Skip to main content

Employee Fails to Present Sufficient Facts to Show Employer Fraudulently Induced Her to Sign Separation Agreement


Pucilowski v. Spotify USA, Inc - Second Circuit Court of Appeals


Facts:  Valerie Pucilowski (“Pucilowski”) worked at Spotify as a user researcher.  During her employment with Spotify, she was diagnose with major depression, generalized anxiety disorder, and attention deficit hyperactivity disorder.  As a result, she sometimes worked from home.  After suffering a head injury and concussion, she took two weeks leave from her job and was apparently terminated three days after she returned to work.

In doing so, she signed a separation agreement which provided her with two months’ salary in exchange for her waiving, among other things, any Family Medical Leave Act (“FMLA”) claims against Spotify.  Pucilowski thereafter proceeded to file suit against Spotify on the grounds that the separation agreement was not enforceable because she claimed Spotify fraudulently induced her to sign the separation agreement and took advantage of her mental condition when she was presented with the agreement.

The district court dismissed her lawsuit on the grounds that her agreement to the terms in the separation agreement was “knowing and voluntary.”  In addition, the court held that Pucilowski had failed to show that her mental condition and concussion prevented her from understanding the agreement.  (New York law, which controls this case, requires a party demonstrate that they were completely unaware of the nature of the transaction and the other side should have, or did know, of this shortcoming.)  Pucilowski subsequently appealed the district court’s dismissal of her case.

Holding:  The Court of Appeals made quick work of this one, jumping straight into the facts.  In particular, the Court noted that Pucilowski was given 14 days to consider whether to sign the separation agreement (and apparently only took 11 days to do so.)  As well, she was given an additional 7 days to revoke the agreement once she signed.  Going one step further, the agreement also included a provision that she “consulted counsel or had the opportunity to consult counsel” about the agreement.

Under a totality of the circumstances view of the situation, the Court found that Pucilowski could not point to any tangible facts to establish that she had been fraudulently induced to sign the agreement.  To the contrary, Pucilowski’s own physical had written in a letter dated February 8, 2019 that “her prognosis is quite good” and could likely return to her “usual potential” in two weeks.  Given that the agreement was signed nearly a month later, the Court held that Pucilowski had failed to establish how her mental condition and concussion had prevented her from understanding the agreement and her waiver of any FMLA claims.

Judgment:  The Court of Appeals affirmed the district court’s dismissal of the employee’s claim that she was fraudulently induced to sign a separation agreement based upon her mental condition on the grounds that the language of the agreement was clear and direct and the employee failed to present sufficient facts to show that she had been taken advantage of or failed to understand what she was signing.

The Takeaway:  I caution readers to not use this case as the standard that employers can run roughshod over employees in these sort of situations.  Rather, I call attention to this case for the simple reasoning that the Court of Appeals was somewhat limited in their review of the district court’s dismissal.  At the district court level, Pucilowski had failed to meet her burden to show she was fraudulently induced into signing the separation agreement.  Had Pucilowski presented more information (or had the agreement been written differently, had there been a shorter timeframe in which she had been presented with the agreement and when she signed it, etc.) at the district court level, it is possible the Court of Appeals could have hung their hat on someone…anything really…to find enough facts presented to allow the fraudulent inducement claim to proceed.

Date:  November 10, 2022

Opinion:  https://www.ca2.uscourts.gov/decisions/isysquery/75f81fe9-1634-44bf-b8f8-4816844cb3f7/1/doc/22-869_so.pdf#xml=https://www.ca2.uscourts.gov/decisions/isysquery/75f81fe9-1634-44bf-b8f8-4816844cb3f7/1/hilite/

Comments

Post a Comment

Popular posts from this blog

NLRB: Discussion Among Employees About Tip Pooling is Protected Concerted Activity

  This Advice Memorandum from the National Labor Relations Board’s Associate General Counsel, Jayme Sophir, addressed whether employees which discussed and complained about tip pooling at work constituted protected concerted activity. In relevant part, an employer in New York operated a chain of steakhouses.  While tip pooling was in place at these steakhouses, some of the employees objected to it on the grounds that it was not transparent and improperly divided tips among the workers.  Employees were told not to complain or talk to each other about the tip pool and were told that doing so would endanger their jobs.  Despite the employer later attempting to provide some clarity as to how the tips were being divided, rancor still existed among some employees.  At one point, the employees were told by a general manager that some employees that had been talking about the tip pool were “cleared out” and the employer would continue to do so. In the Advice Memorandum,...
Post a Comment
Read more

Distance in a Non-Compete Agreement Measured "As the Crow Flies"

Ginn v. Stonecreek Dental Care - Court of Appeals, Twelfth Appellate District of Ohio Facts :  Dr. R. Douglas Martin ("Martin") sold his dental practice to an employee who worked there, Dr. David Ginn ("Ginn").  In doing so, Martin and Ginn signed a contract for the sale which contained a non-compete provision that prohibited Martin from engaging in business "within 30 miles" of the practice for five years starting from October 2010.  While Martin initially stayed on and worked with Ginn for a period, the relationship subsequently deteriorated between the two and Martin went to work for another dental office.  The new dental office was less than 30 miles away when measuring the distance in a straight line.  However, when driving between the offices, the distance was more than 30 miles. Ginn filed a claim against Martin on the grounds that Martin breached the non-compete.   At the trial court level, the court found that "within 30 miles"...
Post a Comment
Read more

Breaking: Labor Secretary Rumored to Be Leaving Administration

A few hours ago, word leaked out that Labor Secretary Marty Walsh (“Walsh”) is in the midst of negotiations to head up the NHL Players Union and leave his position at the Labor Department. Walsh, who has served as the sole Labor Secretary under President Biden, has taken part in a labor renaissance of sorts as support for organized labor has increased during his term as Labor Secretary (although the number of workers that have joined a union over the past two years has not grown as mush as some expected.)  He has also overseen the ongoing negotiations with rail workers over a new contract, although that matter is still on shaky ground and playing out as we speak. As for who might step into the vacant Labor Secretary role, there are already rumblings that President Biden should nominate Deputy Labor Secretary Julie Su (a strong labor advocate) or even a progressive like Senator Bernie Sanders.  Until Walsh officially gives his notice, however, I would expect some/many potential...
Post a Comment
Read more