Employee’s Agreement to Short Period of Limitations Enforced Against Employee

Employee’s Agreement to Short Period of Limitations Enforced Against Employee

      In a recent decision from the Sixth Circuit Court of Appeals, it considered a pair of important issues.  In the first, the Court laid out the analysis for determining whether a plaintiff’s claims did or did not exceed the $75,000 threshold required for diversity jurisdiction.  In the second aspect of the decision, the Court found that a voluntarily entered into six-month period of limitations for bringing a claim against an employer would be enforced.  Shupe v. Asplundh Tree Expert Company, __ Fed.Appx. __, 2014 WL 2119151 (6^th Cir. May 22, 2014).

      Rebecca Shupe (“Shupe”) was employed by Asplundh Tree Expert Company (the “Company”).  She began working for the Company in August, 2008 and was terminated in August, 2011.  At the time of becoming an employee, she signed a “Limitation on Time to File Claims or Lawsuit” (the “Waiver”), it providing in part:

I agree that any claim, administrative claim or lawsuit relating to my service with [the Company] or any of its subsidiaries must be filed no more than six (6) months after the date of the employment action that is the subject of the claim or lawsuit, except as may be provided otherwise in a collective bargaining currently in effect.  I waive any statute of limitations to the contrary.

      Approximately one year after her termination, Shupe filed suit against the Company alleging a number of claims including sexual harassment by her supervisor, who was her former husband.  She also brought claims for gender and age discrimination and that her termination was in retaliation for complaining about her former husband’s harassment.  The Company removed the action to federal court, and Shupe sought remand.

      One of the requirements for diversity jurisdiction is that the amount in controversy exceeds $75,000.  Kentucky does not provide, however, that the amount of liquidated damages sought in a suit be stated in the complaint.  Hence, when a suit is removed to federal court, there is an open question as to whether the amount in controversy does or does not exceed $75,000.  In this instance, Shupe argued that the amount in controversy did not exceed $75,000.  However, the District Court parsed her various claims, noting that back pay alone would amount to some $68,250 by the time of trial, none of which would account for her other claims, including those for punitive damages.  In making that determination, the Court discounted certain settlement offers of less than $75,000, as well as an affidavit that she was not seeking that amount, finding that these did not go to the jurisdictional question of the amount in controversy.  Further, the wording of the affidavit was found to be insufficient in light of other Court rulings as to what is and is not sufficient to make clear that plaintiff is not seeking an amount exceeding $75,000. 

      As such, the District Court’s determination that the requirements of a diversity jurisdiction existed was affirmed, and the Sixth Circuit turned its attention to the District Court’s grant of summary judgment on the basis of the Waiver.

      The Court began by noting that “waivers of statute of limitations are valid and enforceable under Kentucky law” and that there are prior holdings to the effect that the six-month limitation period is not inherently unreasonable.  2014 WL 2119151, *6.  In the face of this, Shupe argued that she did not on a knowing and voluntary basis sign the Waiver.  In response to claims that she was not allowed to have the Waiver and other documents reviewed by her own attorney and that they were not explained to her, the Court responded, generally, that one who does not understand a contract needs to seek assistance before it is signed, if they do not do so they will be bound by the terms thereof.

      In addition, the Sixth Circuit specifically rejected Shupe’s allegation that the Company should have provided her a copy of the Waiver at the time of her termination.  2014 WL 2119151, *9. 

      In that Shupe did not bring her claims within six months of her termination, the summary judgment granted by the District Court was upheld.