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America v. Preston

December 27, 2006


The opinion of the court was delivered by: Paul L. Friedman United States District Judge


This matter is before the Court on defendant's motion to dismiss or, in the alternative, for summary judgment.*fn2 Since both parties rely on materials outside of the pleadings, the Court is treating this motion as a motion for summary judgment. Plaintiff Richard America brought this action against his former employer, the Small Business Administration ("SBA"), for violations of Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. §§ 2000e-5(f)(3) and 2000e-16(c). Defendant argues that plaintiff fails to state a claim because his allegations of discrimination against the SBA were released by a settlement agreement signed in September 1998. Plaintiff acknowledges the settlement agreement but claims that the agreement was breached by the defendant and thus does not bar this lawsuit. Because the Court concludes that plaintiff has stated a claim and that there are genuine issues of material fact in dispute, the Court denies defendant's motion.


Plaintiff, a former employee of the SBA's Office of Financial Assistance ("OFA") in Washington, D.C., filed five administrative complaints of race, sex, and age discrimination against the defendant arising from a 1995 decision to transfer plaintiff to the Kansas City, Missouri office of the SBA and from his alleged constructive discharge in March 1997. See Complaint ("Compl.") ¶¶ 10-20; Mot. at 2. Those complaints were resolved by a September 11, 1998 settlement agreement (the "Settlement Agreement") between plaintiff and defendant. See Settlement Agreement ("Settlement Ag."), Exh. 1 to Mot. In exchange for the discharge of all of plaintiff's pending claims, defendant paid plaintiff $92,500 and expunged references to these matters from plaintiff's personnel file maintained by the Office of Human Resources. See Settlement Ag. ¶¶ 1-6. Paragraph 6 of the Settlement Agreement also stated that "all inquiries [about plaintiff] from prospective employers received by OFA shall be referred to and handled by the Agency's Office of Human Resources." Id. ¶ 6.

After signing the Settlement Agreement in September 1998, plaintiff searched for alternate employment. Although several "promising leads" appeared, plaintiff states that "each time, the opportunities seemed to disappear at the stage in the hiring process that reference checks would normally be conducted." Declaration from Richard America, Att. 1 to Plaintiff's Opposition ("America Decl.") ¶ 4. Suspecting that defendant was not adhering to the provision of the Settlement Agreement requiring it to refer inquiries from prospective employers to the SBA's Office of Human Resources (which would provide a reference without disclosing the details of plaintiff's departure from the SBA), plaintiff retained the services of Documented Reference Check ("DRC"), a reference checking company, to investigate whether defendant was honoring its obligation to do so. See America Decl. ¶¶ 6-7.

A DRC associate, Linda Oparnica, attempted to contact SBA on fourteen separate occasions between April 25, 2002 and June 4, 2002. See DRC Reference Check Report, Exh. 3 to Mot., at 1 ("Reference Check Report"). She succeeded on at least three occasions. See id. On May 2, 2002, Oparnica spoke with Linda Rusche, the OFA manager in Kansas City, who was to have been America's supervisor after his geographic reassignment. See id. Rusche stated that she had never worked with America and suggested that DRC contact the SBA's office in Washington, D.C. See id. at 2. Rusche further stated that DRC "could start with Personnel, but I couldn't suggest anyone specifically." Id.

On May 11, 2002, Oparnica contacted Arnold Rosenthal, OFA's Assistant Administrator for Borrower and Lender Servicing, who did not refer her to the Human Resources Department. He spoke highly of America's intellect and interpersonal skills, and said America was "a very bright think tank-type of individual," and that "he's a very good guy. I really think his strength is, he is a think tank-type of guy. High level thinker. He may not be the guy to take it to the next step, but he is very good about identifying ideas. He's very smart." Reference Check Report at 2-3. Rosenthal said he would hire America again, "for the right position.

Nobody is right for everything. I think he has a lot to offer. Just make sure you put him in the right slot. That's all." Id. at 3. Rosenthal also made reference to "an internal battle going on with his transfer" to Kansas City. Id. When Oparnica asked whether there was "anything else [she] should know" before proceeding with her reference check, Rosenthal stated: "No. I would be the best person to talk to." Id.

On June 4, 2002, Oparnica called OFA Director Jane Butler regarding Mr. America. Butler immediately referred the call to the Office of Human Resources.

Stating that both Ms. Rusche and Mr. Rosenthal had breached the Settlement Agreement by failing to refer DRC's phone calls to the Office of Human Resources, plaintiff sent a letter to defendant on August 6, 2002, requesting that it re-open plaintiff's Title VII claims. See August 6, 2002 Letter from Elizabeth L. Newman (plaintiff's counsel) to Eugene Cornelius, SBA, Ex. 2 to Mot., at 2. On September 24, 2002, having received no reply from defendant, plaintiff appealed for relief to the Equal Employment Opportunity Commission ("EEOC") pursuant to 29 C.F.R. § 1614.504(b). See Opp. at 7.*fn3

Defendant sent plaintiff a letter on October 25, 2002 agreeing to reinstate his complaints. See October 25, 2002 Letter from SBA to America, Exh. 4 to Mot. As a result, on May 30, 2003, the EEOC dismissed plaintiff's appeal as moot and gave plaintiff a notice of his right to sue in federal court. See America v. Barreto, 2003 WL 21302541, at *1-3 (EEOC Appeal No. 01A30721, May 30, 2003). Plaintiff filed a complaint in this Court on August 28, 2003.

On September 3, 2003, plaintiff's counsel tendered to the SBA checks totaling $92,500, the amount given to plaintiff under the Settlement Agreement, because plaintiff had opted to pursue his claims in federal court after he discovered defendant's alleged breach. But on September 5, 2003, defendant sent plaintiff a letter formally rescinding its October 25, 2002 determination that it had breached the Settlement Agreement and its reinstatement of America's claim. SBA based this rescission on the fact that "subsequent to the date of [the October 2002 letter], we have learned that the telephone calls to which you referred in your August 6, 2002, letter were not, in fact, placed by a prospective employer. . . . Accordingly, it has been determined that a breach of paragraph 6 of the settlement agreement did not occur." September 5, 2003 Letter from SBA to America, Exh. 7 to Mot.


A. The Relevant Legal ...

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