## Facts

- The Maine Department of Manpower Affairs (DMA) decided not to hire Nazario Perez in 1976.
- Perez filed discrimination complaints with state and federal administrative agencies, alleging bias against Hispanics.
- Perez also sued DMA in Maine state court under the Maine Human Rights Act.
- In 1979, Perez and DMA executed a written settlement: Perez waived claims against DMA “with respect to any alleged violations of the Maine Human Rights Act,” and DMA paid $20,000 as “full and final settlement of this matter.”
- During settlement negotiations, Perez received a federal right-to-sue letter (a prerequisite for a Title VII action) but did not inform his state-court attorney.
- After receiving the settlement payment, Perez filed a federal action alleging the same failure-to-hire was unlawful discrimination under Title VII.
- In the federal case, both sides’ attorneys testified about their understanding of the settlement’s scope; the district court found the settlement was intended to resolve the entire discrimination dispute, not merely state-law claims.

## Issues

1. Whether the 1979 settlement agreement in the state proceeding released and barred Perez’s later federal Title VII claims arising from the same refusal-to-hire.
2. Whether enforcing that settlement to preclude a subsequent Title VII action is consistent with federal law and Title VII policy governing waivers of discrimination claims.

## Decision

- The First Circuit affirmed judgment for the State of Maine and DMA.
- The court held the 1979 settlement barred the subsequent Title VII action.
- The court accepted the district court’s finding that the parties intended the $20,000 payment and “full and final settlement” language to settle the entire discrimination dispute, regardless of the statutory label.
- The court concluded that enforcing the settlement did not violate Title VII policy because the waiver was not shown to be coerced or involuntary and Perez had counsel and received substantial consideration.

## Legal Principles

- Settlement agreements are interpreted under contract principles; when language is ambiguous, extrinsic evidence may be used to determine the parties’ intent.
- A district court’s finding about the parties’ intent and the scope of a release is reviewed deferentially and will be upheld absent clear error.
- Title VII claims may be waived or released through a private settlement when the waiver is knowing and voluntary and enforcement does not conflict with Title VII’s purposes.
- A procedural step enabling a federal claim (such as a right-to-sue letter) does not, by itself, prevent a settlement from operating as a global resolution when the underlying dispute is the same.

## Conclusion

The court enforced a state-court settlement as a complete resolution of an employment-discrimination dispute and held it barred a later Title VII suit based on the same hiring decision because the evidence supported the finding that the parties intended a full and final release and the waiver was enforceable under federal policy.


Perez v. State of Me., 760 F.2d 11 (1st Cir. 1985)