Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_14-cv-05655/USCOURTS-cand-5_14-cv-05655-0/pdf.json

Nature of Suit Code: 442
Nature of Suit: Civil Rights Employment
Cause of Action: 28:1441 Petition for Removal - Employment Discrimination

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Case No. 5:14-cv-05655-PSG

ORDER GRANTING MOTION TO DISMISS

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United States District Court

For the Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA 

SAN JOSE DIVISION

PAUL LEVESQUE, 

 Plaintiff,

 v. 

RINCHEM COMPANY, INC., et al.,

 Defendants. 

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Case No. 5:14-cv-05655-PSG

ORDER GRANTING MOTION TO 

DISMISS 

(Re: Docket No. 9)

In this employment discrimination case, Plaintiff Paul Levesque seeks rescission of a 

severance agreement that he entered into with Defendant Rinchem Company, Inc. Claiming he 

signed the agreement under economic duress, Levesque seeks to pursue his other claims of 

termination based on age, disability and religious discrimination, among others. Rinchem moves to 

dismiss the complaint in its entirety, arguing that there was no economic duress and that Levesque 

released his claims under the severance agreement. Because the court finds Levesque’s allegations 

of economic duress insufficient, the motion to dismiss is GRANTED with leave to amend. 

I.

This case is about a man who was laid off after twenty-three and a half years as a Rinchem 

employee.1 Levesque was initially employed at Rinchem as a warehouse worker and driver and 

was promoted during his tenure until he was managing as many as four warehouses at a time.2

 He 

 

1 See Docket No. 1 at ¶ 8. 

2 See id. at ¶¶ 9-11. 

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regularly received positive evaluations until two months before his termination.3 Just over a week 

before the termination, Levesque suffered an injury on the job—twisting his knee and tearing his 

rotator cuff.4 He sought and received treatment for his injuries and worked out an arrangement 

with his supervisor to continue working during his recovery.5 On September 25, 2013, Rinchem 

terminated Levesque as a part of a “reduction in force.”6 One month later, Levesque entered into a 

severance agreement with Rinchem in which Levesque received $42,562.50—23.5 weeks of 

salary—plus health insurance coverage through the end of the year in exchange for a release of all 

claims against Rinchem—a settlement that Levesque negotiated above and beyond Rinchem’s 

initial offer.7

This suit followed. Levesque alleges that Rinchem was actually interested in promoting 

younger, Morman individuals over older, non-Morman individuals, such as himself.8 He further 

alleges that he was terminated as a result of his injury and that he only entered into the agreement 

as a result of severe economic duress.9 Levesque alleges eight causes of action in his complaint: 

(1) wrongful termination in violation of public policy; (2) age discrimination in violation of the 

Fair Employment and Housing Act; (3) disability discrimination in violation of FEHA; (4) medical 

condition discrimination in violation of FEHA; (5) religious discrimination in violation of FEHA; 

(6) wrongful termination in violation of public policy; (7) rescission of settlement agreement 

pursuant to Civ. Code § 1689 and (8) declaratory relief.10 Rinchem now moves to dismiss all eight 

claims.

 

3 See id. at ¶ 12. 

4 See id. at ¶¶ 16-19. 

5 See id. at ¶ 18. 

6 See id. at ¶ 19. 

7 See Docket No. 1-1. 

8 See Docket No. 1 at ¶¶ 14-16, 19. 

9 See id. at ¶¶ 16-20. 

10 See Docket No. 1. 

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Case No. 5:14-cv-05655-PSG

ORDER GRANTING MOTION TO DISMISS

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II.

This court has jurisdiction under 28 U.S.C. §§ 1331 and 1338. The parties further

consented to magistrate judge jurisdiction pursuant to 28 U.S.C. § 636(c) and Fed. R. Civ. P. 

72(a).11

Under Fed. R. Civ. P. 12(b)(6), “dismissal can be based on the lack of a cognizable legal 

theory or the absence of sufficient facts alleged under a cognizable legal theory.”12 If a plaintiff 

fails to proffer “enough facts to state a claim to relief that is plausible on its face,” the complaint 

may be dismissed for failure to state a claim upon which relief may be granted.13 A claim is 

facially plausible “when the pleaded factual content allows the court to draw the reasonable 

inference that the defendant is liable for the misconduct alleged.”14 Material properly submitted 

with the complaint may be considered as part of the complaint for purposes of a Rule 12(b)(6) 

motion to dismiss.15 Against these standards, none of Levesque’s claims pass muster.

III.

First, Levesque’s claims—specifically claims one through six—are barred by the valid and 

enforceable contract that he entered into with Rinchem.16 In order for a contract to be legally 

enforceable, there must be an offer, an acceptance, consideration and mutual assent.17 An 

individual is presumed to have the capacity to enter into a contract unless he is wholly without 

understanding or judicially determined insane.18

 

11 See Docket Nos. 7, 13. 

12 Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990). 

13 Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). 

14 Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009). 

15 Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542, 1555 (9th Cir. 1989). 

16 As an initial matter, Rinchem points out that the Separation Agreement and Release is governed 

under New Mexico law. Because the court would reach the same result under either legal regime, 

it is unnecessary to determine which law properly governs. 

17 See Cal. Civ. Code § 1556; New Mexico Jury Instr. 13-801. 

18 See Cal. Civ. Code § 38; New Mexico Jury Instr. 13-837. 

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Mutual assent is shown by one party’s offer, the other party’s acceptance and 

communication of such acceptance to the offeror.19 Here, Levesque admits that he “negotiated 

with [Rinchem] regarding the terms of his separation” and was able to secure more favorable terms 

than Richem had originally offered.20 Both parties signed the agreement and Levesque accepted 

the lump sum payment due to him under the agreement. 

Consideration is vital to contract formation.21 “Consideration may consist of a return 

promise, an act, a forbearance, or the creation, modification, or destruction of a legal relation.”22 

Under the terms of the agreement, “Employee shall receive the negotiated lump sum amount of the 

equivalent of 23.5 weeks of employee’s salary: $42,562.50 . . . less all applicable federal, state and 

local taxes, deductions and withholdings.”23 Rinchem also agreed to pay the employer and 

employee portion of Levesque’s health insurance premiums through December 31, 2013.24 

Levesque does not allege that Rinchem failed to follow through. 

Significantly, Levesque does not allege that Rinchem breached the agreement, which 

suggests that he concedes that the contract is valid and enforceable.25 Under the agreement, 

Levesque waived “any and all claims, known or unknown, arising out of EMPLOYEE’S 

employment and resignation thereof . . . [including] any and all claims under . . . the California Fair 

 

19 See Donovan v. RRL Corp., 26 Cal. 4th 261, 270-71 (2001); New Mexico Jury Instr. 13-801; 

Rest. 2d Contracts §§ 22(1), 23-24. 

20 Docket No. 1 at ¶ 21; see Docket No. 1-1 at 1 (“WHEREAS, EMPLOYEE has negotiated with 

RINCHEM regarding the terms of his separation and for additional pay and benefits above what 

was previously offered to him.”). 

21 See Cal. Civ. Code § 1550; New Mexico Jury Instr. 13-801; Rest. 2d Contracts §§ 71-81. 

22 Cal. Civ. Code § 1605; New Mexico Jury Instr. 13-814. 

23 Docket No. 1-1 at 1. 

24 See id. 

25 See San Mateo Union High School Dist. v. Cnty. of San Mateo, 213 Cal. App. 4th 418, 439-40 

(2013) (holding that a complaint that fails to properly allege breach of contract is deficient as a 

matter of law); Wagner Equip. Co. v. Wood, Case No. 11-cv-00466, 2012 U.S. Dist. LEXIS 39589, 

at *7-8 (D.N.M. Mar. 20, 2012) (“To state a claim for breach of contract under New Mexico law, a 

plaintiff must allege ‘the existence of a contract, breach of the contract, causation, and damages.’” 

(quoting Abreau v. N.M. Children, Youth & Families Dep’t, 797 F. Supp. 2d 1199, 1247 (D.N.M. 

2011))). 

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Employment and Housing Act . . . and all common law and other claims including, but not limited 

to, claims for wrongful or retaliatory discharge . . . [and] discrimination or harassment.”26 Claims 

one and six are for wrongful termination under the common law.27 Claims two through five all 

arise under FEHA. Levesque waived all of these claims under the agreement. 

Second, Levesque does not allege facts sufficient to support a rescission claim based on 

economic duress. Under New Mexico law, rescission is “an equitable remedy that results in the 

cancellation of a contract entered into through mistake, fraud, or duress.”28 Duress is “the 

intentional action by one person presenting such a serious business or financial loss or injury to the 

other person to the contract that he or she has no reasonable choice or alternative.”29 Under 

California law, “[a] party to a contract may rescind the contract in the following cases: [i]f the 

consent of the party rescinding, or of any party jointly contracting with him, was given by mistake, 

or obtained through duress, menace, fraud, or undue influence, exercised by or with the connivance 

of the party as to whom he rescinds, or if any other party to the contract jointly interested with such 

party.”30 “Economic duress is an equitable doctrine which ‘come[s] into play upon the doing of a 

wrongful act which is sufficiently coercive to cause a reasonably prudent person faced with no 

reasonable alternative to succumb to the perpetrator’s pressure.’”31 “The doctrine of economic 

 

26 Docket No. 1-1 at 2. 

27 Levesque argues that because there is a LC 132A claim carve-out in the release, his wrongful 

termination claims are related to the LC 132A claim and thus also are exempted. But the language 

of the release clearly includes wrongful termination claims under the common law and excludes 

only “any LC 132A claim for the injury reported on 9/17/2013.” Docket No. 1-1 at 2. 

28 Branch v. Chamisa Dev. Corp., 147 N.M. 397, 401 (2009). 

29 New Mexico Jury Instr. 13-838. 

30 Cal. Civ. Code § 1689. 

31 Johnson v. Int’l Bus. Machines Corp., 891 F. Supp. 522, 528-29 (N.D. Cal. June 1995) (quoting 

Rich & Whillock, Inc. v. Ashton Dev. Inc., 157 Cal. App. 3d 1154, 1158 (1984)); see also Sheehan 

v. Atlanta Int’l Ins. Co., 812 F.2d 465, 469 (9th Cir. 1987) (holding that “economic duress occurs 

when a person subject to a wrongful act, such as a threat to withhold payment of an acknowledged 

debt, must succumb to the demands of the wrongdoer or else suffer financial ruin.”); Aikins v. 

Tosco Refining Co., Inc., Case No. 98-cv-00755, 1999 U.S. Dist. LEXIS 3994, at *7-8 (N.D. Cal. 

Mar. 29, 1999); New Mexico Jury Instr. 13-838; Tierra Realty Trust LLC v. Village of Ruidoso, 

296 P.3d 500, 509-10 (2013). 

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duress serves as a ‘last resort’ to correct exploitation of business exigencies ‘when conventional 

alternatives and remedies are unavailing.’”32

The parties quibble over whether Johnson v. IBM is distinguishable from the case at bar. In 

Johnson, IBM notified Johnson that he was laid off and offered Johnson a severance agreement in 

exchange for release of all claims.33 Johnson accepted the agreement but later filed a lawsuit 

against IBM for race and age discrimination, simultaneously seeking rescission due to economic 

duress.34 The agreement between Johnson and IBM contained terms that advised Johnson to 

consult with an attorney and confirmed that Johnson’s assent was voluntary.35

In making a determination, the Johnson court identified a four-part test to find economic 

duress: “(i) that IBM [the defendant] engaged in a sufficiently coercive wrongful act such that; 

(ii) a reasonably prudent person in Johnson’s economic position would have had no reasonable 

alternative but to succumb to IBM’s coercion; (iii) IBM knew of Johnson’s economic vulnerability; 

and (iv) IBM’s coercive wrongful act actually caused or induced Johnson to endorse the 

Release.”36 The court denied Johnson’s rescission claim, finding that Johnson was not facing 

imminent bankruptcy or financial ruin, that—while he subjectively may have believed he had no 

choice but to sign the release—objectively he had reasonable alternatives to signing the release, 

and that his “decision to endorse the [r]elease . . . was his own, made knowingly and freely after 

receiving advice of counsel” and absent “any untoward action on the part of IBM.”37

At first blush, Levesque appears similarly situated to Johnson. Like Johnson, Levesque 

signed an agreement after he was terminated in which he agreed to release all claims against his 

former employer. Levesque distinguishes Johnson on two primary bases: (1) that Johnson was a 

 

32 Johnson, 891 F. Supp. at 529 (quoting Rich & Whillock, 157 Cal. App. 3d at 1159).

33 See id. at 527. 

34 See id. at 524-25. 

35 See id. at 525-528. 

36 Id. at 527-28. 

37 Id. at 529-30. 

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well-educated computer engineer with ample job opportunities following his termination and 

(2) that Johnson had consulted an attorney about his discrimination claims prior to signing the 

release.38 But for the purpose of rescission based on economic duress, these are distinctions 

without a difference. 

Levesque does not allege that he had no other employment opportunities. He states that he 

was injured and ill but stops short of alleging that he was out of options.39 Levesque further alleges 

that insurance payments for his treatments totaled over $32,000 per year, but he fails to identify 

what his out-of-pocket medical bills would have been following his termination.40 Nor does 

Levesque specify whether he had other assets aside from the worker’s compensation checks that he 

received every two weeks in the amount of $2,133.44.41 While the court is sympathetic to 

Levesque’s unfortunate position, his representation that he did not know how long he would 

continue receiving worker’s compensation payments simply does not suggest the kind of threat of 

imminent bankruptcy or financial ruin required to allege economic duress.42 

As to whether Levesque had the opportunity to consult an attorney before signing the 

release, Levesque readily admits in his complaint that he received legal advice from a worker’s 

compensation attorney.43 While Levesque questions this attorney’s specific employment law 

experience, a worker’s compensation attorney is still an attorney.44 What is more, after receiving 

advice from this attorney, Levesque was able to negotiate a better deal for himself than what 

Rinchem had originally offered.45 Finally, Levesque has not alleged that Rinchem coerced or 

 

38 See Docket No. 15 at 8. 

39 See Docket No. 1 at ¶ 20. 

40 See Docket No. 1 at ¶13. 

41 See Docket No. 15-2 at ¶ 3. 

42 See id.

43 See Docket No. 1 at ¶ 21. 

44 Levesque’s representation that he was not able to afford an attorney to consult with him about 

his termination does not change the fact that he already had advice of his worker’s compensation 

counsel. See Docket No. 15-2 at ¶ 5. 

45 See Docket No. 1-1 at 1. 

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