California Court of Appeal SLAPPs Claim for Breach of Settlement Agreement

Perhaps you have read about the EEOC's recent lawsuits attacking severance agreements as allegedly containing illegal provisions, because they impede the EEOC's work. The EEOC is challenging everything from "cooperation clauses," to general releases that broadly preclude the releasing employee from bringing future claims.  You know, in exchange for money.   Here's an example of what the EEOC is doing.  If the EEOC wins,  and they don't win all of these efforts to radically change the law via agency internal policy and litigation rather than legislation (Hi, credit check lawsuits), many standard releases will have to be modified.

Yes, the above discussion is related to why I asked you here today.  Somewhat. The California Court of Appeal just found that an employer's lawsuit against a union for breach of settlement agreement should be stricken because the lawsuit was a Strategic Lawsuit Against Public Participation.   The court's ruling in part is based on a conclusion that the parties' non-cooperation agreement was not enforceable.

The United Farmworkers Union settled one of two pending unfair labor practice charges with a company called D'Arrigo Bros. of California.

On February 18, 2011, UFW's attorney sent D'Arrigo's counsel a letter purporting to "memorialize the UFW's agreement." In the letter UFW acknowledged that it had obtained dismissal of the second ULP, and it promised not to refile this charge "and/or the substantive allegations at a later date." . . . UFW therefore agrees that said Objection Five will in fact be dismissed in its entirety or that, in the event the Executive Secretary for any reason declines to dismiss all or any of it prior to a hearing, UFW will timely act to withdraw its declarations and argument regarding Objection Five and will not present any evidence thereon in the objection process; and will continue to advise (in writing, on the record) the Executive Secretary, General Counsel, and/or assigned administrative law judge that UFW wants Objection Five entirely dismissed; and that UFW will not pursue, nor assist [in] pursuing, Objection Five in any fashion whatsoever."

Then, during proceedings on the remaining unfair labor practice charge, D'Arrigo believed the UFW breached the above agreement and cooperated with the Agrigultural Labor Relations Board's general counsel.

D'Arrigo sued the UFW for breaching the settlement agreement.  The UFW filed a motion to strike the D'Arrigo lawsuit under California's anti-SLAPP law.  The UFW's basis for the motion was that D'Arrigo's claim was really a lawsuit designed to retaliate against UFW for cooperating with the ALRB's proceedings in the matter that was not settled.

The Court of Appeal held that UFW should win the anti-SLAPP motion, resulting in dismissal of D'Arrigo's lawsuit.    Of note, the Court held that D'Arrigo's basis for asserting breach of contract - that the UFW violated an agreement not to cooperate with the ALRB - was unenforceable:

we agree with UFW—and with the General Counsel as amicus curiae-- that any interpretation of the stipulated language to prohibit UFW from cooperating with [the general counsel] in his investigation and prosecution of the first ULP charge must be rejected as contrary to the public policy inherent in the ALRA.

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Moreover, the [employer's] ability to guarantee the silence of witnesses by means of a legally enforceable private agreement does not comport with either the spirit or the stated purpose of the ALRA." 

That purpose is clearly stated in Labor Code section 1140.2: "[T]o encourage and protect the right of agricultural employees to full freedom of association, self-organization, and designation of representatives of their own choosing, to negotiate the terms and conditions of their employment, and to be free from the interference, restraint, or coercion of employers . . . ." This public interest is not advanced if private agreements between employer and employee are allowed to obstruct the General Counsel's prosecution of complaints. (Cf. E.E.O.C. v. Astra U.S.A., Inc. (1st Cir. 1996) 94 F.3d 738, 744-745 [settlement provision prohibiting employee from assisting EEOC in its investigation of sexual harassment charges against employer is void as against public policy].)

So, another trend in employment law appears to be increased scrutiny of releases.  Employers should ensure they know what they are bargaining for when they settle claims.  Absolute confidentiality is not realistic. Neither is a promise never to participate or cooperate in a future proceeding.  Employers should not pay settlements or separation pay expecting to fully achieve these goals.   That said, there are ways to draft agreements to comply with the limitations.   At least there used to be. We'll have to see what happens in the EEOC's litigation.

This case is D'Arrigo Bros. of California v. United Farmworkers of Am.  and the opinion is here.