Brandt v. Verizon Communications, Inc., 5:18-cv-07575

Background

Plaintiffs Brandt and James were long‑time Intel Media employees who accepted employment with Verizon after Verizon’s 2014 acquisition; Verizon HR told employees severance would be two weeks’ pay per year of service and did not disclose a years‑of‑service cap.
Plaintiffs accepted Verizon employment in reliance on that representation; they did not read the posted Verizon Severance Plan before accepting.
In March 2017 Verizon terminated plaintiffs and offered severance subject to the Severance Plan’s 17.5‑year cap; plaintiffs signed general releases (including a §1542 waiver) to receive the severance payments but later claimed the releases were unenforceable.
Plaintiffs filed suit asserting misrepresentation, promissory fraud, negligent misrepresentation, violation of Cal. Labor Code §970, promissory estoppel, and a declaratory judgment that the releases violate Cal. Civ. Code §1668; defendants moved to dismiss under Rule 12(b)(6).
The district court concluded the releases barred plaintiffs’ claims, found plaintiffs’ newly‑pleaded economic‑duress allegations inadequate, held the releases were supported by written form (no new consideration required), and dismissed the FAC without leave to amend.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the releases violate Cal. Civ. Code §1668 (cannot contract away liability for fraud)	Releases are unenforceable because Verizon’s pre‑hire misrepresentations about severance were ratified by Verizon’s 2017 refusal to pay beyond the cap, making the fraud concurrent with the releases	Releases do not exempt Verizon from future fraud because plaintiffs signed releases in 2017 with knowledge of the cap and alleged misrepresentations; §1668 does not apply	Court rejected plaintiffs’ theory; plaintiffs’ allegations do not plausibly show the releases were meant to immunize Verizon for concurrent/future fraud; §1668 inapplicable
Whether plaintiffs adequately pleaded economic duress to avoid the releases	Plaintiffs allege they faced extended unemployment, age‑related reemployment difficulties, and thus had no realistic alternative to signing releases	Verizon argues allegations show ordinary financial pressure, not the bankruptcy/financial‑ruin standard required for economic duress; plaintiffs had counsel and were aware of terms	Court held economic duress allegations insufficient: plaintiffs did not plead coercive wrongful act linked to signing, no showing of no reasonable alternative, no particularized Verizon knowledge, and thus duress claim fails
Whether the releases lacked adequate consideration	Plaintiffs contend severance was owed under employment terms and therefore not new consideration for the releases	Verizon points to the written releases and payment of severance as adequate consideration (or, at minimum, writing suffices under Cal. Civ. Code §1541)	Court held written releases extinguish obligations in the absence of fraud/duress; plaintiffs did not plead fraud/duress adequately, so consideration argument fails
Whether the court may consider the releases on a Rule 12(b)(6) motion	Plaintiffs argued releases are an affirmative defense and not properly considered at pleading stage	Verizon noted plaintiffs seek declaratory relief that hinges on the releases and plaintiffs do not dispute the releases’ contents	Court considered the releases because plaintiffs’ own declaratory claim makes the releases integral to the complaint and their contents are undisputed; dismissal at pleading stage was appropriate

Key Cases Cited

Ashcroft v. Iqbal, 556 U.S. 662 (plausibility standard for pleadings)
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (complaint must allege facts suggesting illegal conduct before discovery)
Conservation Force v. Salazar, 646 F.3d 1240 (Rule 12(b)(6) tests legal sufficiency)
Reese v. BP Exploration (Alaska) Inc., 643 F.3d 681 (courts accept well‑pled factual allegations as true on motion to dismiss)
Khoja v. Orexigen Therapeutics, 899 F.3d 988 (documents incorporated by reference may be considered on a Rule 12(b)(6) motion)
Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542 (same)
SI 59 LLC v. Variel Warner Ventures, LLC, 29 Cal. App. 5th 146 (Cal. law: §1668 bars contractual exemption from liability for fraud)
Blankenheim v. E.F. Hutton & Co., 217 Cal. App. 3d 1463 (seller cannot escape liability for own negligent misrepresentation by contract)
Simmons v. Ratterree Land Co., 217 Cal. 201 (fraud in the inducement vitiates agreement)
Perez v. Uline, Inc., 157 Cal. App. 4th 953 (financial hardship alone generally insufficient for economic duress)
Skrbina v. Fleming Cos., Inc., 45 Cal. App. 4th 1353 (written release extinguishes obligation unless obtained by fraud, duress, or undue influence)