The Second U.S. Circuit Court of Appeals recently weighed in on release provisions in separation agreements in the context of a head injury.
While at work, Valerie Pucilowski suffered a panic attack that resulted in her loss of consciousness. She hit her head and experienced a concussion. Pucilowski’s doctor released her to work intermittently from home, but she took additional leave for her mental health.
When she returned to work, Spotify presented Pucilowski with a separation agreement that provided two months’ severance pay in exchange for a release of all claims.
Pucilowski signed but then sued, alleging that she was terminated in violation of the Family and Medical Leave Act. She claimed Spotify took advantage of her condition and that she lacked the capacity to understand what she was signing.
The Second Circuit disagreed, affirming dismissal of her claim because it was barred by the release provision of her separation agreement.
Pucilowski’s own pleading demonstrated that her release of claims against Spotify was knowing and voluntary, the court said.
“First, the complaint alleges that Pucilowski’s work as a user researcher at Spotify received high praise from coworkers and supervisors,” the panel wrote. “This precludes any finding that she lacked the education or business experience to understand the release.”
Next, Pucilowski was given 14 days to consider the agreement—but took only 11 days to sign it—and was given seven additional days to revoke the agreement once it was signed. She also assented to the agreement’s statement that she had “consulted counsel or had the opportunity to consult counsel about this … agreement.”
“These circumstances preclude any finding that she was not given sufficient time to knowingly and voluntarily release her claims,” the court said.
The language of the release provision demonstrated the requisite clarity, the panel said, and Pucilowski received two months’ salary in exchange for executing the separation agreement, a benefit exceeding what she was entitled to by law or contract.
“While Pucilowski was not represented by counsel in connection with the signing of the separation agreement and is not alleged to have had any role in deciding the terms of the agreement, under the totality of the circumstances pleaded by Pucilowski, we conclude, as the district court did, that Pucilowski’s execution of the separation agreement can only be deemed knowing and voluntary and, therefore, that the release is enforceable, precluding her claims,” the court wrote.
The Second Circuit was not persuaded by Pucilowski’s argument that she signed the release shortly after returning to work on March 8, 2019, noting that she alleged her physician stated on February 7, 2019, that “her prognosis is quite good” and that “she could likely return” to her “usual potential” in two weeks.
“In these circumstances and in the absence of any allegations that Pucilowski’s head injury was still adversely affecting her when she signed the separation agreement a month after the physician letter, the district court was not required to accept the complaint’s conclusory assertion that Pucilowski ‘lacked the requisite mental capacity to enter into the agreement and/or understand the terms and obligations of the agreement due to her mental health conditions,’” the court wrote.
Further, the panel found no error in the district court’s denial of leave to replead as futile, rejecting Pucilowski’s attempt to add allegations regarding her non-involvement in setting the terms of the separation agreement and her attempt to repudiate the separation agreement in January 2021 when she offered to return money received under the settlement.
To read the summary order in Pucilowski v. Spotify USA, Inc., click here.
Why it matters: Lacking any evidence that the plaintiff’s head injury was still having an impact on her decision making or health, the court affirmed the enforcement of the release provision in the separation agreement that she signed.