Court Enforces a “No Reemployment” Provision in a Longshore Settlement

California’s Second Appellate District issued an interesting unpublished case.  In Homeport Insurance Services, Inc. v. Lundy, the court addressed whether a “no reemployment” provision in a settlement agreement violated inter alia the Longshore and Harbor Workers’ Compensation Act (“LHWCA”).

In Lundy, the claimant was a “non-steady” longshoreman,  meaning he worked on a day-to-day or per job basis for employers in need of help.  In 2006, the claimant was injured in a car accident.  He filed a claim for LHWCA benefits and a separate lawsuit for personal injuries.  After being released to light duty, and performing light duty work, the claimant settled both his workers’ compensation claim and his personal injury lawsuit.  As a part of the settlement, the claimant consented to three “no reemployment” provisions, one in the personal injury settlement and the other two in the workers’ compensation settlement documents.  The Department of Labor approved the LHWCA settlement without making any findings about the “no reemployment” provision.

Despite the “no reemployment” provision, the claimant accepted dispatch assignments for the employer on nine occasions.  The employer could not monitor his acceptance of work because the assignments were made through the claimant’s union’s dispatch hall.  When the employer did find out about the continued employment, the employer sent a cease-and-desist letter to the claimant’s attorney.  The claimant did not stop seeking employment, so the employer filed the present action for “specific performance of the personal injury settlement agreement and a permanent injunction barring Lundy from working at any Homeport-insured company, including SSA.”  In response, the claimant contended that the “no reemployment” provision violated Section 49 of the LHWCA, its discrimination provision.

The California court disagreed.  The claimant presented no evidence that the employer “acted with a discriminatory or retaliatory intent when it conditioned the settlement…on his waiver of a right to seek reemployment.”  Further, the employer did not include the “no reemployment” provision because of any animus associated with the claimant’s workers’ compensation claim.  Nor was there a uniform policy requiring every employee who settled a workers’ compensation claim to consent to a “no reemployment” provision as part of their settlement.  Instead, the “no reemployment” provision was carefully negotiated as a part of this settlement, and the claimant was represented by counsel throughout the negotiations.  Accordingly, the “no reemployment” provision was enforceable as to the employer.

Homeport Insurance Servs., Inc. v. Lundy, No. B236276 (Cal. App. 2 Dist. 11/5/12) (unpublished).

Opinion: Even though the California court issued an unpublished opinion (with two concurring judges), I anticipate that the Lundy decision will be mentioned in future settlement negotiations.  There are too few cases addressing these “no reemployment” provisions.