No Breach of Settlement Agreement by Employer Where Employee Agreed to Resign But Was Disciplined Pending Approval of Settlement Agreement

Cabrera-Renne v. City of Paterson, 2009 WL 1011091 (App. Div., April 16, 2009) – As part of the settlement of her NJLAD claims, the plaintiff’s employer permitted her to continue working until the settlement agreement was approved by the City Council. The plaintiff subsequently violated her employer’s code of conduct and was disciplined for insubordination with a 30-day suspension. The plaintiff sought to rescind the settlement agreement, claiming her employer’s charge was false and retaliatory, and that the employer had agreed not to file any disciplinary actions against her through her last day of employment.

The Appellate Division declined to address the substance of the disciplinary charge, noting that the plaintiff could challenge the charge administratively if she wished. With regard to the settlement agreement, the court found that it was not breached by discipline for conduct occurring post-agreement. Noting the strong public policy supporting the enforcement of settlement agreements, the court interpreted the agreement consistent with its plain meaning: “For plaintiff to believe that while waiting for the City Council to act, she could return to work, violate rules and act with impunity and not be penalized with disciplinary action . . . is . . . ridiculous.” The fact that the court found no evidence in the record of fraud by the employer was likely key to this finding. The court stated that public policy supporting enforcement of the agreement is even more potent in a case like this, where the plaintiff was a police officer.

This case instructs that employers are not barred from acting against an employee who remains working pending approval of a settlement agreement, so long as the discipline is not pretextual.

Note: This article was published in the May 2009 issue of the New Jersey eAuthority.