Brian Perez v. Uline, Inc., et al
Cite as 2007 SOS 7169

Severance Agreement as basis for Release of Overtime Claims

The plaintiff, Brian Perez is a captain of the United States Marine Corps Reserves and employed in Uline, Inc. On March 2003, after his duty with the Reserves, upon reporting to work, the company terminated Perez' employment and presented him with a "Severance Agreement and Release."

According to the agreement, the company will be paying him with his six weeks' salary. In exchange, Perez will have to release the Uline, Inc. and other responsible personnel with all claims whether according to federal or state law, decision, order, policy or regulation that establishes or is related to employee's rights to claim. The agreement also indicates that Perez has to release the company from all claims in tort or contract that is based upon public policy, also, all claims that allege defamation or wrongful discharge.

The agreement gave Perez 7 days in which to decide whether to accept such terms and conditions or not. He was also given an option to consult with a legal counsel. He also negotiated in vain for an increase of the payment indicated.

Perez signed the agreement during the last day given. Later on, he sued Uline, Inc. and three of its personnel, namely, Patrick Shea, Mike Donaghy, and Salvador Alcaraz on the following charges:

• Wrongful Termination in violation of several federal and state statutes, which prohibit members of the armed services from being terminated on the grounds of their response to military obligations. These statutes include several provisions in the Uniformed Services Employment and Reemployment Rights Act of 1994 (38 U.S.C. § 4301 et seq.) or USERRA


• Breach of Oral Employment Contract


• Defamation


• Failure to provide overtime payment, violating the Labor Code

These charges were brought up in the Superior Court of Orange County.

In response, the defendants filed the following:

• General denial


• Affirmative defenses, which include the Claim of Release, based on the plaintiff's execution of severance agreement.

The Court, based on Kirk H. Nakamura's judgment, ruled in favor of the defendant on the following grounds:

• It found that the agreement signed by the plaintiff was a release of all his claims


• The plaintiff had adequate period in which to make a rational decision to accept the defendant's offer and there was no sign indicating that he had been deceived or threatened to execute the agreement.

The individual defendants did not answer the complaint but the Court included them in the favorable judgment.

Perez brought up an appeal of this decision in the Fourth Appellate District, Division 3 of the Court of Appeal of the State of California.

On December 6, 2007, the Court of Appeal handed down its reversal in part and affirmation in part of the Superior Court's judgment.

• Judgment reversed in terms of enforcing the release concerning wrongful termination and breach of contract claims. USERRA directs that its provision may not be eliminated by a contract. The release of rights indicated in the severance agreement might not be enforced to the extent that it deals with the claims of termination based on plaintiff's military service or membership in the military.


• Judgment affirmed as to the defamation and overtime payments claims. There was no evidence that could invalidate the release signed by the plaintiff as to such conditions.