Court Rejects “Economic Duress” Argument re Settlement of Employment Discrimination Claims

In Westbrooke v. Bellevue Hospital Center et al, 2019 WL 233611 (SDNY Jan. 16, 2019), the court dismissed plaintiff’s complaint – alleging employment discrimination – with prejudice.

In sum, plaintiff alleged that she was discriminated against on the basis of her age, gender, disability, and race, and then subjected to retaliation for complaining about it. After her termination, plaintiff executed an Agreement and Release, which by its terms bars her claims against defendants.

Plaintiff sought to void the agreement on the ground of “economic duress”. The court rejected that argument.

Here is the relevant law, as summarized by the court:

To void a contract on the ground of economic duress, the complaining party must show that its agreement was procured by means of (1) a wrongful threat that (2) precluded the exercise of its free will.” Interpharm, Inc., 655 F.3d at 142. Westbrooke must also allege that Defendants engaged in “threatening conduct that is ‘wrongful,’ i.e., outside of [Defendants’] legal rights.” Id. Moreover, “a mere demonstration of financial pressure or unequal bargaining power will not, by itself, establish economic duress.

In finding that doctrine inapplicable, the court explained, inter alia:

[Plaintiff’s complaint] fails to plausibly allege that the Agreement is voidable because Westbrooke executed it under economic duress. Westbrooke alleges that after she was terminated she submitted an Application for Service Retirement to the NYC Employees’ Retirement System which was denied; that she lost her healthcare benefits and could not afford “the alternative [coverage under] COBRA”; and that she had “no access to [her] home – causing involuntary acceptance of this contract.” SAC at 5. Although the Court is sympathetic to Westbrooke’s personal circumstances, these allegations do not constitute economic duress as a matter of law.

Westbrooke has not alleged that she was subjected to a “wrongful economic threat” that deprived her of her free will when she executed the agreement. … Indeed, Westbrooke signed the Agreement several weeks after she was terminated, and the SAC bears no indication that throughout that time Westbrooke was anything other than “free to reject the terms of the agreement, which [s]he did not.” … Rather, all Westbrooke has alleged is that, when she signed the Agreement, she was under serious financial strain. Nevertheless, the “case law is clear that ‘difficult choices do not constitute duress.’ ” See id. at *10. The Court therefore finds that the SAC’s allegations regarding Westbrooke’s economic difficulties do not alter this Court’s prior conclusion that Westbrooke signed the Agreement knowingly and voluntarily, and that the Agreement is not voidable on grounds of economic duress.