Opinion
No. 54555-8-I
Filed: May 2, 2005 UNPUBLISHED OPINION
Appeal from Superior Court of King County. Docket No. 02-2-29670-0. Judgment or order under review. Date filed: 07/02/2004. Judge signing: Hon. Steven Scott.
Counsel for Appellant(s), Randy Perry Baker, Sheridan Baker PS, 705 2nd Ave Ste 1200, Seattle, WA 98104-1798.
John Patrick Sheridan, Sheridan Baker PS, 705 Second Ave., Suite 1200, Seattle, WA 98104-1798.
Counsel for Respondent(s), Amy H Koziak, Davis Wright Tremaine, 1501 4th Ave Ste 2600, Seattle, WA 98101-1688.
Jeffrey Bennett Youmans, Davis Wright Tremaine, 1501 4th Ave Ste 2600, Seattle, WA 98101-1688.
When a terminated employee agrees to release the employer from all claims arising from employment in exchange for severance payments, the release bars the employee from pursuing a discrimination claim unless it is shown to be invalid for reasons recognized by ordinary contract law. Although appellant claims her former employer falsely told her that she could not continue her health care insurance under COBRA unless she signed the release, she has not produced evidence of a false statement. And having had more than a month to study the relevant documents and ask for advice, she is unable to show that she justifiably relied on what she understood from the discussion on the day she was fired. We affirm the order of summary judgment dismissing her claim.
FACTS
American President Lines, a global shipping company, hired Momoyo Nishiyama as a sales support person in the Chicago office at the end of 1986. In early 2000, Nishiyama applied for and was hired to fill an inside sales position in APL's Seattle office.
APL went through a company wide reorganization and workforce reduction in early 2002. The Seattle management decided to eliminate Nishiyama's position. Geir Sylte, Nishiyama's direct supervisor, and Peter Rumwell, human relations manager, met with Nishiyama on January 7, 2002. Sylte and Rumwell informed Nishiyama she was losing her job. Nishiyama was shocked and upset at receiving this news, and recalls very little detail about the meeting. Her most enduring recollection is being told that she had to sign a certain document in order to continue her health care benefits under COBRA.
Consolidated Omnibus Budget Reconciliation Act of 1985, Public Law 99-272.
The severance plan Nishiyama received at this meeting presented her with an option. Upon signing an election form and a release of claims, a terminated employee could receive severance pay, either in biweekly installments or a lump sum payment. For someone who elected to continue health care benefits under COBRA, and who also elected the bi-weekly payment option in the severance plan, the company would continue to pay the health care premiums the same as for an active employee during the period severance payments were being received. Nishiyama was told that based on her salary and length of service, she could receive severance pay of approximately $30,000, either in a lump sum or over a period of 28 weeks. Nishiyama took home the severance plan, a document of some 15 pages, and understood she had up to 45 days to decide whether or not to sign the attached forms.
Clerk's Papers at 72.
Nishiyama was too depressed about being terminated to read the documents carefully, but she was concerned about continuing her health care benefits and aware of the 45-day deadline. She briefly reviewed the plan documents and then on February 5, a month after being terminated, she signed and returned two forms to APL. One was the severance plan employee election form indicating her choice of the biweekly payment option, and the other was a severance plan release agreement.
Clerk's Papers at 82, 83-85.
The three-page release agreement included a release of claims arising out of her employment. It states in pertinent part:
PLEASE READ THIS ENTIRE AGREEMENT CAREFULLY. NOTE THAT IT CONTAINS A RELEASE AND WAIVER OF CLAIMS. IF YOU AGREE TO ITS TERMS, SIGN BELOW.
I have received information about the APL Limited ('APL') Severance Plan (the 'Plan'), and I understand the options that I have under the Plan. In particular, I understand that the separation assistance associated with the Plan is provided in exchange for my promises under the terms of this Agreement.
. . .
As consideration for my receipt and acceptance of the separation assistance associated with the Plan, I hereby waive, release and fully discharge, and agree not to pursue, any and all claims and/or causes of action I have against APL arising out of and/or connected with my employment with APL or any of its subsidiaries or the termination of that employment. I recognize and agree that such claims include, but are not limited to, claims under Title VII of the Civil Rights Act of 1964, as amended, Section 1981 of Title 42 of the United States Code, the Age Discrimination in Employment Act, as amended, the California Fair Employment and Housing Act, as amended, and all other employment laws, whether federal, state or local. I agree that all obligations owed me by APL and/or any of its subsidiaries as a result of my employment, except for vested benefit rights, are hereby satisfied.
I understand that by signing this Agreement I am not giving up any rights that I may have to vested benefits or any right to the continuation of certain welfare benefits at my expense under COBRA.
I acknowledge that I have been advised to consult with an attorney prior to executing this Agreement and that I have been given at least forty-five (45) days within which to consider whether to execute this Agreement. I also acknowledge that I have read this Agreement, that I fully understand its meaning, that it includes a full and final release and settlement of all claims, known or unknown, which I may have regarding my employment within APL or any of its subsidiaries and/or the termination of such employment and that I agree to its terms.
I understand that I may revoke this Agreement upon written notice to the Company within seven (7) days after the date of my signature set forth below.
Clerk's Papers at 83-85.
Upon receiving the release, APL sent checks to Nishiyama in biweekly installments through July, 2002, totaling more than $29,000. According to Nishiyama, she did not understand that she had signed a release of any potential discrimination claims against APL until she consulted an attorney shortly before the severance payments ended. She wrote to APL in August 2002 claiming that she did not consider herself bound by the waiver because it was not knowing and intelligent. She enclosed two uncashed severance checks, and a personal check for $1,000 to begin repayment of the severance payments she had already accepted from APL.
Clerk's Papers at 148.
Clerk's Papers at 175-76.
Nishiyama filed a complaint against APL in November 2002, alleging employment discrimination. APL asserted the signed release as a complete defense, and obtained an order of dismissal on summary judgment in January 2004. The trial court concluded:
Clerk's Papers at 1-22.
1. The Release that Plaintiff signed bars all of her claims against Defendants;
2. Plaintiff has failed to establish any grounds for rescission of the Release; and
3. Plaintiff waived any right to rescission by failing to assert it promptly.
Clerk's Papers at 1162.
Nishiyama appeals from this order.
When reviewing a grant of summary judgment, we engage in the same inquiry as the trial court. Pulcino v. Federal Express Corp., 141 Wn.2d 629, 639, 9 P.3d 787 (2000). Summary judgment is appropriate only when, after reviewing all facts and reasonable inferences in the light most favorable to the nonmoving party and all questions of law de novo, there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. CR 56(c); Wilson v. Steinbach, 98 Wn.2d 434, 437, 656 P.2d 1030 (1982).
VALIDITY OF WAIVER
Nishiyama contends the release she signed does not justify summary judgment because there are issues of fact about whether she knowingly and voluntarily waived her claim of employment discrimination.
In Washington, a release of employment discrimination claims asserted under Washington's Law Against Discrimination, RCW 49.60, is governed by contract law. Chadwick v. Northwest Airlines, Inc., 33 Wn. App. 297, 303, 654 P.2d 1215, aff'd and analysis adopted, 100 Wn.2d 221, 667 P.2d 1104 (1983). Northwest terminated Chadwick for persistent absences. Chadwick brought suit alleging the real reason was discrimination against him due to his physical handicap. Chadwick, 33 Wn. App. at 303. The issue was whether Chadwick had validly waived such a claim in an earlier settlement he reached with Northwest. A year earlier, after Chadwick took an extended sick leave, Northwest had agreed to reinstate him conditioned on minimum attendance requirements. As part of the settlement, Chadwick had also agreed not to file discrimination or any other claims against Northwest. Northwest successfully moved for summary judgment based on the release of claims. This court affirmed, and rejected Chadwick's argument that the release agreement violated the public policy against discrimination. 'We find no authority for adopting a rule that per se voids a settlement simply because it involves a potential discrimination claim.' Chadwick, 33 Wn. App. at 300.
Applying ordinary contract law, we also rejected Chadwick's argument that the release could be invalidated if a jury found that he did not fully understand the legal effect of the release. Chadwick, 33 Wn. App. at 303. Voluntary means 'signing an instrument of one's own free will, knowing that one is signing the agreement.' Chadwick, 33 Wn. App. at 303. 'Unless there is a showing of fraud, deceit, coercion, mutual mistake or mental incompetency at the time the instrument is executed, one having the opportunity to read it is deemed by law to have understood its contents and cannot claim to have been misled thereby.' Chadwick, 33 Wn. App. at 303, citing National Bank of Washington v. Equity Investors, 81 Wn.2d 886, 912-13, 506 P.2d 20 (1973).
On review, the Supreme Court adopted this court's analysis, and added, the 'result in no manner weakens the laudatory objectives of RCW 49.60.' Chadwick, 100 Wn.2d at 223.
Nishiyama contends that Chadwick is no longer good law, and should be overruled in light of the strong state policy against discrimination. She urges that the proper standard to determine the validity of a release of a discrimination claim is the 'totality of the circumstances' standard utilized by some federal courts. See, e.g., Coventry v. United States Steel Corp., 856 F.2d 514, 523 (3rd Cir. 1988). Overruling Chadwick is not an option for this court. Nishiyama's argument about the validity of her waiver must be evaluated under ordinary contract law.
FRAUD
Nishiyama claims summary judgment was improper because APL induced her execution of the waiver by fraud. She declares that Rumwell falsely represented to her that she would lose her COBRA benefits if she did not accept the severance and sign the release.
Rumwell declared that in the termination meeting he explained to Nishiyama that she could continue her health care coverage under COBRA at her own expense, but APL would pay the COBRA premiums for 28 weeks if she took the severance plan offer and elected biweekly payments:
Now that her employment was ending, she could elect to continue her health care coverage under COBRA. I explained that COBRA coverage was ordinarily at the employee's expense, and I went over with her what her exact COBRA premiums would be . I also told her that if she accepted APL's severance offer and elected a series of biweekly severance payments, APL would pay the full COBRA premium for her health care coverage during the 28 weeks in which she received severance payments. I never told her that she had to accept APL's severance offer or sign a release of claims in order to get COBRA benefits. I only said that if she chose to accept biweekly severance payments, then APL would pay her COBRA premium during the severance period.
Clerk's Papers at 62-63.
In response, Nishiyama declared she 'understood' if she did not sign the severance package documents she would not be eligible to continue her medical benefits under COBRA. 'He never told me that if I don't sign I still get COBRA benefits.' In her deposition, Nishiyama said, 'I remember that Pete Rumwell said you have to sign to get the benefits, so that's stuck in my mind.'
Clerk's Papers at 1012-13.
Clerk's Papers at 791.
Fraudulent misrepresentation requires proof of a false statement, upon which the party seeking to avoid the contract was entitled to rely and did rely, and such reliance resulted in an injury. Rainier National Bank v. Clausing, 34 Wn. App. 441, 446, 661 P.2d 1015 (1983). A party who cannot point to any false statement cannot avoid a waiver on grounds of fraud. Yakima County Fire Protection Dist. 12 v. City of Yakima, 122 Wn.2d 371, 391, 858 P.2d 245 (1993).
Nishiyama does not recall a specific statement made by Rumwell or Sylte about COBRA coverage. And she has not disputed any of the factual statements made by Rumwell in his declaration. Her proof is what she understood after the meeting in which she was laid off. She came away from the meeting with the belief that unless she signed the release within 45 days, she would not be eligible for COBRA benefits at all. She now argues that a finder of fact, considering what she understood after the meeting, could reasonably draw the inference that Rumwell or Sylte did in fact misrepresent that Nishiyama's eligibility for COBRA coverage depended on her signing a release of claims.
We have some doubt that Nishiyama, a nonmoving party on summary judgment, can rely on an inference from what she understood after the conversation to prove that either of the company representatives made a false statement during the conversation — especially in the face of Rumwell's detailed description of what he said and did not say. See Robinson v. Avis Rent A Car System Inc., 106 Wn. App. 104, 116-19, 22 P.3d 818 (2001).
But even if the law does allow such an inference, Nishiyama has failed to raise an issue of fact as to her justifiable reliance on the statement. Where the correct information is reasonably ascertainable by the complaining party, she may not justifiably rely on the other party's statement. Clausing, 34 Wn. App. at 446. In this case, Nishiyama had the severance plan document itself and 45 days to read it. She had an information packet on COBRA sent to her by the company on January 30. Both of these documents accurately describe the relationship between the severance plan and COBRA coverage, and neither of them states that continuation of health care coverage is dependent on accepting a severance offer. Nishiyama also had, within the seven-day period during which she was entitled to revoke the release, an accurate description of her rights under COBRA sent to her by the third party administrator of APL's COBRA benefits program.
The material discussed in all these documents is obviously complex enough to require a fair amount of concentration by the reader. Nishiyama acknowledges thinking about whether to consult a lawyer before signing the release, and indeed the release advises consultation with an attorney. Nishiyama wanted to have the medical benefits and severance, but she did not read the documents carefully, and chose not to ask anyone else for help understanding them. 'I just don't wanted to read it for the — just it too depressing. I don't want to deal with it.' Because she had ample access to information disclosing that she could have rejected the severance offer and still continue her health care benefits at her own expense under COBRA, Nishiyama cannot establish the element of justifiable reliance.
Clerk's Papers at 791.
DURESS
Next, Nishiyama claims that the threatened loss of her COBRA medical benefits placed her under duress. To prove duress, Nishiyama is required to prove words or conduct on the part of the company representatives that deprived her of her free will. See Pluess v. City of Seattle, 8 Wn. App. 133, 137, 504 P.2d 1191 (1972). The loss of free will must occur at the time the signer entered into the challenged agreement. 'The mere fact that a contract is entered into under stress or pecuniary necessity is insufficient.' Retail Clerks Health Welfare Trust Funds v. Shopland Supermarket, Inc., 96 Wn.2d 939, 944, 640 P.2d 1051 (1982).
Nishiyama presents no evidence that Rumwell threatened her with the loss of benefits, or that anything he or Sylte said actually served to deprive her of her free will. The fact that she waited a month before signing the release, and signed it at home after having the opportunity to get advice about it, defeats her claim of duress.
CREDIBILITY
Finally, Nishiyama attempts to avoid summary judgment by attacking Rumwell's credibility on collateral matters. For example, Rumwell told Nishiyama her termination was not performance related, while others in management made comments suggesting her performance was a factor.
An issue of credibility is present only if the party opposing the summary judgment motion comes forward with evidence that contradicts or impeaches the movant's evidence on a material issue. Dunlap v. Wayne, 105 Wn.2d 529, 536-37, 716 P.2d 842 (1986). The 'opposing party may not merely recite the incantation, 'Credibility,' and have a trial on the hope that a jury may disbelieve factually uncontested proof.' Howell v. Spokane Inland Empire Blood Bank, 117 Wn.2d 619, 627, 818 P.2d 1056 (1991), quoting Amend v. Bell, 89 Wn.2d 124, 129, 570 P.2d 138, 95 A.L.R.3d 225 (1977). The evidence supporting Nishiyama's attack on Rumwell's credibility is insufficient to contradict APL's evidence on the material issue of the validity of the waiver.
In summary, even when the evidence is viewed in the light most favorable to Nishiyama, it does not establish that her execution of the release was anything other than knowing and voluntary. Under well established principles of contract law, the knowing and voluntary waiver bars her employment discrimination claim against her former employer.
DENIAL OF SANCTIONS
The motion for sanctions arose from APL's belated production of documents. Originally, Sylte said that Maylia Tsen, his supervisor at the time of Nishiyama's termination, thought Nishiyama's performance inadequate — thus supporting the company's defense that the company had a valid reason for firing her. He based this statement on a management note dated November 2002 — well after Nishiyama's termination. Nishiyama, suspicious of the postdated note, pressed for more documents, and in November 2003 the company produced some new notes of Sylte's conversations with Tsen. The new notes could support an inference that Tsen actually thought Nishiyama was performing well. Nishiyama sought to depose Tsen to explore the discrepancy. Meanwhile, APL brought its motion for summary judgment. The trial court granted summary judgment in January 2004, but allowed Nishiyama to proceed to take the deposition of Tsen, who had been difficult to schedule.
At the deposition, Nishiyama learned that Tsen had recently lost her job with APL; that she too thought she was the victim of employment discrimination; and that she too had waived her right to sue, believing that she would lose COBRA benefits if she did not sign a waiver. And unlike Nishiyama, Tsen had actually read the severance plan.
Nishiyama moved to sanction APL under CR 26(g) for belated production, claiming that the notes provided extraordinarily probative evidence, and that she would have deposed Tsen earlier if APL had disclosed the notes in response to her first requests for production. She also moved for relief from the order of summary judgment on the basis that Tsen's deposition created a material issue of fact. Nishiyama assigns error to the orders denying these two motions.
Decisions by a trial court denying or granting sanctions under the rules of discovery are reviewed for an abuse of discretion. A trial court abuses its discretion when its order is manifestly unreasonable or based on untenable grounds. In determining whether an attorney has complied with the rule, the court should consider all of the surrounding circumstances, the importance of the evidence to its proponent, and the ability of the opposing party to formulate a response or to comply with the request. Washington State Physicians Ins. Exchange Ass'n v. Fisons Corp., 122 Wn.2d 299, 338, 858 P.2d 1054 (1993).
One of Sylte's notes, from a management meeting with Tsen on October 17, 2001, states: 'Nike — wants to assign to Momoyo!' According to Nishiyama, this note shows that Tsen viewed her performance favorably, because Nike was the company's largest Seattle account. On the other hand, the second note — from a November 6, 2001 meeting — does not reflect a positive assessment by Tsen. It states: 'Momoyo — development plan' and 'monitor closely/meet once/wk'. Tsen testified that a development plan is 'to help achieve the person if they're weak in something to help them get to what they need to be, and especially in Momoyo's case'. The trial judge said that the two documents, while relevant to the discrimination claim, were 'not smoking guns on any issues in this case.' The court refused to find a sanctionable discovery violation, and concluded there was no prejudice to Nishiyama because the information in the documents would not have changed the ruling on summary judgment. We agree with the trial court's assessment. The late-disclosed notes did not focus on Nishiyama. Because they were from discussions between Sylte and Tsen regarding a wide variety of management and sales related issues, they were kept in a separate location from the personnel files. For this reason, APL's failure to disclose them initially was not a violation of its duty to make reasonable efforts to produce all documents related to Nishiyama's employment. The notes do not specifically contradict any evidence in the case. Neither the notes nor Tsen's deposition testimony tend to prove that Nishiyama's release was other than knowing and voluntary. We find no reversible error in the trial court's decisions on Nishiyama's motion for sanctions and her motion for relief from summary judgment.
Clerk's Papers at 1648.
Clerk's Papers at 2606.
Clerk's Papers at 2574.
Verbatim Report of Proceedings, 3/11/04 at 47.
Verbatim Report of Proceedings, 3/11/04 at 48-50.
Affirmed.
SCHINDLER and APPELWICK, JJ., Concur.