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Hackensack University Medical Center v. Xiao

United States District Court, D. New Jersey

May 7, 2018

HACKENSACK UNIVERSITY MEDICAL CENTER, Plaintiff,
v.
YINGLIAN XIAO a/k/a Julia Xiao, Defendant.

          OPINION

          KEVIN MCNULTY, United States District Judge

         Plaintiff Hackensack University Medical Center ("HUMC") seeks to enforce a settlement of this lawsuit against Yinglian Xiao, a/k/a Julia Xiao. HUMC seeks a declaration that the matter is settled on the terms stated in a signed term sheet. Ms. Xiao claims that the parties did not reach an enforceable settlement agreement and seeks to vacate the settlement.

         I. BACKGROUND[1]

         Defendant Yinglian Xiao ("Ms. Xiao") worked for HUMC. (Def. Br. 3; Pl. Br. 2). She claims that in the beginning of March 2017, she reported unlawful activities of Frank Pipas, the Vice President of HUMC for Finance, to Robert Glenning, the HUMC Chief Financial Officer. (Def. Br. 3). The "circumstances quickly deteriorated" and she reported Frank Pipas's conduct to Robert Glenning again. (Def. Br. 3). Ms. Xiao alleges that, after her whistleblowing, the work computer assigned to her was monitored and audited without her knowledge. (Def. Br. 3). She was then allegedly "threatened and forced ... off duty." (Def. Br. 3). Ms. Xiao allegedly lost her compensation and benefits from HUMC. (Def. Br. 3).

         HUMC alleges that Ms. Xiao "had transferred files from HUMC's system to herself by copying documents to a removable USB drive." (Pl. Br. 2). These files allegedly included thousands of rows of data-social security numbers, names, employment status, birth date, sex, hire date, and salary information- for active employees and retirees of HUMC. (Pl. Br. 2). HUMC claims that they initially demanded that Ms. Xiao return the documents. (Pl. Br. 2). When she refused, HUMC instituted this action. HUMC's complaint alleges breach of contract and conversion, as well as violations of federal and state statutes relating to the unauthorized taking of data from HUMC's computers. (Pl. Br. 2). HUMC sought a temporary restraining order ("TRO") and preliminary injunction to prevent Ms. Xiao from using the documents and to compel her to return the documents. (Pl. Br. 2). Ms. Xiao denies that she copied documents. (Def. Br. 3-4). She claims that HUMC falsely accused her in retaliation for her whistleblowing activities. (Def. Br. 3-4).

         On April 25, 2017, the court entered an order to show cause with a TRO, barring Ms. Xiao from using any wrongfully taken documents. (Pl. Br. 3). On May 4, 2017, counsel and the court agreed that the TRO should remain in place while the parties discussed an amicable solution. (Pl. Br. 3).

         On June 19, 2017, the parties submitted a consent order and final judgment to the court. (Def. Br. 5-6; Pl. Br. 3-4; ECF No. 12). The court entered the order and judgment, which (1) permanently restrained and enjoined Ms. Xiao from transferring, disseminating, erasing, destroying, altering, or otherwise making use of the Documents; (2) ordered Ms. Xiao to return any copies of Documents to HUMC; and (3) ordered Ms. Xiao to furnish HUMC with a sworn affidavit that she is not in possession of any Documents and has not transferred, disseminated, or made use of the Documents. (ECF No. 13). The court retained jurisdiction over the matter for purposes of "construction, modification, and enforcement of this Consent Order, including the terms of the parties' settlement agreement." (ECF No. 13).

         Also on June 19, 2017, HUMC and Ms. Xiao's then-counsel executed a "Term Sheet." (Def. Br. 7; PI. Br. 3-4). Ms. Xiao now denies that this term sheet constituted a settlement agreement, stating that the parties merely agreed to continue to negotiate a settlement agreement. (Def. Br. 7; PI. Br. 3-4). The term sheet, which covers three pages, states the following:

         TERM SHEET FOR SETTLEMENT AGREEMENT

1. The term "Documents" shall include all documents listed in the DLP report attached as Exhibit 1 to the Declaration of Thomas Flynn [ECF No. 1-2], as well as any confidential documents or data (including in hard copy or electronic form) originating from HUMC's computer systems, including, but not limited to any documents containing trade secrets; proprietary or sensitive commercial information; or documents containing personal information about employees, such as, by way of example, social security numbers, addresses, or any other personal identifying information and shall further include all data or information contained in the documents listed in the DLP report or other confidential documents.
2. References to "Ms. Xiao" shall include her, as well as any agents, employees, or representatives acting on her behalf.
3. References to "Device" shall include any USB drive, flash drive, or any other type of external data storage device in whatever form.
4. The Parties have agreed to a consent order permanently restraining and enjoining Ms. Xiao from transferring, disseminating, erasing, destroying, altering, or otherwise making use of the Documents.
5. Ms. Xiao shall return any and all copies of the Documents in her possession, including any Devices containing the Documents or any copies of the Documents, within three (3) days of the date of the Court's entry of the Consent Order.
6. Ms. Xiao agrees to furnish to HUMC an affidavit stating that (a) she is not in possession of any of the Documents; (b) she has not, to date, transferred, disseminated, or otherwise made use of any of the Documents; and (c) she has not copied or otherwise transferred any Device containing the Documents or any portion thereof. This statement will be furnished to HUMC within five (5) days of the Court's entry of the Consent Order.
7. Ms. Xiao's employment at HUMC will be terminated effective as of the effective Date of the Settlement Agreement.
8. The Agreement will contain a mutual non-disparagement clause (including Pippas and Coleman).
9. HUMC shall provide Ms. Xiao with a neutral reference that includes only dates of employment and job title. HUMC shall cause its Human Resources, Job references, and employment verification systems to identify that Ms. Xiao resigned her employment as of the effective Date of the Settlement Agreement.
10. The parties will mutually release each other from any and all claims arising before the date of the execution of the final settlement agreement, including those asserted in the Litigation and any potential employment claims alleged by Ms. Xiao.
11. If Ms. Xiao is found to be in possession of any of the Documents or a Device containing any of the Documents, to have misrepresented any statement in her sworn statement, or if she violates the Consent Order or otherwise breaches the settlement agreement, HUMC shall be entitled to liquidated damages in the amount of $20, 000, plus attorneys' fees and costs of suit, as well as any penalties or damages ordered by the Court upon a finding of contempt.
12. The Consent Order shall be otherwise enforceable before the final execution of any ...

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