Virginia Supreme Court Rejects Damages for Breach of Nondisparagement Agreement

The Virginia Supreme Court recently reaffirmed the rule that a breach of contract does not allow recovery of damages based on humiliation or injury to feelings. 

In Isle of Wight County v. Nogiec and Small v. Nogiec, 704 S.E.2d 83 (Va. 2011), the Court affirmed the trial court's reversal of two plaintiff's verdicts based on statements made by a county official in violation of a nondisparagement clause in the plaintiff's severance agreement.  As part of Alan Nogiec's decision to retire early from his position as director of the Parks and Recreation Department for the Isle of Wight County, he entered a severance agreement with the County providing that the parties would "refrain from making any disparaging comments or statements, whether written or oral, about the other or any member of the County's Board of Supervisors, administrators, or employees."  Id. at 84. 

Two months later, Patrick Small, a witness before the Board, testified that the previous Parks and Recreation director (that is, Nogiec) had made significant mistakes, and indeed, had taken action that "border[ed] on negligence."  Id. at 85.  Nogiec brought suit against the County for breach of contract, and against Small for defamation.  After trial, the court entered verdicts for Nogiec against both defendants.

The Virginia Supreme Court reversed the judgment against the County. The evidence of harm resulting from the breach, which the Court described as "embarrassment and humiliation," was not recoverable for a breach of contract.  Id. at 86.  The Court based his holding on the rule that "tort damages are not recoverable for breach of contract under the circumstances of this case."  Id. at 87.  Evidence of pecuniary damages was necessary, and Nogiec did not provide it.  The Court also pointed out that if Nogiec were permitted to prevail on both his breach of contract and defamation claims, he would have been recovering twice based on the same evidence.  Nogiec testified that he "believed" that Small's statements adversely affected his ability to find new employment, but failed to present any evidence other than the fact that he was not invited for job interviews for any of the positions for which he applied during a two-month period following Small's report to the Board.  

The Court upheld, by contrast, the verdict against Small for defamation.  Though it acknowledged that Small's testimony was entitled to a qualified privilege for reporting his duties to the Board, the Court pointed out that the circuit court had given the jury a proper instruction about malice (the necessary showing to overcome the privilege). 

In light of these holdings, lawyers drafting severance agreements should not presume that a nondisparagement clause will provide their clients with complete compensation for nonpecuniary damages.  As long as the law refuses to grant recovery of emotional distress or other tort-like damages, drafters must pay close attention to which remedies the law will actually permit.  Presumably, the parties to a severance/settlement agreement can agree, by contract, that emotional distress and humiliation, resulting from a breach of a nondisparagement clause, is compensable.  But, what employer would ever agree to such a provision?  One approach is to provide in the nondisparagement clause that proof of a breach alone without necessarily proof of actual damage, is compensable, and that the jury can determine the damages to be awarded.  Or, one could provide that proof of a breach automatically results in an award of a fixed amount of liquidated damages.  Bottom line, the Virginia Supreme Court's decision underscores the need for counsel to carefully craft nondisparagement clauses so that they have teeth and hopefully deter each side from badmouthing the other.  While the Nogiec case involves an employee being disparaged, in my experience, oftentimes nondisparagement clauses are of vital importance to management.  I would be interested in the suggestions of others on how to craft more meaningful nondisparagement clauses.

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The Iowa Caucus


A Simple Prayer

by

Robert B. Fitzpatrick

Mine eyes have seen . . .
Medgar, dead at the hand of hate,
Ross’ grocery store in Port Gibson, and the voices of hope,
Unita in Mayersville, Eddie Ford, Roosevelt and Pauline, and most especially, our Ms. Daisy, Ms. Minnie Ripley,

Mine eyes have seen . . .
Martin, dead at the hand of hate,
Tut gone forever, but Rosie at Head Start with the sparkling eyes of a child,
Then hope again, Bobby,

Mine eyes have seen . . .
Anna Walentynowicz in Gdansk, and,
The Philosopher King, Václav Havel,
And death yet again, Fr. Popieluszko, but hope alive at St. Stanislas Kostka,

Mine eyes have seen . . .
The smile, the erect bearing, and those wonderful shirts – after Robbin Island, and,
Lucky Dube voicing the hope,
And then death again this last fall as we killed our own, Lucky,

Mine eyes have seen . . .
And, my back straightened with pride this morning,
I thought I saw beyond the horizon,
Or, was it but a dream,

Protect your son, Oh Lord,
Work your will,
And let us see,
Whether the refrain is complete.


Is A Constructive Discharge Claim A Continuing Violation And If So, Who Cares?


In response to my post regarding the opinion in Mayers of the D.C. Court of Appeals,
there has been some discussion that, for example, if a former employee, who alleges that he/she was constructively discharged as a result of an accumulation of intolerable acts, on the 365th day after the resignation/constructive discharge, the former employee's complaint might be time barred if the last of the series of intolerable acts that precipitate the resignation occurred 366 or more days before the filing. Frankly, while that is intellectually interesting, I doubt if any Judge would give the time of day to such an argument. The culminating event, the resignation/constructive discharge, has to be an actionable event even though, in a sense, all of the wrongs that lead the employee to quit Suders-like preceded resignation and, in some cases, could be all outside the one year statute of limitations.

On a nearly silly tangent, I have to assume that Maryland, even after Hass, in a constructive discharge circumstance where the person announces their resignation on day X to be effective on X plus two weeks, the statute of limitations begins to run from the announcement date, not the effective date of the constructive termination.

Having said the above, the discussion regarding my initial post, has led me to revise my conclusion that whether or not the courts denominate constructive termination cases as akin to Morgan - cumulative wrong cases is indeed of significant value to Plaintiffs. Let me explain my thinking.

If constructive termination is viewed as a cumulative wrong, then the entire string of events that eventually "breaks the camel's back" and culminates in a resignation called a constructive termination, under Morgan, so long as there is no break in the chain, the entire chain/string of events is actionable and all of the wrongs committed during the chain are compensable, not just the events that occurred within the one year D.C. Human Rights Act statute of limitations. So, if it is death by a thousand cuts over more than a year, the events before the year before filing are not only evidence, under Morgan they are liability events.

Thus, the jury can consider all of the events no matter how far back in time the chain of events goes, in assessing the amount of the jury's award. So, while maybe a bit esoteric, conceiving of constructive termination as a cumulative wrong is helpful for closing argument and for shutting down arguments that the events prior to the one year period unduly swayed the jury and affected inappropriately the amount of their award.

Also, viewing constructive terminations as cumulative wrongs shuts down arguments by the defense that the events occurred within one year before the resignation in toto do not amount to sufficient intolerability to justify an employee, like the police woman in Suders, saying "enough is enough", and having her resignation viewed as a fit response to the intolerable acts.