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Patel v. Lowes Home Centers

February 16, 2007


The opinion of the court was delivered by: Magistrate Judge Kemp



Plaintiff, Rita R. Patel, filed this action against her former employer, Lowes Home Improvement, alleging a number of causes of action surrounding the termination of her employment. She subsequently filed an amended complaint which added Gregory Lane, a Lowes employee, as an additional defendant. The amended complaint alleges that Mr. Lane sexually harassed her and that she was retaliated against for reporting that harassment to Lowes. She also asserted claims for sexual harassment, for termination in violation of public policy, for defamation, and for false imprisonment. The latter claims arise out of the reason given by Lowes for the termination of her employment. Lowes claimed that Ms. Patel engaged in theft activities while working as a Lowes cashier. Lowes also counterclaimed based upon its theft allegations.

On December 8, 2006, Lowes filed a motion for a hearing and to enforce a settlement agreement which was allegedly entered into between Lowes and Ms. Patel in the summer of 2006. The matter was subsequently referred to the undersigned for the holding of the hearing and the issuance of a Report and Recommendation. The following constitutes the Court's recommended findings of fact, conclusions of law, and disposition of the motion.


Almost all of the facts relating to the motion to enforce the settlement agreement are undisputed. They will be set forth in narrative form, and the Court will identify those areas where the facts are in dispute and a recommended resolution of those factual disputes.

One of the issues in this case is whether Lowes would be able to prove that Ms. Patel engaged in theft activities or whether it could prove that it had a good faith basis for believing that she did. Obviously, if Lowes actually believed that Ms. Patel was stealing from the store, that would significantly undercut her claim that she was discharged because she complained about sexual harassment and would substantially affect her ability to prevail on her state law claims of defamation and false imprisonment. Such evidence would also have an impact on Ms. Patel's ability to prove that the reasons given for her termination were a pretext for discrimination. Finally, the evidence is vital to Lowes' counterclaim for theft damages.

Lowes filed a criminal complaint against Ms. Patel at or shortly after the time of her termination. In connection with that criminal complaint, Lowes provided certain security tapes to the Dublin Police Department for review. Apparently as a result of a transition between a more traditional VHS tape recording system and a computer-based digital recording system, the tapes which Lowes provided to the Dublin Police Department did not actually depict Ms. Patel engaged in any type of criminal activity. That criminal case was subsequently dropped.

Once Ms. Patel filed this case, Lowes made a renewed effort to locate additional videotapes which showed Ms. Patel taking cash from her register. Until July, 2006, it was unable to do so. In July, 2006, however, things changed. Although the date on which the videotapes at issue were located is not reflected in the record, as early as July 5, 2006, Lowes' counsel met with Ms. Patel's counsel to show them clips from videotapes recorded in June and July of 2004 which, according to Lowes, showed Ms. Patel engaging in "refund fraud." According to Lowes, Ms. Patel was processing transactions which appeared to be customer requests for refunds using duplicate receipts and taking money from her cash register to pay for these refunds. Rather than giving the refunds to the customers, however, she was keeping the money for herself.

After showing the videotapes to Ms. Patel's attorneys, Spencer Youell and Merl Wayman, the attorneys advised Lowes that they needed to discuss the matter further with their client. Within the next two weeks, several things occurred. First, Lowes, acting through Eric Chase, its Loss Prevention Manager, filed a criminal complaint against Ms. Patel with the Dublin Police Department. Second, Ms. Patel, through her attorneys, hired an expert witness, one Mr. Powers, and requested him to review the tapes. He then met with Jeffrey Hiller, one of Lowes' attorneys, and several Lowes officials in Dublin, Ohio and viewed the original videotapes. According to Mr. Hiller, after reviewing the tapes and documents associated with the transactions which occurred on those days, Mr. Powers said "We don't represent thieves" and left the meeting. On July 19, 2006, David Kadela, another one of Lowes' attorneys, sent a letter to Mr. Youell suggesting that the continuation of this lawsuit would violate Rule 11 in light of the evidence that Ms. Patel had stolen from Lowes. Three days later, Mr. Youell called Mr. Kadela, stated that he had decided to "raise the white flag," and told Mr. Kadela that his client, Ms. Patel, would agree to the dismissal of her claims so long as Lowes agreed to dismiss its counterclaims and to send a letter to the prosecuting attorney requesting that the criminal case be dropped. In that same conversation, Mr. Youell requested that Lowes consider expunging Ms. Patel's file. However, he also stated that he was not making expungement a condition of any settlement. Mr. Kadela replied that he believed Lowes would agree to the basic proposal but he was not certain how Lowes would react to the request for expungement. He agreed to talk to Lowes and find out if the case could be settled along the terms proposed by Mr. Youell. At no time during this conversation did Mr. Youell state or imply that he did not have authority from Ms. Patel to make the settlement offer.

After this phone conversation, Mr. Kadela asked Mr. Hiller to contact Lowes to find out whether it would agree to the settlement. Mr. Hiller did so and was advised that the basic terms of the settlement were acceptable but that Lowes would not agree to expunge Ms. Patel's record. Mr. Hiller told Mr. Kadela that Lowes had agreed to the deal, and Mr. Kadela requested Mr. Hiller to call Ms. Patel's attorneys to tell them the same thing. Mr. Hiller then spoke with Meryl Wayman, advised him that an agreement had been reached, and stated that Lowes' attorneys would prepare the settlement agreement.

After this conversation, Mr. Kadela prepared a settlement agreement and sent it to Mr. Youell. When he had not received the agreement back by September 6, 2006, he called Mr. Youell, who said that Ms. Patel needed another week to review the document with her family members. Although Mr. Kadela professed not to understand why a delay was necessary because the agreement was fairly straightforward and the terms had already been agreed to, he granted that additional week. He did not speak with either of Ms. Patel's attorneys again until September 27, 2006, when he had a conversation with Mr. Wayman. At that time, Mr. Wayman told Mr. Kadela that Ms. Patel was to have met with Messrs. Youell and Wayman on September 22, 2006 but had not appeared for the meeting. Mr. Wayman stated that they had mailed Ms. Patel a letter telling her that if she did not sign the agreement, they would withdraw from representing her. Subsequently, Messrs. Youell and Wayman filed a motion for leave to withdraw which was supported by a sealed memorandum and exhibit. The Court gave Ms. Patel the opportunity to respond to that motion, but she did not, and it was granted on November 1, 2006. Ms. Patel then retained other counsel who represented her at the hearing on February 7, 2007. She has never signed the settlement agreement.

Because Ms. Patel had not signed the agreement, Lowes did not request the prosecutor to drop the criminal case against Ms. Patel. That case went to trial on December 19, 2006. The only witnesses called at the trial were a Dublin police officer and Eric Chase, who, at the time of the trial, was no longer employed by Lowes. Lowes did not provide any documentation to be used at the trial. According to Ms. Patel, she did not testify and the case was dismissed.

The only fact which appears to be in dispute relate to whether Ms. Patel actually authorized Mr. Youell to make a settlement proposal on her behalf. According to Ms. Patel, she was aware that Mr. Youell and Mr. Wayman were talking to Lowes' attorneys about resolving the case, but she told them that she would have to see a proposal in writing before she would agree to any settlement. She testified that she never made any comment to Mr. Youell or Mr. Wayman to the effect that they should "raise the white flag" and agree to give up her claims in exchange for the agreement to dismiss the counterclaims and request withdrawal of the criminal complaint. She agreed that Mr. Youell and Mr. Wayman recommended that she settle along those lines during a telephone conversation and that this recommendation was made after they met with ...

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