In Zuber v. Boscov’s, U.S. Court of Appeals for the Third Circuit, No. 16-3217, the Third Circuit reversed a decision of the Eastern District of Pennsylvania that dismissed an employee’s claims under the Family and Medical Leave Act (FMLA) and common law on the basis of a compromise and release agreement signed by the employee to settle his workers’ compensation claims.
The timeline is important to the court’s determination. Craig Zuber was injured at work on Aug. 12, 2014. He filed a workers’ compensation claim and went out on leave, returning to work on Aug. 26, 2014. His employment was terminated on Sept. 10, 2014. On April 8, 2015, Zuber signed a compromise and release agreement to settle his workers’ compensation claims. On July 9, 2015, Zuber filed his FMLA claims against Boscov’s.
Zuber’s complaint alleged that Boscov’s interfered with his FMLA rights by failing to notify him of his rights and by failing to designate his leave as covered by the FMLA. He also alleged that Boscov’s retaliated against him for exercising his rights under the FMLA and for asserting a workers’ compensation claim under Pennsylvania common law.
Boscov’s moved to dismiss the complaint on the basis of the compromise and release agreement, and the Eastern District of Pennsylvania agreed. The district court found that the compromise and release agreement was a general release meant to waive all claims, including the FMLA and common law claims. The district court opined that the release include “broad, all-encompassing language” relating to the work injury claim and its “sequela.” Specifically, the district court noted that the use of the words “sequela whether known or unknown at this time” broadened the scope of the release.
In so doing, the district court relied on two cases: Hoggard v. Catch, No. 12-4783, (E.D. Pa. July 9, 2013)(Kelly, J.) and Canfield v. Movie Tavern, No. 1303484, (E.D. Pa., Dec. 12, 2013)(Baylson, J.). In Hoggard, the release in question recited that it “completely resolves all claims and issues arising out of the claimant’s injuries …” The Hoggard court found that this language resulted in release of all employment claims against the employer which arose from the work injury, including wrongful termination claims. In Canfield, the release in question recited that it released all “workers’ compensation claims …” Because it was specifically limited to workers’ compensation claims, the Canfield court found that the release did not waive the employee’s employment law claims.
In reversing the district court to find that the Zuber release did not release the employee’s FMLA and common law claims, the Third Circuit analyzed the phrase “sequela, whether known or unknown at this time.” The Third Circuit found that the release was unambiguous of its face, and refused to review parol evidence. The Third Circuit noted that the word “sequela” means “suit,” and that the language of the release thus was intended to waive his work injury claims and any “work injury claim” suit. The modifier “its” before the word “sequela” renders the release limited to the workers’ compensation claim. Further, the court noted that the agreement to forfeit any damages claims was also modified by the phrase “work injury claims.”
Interestingly, the Third Circuit also based its determination on the “structure” of the release. Elsewhere in the document, the agreement recited that its purpose was to resolve the work injury claim, and that it was a release of the employee’s workers’ compensation claims. Given this language, the Third Circuit reasoned, the release paragraph could not be read as a general release. Accordingly, the Third Circuit held that Zuber did not waive his FMLA and common law claims.
The issue of the impact of compromise and release agreements in the context of later wrongful termination claims is a common one. The Third Circuit’s opinion, read with the opinions in Hoggard and Canfield, suggests that courts will meticulously review the agreement under general contract principles to determine whether there was a waiver of broader employment law claims. The interesting thing about the Zuber opinion is that both the district court and the Third Circuit engaged in this meticulous review of the language and came up with a different answer.
Likely, this results from the procedural posture of workers’ compensation claims. Those claims proceed on a completely separate track than any statutory or common law termination claims, and the issues are narrow: wage loss and medical expenses as a result of a work injury. Further, the workers’ compensation settlement is sometimes reached while the wrongful termination suit is pending. An unintended result to a challenge to a compromise and release agreement (for example, a finding that a release is limited where one party intended it as general) might result from the procedural posture of both cases, error or lack of precision in drafting. Courts will have to unravel imprecise language without reference to that context.
The Zuber opinion highlights the importance of clarity and consistency in a release. The issue of whether or not a release is a “general” release should be discussed, agreed to, and recited in the release. In the context of settling workers’ compensation claims, this might require discussing with the client any common law or statutory employment claims, and, for the employer, a discussion regarding the possibility of future claims. The opinion in Zuber reflects that it will be difficult to predict what a court will do with particular language in the agreement.
Patricia Collins is a partner with Antheil Maslow & MacMinn, based in Doylestown. Her practice focuses primarily on commercial litigation, employment and health care law. To learn more about the firm or Collins, visit www.ammlaw.com.