equivalent of a motion for partial summary judgment and I will subject it to the same criteria.

Summary judgment shall be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). See also Celotex Corp. v. Catrett, 477 U.S. 317,322 (1986). The party moving for summary judgment bears the burden of demonstrating the absence of a genuine issue of material fact; this burden is satisfied if the moving party can point to the absence of evidence necessary to support an essential element of the non-moving party's claim. Goenaga v. March of Dimes Birth Defects Foundation, 51 F.3d 14, 18 (2d Cir. 1995). If there is "any evidence in the record from any source from which a reasonable inference could be drawn in favor of the non-moving party," then summary judgment should not be granted. Chambers v. TRM Copy Centers Corp., 43 F.3d 29, 37 (2d. Cir. 1994). The substantive law will identify which facts are material. Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1986) ("Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.").

A party resisting summary judgment "may not rest upon the mere allegations or denials of the adverse party's pleading, but the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). As Judge Motley aptly stated in Eppendorf-Netheler-Hinz v. Enterton Co., 89 F. Supp.2d 483, 485 (S.D.N.Y. 2000):

[J]udges . . . [are not] required to submit a question to a jury merely because some evidence has been introduced by the party having the burden of proof, unless the evidence be of such a character that it would warrant the jury in finding a verdict in favor of that party. . . .[I]n every case, before the evidence is left to the jury, there is a preliminary question for the judge, not whether there is literally no evidence, but whether there is any upon which a jury could properly proceed to find a verdict for the party producing it, upon whom the onus of proof is imposed.
(citing and quoting Anderson, 477 U.S. at 251). See also Western World Ins. Co. v. Stack Oil, Inc., 922 F.2d 118, 121 (2d Cir. 1990) ("The non-movant cannot escape summary judgment merely by vaguely asserting the existence of some unspecified disputed material facts, or defeat the motion through mere speculation or conjecture.") (citations and internal quotation marks omitted). Thus, the party resisting summary judgment must "come forward with specific facts to show there is a factual question that must be resolved at trial." Donahue v. Artisan, 00-8326, 2002 WL 523407, at *1 (S.D.N.Y April 8, 2002).

The cross-motions in the case at bar turn upon the validity and effect of the Release. If, applying these criteria, the Court decides in plaintiff's favor on any one of his four arguments to invalidate the Release, or decides that there is a triable issue of fact regarding any one of those arguments, then the defendants' motion for partial summary judgment will be denied. Conversely, if the Court decides in favor of the defendants on all grounds ...


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