Gallo v. Inter-Con Security

Background

Joseph M. Gallo, proceeding without a lawyer, sued Inter-Con Security Systems Inc., his former employer. He alleged age discrimination and breach of a February 9, 2018 settlement agreement. The earlier dispute concerned Gallo’s termination after he allegedly failed to complete a supplemental medical examination. The parties settled that dispute, and the earlier action was dismissed with prejudice.

Under the settlement agreement, Gallo released claims existing when he signed the agreement, including claims under the Americans with Disabilities Act and related federal employment-discrimination laws. Inter-Con agreed to begin the process of re-employing Gallo as a special security officer and, if he met the required qualifications, place him in the next available open position. Inter-Con later rehired him, but Gallo alleged that it did not restore his seniority or full-time status and did not provide related vacation benefits. He also alleged that Inter-Con failed to reimburse him $1,250 for a required stress test or other medical expenses.

Defendant’s Motions

Inter-Con moved to dismiss the amended complaint under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint alleges enough facts to state a legally plausible claim. It argued that the settlement agreement released Gallo’s age-discrimination claim, that he had not adequately pleaded breach of contract, and that Inter-Con had substantially performed its obligations. Inter-Con also requested costs and fees from the earlier action under Rule 41(d).

Age-Discrimination Claim

The court held that Gallo’s current age-discrimination allegations were the same allegations raised in the earlier action. The settlement agreement clearly released claims arising from Gallo’s employment, including the discrimination claims at issue. Applying the circumstances surrounding the agreement, the court emphasized that Gallo had been represented by counsel in the earlier action, had several months to consider a draft, participated in negotiating the agreement, was advised to consult an attorney, and had done so. The court also found that the agreement’s language was clear and that Gallo received consideration, including Inter-Con’s efforts to re-employ him.

The court rejected Gallo’s assertions that Inter-Con used “a play on words” and “deceitful tactics.” It found those assertions too conclusory to show fraud, duress, or another basis for invalidating the agreement. The court therefore held that Gallo knowingly and voluntarily waived the discrimination claims and dismissed the age-discrimination claim with prejudice. The court also noted that the claim might independently be barred by the rule against relitigating claims resolved in a prior final judgment.

Breach-of-Contract Claim

The court held that Gallo had not adequately pleaded breach of contract. A contract claim must identify the agreement, the plaintiff’s performance, the defendant’s breach, and resulting damages. Gallo did not identify specific settlement-agreement provisions that Inter-Con allegedly violated.

As to the $1,250 reimbursement, Gallo did not identify a provision requiring that payment or allege when he completed the stress test, its cost, or when he provided the results to Inter-Con. The court also noted Inter-Con’s representation that it would reimburse him after receiving required paperwork, but it did not decide whether that representation was factually correct.

As to seniority, full-time status, and vacation benefits, the court found that the settlement agreement required Inter-Con to begin the re-employment process and place Gallo in an available position if he met the required qualifications. Gallo acknowledged that Inter-Con rehired him. He did not provide enough detail about what seniority, shift rights, or vacation benefits the agreement required Inter-Con to provide. The court therefore dismissed the breach-of-contract claim without prejudice.

Leave to Amend

The court granted Gallo leave to amend only the breach-of-contract claim. It concluded that amending the age-discrimination claim would be futile because the settlement agreement barred it. Gallo was permitted to file a second amended complaint by September 29, 2021. The court stated that if he did not replead the contract claim by that date, it would dismiss the remainder of the case with prejudice.

Request for Fees

The court denied Inter-Con’s request for costs and fees under Rule 41(d). Although the present lawsuit was based substantially on the same facts as the earlier action, the court found no indication of bad faith or improper motives. It also recognized that the earlier action had been dismissed for the good reason that the parties had settled the dispute and that Gallo was proceeding without a lawyer.

Disposition

The court granted Inter-Con’s motion to dismiss. It dismissed Gallo’s age-discrimination claim with prejudice and dismissed his breach-of-contract claim without prejudice, while allowing amendment of the contract claim. The court denied Inter-Con’s motion for fees.