Most employers are aware that taking adverse action against an employee who has alleged a legal violation can lead to a second claim for retaliation. What happens, however, when the alleged action results from an employee’s refusal to discuss or respond to a settlement proposal for the underlying claim? According to a new decision from the Second Circuit Court of Appeals, the act of declining to entertain settlement is itself a protected activity under Title VII.

In Newton v. LVMH Moët Hennessy Louis Vuitton Inc., the plaintiff was an in-house lawyer who alleged that she had been sexually propositioned and harassed by a company executive. She complained internally and eventually filed a lawsuit, which was then sent to binding arbitration. The plaintiff claimed that the employer’s new general counsel requested a meeting with her to discuss settlement of the claims. When she refused to engage in such discussions, the plaintiff alleged that she was unfairly disciplined and eventually terminated in retaliation for this refusal. The district court dismissed the retaliation claim and the plaintiff appealed this decision to the Second Circuit.  

The Second Circuit reversed the district court, remanding the claims for further proceedings. The court concluded that refusing to settle or discuss settlement of a discrimination or harassment claim is a continuation of the initial protected complaint of wrongdoing by the employer. Taking adverse action against an employee on this basis would therefore constitute retaliation under Title VII.

This decision does not mean that employers cannot or should not attempt to resolve employee claims. However, the employer’s approach should be carefully considered, planned, and documented, especially where the employee is represented by counsel. Unlike its own legal counsel, the employer has the right to directly raise settlement with the employee. However, if this approach is rebuffed, the employer should end such efforts, and make sure that the employee’s choice not to engage in such discussions is not used as grounds for disciplinary or other adverse action involving their employment.

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