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Eastern District Allows Post-Settlement Claims To Proceed

Published by on November 5, 2012

In Car Pool, LLC v. Hoke (3:12-cv-511), the U.S. District Court for the Eastern District of Virginia allowed claims for breach of a settlement agreement between an employer and employee to proceed to discovery.  The Court also allowed the employee’s counterclaims for sex discrimination, hostile work environment and retaliation to proceed.  Most significantly, the Court […]

In Car Pool, LLC v. Hoke (3:12-cv-511), the U.S. District Court for the Eastern District of Virginia allowed claims for breach of a settlement agreement between an employer and employee to proceed to discovery.  The Court also allowed the employee’s counterclaims for sex discrimination, hostile work environment and retaliation to proceed.  Most significantly, the Court allowed the employee’s retaliation claim based on the filing of the breach of contract lawsuit to proceed.  More after the break.

The employer, Car Pool, LLC (“Car Pool”) brought an action against former employee Brooke Hoke for breach of contract and rescission of contract alleging that she breached the confidentiality clause of the agreement by sharing details of the settlement with a coworker.  According to the Court’s Opinion, Hoke filed an EEOC charge alleging sexual harassment in violation of Title VII.  After Hoke received her right to sue letter, Car Pool and Hoke entered into a settlement agreement.

As part of the settlement negotiations, the isolated nature of Hoke’s claims was brought up.  Hoke expressly represented that she told no one about the prospect of settlement.  Additionally, the confidentiality provision of the Agreement including a statement that Hoke “has not disclosed any facts or circumstances relating to this matter to any member of the press or anyone else….or otherwise published such information, including in a blog, Facebook or similar internet or social media.”

Three days after Hoke signed the Agreement, Car Pool received a charge of discrimination by a former co-worker of Hoke’s, Moutasim Shaabneh.  Shaabneh allegedly learned of Hoke’s settlement from Hoke, and retained the same counsel as Hoke.  In entering the settlement agreement with Hoke, Car Pool alleges, that it relied upon Hoke’s representation that she had not disclosed the prospect of settlement to anyone.  If Car Pool had known she did, it would not have entered into the agreement with Hoke.

In ruling on Hoke’s motion to dismiss, the court found that Car Pool alleged sufficient facts to support a plausible claim for breach of contract and denied Hoke’s motion.  The complaint alleges that two parties entered into an agreement, that Hoke represented to Car Pool that she had not disclosed the prospect of settlement to anyone, and Hoke breached the agreement by communicating with Shaabneh about the settlement prior to signing the agreement.  This breach injured Car Pool by inducing it to enter into an agreement it would not have otherwise entered into.  Thus, sufficient facts were pled to state a claim.

Hoke also brought a counterclaim for unlawful sex discrimination, hostile work environment and retaliation under Title VII and breach of contract alleging Car Pool breached the agreement by bringing suit seeking rescission of the contract.  Car Pool moved to dismiss the counterclaims brought under Title VII on the basis that they were barred because they were filed beyond the ninety day period following her receipt of the right to sue letter from the EEOC.  Fourth Circuit precedent, however, states that equitable tolling is available when the complainant has been induced or tricked by his adversary’s misconduct into allowing the filing deadline to pass.  Car Pool’s motion was denied because Hoke pleaded sufficient facts to make a plausible claim that the limitations period is subject to equitable tolling.  Hoke pled that Car Pool waited until the ninety-day period ended to confront Hoke about the allege breach.

The court dismissed Hoke’s claim for breach of contract, finding that the filing of suit over a breach of contract cannot constitute a breach of confidentiality, by itself.  Hoke’s theory that Car Pool’s filing of a complaint disparaged her in breach of the agreement likewise failed.

The Court did allow Hoke’s retaliation claim based on the filing of the breach of contract lawsuit to proceed to discovery.  The Court found that the filing of the breach of contract lawsuit was the kind of action that might deter a reasonable employee from filing a charge of discrimination.  It will be interesting to see whether this case generates more rulings from the Court, as the risk of a retaliation counter-claim is an important factor for employers to consider when considering litigation against an employee or former employee who has engaged in protected activity.

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