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socrateaser
socrateaser, Lawyer
Category: California Employment Law
Satisfied Customers: 33547
Experience:  Retired (mostly)
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I need help to review the clauses in the seperation agreement

Resolved Question:

I need help to review the clauses in the seperation agreement below since I have two concerns and am not sure my understandings are correct:

1. under # XXXXX the new verbiage employeer attorney added in shows that they can still disclose the information to the potential hiring manager outside of Health Plan but inside the company ( i.e. to the hiring managers in the Medical group or hospital group, the other two legal entities under the same company besides Health Plan). Please let me know whether you read the same

2. Since they added in the second paragraph into #9 in the revision and changed nothing in #10, it looks like I need to pay $2000 if any of the people mentioned in #9 breaches the confidentiality. Those people would include Health Plan, and "auditors, attorneys, accountants, managers and other employees of XX (employer company) who require the information in the normal course of business". If that is the case, I do not think the clause is logical or reasonable. I should not pay if the other party breaches the agreement. Please let me know whether that is your understanding as well.


---------------------------------------------------------------------------------
9. Non-disparagement.
In the event of a breach of this provision, a non-breaching party may choose to respond to any disparaging statement by a breaching party by providing accurate information, and any such response will not be deemed to be a breach of this Agreement and Release. Zhou agrees that Zhou will not at any time hereafter make any statements, either verbal or written to anyone, including without limitation, any electronic or print news media or other publications, or any community organizations, that would disparage the reputation, image, good will or commercial interest of Health Plan or any of the other XXX (employer company) entities or their employees or agents. Health Plan agrees to use its best efforts to cause Ray Poppino, Greg Klenske and BXXXXX XXXXX, while under the control of Health Plan, not to make any statements, either verbal or written to anyone outside of XXX (employer company) including without limitation, to any electronic or print news media or other publications, or any community organizations, that would disparage the reputation, image, good will or commercial interest of Zhou.
10. Confidentiality of Agreement. Zhou agrees that Zhou will keep the terms of this Agreement and Release, and the amount of the payments, completely confidential. Zhou further agrees that Zhou has not and will not publicize or disclose, the terms of this Agreement and Release to any person, including any current, former or future employees of Health Plan or any of the other entities affiliated with the XXX (employer company). Zhou may disclose information about this Agreement and Release to Zhou’s spouse/domestic partner, attorney and/or tax advisor, provided they are informed of and agree to be bound by this confidentiality provision, and as may be required by lawful subpoena or court order, or as otherwise necessary to effectuate or enforce this Agreement and Release. Zhou may disclose the fact that she resigned her employment without breaching this provision of the Agreement and Release
Health Plan agrees that it will keep the terms of this Agreement and Release completely confidential, except that it may disclose the contents of this Agreement and Release as is necessary to auditors, attorneys, accountants, managers and other employees of XXX( employer company) who require the information in the normal course of business, or where disclosure may be required by law or by judicial or administrative process or order.
Submitted: 1 year ago.
Category: California Employment Law
Expert:  Fran-mod replied 1 year ago.
Hi, I'm a moderator for this topic. I've been working hard to find a professional to assist you right away, but sometimes finding the right professional can take a little longer than expected.

I wonder whether you're ok with continuing to wait for an answer. If you are, please let me know and I will continue my search. If not, feel free to let me know and I will cancel this question for you. Thank you!
Customer: replied 1 year ago.


Yes, please continue with your search. Thanks.

Expert:  Fran-mod replied 1 year ago.
Hello Jie,

Thank you for your continued patience. We will continue the search for a professional for you.
Expert:  socrateaser replied 1 year ago.
Hello,

Customer service has asked me to review your question.

Re #9, in my opinion, the nondisparagement requirement is meaningless. The issue is what sort of remedy are you entitled to in the event that someone who works for your employer disparages your reputation in breach of the separation agreement. Without a remedy (money damages), there is no incentive for anyone to remain silent about the issue.

Re #10, I do not see any reference to $2,000 (or any other amount). Maybe you left a sentence out of the paragraph.

Hope this helps.

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Customer: replied 1 year ago.


Yes, I forgot to attach paragraph 11. Here it is. But this paragraph only constraints my side and not other people from the company side. That is why I am concerned. How should I rephrase this paragraph to constraint the company side? Does California Civil Code, section 1671 apply to the other party as well? Thanks.


 


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11. Enforcement of Confidentiality. Zhou agrees that in the event Zhou breaches Zhou’s obligation in paragraph 10 above not to disclose confidential information; or Zhou or any of the other persons identified in paragraph 10 above, breach their obligation to keep this Agreement and Release confidential, the damages to Health Plan for breaching that obligation would be impractical and extremely difficult to ascertain, that the magnitude of Health Plan’s direct and consequential harm is likely to be quite substantial, and that it is in the parties’ interest to liquidate the amount of Health Plan’s recoverable damages for the sake of predictability and avoidance of costly litigation over the magnitude of Health Plan’s damages. Therefore, pursuant to California Civil Code, section 1671, Zhou agrees to pay Health Plan the sum of Two Thousand Dollars ($2,000.00) as liquidated damages for any such breach, upon proof of such breach by clear and convincing evidence, and agrees that amount is reasonable in light of the circumstances at the time of this Agreement and Release.

Expert:  socrateaser replied 1 year ago.

Civil Code 1671 is simply the definition of "liqudated damages" in California. For an employment contract, subsection (b) provides that "...a provision in a contract liquidating the damages for the breach of the contract is valid unless the party seeking to invalidate the provision establishes that the provision was unreasonable under the circumstances existing at the time the contract was made." A liquidated damages clause can be rendered unenforceable by showing in court that the amount of liquidated damages lack a proportional relation to damages which may actually flow from failure to perform under a contract.” Ridgley v. Topa Thrift & Loan Ass’n (1998) 17 Cal.4th 970, 977.

However, $2,000 could be argued to be too small of a damage award under your agreement, so this leaves you in a very uncertain position in the event of a dispute.

That said, I cannot draft any final legal document in this forum, so please understand that what follows is intended as an example, of what an enforcement clause could look like:

In the event of a breach by either party of the obiligation of nondisparagement or confidentiality under this agreement, the parties agree that it would be unreasonably difficult to ascertain damages for the breach in advance of its occurrence, and therefore the parties agree that each and every individual breach of either of the aforementioned obligations shall entitle the nonbreaching party to liquidated damages in the amount of $2,000.00 USD.

Hope this helps.

Customer: replied 1 year ago.

Hi,


 


Thanks for the help.


 


Here is company atterny's response per the HR person.


---------------------------------------------------------------------------------------------


 


We cannot agree to Jie's changes. We will not limit the non-disparagement obligation to Health Plan. We need the ability to provide information about her performance or behavior to any of the KP entities without a claim that we breached our non-disparagement obligation. We will not agree to pay her liquidated damages for breach of the confidentiality provision.
______________________________________________________


The second sentence refer to the change I made in a paragraph under #9-


Health Plan agrees to use its best efforts to cause Ray Poppino, Greg Klenske and BXXXXX XXXXX, while under the control of Health Plan, not to make any statements, either verbal or written to anyone outside of XXX HEALTH PLAN, INC, including without limitation, to any electronic or print news media or other publications, or any community organizations, that would disparage the reputation, image, good will or commercial interest of Zhou.



I changed XXX to XXX HEALTH PLAN, INC because there are three legal entities under this holding company: XXX Health Plan, XXX Medical Group and XXX Hospital. I wanted to make sure that the dispute is only known within Health Plan so that when I apply for jobs within the XX Medical Group and XXX Hospital, the HR in the other two groups does not know there is dispute. Otherwise, it will impact my application. Is it legally required that the HR files are accessable to any of the legal entities within this holding company?



Also, company attorny's repsonse does not address my second concern on the $2000 litigation damage charge either. Why should I pay the company a fine when there is a breach on their side? How should I respond to this unlogical request?


Expert:  socrateaser replied 1 year ago.

Is it legally required that the HR files are accessable to any of the legal entities within this holding company?

 

A: No. But, this doesn't mean that the attorney can't make the demand. It's all about your leverage. If you have something that could cost the employer a lot more if you were to go to trial or arbitration on the issues surrounding the separation agreement, then you have leverage. Otherwise, the attorney will simply say, no, and you'll have to choose whether or not to sign or sue/arbitrate.

 

Also, company attorny's repsonse does not address my second concern on the $2000 litigation damage charge either. Why should I pay the company a fine when there is a breach on their side?

 

A: Once again, it's all about leverage. If I were representing you, and if I thought you had a strong case, then I wouldn't settle -- I'd say, "If you (kp) don't change your mind, then we're going to court/arbitration. Your choice, but if we don't have a response one way or the other by ??/??/????, then we will assume there's no deal and I will proceed to enforce my client's rights."

 

If I thought you had a weak case, I'd probably suggest that you take the deal.

 

How should I respond to this unlogical request?

 

A: Only you can decide how to respond. I'm not permitted to advocate a course of action in this forum. The decisions on what to do with the information provided must be yours alone.

 

Hope this helps.

socrateaser, Lawyer
Satisfied Customers: 33547
Experience: Retired (mostly)
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