Raczak v. Ameritech Corp.

NATHANIEL R. JONES, Circuit Judge,

concurring in part.

I agree with Parts I and II of the Judge Boggs’ opinion, but I disagree regarding the tender-back requirement in Part III. Under the circumstances in this case, I do not believe Plaintiffs are required to tender back the consideration they received as a precondition to bringing suit against the Defendants *1269 under the Age Discrimination in Employment Act (“ADEA”), 29 U.S.C. § 621 et seq., as amended by the Older Workers Benefit Protection Act (“OWBPA”), 29 U.S.C. § 626 et seq. The judgment of the district court on this issue will be affirmed.

The application of the “tender-back” doctrine in ADEA cases has created a 'split between the circuits. The Fourth and Fifth Circuits have applied the tender-back doctrine requiring plaintiffs to tender-back the consideration received before filing suit, while the Seventh and Eleventh Circuits have rejected a tender-back requirement. Compare O’Shea v. Commercial Credit Corp., 930 F.2d 358 (4th Cir.1991), cert. denied, 502 U.S. 859 , 112 S.Ct. 177 , 116 L.Ed.2d 139 (1991), and Wittorf v. Shell Oil Co., 37 F.3d 1151 (5th Cir.1994), with Forbus v. Sears Roebuck & Company, 958 F.2d 1036 (11th Cir.), cert. denied, 506 U.S. 955 , 113 S.Ct. 412 , 121 L.Ed.2d 336 (1992), and Oberg v. Allied Van Lines, Inc., 11 F.3d 679 (7th Cir.1993), cert. denied, — U.S. -, 114 S.Ct. 2104 , 128 L.Ed.2d 665 (1994). Judge Boggs’ opinion, following the Fourth and Fifth Circuits, finds that a tender-back requirement is “consonant with basic notions of fairness in contract law.” Boggs Op. at [1268], Judge Boggs believes that if Plaintiffs retain compensation benefits, given pursuant to a severance agreement, they are precluded from filing suit under the ADEA. I disagree with this conclusion. Nor do I believe that the Plaintiffs ratified their severance agreements by continued retention of their benefits. I find the reasoning of the Seventh and Eleventh Circuits more persuasive and disagree with the proposition that Plaintiffs are required to tender back the compensation they have received.

In Forbus v. Sears Roebuck & Company, 958 F.2d 1036 (11th Cir.), cert. denied, 506 U.S. 955 , 113 S.Ct. 412 , 121 L.Ed.2d 336 (1992), the Eleventh Circuit held that retirees who brought suit under the ADEA were not required to return the consideration received for releases as a prerequisite to bring suit. Id. at 1041. The facts in Forbus are similar to those in this case. The plaintiffs were employees at a Sears Retail Distribution Center.. Id. at 1038. Sears informed the plaintiffs that the distribution center would be converting into a smaller retail center and would be reducing the number of jobs available. Id. The plaintiffs were offered a voluntary severance package, which they each accepted. Id. Acceptance of the package required the signing of a release and waiver of any claims against Sears. Id. The court held that the retention of the severance benefits did not constitute ratification of the releases. Id. at 1041. In Oberg v. Allied Van Lines, Inc., 11 F.3d 679 (7th Cir.1993), cert. denied, — U.S. -, 114 S.Ct. 2104 , 128 L.Ed.2d 665 (1994), the Seventh Circuit followed the reasoning in Forbus and held that former employees could not ratify their severance agreements by retaining the benefits received from Allied. Id. at 683. On similar facts, the court found the reasoning in Forbus compelling and rejected a tender-back requirement.

Both Forbus and Oberg rejected the notion that Plaintiffs must tender back severance benefits prior to maintaining a suit under the ADEA Both circuits relied heavily on the Supreme Court decision in Hogue v. Southern Ry., 390 U.S. 516 , 88 S.Ct. 1150 , 20 L.Ed.2d 73 (1968). While Hogue did not involve ADEA claims, it is clearly analogous to the ADEA situation.

At issue in Hogue was whether petitioner was required to tender back payments received prior to the bringing of suit under the Federal Employers’ Liability Act (“FELA”), 45 U.S.C. § 51 et seq. Id. at 518 , 88 S.Ct. at 1152 . Holding that no such requirement existed, the Court argued that to require the return of benefits would be “wholly incongruous with the general policy of the Act to give railroad employees a right to recover just compensation for injuries negligently inflicted by their employers.” Id. (quoting Dice v. Akron, C. & Y.R. Co., 342 U.S. 359, 362 , 72 S.Ct. 312, 314-15 , 96 L.Ed. 398 (1952)).

Other courts have applied Hogue to bar tender prerequisites in lawsuits involving federal statutes other than the FELA. See, e.g., Smith v. Pinell, 597 F.2d 994, 996 (5th Cir.1979) (barring a tender requirement pursuant to the Jones Act); Wahsner v. American Motors Sales Corp., 597 F.Supp. 991, 998 (E.D.Pa.1984) (holding that there is no ten *1270 der-back requirement in a ease involving the Automobile Dealers’ Day in Court Act). These cases show that the application of the Hogue decision is not limited to the FELA context, and its denial of the tender-back requirement can legitimately be extended to other remedial statutes. The Hogue decision is the only time the Supreme Court has spoken on the issue of tender-back prerequisites and should be followed by this court.

Hogue may be extended logically to ADEA claims. Both statutes are designed to make employees whole again from injuries received, whether physical or emotional, during the course of employment. I disagree with Judge Boggs’ reasoning that Hogue is inapplicable to the instant case because under the facts of Hogue the injury was not in doubt. Boggs Op. at [1267]. Judge Boggs precludes applying Hogue in the present case because the injury was not clearly established. The fact that injury is not clearly established, as is the case under the FELA, is not reason enough to hold that Hogue is not analogous. There is no doubt but that the Hogue decision is applicable to the instant case. Accordingly, Plaintiffs should not be barred from suit by a tender-back requirement. The consideration Plaintiffs received is not a bar to suit but should instead be considered as an affirmative defense once a suit is filed. Isaacs v. Caterpillar, Inc., 765 F.Supp. 1359, 1371 (C.D.Ill.1991). Defendants have a right to argue that the signing of the release agreement bars plaintiffs’ claim of age discrimination, but this is something that should be argued once suit is brought.

Further, to require Plaintiffs to tender back benefits would be inequitable. A tender-back requirement would deter 'meritorious ADEA filings. Potential Plaintiffs would be faced with the Hobsonian choice of releasing their claims and receiving payments immediately or filing an age discrimination claim that would likely take years to resolve. It is doubtful that few claimants would choose the latter. If Plaintiffs had already received release consideration they would have to recover any amounts spent before they could bring a claim. This would bar Plaintiffs from litigating their age discrimination claims in court. Rather than a bar to suit, a release should be considered as a factor that would reduce the judgment amount received by a plaintiff upon bringing suit. I find the reasoning of the district court compelling:

It would be inequitable and contrary to the protective nature of the OWBPA to require plaintiffs to tender back the consideration received in exchange for executing waivers where the waivers were obtained without compliance with the OWBPA. Furthermore, it would deter meritorious challenges to releases. Workers who are forced out in an involuntary termination “are unlikely to be able to put their severance payments aside for future ‘tenders’ or to be able to come up with the money to make such a tender at such later time as they acquire grounds to believe that a successful lawsuit might be mounted in connection with their retirements.”

Memorandum and Order of Aug. 1, 1994 at 21 (quoting Isaacs v. Caterpillar, Inc., 765 F.Supp. 1359, 1367 (CD.Ill.1991)).

Requiring that release amounts be subtracted from judgment amounts would be a more equitable remedy than forcing potential claimants to tender back benefits prior to bringing suit. Plaintiffs would not be earning a windfall by being able to retain their benefits and receive a judgment amount as well, and employers would not be penalized twice for the same actions because any money already received could be subtracted by the fact-finder before awarding final damages.

Additionally, a tender-back requirement would contradict the concerns that Congress evidenced in enacting the OWBPA. Congress established the OWBPA because of its concern that employees may waive their rights prior to becoming aware that they are entitled to legal and equitable relief.

The Committee’s [Committee on Education and Labor] major concern in this regard is that early retirees or employees ... can be forced to waive their right to file a claim when the employer conditions such participation on the signing of a waiver____ The preemptive waiver of rights occurs before a dispute has arisen and indeed *1271 before an employee is even aware of any potential or actual pattern of discrimination. Such a preemptive waiver also may preclude the employee from asserting claims that arise out of subsequent discriminatory conduct by the employer, e.g., hiring younger workers to replace the terminated older workers. These waivers are both unfair and inconsistent with the intent of the ADEA.

H. Rep. No. 101-664, 101st Cong., 2d Sess. 22-23 (1990), U.S.Code Cong. & Admin.News 1990, p. 1509. It was the intent of Congress that waivers would not preclude parties from bringing suit under the OWBPA. To require a tender-back requirement is an effective bar to suit and as such, it is incongruous with the intent of the OWBPÁ.

For the forgoing reasons, the judgment of the district court will be affirmed on this issue.