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Jordan v. Verizon Corp.

December 10, 2008


The opinion of the court was delivered by: Gerard E. Lynch, District Judge


In 2002, plaintiff Kathryn Jordan, a former employee of Verizon Corporation, brought an action against Verizon charging discrimination and denial of disability benefits. That action was settled, when the parties reached an agreement to resolve those claims. See Judgment of August 30, 2004, Jordan v. Verizon Corp., No. 02 Civ. 10144 (SAS) (S.D.N.Y. Aug. 30, 2002), aff'd No. 04-5581, 2005 WL 3116750 (2d Cir. Nov. 22, 2005) ("Jordan I"). Jordan now brings this second action against Verizon, alleging state law breach of written contract, breach of oral contract, fraudulent inducement, and breach of covenant of good faith and fair dealing, all relating to that settlement agreement. Verizon moves to dismiss this action in its entirety, arguing that the Court does not have subject matter jurisdiction over Jordan's claims or, in the alternative, that her claims should be dismissed because they duplicate claims that the Court resolved against Jordan after she moved to vacate the judgment in Jordan I. See Jordan v. Verizon Corp., No. 02 Civ. 10144 (GBD), 2007 WL 4591924 (S.D.N.Y. Dec. 27, 2007) (denying Jordan's Rule 60(b) motion) ("Jordan II"), appeal dismissed, No. 08-1984, slip op. (2d Cir. Sept. 25, 2008) ("Jordan III"). For the following reasons, defendant's motion will be granted, with plaintiff being granted leave to replead as described below.


This case has a complex procedural history.*fn1 The following recitation is limited to those aspects of the case that are relevant to the pending motion.

Plaintiff Jordan commenced her first action against Verizon on December 23, 2002, claiming discrimination on the basis of gender, age, and disability, in violation of federal, state, and local laws, and wrongful denial of enhanced disability benefits under Verizon's Long Term Disability ("LTD") Plan. On July 14, 2004, after engaging in settlement negotiations before the Honorable Gabriel Gorenstein, United States Magistrate Judge, during which plaintiff was represented by counsel, plaintiff signed a release and settlement agreement.

After the execution of the agreement but before the judgment was entered, plaintiff raised a number of concerns about the settlement, including that her attorney, who was no longer representing her, had misrepresented the terms of the agreement and coerced her into settlement. Plaintiff raised those concerns before the assigned District Judge, the Honorable Shira A. Scheindlin, in a status conference on July 23, 2004, during which plaintiff stated that her request for an "exit interview" was the "last stumbling block" toward settlement and that she would accept the settlement if Verizon provided her with such an interview. Verizon agreed to do so, and on August 27, 2004, Judge Scheindlin entered a judgment and dismissed the action with prejudice pursuant to the settlement agreement. The settlement agreement included a release of all plaintiff's claims against Verizon, including those "[c]laims asserted or which could have been asserted in the complaint in [that case]." (Compl., Ex. I § 2(b) "Examples of released Claims.").

Jordan then had second thoughts and attempted to unwind the settlement. She appealed the judgment to the Second Circuit, arguing that she entered the agreement under duress resulting from her pro se status, Verizon's threat to move for sanctions if she abandoned the settlement, and pressure from Judge Scheindlin and Magistrate Judge Gorenstein to reach a settlement. Plaintiff also claimed that Verizon had intentionally misrepresented the terms of the settlement agreement, negotiated the settlement in bad faith, and suppressed evidence during discovery and that, accordingly, she should be permitted to revoke her consent to the agreement.

In its decision, the Second Circuit noted that plaintiff had affirmatively agreed to the settlement agreement on two different occasions, Jordan I, 2005 WL 3116750, at *1, but found that the fraud and duress claims were not properly before the Court because they had not been raised in the District Court, id. at *2. Accordingly, the Court did not address the merits of those claims, but affirmed the district court's judgment without prejudice to plaintiff's right to file a Rule 60(b) motion in the district court. Id.

On March 1, 2006, plaintiff, appearing pro se, moved to vacate the judgment.*fn2 In that motion, Jordan alleged that: (1) she was coerced into executing the settlement through threats of litigation and sanctions; (2) she was denied adequate time to consider the proposed settlement under contract law and the Older Workers Protection Act, and denied accommodation under the Americans with Disabilities Act; (3) defendant fraudulently misrepresented the facts about the terms, value, and benefits of the proposed settlement, and that attorneys for both sides agreed to settle without her consent; (4) defendant negotiated in bad faith to defraud her of her ERISA pension rights, and her right to litigate her claims; and (5) new material evidence had been discovered that was suppressed by defendant during discovery. Jordan II, 2007 WL 4591924, at *2 (summarizing Jordan's claims).

The motion was reassigned to the Honorable George B. Daniels, United States District Judge, and referred to the Honorable Ronald L. Ellis, United States Magistrate Judge, for a Report and Recommendation ("R&R"). On August 31, 2007, Judge Ellis issued his R&R, in which he carefully examined plaintiff's motion under Rule 60(b)(2), which deals with newly discovered evidence; Rule 60(b)(3), which addresses fraud and bad faith by the adverse party; and the catchall provision of Rule 60(b)(6). Id. at *3; see Fed. R. Civ. P. 60(b).

In recommending a denial of plaintiff's claim under Rule 60(b)(2), Judge Ellis considered and rejected plaintiff's claim that new material evidence had surfaced, which Jordan claimed had been suppressed by defendant during discovery in order to defraud the Court and conceal the value of the benefits she was asked to forfeit. Id. at *8-9. Judge Ellis also found no evidence to support Jordan's Rule 60(b)(3) claim that defendant acted in bad faith to defraud plaintiff. In particular, Judge Ellis rejected Jordan's allegations that defendant perpetrated a fraud upon the court by intentionally misrepresenting the terms and value of the settlement by willfully deceiving her about her ability to retain her pension benefits, and that defense counsel falsely implied to the Court that she would continue to receive LTD benefits as long as she was disabled. Id. at *10. Judge Ellis further found that plaintiff failed to abduce any proof that defendant negotiated in bad faith or did not intend to honor the terms of the settlement agreement. Id. Lastly, Judge Ellis found no "extraordinary circumstances justifying relief" under Rule 60(b)(6). Judge Ellis found "unsupported by the record" plaintiff's allegations that she settled the case under duress due to illness, lack or representation, or economic pressure, and that Judges Gorenstein and Scheindlin exerted excessive influence on her to settle the case. Id. at *11-12.

To the contrary, Judge Ellis determined that during all stages of the settlement process, plaintiff was competent to make settlement decisions and had appropriate legal representation and that neither the defendant, nor any lawyer or judge presiding over the matter, had improperly influenced plaintiff's voluntary decision to settle her claims. Id. at *13.*fn3 Finding that plaintiff had failed to demonstrate any basis for vacating the judgment, Judge Ellis recommend that the motion to vacate be denied.

On receiving plaintiff's objections to the R&R, in which plaintiff disputed all of Judge Ellis's findings, Judge Daniels reviewed the record de novo and determined that the Magistrate Judge's findings were supported by the record, that there were "no facts to support a conclusion that Verizon made any intentional misrepresentations, negotiated in bad faith, or suppressed evidence," and that the record did not "support any finding of duress or coercion." Id. at *5. Accordingly, Judge Daniels adopted the R&R in its entirety and denied plaintiff's motion to vacate the judgment. Id.

Plaintiff appealed that ruling to the Second Circuit. The Court of Appeals summarily dismissed the appeal, inter alia stating that the appeal "lacks an arguable basis in law or fact." Jordan III, slip op. at 1. While that appeal was pending, plaintiff filed the instant action, "seek[ing] to vacate the [settlement] Agreement in its ...

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