Duckworth v. R3 Education, Inc. et al
Judge F. Dennis Saylor, IV: ORDER entered. MEMORANDUM AND ORDER. Defendants' Motion to Dismiss is GRANTED.(FDS, law1)
UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
R3 EDUCATION, INC.,
STEVEN C. RODGER, and
TERRY J. MOYA,
Civil Action No.
MEMORANDUM AND ORDER
ON DEFENDANTS’ MOTION TO DISMISS
This is a lawsuit claiming an alleged wrongful termination. Dr. Hugh Duckworth
contends that because his employer wrongfully categorized his termination as “for cause,” he
was deprived of his rights under a Securityholders Agreement and Stock Option Agreement.
The complaint asserted claims under the Americans with Disabilities Act (“ADA”), the
Massachusetts anti-discrimination statute, and state contract law. Defendants have moved to
dismiss the complaint under Fed. R. Civ. P. 12(b)(6) for failure to state a claim. For the
following reasons, the motion to dismiss will be granted.
The following facts are as stated in the complaint.
Dr. Hugh Duckworth was employed by R3 Education, Inc. (“R3”), a holding company
that owns three medical schools in the Caribbean: St. Matthews University School of Medicine,
Medical University of the Americas, and the Saba School of Medicine. (Compl. ¶ 10).
Duckworth served as Executive Dean at the Saba University School of Medicine and Associate
Dean of Basic Sciences at Medical University of the Americas and the Saba University School of
Medicine. (Id. ¶ 13).
R3 is a Delaware corporation with a principal place of business in Massachusetts. (Id. ¶
2). Steven Rodger and Terry Moya are, respectively, the Chief Executive Officer and the Chief
Financial Officer of R3. (Id. ¶¶ 11-12).
On July 1, 2013, Duckworth received a letter signed by Rodger confirming that he had
been placed on paid leave from his employment because of “repeated insobriety while rendering
services as an employee.” (Id. ¶ 36; Docket No. 9, Ex. 5). 1 The letter indicated that his salary
would be reduced to $110,000 while he remained on paid leave. (Docket No. 9, Ex. 5). It also
stated that his “repeated insobriety would justify [his] termination for cause,” but that Rodger
“was willing to continue [his] employment with the Company,” subject to various terms and
Among the terms and conditions were that Duckworth would be relieved of his current
duties, although he would retain certain titles; that he would “perform such duties as requested,”
but he would cease to come in to the office; and that he would surrender all keys and other
Under Fed. R. Civ. P. 12(b)(6), a court normally cannot consider evidence outside the complaint and
attached exhibits without converting the motion into a motion for summary judgment. However, the First Circuit
has recognized “narrow exceptions” to that rule, including “documents central to [plaintiff’s] claim[s]” and
“documents sufficiently referred to in the complaint.” Watterson v. Page, 987 F.2d 1, 3 (1st Cir. 1993). The
complaint makes many references to the July 1, 2013 and July 14, 2014 letters, both of which defendants have
provided as exhibits. Plaintiff has not contested the authenticity of those documents. The Court will therefore
consider the letters in connection with the motion to dismiss.
company property. (Id. ¶¶ 1-4). It also provided that he would lose certain non-vested or nonexercised stock option rights. (Id. ¶ 6). It directed him to “immediately seek appropriate
professional help for [his] substance abuse problem.” (Id. ¶ 7). It included a paragraph releasing
the company and its officers and employers from all claims. (Id. ¶ 9). It included a statement
that his continued employment would be at-will. (Id. ¶ 8). Finally, it included an integration
clause that superseded and cancelled “all prior or contemporaneous discussions, negotiations,
representations or agreements with respect to the matters addressed herein.” (Id. ¶ 11).
Duckworth was given until 5:00 p.m. on July 28, 2013, to decide whether to accept the
offer. (Id. ¶ 10). The release language of the letter also stated he would have seven days from
the date of execution to revoke his acceptance of the agreement. (Id.). According to the
complaint, Rodger orally assured Duckworth that he could keep his job provided he signed the
letter. (Compl. ¶ 36). Duckworth ultimately signed the letter on July 29, 2013. (Docket No. 9,
About a year later, on July 14, 2014, Duckworth received a letter signed by Moya stating
his employment would be terminated effective August 15, 2014. (Compl. ¶¶ 26-27). The
termination was “for cause,” although the letter did not specify the specific basis. (Id. ¶ 30).
The July 1, 2013 letter did not provide any specific examples of Duckworth’s insobriety.
The complaint alleges that R3 encouraged a “party atmosphere” and that other employees,
including top management, were intoxicated at company events but did not suffer similarly
adverse employment consequences. (Id. ¶¶ 48-49).
The Securityholders Agreement and Stock Option Agreement
As noted, the letter provided that Duckworth would lose certain rights concerning R3
stock options. In December 2008, Duckworth became a party to R3’s Securityholders
Agreement by executing a joinder document to become a “management stockholder.” (Id. ¶ 14).
As relevant here, the agreement stated:
[U]pon the occurrence of a Call Event affecting a Management Stockholder, the
Company shall have the right to purchase . . . all . . . of the Shares held by such
Management Stockholder at the Purchase Price and during the Exercise Period
applicable thereto as described . . . in Schedule 2 hereto.
(Id. ¶ 15). The agreement defined “Call Event” as “the first to occur of any of the Triggering
Events.” (Id. ¶ 16). A “Triggering Event” in turn was defined as the “termination of [the]
employment relationship . . . for any reason.” (Id. ¶ 17). There were six categories of triggering
events, including “a termination for Cause.” (Id.). Justification for termination with cause
included “repeated insobriety or any use of illegal drugs while rendering services as an
employee.” (Id. ¶ 19).
Schedule 2 of the Securityholders Agreement provided that in the event of a termination
for cause, the “purchase price” of the securities would be the “lower of initial value and book
value.” (Id. ¶ 18). The “initial value” of the securities at Duckworth’s termination was $0.001
per share. (Id. ¶ 43). Because Duckworth held 319 shares of R3 common stock at his
termination date, the “total purchase price payable by [R3] for [his] stock [was] $0.319, or $0.32
By contrast, termination without cause would result in the “purchase price” being the
“stipulated value” of the securities, which was defined as:
[T]he quotient obtained by dividing (A) the difference obtained by subtracting (I)
Funded Debt of the Company as of the date Stipulated Value shall be determined,
from (II) the product of the Company’s Adjusted EBITDA for the 12-month
period ending on such date times five (5), by (B) the number of Shares
outstanding or deemed outstanding on such date.
(Id. ¶ 44). Because the value of several variables remains unknown to Duckworth, additional
information is required to calculate the exact “stipulated value.” (Id. ¶ 45). Nevertheless, the
complaint contends that the stipulated value was much higher than the “initial value,” and uses
the Company’s reported par value of $350 per share as a proxy. (Id.).
Duckworth was also a party to a Stock Option Agreement dated December 1, 2008. (Id.
¶ 20). The Stock Option Agreement granted him the opportunity to purchase 255 shares of R3
common stock at $100 per share. (Id. ¶ 21). However, if his employment was terminated for
cause, then those options would be forfeited. (Id. ¶ 22). Approximately two weeks after
Duckworth’s departure, R3 common stock was valued at $350 per share, according to publicly
available information on file with the Massachusetts Secretary of State. (Id. ¶ 40). Therefore,
Duckworth would have been entitled to profits of $250 per option had he not been terminated for
Duckworth filed the complaint in this action on June 23, 2017. It asserts asserting ten
counts: Counts 1, 3, and 5 allege breach of contract; Counts 2, 4, and 6 allege breach of the
implied covenant of good faith and fair dealing; Counts 7 and 8 allege violation of the ADA; and
Counts 9 and 10 allege violation of the Massachusetts anti-discrimination statute. Defendants
have moved to dismiss the complaint for failure to state a claim, contending that plaintiff’s
claims are barred by the release included in the July 1, 2013 letter.
On a motion to dismiss, the court “must assume the truth of all well-plead[ed] facts and
give . . . plaintiff the benefit of all reasonable inferences therefrom.” Ruiz v. Bally Total Fitness
Holding Corp., 496 F.3d 1, 5 (1st Cir. 2007) (citing Rogan v. Menino, 175 F.3d 75, 77 (1st Cir.
1999)). To survive a motion to dismiss, the complaint must state a claim that is plausible on its
face. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). In other words, the “[f]actual
allegations must be enough to raise a right to relief above the speculative level, . . . on the
assumption that all the allegations in the complaint are true (even if doubtful in fact).” Id. at 555
(citations omitted). “The plausibility standard is not akin to a ‘probability requirement,’ but it
asks for more than a sheer possibility that a defendant has acted unlawfully.” Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 556). Dismissal is appropriate if the
complaint fails to set forth “factual allegations, either direct or inferential, respecting each
material element necessary to sustain recovery under some actionable legal theory.” Gagliardi v.
Sullivan, 513 F.3d 301, 305 (1st Cir. 2008) (quoting Centro Medico del Turabo, Inc. v. Feliciano
de Melecio, 406 F.3d 1, 6 (1st Cir. 2005)).
Plaintiff’s counsel conceded during oral argument that plaintiff’s claims are totally barred
if the July 1, 2013 release is valid. The principal question, therefore, is the enforceability of the
Whether the Release Was Knowing and Voluntary
A release of employment claims is valid where the employee knowingly and voluntarily
assented to it. Rivera-Olmo v. State Ins. Fund Corp. (SIFC), 250 Fed. Appx. 365, 367 (1st Cir.
2007). The First Circuit has provided a six-factor test to determine whether there has been a
knowing and voluntary assent. Hernandez v. Philip Morris USA, Inc., 486 F.3d 1, 8 (1st Cir.
2007). The six factors are the following:
(1) the plaintiff's education, business experience, and sophistication; (2) the
parties' respective roles in deciding the final terms of the arrangement; (3) the
agreement's clarity; (4) the amount of time available to the plaintiff to study the
agreement before acting on it; (5) whether the plaintiff had independent advice—
such as the advice of counsel—when [signing] the agreement; and (6) the nature
of the consideration tendered in exchange for the waiver.
Smart v. Gillette Co. Long-Term Disability Plan, 70 F.3d 173, 181 (1st Cir. 1995). “Because
release is an affirmative defense, the burden rests with the releasee to establish that a particular
release [is valid].” Hernandez, 486 F.3d at 8 (internal citations omitted).
The first factor, plaintiff’s education and experience, weighs strongly in favor of
defendants here. By his own admission, plaintiff holds a medical degree, is an accomplished
surgeon, and has held a variety of leadership positions at hospitals and universities during his
career. (Compl. ¶ 23). It is highly doubtful that plaintiff did not understand the ramifications of
Plaintiff relies heavily on the second factor—that is, whether there was an opportunity to
negotiate the terms of the agreement. He alleges that “there was no opportunity to negotiate or
change the terms of the letter and his choices were [to] sign the letter or be terminated,” and thus
the release was effectively a contract of adhesion. (Pl.’s Opp. at 8). Even assuming the truth of
that statement, that factor favors the plaintiff, but is “of only modest import here.” Hernandez,
486 F.3d at 9. Among other things, the complaint does not allege that plaintiff even suggested
changes to the language, or attempted to negotiate terms and was rebuffed.
The third factor, the clarity of the agreement, favors enforceability. The release’s
provisions are straightforward and clear, stating that plaintiff was waiving “all claims or
liabilities of any kind, whether known by the Employee or unknown, including but not limited to
any claims arising out of or relating in any way to Employee’s employment with [R3].” (Docket
No. 9, Ex. 5 ¶ 9).
The fourth factor, the time available to study the agreement, also favors enforceability.
Plaintiff was given 27 days to decide whether to accept the terms of the release, and ultimately
signed one day after the deadline. (Id. ¶ 10). 2 In addition, he was granted an additional seven
The release states “[e]mployee further acknowledges that he has been given at least 21 days to consider
the meaning and effect of this agreement before signing it.” (Docket No. 9, Ex. 5, ¶ 10). However, the release was
days following the date of execution to revoke the release. (Id.). That was ample time for
anyone, much less someone of plaintiff’s education and sophistication, to review the agreement.
See Bukuras v. Mueller Group, LLC, 2008 WL 3978210, at *8 (D. Mass. Aug. 14, 2008) (finding
21 days sufficient for an employee to decide whether to sign a release).
The fifth factor, the opportunity to seek independent counsel, favors enforceability. The
release urged plaintiff to seek legal counsel of his choosing before signing. (Docket No. 9, Ex. 5
¶ 10). Plaintiff’s failure to consult an attorney before signing is irrelevant to consideration of this
factor. See Hogan v. Eastern Enters./Boston Gas, 165 F. Supp. 2d 55, 62 (D. Mass. 2001).
Finally, the sixth factor, the nature of the consideration, similarly favors enforceability.
Plaintiff received consideration in exchange for signing the release, which provided him the
opportunity to continue indefinitely as an at-will employee and to be paid despite performing
little or no work. 3 He was “relieved of [his] duties as Executive Dean of [the] Saba University
School of Medicine.” (Docket No. 9, Ex. 5, ¶ 1). He would nominally remain as “Associate
Dean of Basic Sciences of Medical University of the Americas and St. Matthew’s University
School of Medicine” but otherwise be placed on paid leave. (Id. ¶ 2). 4 Commensurate with his
greatly reduced workload, his salary was reduced to $110,000, and all options under the Stock
Option Agreement were forfeited. (Id. ¶¶ 5-6). Plaintiff enjoyed the benefits of the contract for
more than a year. R3’s “forbearance from ending the employment relationship [immediately],
coupled with [plaintiff’s] continued performance, can satisfy the consideration requirement.”
dated as of July 1, 2013, and provided plaintiff until 5:00 p.m. on July 28, 2013, to decide whether to sign,
effectively granting 27 days. (Id.).
Otherwise, plaintiff would have been “terminated for cause effective immediately.” (Docket No. 9, Ex.
The complaint alleges that plaintiff was employed as Associate Dean of Basic Sciences at the Saba
University School of Medicine rather than St. Matthew’s University School of Medicine.
Cochran v. Quest Software, Inc., 328 F.3d 1, 10 (1st Cir. 2003).
Plaintiff contends that “defendants did not have cause to terminate” him and therefore
there was no consideration. (Pl.’s Opp. at 8). However, in Massachusetts, “where an
employment contract, be it express or implied, contains no definite period of employment, it
establishes employment at-will.” See Jackson v. Action for Boston Comm. Dev. Inc., 403 Mass.
8, 9 (1988). Because plaintiff’s employment with R3 was at-will, R3 could have terminated him
at any time, subject to limited exceptions not applicable here. Accordingly, because “the
employee had no right to continued employment and the employer had no right to the
employee’s future services,” R3’s offer of continued employment was adequate consideration for
the new agreement. Cochran, 328 F.3d at 10. See also Cellular Accessories for Less, Inc. v.
Trinitas LLC, 2014 WL 4627090, at *7 (C.D. Cal. Sept. 16, 2014) (“[A]n at-will employment
agreement can generally be modified by an employer at any time; the modification essentially
terminates the prior agreement and creates a new, unilateral contract, which the employee
accepts by continuing to [perform] . . . under the modified terms.”); Tomer v. Hollister Assocs.,
2007 WL 2908268, at *3-4 (Mass. App. Ct. Oct. 5, 2007).
On balance, the factors overwhelmingly indicate that plaintiff knowingly and voluntarily
entered into a valid release and thereby relinquished his claims.
Whether the Release Was Executed Under Duress
The complaint further alleges that the release is unenforceable because plaintiff entered
into the agreement under economic duress. (Compl. ¶ 37). 5 “To show economic duress (1) a
party ‘must show that he has been the victim of a wrongful or unlawful act or threat, and (2) such
The complaint also alleges that the release was unconscionable. (Compl. ¶ 37). However, as plaintiff
failed to address that argument in both his opposition to defendants’ motion to dismiss and the motion hearing, it is
act or threat must be one which deprives the victim of his unfettered will.’” International
Underwater Contractors, Inc. v. New Eng. Tel. & Tel. Co., 8 Mass. App. Ct. 340, 342 (1979)
(quoting 13 WILLISTON, CONTRACTS § 1617, at 704 (3d ed.1970)). Proof of duress requires
more than that a party took advantage of another's negative economic situation; it requires
evidence that the accused party caused the financial difficulty to induce the contract or
agreement. Id. (citing 13 WILLISTON, supra, § 1617, at 708.).
In Massachusetts, “[r]elease of a party from its contractual obligations on a claim of
economic duress is ‘reserved for extreme and extraordinary cases.’” Society of the Holy
Transfiguration Monastery, Inc. v. Archbishop Gregory of Denver, Colorado¸ 685 F. Supp. 2d
217, 224 (D. Mass. 2010) (quoting Cabot Corp. v. AVX Corp., 448 Mass. 627, 639 (2007)). This
is not one of those “extreme and extraordinary cases.” The complaint fails to plead sufficient
facts to support the contention that defendants caused any financial difficulty in order to induce
plaintiff into accepting the release. The choice provided to plaintiff—between (1) immediate
dismissal from his at-will employment or (2) acceptance of R3’s allegedly non-negotiable
conditions for continued employment—was neither unduly wrongful nor oppressive. That is the
type of “hard bargaining” that is “not only acceptable, but indeed, desirable, in our economic
system, and should not be discouraged by the courts.” Pizzeria Uno Corp. v. Pizza by Pubs, Inc.,
2011 WL 4020845, at *5 (D. Mass. Sept. 9, 2011) (quoting Cabot Corp., 448 Mass. at 639).
Even assuming that the complaint states a prima facie claim of economic duress,
plaintiff’s argument still fails. A release that was entered into under duress “is voidable, not
void, and the party claiming duress must act promptly to repudiate the agreement or be deemed
to have waived his right to do so.” Citizens Bank of Massachusetts v. Bishay, 1997 WL 785596,
at *12 (Mass. Sup. Ct. Nov. 24, 1997) (citing Ismert & Associates v. New England Mut. Life Ins.,
801 F.2d 536, 547-48 (1st Cir. 1986)). A coerced party who fails to contest the release within a
reasonable time period and accepts the benefits of the agreement ratifies and affirms the release.
Plaintiff signed the release on July 29, 2013, and was terminated the following summer.
In the interim, he collected approximately $110,000 in salary for minimal or no work. He did
not file suit seeking to disaffirm the release until three years later, on June 23, 2017. By
accepting the release’s benefits and waiting several years before filing suit, plaintiff ratified the
release. See Abbadessa v. Moore Bus. Forms, Inc., 987 F.2d 18, 24 (1st Cir. 1993) (finding
delay of seven months by plaintiff precludes economic duress defense); In re Boston Shipyard
Corp., 886 F.2d 451, 455 (1st Cir. 1989) (holding that plaintiff ratified a contract by accepting its
benefits for months before asserting a claim of economic duress).
Whether the Integration Clause Bars Recovery on the Alleged Oral Promise
The complaint further contends that defendant Rodger orally assured plaintiff that he
could keep his job provided he signed the release. (Compl. ¶ 36). However, the July 1, 2013
letter contained an integration clause, which stated that the agreement superseded “all prior or
contemporaneous discussions, negotiations, representations, or agreements.” (Docket No. 9, Ex.
5, ¶ 11). It is well-settled that “where an agreement is unambiguous and contains an integration
clause, a court must give effect to its obvious meaning.” HipSaver Co., Inc. v. J.T. Posey Co.,
490 F. Supp. 2d 55, 63 (D. Mass. 2007) (citing Bank v. IBM, 145 F.3d 420, 424 (1st Cir. 1998)).
“That means, of course, that an inquiring court should construe the written documents within its
four corners, unfestooned with covenants the parties did not see fit to mention.” Id. (quoting
United States v. Alegria, 192 F.3d 179, 185 (1st Cir. 1999)). Because the terms of the July 1,
2013 letter are plain and unambiguous, the alleged oral promise may not be enforced.
Whether the Release is Unenforceable as a Matter of Public Policy
Finally, plaintiff contends that the release should not be enforced as a matter of public
policy because, as a purported alcoholic, he was entitled to protections under Massachusetts law.
Mass. Gen. Laws ch. 151B § 1 et seq. It is true that releases are unenforceable as against public
policy when they shield a defendant from violation of statutory duties. See Zavras v. Capeway
Rovers Motorcycle Club, Inc., 44 Mass. App. Ct. 17, 19 (1997) (citing Henry v. Mansfield
Beauty Academy, Inc., 353 Mass. 507, 511 (1968)). However, Zavras and Henry are inapposite.
Both involved prospective releases for harm caused intentionally, recklessly, or with negligence.
Id. By contrast, the July 1, 2013 letter was retrospective, releasing defendants from all claims
plaintiff may have accrued in connection with his employment.
Moreover, public policy favors enforcement of releases in the employment context. The
First Circuit has emphasized that “in the employment law context . . . releases provide a means
of voluntary resolution of potential and actual legal disputes, and mete out a type of industrial
justice.” Rivera-Flores v. Bristol-Myers Squibb Caribbean, 112 F.3d 9, 11 (1st Cir. 1997).
Under this principle, “releases of past claims have been honored under the laws prohibiting race
and gender discrimination . . . [and] under the ADEA, which prohibits age discrimination in
employment . . . as well as under ERISA.” Id. at 11-12 (internal citations omitted). There is no
reason why this notion does not also apply to releases of claims under Massachusetts law. 6
Adopting plaintiff’s position would render many such releases worthless and introduce
substantial uncertainty into the labor markets.
To the extent the complaint alleges “constructive discharge,” those claims are also barred by the release.
See Rivera-Flores, 112 F.3d at 14 (“Even if [plaintiff] had valid claims under [various] statutes, he could have
waived those claims.”).
For the reasons stated above, defendants’ motion to dismiss the complaint is GRANTED.
/s/ F. Dennis Saylor
F. Dennis Saylor IV
United States District Judge
Dated: November 9, 2017
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