Chinese Bank Can’t Nix $1.5M Harassment Deal, NY Court Told

On April 21st a former employee of China Merchants Bank asked a New York state judge to enforce a $1.5 million confidential settlement stemming from her sexual harassment, discrimination, and retaliation allegations – a deal the bank claims she rejected.

The allegations spilled into public view for the first-time during summary judgment arguments in a case that has been litigated under seal since it was filed in October 2020 by Hui "Sherry" Li, a senior employee in the bank's New York City office until she claims she was pushed out. Li's Wigdor LLP attorney argued she signed the deal, but the bank said it was too late because her counteroffer was technically a rejection.

One attorney for China Merchants Bank went so far as to say Li is free to sue or even disparage the bank, drawing nods of approval from a coterie of bank representatives sitting in the gallery.

State Supreme Court Justice Joel M. Cohen asked the bank’s attorney, "She could do that tomorrow in your view?" And further questioned, "There's no contract? Nothing that would prevent her from suing your client?"

"She is not bound," Foreman said, arguing Li has no obligation to keep her claims quiet. "She is free to disparage the bank."

But Li’s attorney David Gottlieb of Wigdor described an impossible situation for his client as she seeks to enforce the confidential agreement in court. "She cannot breach confidentiality, she can't disparage," he said. "She's complied with every single aspect of this."

Li's contract lawsuit is an unusual case where an alleged victim of harassment is suing to enforce a settlement deal that would effectively silence her own claims against her former employer. The #MeToo movement launched a fleet of lawsuits by alleged victims seeking to escape such agreements.

New York even revised its anti-discrimination law to ban employers from insisting on confidentiality provisions but allows complainants to agree to confidentiality if it is their preference. The state's newly enacted rule mandating complainants wait 21 days to consider such a provision figured prominently in the arguments Thursday.

The bank's settlement offer included language that Li had between 21 and 25 days to accept the contract, Gottlieb argued. After six or seven iterations, Li signed and accepted the final offer in that August 2020 window, he said.

"She couldn't accept it faster, but why couldn't she reject it faster?" Justice Cohen asked, voicing a novel question about whether the state's 21-day rule not only prohibits early acceptance of a confidential settlement deal but also early rejection.

The bank argued Li only signed the bank's final offer after sending a counteroffer, which came after 21 days and "extinguished our offer," killing the deal altogether.

Gottlieb said he was prepared to air Li's allegations in open court if Justice Cohen rules against her bid to enforce the $1.5M settlement deal. "Then we'll be back here," he said.

Justice Cohen reserved judgment on the motion.

Details of the underlying allegations were scant at the hearing as all court documents in the case remain under seal. While the judge declined Law360's informal request to unseal even the reasoning for sealing the case, Justice Cohen rejected the bank's effort to eject the press from the courtroom at the start of the hearing.

This is not the first time the bank has faced discrimination claims by a Wigdor client.

In 2018, Xin Wang, a former chief risk officer and head of corporate banking in the U.S. for China Merchants Bank, claimed she was illegally fired for lodging multiple complaints of racial discrimination in the bank's business practices, including allegedly limiting its participation in a Harlem real estate deal because of the area's African American population.

The parties settled that case on undisclosed terms in December 2019.

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