$2.6 Million Wrongful Termination Case Settles with Knights of Columbus After Finding of “Bad Faith” Actions by Legal Team

$2.6 Million Wrongful Termination Case Settles with Knights of Columbus After Finding of “Bad Faith” Actions by Legal Team

by Jim McCabe

I am happy to report that we recently finalized a significant case on behalf of our client, Jose Martinez, who brought claims alleging wrongful termination against his former employer, the Knights of Columbus.  The case was filed with the American Arbitration Association in May 2020 and went to a trial before the nationally known and highly respected Arbitrator Hunter Hughes in June 2021 in Atlanta.  The Knights of Columbus was represented by the Connecticut firm Ryan and Ryan, LLC and David Gevertz of Baker Donelson, Bearman Cardwell & Berkowitz, PC, who is based in Atlanta.  Following three and a half days of testimony, the parties filed extensive post-arbitration briefs. 

After considering the evidence presented at trial, Arbitrator Hughes found in Mr. Martinez’s favor and against the Knights of Columbus and awarded just over $2.1 million in damages, as well as attorneys’ fees and costs.  The parties then negotiated fees and costs settling the case for a total of $2.6 million.  As far as we know, this is the largest award in a single plaintiff wrongful termination case in Georgia history.  The opinion is reported at Martinez v. Knights of Columbus, 2021 AAA EMPLOYMENT LEXIS 572 (Sept 29, 2021).  We briefly cover the high points below that were alleged in the lawsuit.   

After spending his entire 27-year career with the Knights of Columbus in operations, Mr. Martinez’s career ended while he was under contract as the General Agent for the Knights of Columbus’ operation in the state of Georgia.  His contract was terminated, not because of his performance, which was notably impressive and had been awarded by the company close in time to his termination.  The decision to terminate was also not made by any of his long-time colleagues or current managers in the operations side of the business.  Instead, the decision to terminate was made by the General Counsel (known as the Supreme Advocate, John Marella) and a team of in-house lawyers at the Order.  Members of this team testified that they thought Mr. Martinez was “difficult” and that the Order refused to comply with the plain terms of the payment provisions of their agreement with Mr. Martinez, even though they acknowledged that was what the agreement required.  As Arbitrator Hughes explained, the Order effectively issued a “fiat” to Mr. Martinez and refused to comply with the written agreement’s terms. 

When Martinez did take action to obtain the payments, the Order refused to discuss the matter with him directly, instructed him only to speak with outside counsel, and told him that he should obtain his own counsel.  It then tasked a junior member of its legal team and its outside counsel with resolving the matter, who took the position that the Order would not make the payments due unless and until Mr. Martinez complied with their extra-contractual demands, notably that he produce the “original receipts” for nearly all of his expenses, documentation not even required by the IRS.

When Mr. Martinez’s attorney pushed back on these extra-contractual requirements and demanded payment of the amounts past due, the Order ignored him time and again and continued to insist on these extra-contractual conditions, eventually threatening to terminate him for dishonesty if he did not comply.  Under threat of termination and in a very short time frame (three days), Mr. Martinez produced detailed expense documentation for all of his individual expenses.  The Order then picked apart his submission, interpreting it in the worst light and without any consultation with Mr. Martinez.  When Mr. Martinez sought to provide further explanation and documentation to address its concerns through his attorney, the Order refused to even consider it and terminated his agency, well prior to what would have been a reasonable amount of time and without affording him the opportunity to explain his position.

In its termination letter, the Order’s only assertion of alleged dishonesty related to inconsistencies it observed in Mr. Martinez’s mileage expenses.  However, Arbitrator Hughes did not buy this explanation, stating “[t]he only specific accusation of dishonesty related to Martinez’s mileage claim…is without merit” and which he said was “inexplicably” made even though the Order had already been informed that this was not a valid basis.  In sum, Arbitrator Hughes concluded that the evidence did not support any “reasonable basis to conclude that Martinez’s expense claim was dishonest.”  Making matters worse, even after his termination, the Order refused to pay Mr. Martinez the vested first-year and renewal commissions that he was clearly entitled to receive under the agreements, putting Mr. Martinez and his family in a very difficult financial position.  Arbitrator Hughes further concluded that the Order committed “bad faith, intentional and/or reckless breaches” of the Agreement with Martinez through nine different actions. As a result, he awarded an additional $100,000 in punitive damages. 

While Mr. Martinez certainly would have preferred for this never to have happened, we are very happy that we could advocate for him over the course of several years and secure justice for Mr. Martinez and his family in a hard-fought case.