In October, the Federal Home Loan Bank of San Francisco reached a $3.6 million settlement with two former executives in its Washington, DC, office of legislative and regulatory affairs who claimed they were the victims of racial discrimination.
There’s just one problem: Despite apparently reaching an agreement during mediation, the bank didn’t pay up.
Last week, Lawrence Parks, former senior vice president for external, legislative and regulatory affairs, and Timothy Simons, former vice president for legislative and regulatory outreach and compliance, filed a lawsuit in the district court in Washington seeking the putative $3.6 million in damages, plus court costs and additional damages.
In the underlying complaint, Parks and Simons had alleged they were subject to practices that had a disparate impact on Black employees. They claimed the bank closed its DC office and fired them after they complained about racial discrimination.
But the lawsuit isn’t about the specifics of that complaint. The two executives are suing for breach of contract and breach of covenant of good faith and fair dealing related to the bank’s alleged failure to fulfill the terms in its mediation agreement.
The plaintiffs argue that the mediation — which they did not request — was in good faith and that both parties agreed in advance that any settlement they reached would resolve the dispute. More importantly, the mediator’s proposal stated that any such agreement “is enforceable in the same manner as any other written contract.”
Parks and Simons claim they did not initially file a suit against the bank, or the employees named in this suit, because they agreed to wait until after mediation. They said a settlement was reached on Oct. 8, 2018, providing a signed, handwritten copy of that document in the appendix to their filing.
Mediator proposals are typically short and sweet. The problem seems to be that the parties cannot reach a long-form version of that settlement.
Parks and Simons claim the bank and its co-defendants have attempted to add terms that would “materially alter (and effectively nullify) the agreement struck at mediation.”
They claim the bank was trying to stretch the payout over 10 years and include claw-back provisions and non-compete clauses that would dramatically change the value of the settlement.