Amicus Curiae Brief — Oubre v. Entergy Operations, Inc.

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Supreme Court, U.S.

FIEFLED

JUN 20 1997

DREIGE OF THE CLERK

No. 96-1291

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1996

DOLORES M. OUBRE,

Petitioner,

ENTERGY OPERATIONS, INC.,

Respondent.

On Writ of Certiorari to the

United States Court of Appeals

for the Fifth Circuit

BRIEF AMICUS CURIAE OF THE

AMERICAN ASSOCIATION OF RETIRED PERSONS

IN SUPPORT OF PETITIONER

CATHY VENTRELL-MONSEES*

LAURIE MCCANN

THOMAS OSBORNE

AMERICAN ASSOCIATION

OF RETIRED PERSONS

601 E Street, N.W.

Washington, DC 20049

(202) 434-2060

Counsel for Amicus Curiae

American Association of

Retired Persons

*Counsel of Record

TABLE OF CONTENTS

INTEREST OF AMICUS CURIAE

SUMMARY OF THE ARGUMENT

I. THE OLDER WORKERS’ BENEFIT

PROTECTION ACT ABROGATED THE

COMMON LAW _ PRINCIPLES’ OF

RADIFICATION AND TENDER BACK

A. The Plain Language of the OWBPA

Demonstrates Congress’ Clear Intent To

Abrogate the Common Law of Waivers,

Including The Principles of Ratification and

. The Doctrines of Ratification and Tender

Back Are At Direct Odds With the

Purposes of the ADEA, As Amended by the

. WAIVERS THAT VIOLATE THE OWBPA

ARE UNENFORCEABLE AS A MATTER OF —

PUBLIC POLICY

. THE OWBPA WAS ENACTED TO PROTECT

EMPLOYEES FROM OVERREACHING

CONCLUSION

TABLE OF AUTHORITIES

CASES

Page

American Soc. of Mech. Engineers v. Hydrolevel Corp.,

456 U.S. $56 (1982) on ccvcccccccccccscssusucunes 4

Andrus v. Glover Constr. Co.,

446 U.S. 608 (1980)... ces ccccccccccsccsccseces 8

Astoria Federal Sav. & Loan Ass'n v. Solimino,

$01 U.S. 104 (1DP1) ..ccccccesccccessusuuanen 4,10

Carr v. Armstrong Air Conditioning, Inc.,

817 F. Supp. 54 (N.D. Ohio 1993) ........-..0005: 12

Collins v. Outboard Marine Corp.,

808 F. Supp. 590 (N.D. Ill. 1992) ......... 02 cece ees 7

Connecticut Nat'l Bank v. Germain,

$03 U.S. 249 (1992) .nccccccccccccccsssssssseeen 6

Continental Casualty Co. v. United States,

314 U.S. $27 (1942) wc cccccsccccsccnsccvonssees 9

Fleming v. U.S. Postal Service AMF O'Hare,

27 F.3d 259 (7th Cir. 1994), cert. denied,

513 U.S. 1085 (1995) .....ccccccccccecevcsceees 18

Forbus v. Sears Roebuck & Co.,

958 F.2d 1036 (11th Cir. 1992) ..........-.+-- 12, 19

Griffin v. Kraft Gen. Foods, Inc.,

62 F.3d 368 (11th Cir. 1995) ......-- ee ee eeee cuanl

Harrison v. Arlington Ind. School Dist.,

717 F. Supp. 453 (N.D. Tex.), aff'd without Op..,

891 F.2d 904 (Sth Cir. 1989) ..................... 9

Hazen Paper Co. v. Biggins,

Ne a. ccc ccccccces 2

Hogue v. Southern Ry. Co.,

I 4, 10, 12, 19

Isaacs v. Caterpillar, Inc.,

702 F. Supp. 711 (C.D. Ill. 1988) ................. 19

Isaacs v. Caterpillar, Inc.,

765 F. Supp. 1359 (C.D. Ill. 1991) ........ 4, 12, 13,19

Isbrandtsen Co. v. Johnson,

Lancaster v. Buerkle Buick Honda Co.,

809 F.2d 539 (8th Cir. 1987) ..................... )

Lockheed Corp. v. Spink,

re 2

Long v. sears Roebuck & Co.,

105 F.3d 1529 (3d Cir. 1997) .......000..0... passim

McKennon v. Nashville Banner Public Co.,

Fn 11,12

Mobil Oil Corp. v. Higginbotham,

es ss ccc ccccccces 6

O'Connor v. Consolidated Coin Caterers Corp.,

Ses Gs GEE Uhnwevetescncaceustetedenes 2

Oberg v. Allied Van Lines, Inc.,

11 F.3d 679 (7th Cir. 1993), cert. denied,

Fan ee Es . -- weenscesbeces’ 5, 10, 14, 18

Oscar Mayer & Co. v. Evans,

ee ee SE idbanvercenenssgsssssbnuwet 10

Raczak v. Ameritech Corp.,

Se CE OUOED ccccciccenddbecéees 12

Rubin v. United States,

Se ED. Geb bacdbctedditcicetdevesedes 6

Runyan v. National Cash Register Corp.,

787 F.2d 1039 (6th Cir. 1986) ................4... 9

Soliman v. Digital Equip. Corp.,

869 F. Supp. 65 (D. Mass. 1994) .............. 8, 12

Taylor v. Gordon Flesche Co.,

FO EE GED cc cvcccucescccececss 9

Town of Newton v. Rumery,

TS vcs cunchekeeseestbeuuvtedeus 14

United States v. Texas,

Fae Se SED cccccsesetdedbdcdeessuceuass 6

STATUTES AND LEGISLATIVE HISTORY

Age Discrimination in Employment Act, (ADEA),

29 U.S.C. § 621 ef seg. (1994)... 2.6... cece passim

Se EE cacentecwescecocectccccsecut 10

EE Ce cacedicnccccecseces passim

ED cen ep cece ccccecesceecth 9

IEE co ccccccccccceseceevess 8

i ED oc ccccccccesccecesecses 8

A ee re 8

ee ED occ dccececccccccccccecess 8

Federal Employees Liability Act (FELA),

Be Oe OI cccccccccessccccccss 10

Older Workers Benefit Protection Act (OWBPA),

Pub. L. No. 101-433, 104 Stat. 978, 983 (1990) .. passim

H.R. Rep. No. 221, 101" Cong., Ist Sess. (1989) ....... 16

H.R. Rep. No. 664, 101" Cong., 2d Sess.(1990) ~.... 11,13

S. Rep. No. 79, 101" Cong., Ist Sess. (1989) ...... 5,13,16

S. Rep. No. 263, 101" Cong., 2d Sess. (1990) ....... 11,13

MISCELLANEOUS

Restatement (Second) of Contracts § 85 .............-- 4

Restatement (Second) of Contracts §178(1) .......... 14

Restatement (Second) of Contracts § 178 (3) ........-. 15

Restatement (Second) of Contracts § 179

Restatement (Second) of Contracts § 197

No. 96-1291

IN THE

Supreme Court of the United States

OCTOBER TERM, 1996

DOLORES M. OUBRE,

Petitioner,

ENTERGY OPERATIONS, INC..,

Respondent.

BRIEF AMICUS CURIAE OF THE

AMERICAN ASSOCIATION OF RETIRED PERSONS

IN SUPPORT OF PETITIONER

STATEMENT OF THE CASE

AARP adopts the Petitioner’s statement.

INTEREST OF AMICUS CURIAE*

The American Association of Retired Persons (AARP) is a

nonprofit membership organization of more than 30 million

* AARP’s brief has not been approved or financed by petitioner or her

counsel or any other party.

persons age 50 or older that is dedicated to addressing the

needs and interests of older Americans. More than one-third of

AARP's ty the are Non Dinan individuals, many of whom are

protected scrimination in Employment Act,

(ADEA), 0 US. S.C. “f 621 et seq. (1994).

One of AARP's primary objectives is to achieve dignity and

equality in the work place t lice dough pie aide, rch , practices,

and policies regarding work its

research, publications, and raining progam. AARP seks

eliminate ageist stereotypes, to encourage employers to hire

and to retain older workers, and to help older workers

overcome the obstacles they encounter because of age. Since

1985, as part of its advocacy efforts, AARP has filed more than

150 amicus curiae briefs in the federal district and appellate

courts and in the U.S. Supreme Court the proper

interpretation and application of the ADEA. In this Court,

AARP has partici as amicus curiae in, among others, the

cases of Hazen Paper Co. v. Biggins, 507 U.S. 604 (1993);

Lockheed Corp. v. Spink, 116 S. Ct. 1783 (1996); and

O'Connor v. Consolidated Coin Caterers Corp., 116 S. Ct.

1307 (1996).

AARP's concern in this case is that the courts not strip older

workers of carefully crafted statutory ions at the time

they are the most vulnerable to employer ——. If

ratification and tender back principles override the Older

Workers Benefit Protection Act (OWBPA), Pub. L. 101-433,

104 Stat. 978, 983 (1990), employers will have no incentive to

follow the requirements Congress deemed necessary to prevent

employer overreaching.

For these reasons, AARP submits its brief amicus curiae.

SUMMARY OF THE ARGUMENT

Congress affirmatively abrogated the common law

Rede ee ee an eens ee

II of the Older Workers Benefit Protection Act (OWBPA), Pub

L. No. 101-433, 104 Stat. 978, 983 (1990). The OWBPA was

enacted to prevent employers from unfairly obtaining waivers

eS a

bien Cine cree aed aso requirements

enforceable. A court cannot enforce a waiver to bar an ADEA

suit if even one of the OWBPA’s criteria is absent.

Moreover, even if had not supplanted contract

principles with the OWBPA, the Restatement (Second) of

Contracts states that, as a matter of — policy, waivers that

violate a statute, such as the OWB may not be enforced.

In enacting the OWPBA, Congress expressed its belief that due

cplyees,prteig older workers om positions of employers and

re ea ee unfair and abusive

that waivers

roe we tne a

cee intent

that do not with the OWB A not be enforced must

be respected. loyers be able to thwart the

express will of Congress by the ——s s

Se areas

on age Wi repercussion.

Finally, ratification and tender back must not be judicially

superimposed on the OWBPA because they harm the very

the OWBPA was designed to protect, older employees.

Susteren do not need the ratification and tender back

Socenans 0 gata CON Gan e discrimination lawsuits.

Employers need to y with the clear and specific

requirements of the OWBPA, which provide employers with

the defense they seek from age discrimination suits.

ARGUMENT

I. THE OLDER WORKERS BENEFIT PROTECTION

ACT ABROGATED THE COMMON LAW

PRINCIPLES OF RATIFICATION AND TENDER

BACK.

The common law principles of ratification and tender back’

are anomalous to both the letter and spirit of the OWBPA and

did not survive its enactment. Common law principles survive

a statute "only upon legislative default, applying where

Congress has failed expressly or impliedly to evince any

intention on the issue." Astoria Fed. Sav. & Loan Ass'n v.

Solimino, 501 U.S. 104, 110 (1991). In litigation under federal

statutes, common law doctrines are appropriately applied only

when the principles underlying such doctrines are consistent

with the congressional intent e or implied in the

statutes. American Soc. of Mech. Eng’rs v. Hydrolevel Corp.,

456 U.S. 556, 569 (1982).

Congress was convinced that the common law did not

adequately protect the rights of older workers asked to waive

their rights under the ADEA:

” “The common law doctrine of ratification results in the enforcement of

‘a promise to perform all or part of an antecedent contract of the promisor

previously voidable by him.’”” Long v. Sears Roebuck & Co., 105 F.3d

1529, 1535 n.10 (3d Cir. 1997) citing Restatement (Second) of Contracts

§ 85 (1981). The “tender back” doctrine “require[s] a refund as a

prerequisite to institution of suit.” Hogue v. Southern Ry. Co., 390 U.S.

516, 518 (1968).

In most cases, these two common law contract doctrines are

inextricably entwined. See Isaacs v. Caterpillar, Inc., 765 F. Supp. 1359,

1373 (C.D. Ill. 1991) (“States that require a tender to challenge a release

sometimes use the language ‘condition precedent to suit’ and sometimes use

the language of ‘ratification.’ But there is no meaningful difference between

the two.”).

a as

Even the decisions that have followed the more

protective ‘totality of the circumstances’ approach .. .

have not held that certain protective factors must be

present . . . The instant legislation, by contrast, will

limit unsupervised waivers to certain situations and then

spell out clear and ascertainable standards to govern

those situations.

S. Rep. No. 79, 101st Cong., Ist Sess. 17 (1989) (emphasis

added).”

In the OWBPA, Congress expressed a very specific intent

to restrict the circumstances under which an employer may

obtain a waiver’ of ADEA rights and claims. “[TJhe

enactment of the OWRPA changed the legal a

concerning waivers of AEA rights or claims. Long v. Sears

Roebuck & Co., 105 F.3d 1529, 1534 (3d Cir. 1997).

By specifically limiting the manner in which employers

may secure such waivers, * has occupied this area of

the law.” Oberg v. Allied Van Lines, Inc., 11 F.3d 679, 683

(7th Cir. 1993), cert. denied, 511 U.S. 1108 (1994).

Judicially imposing ratification and tender back onto the

comprehensive scheme that Congress created for

waivers of ADEA rights or claims would “rewrit[e] rules that

2 “In enacting the OWBPA, Congress . . . rejected the applicability of

common law contract principles and declined to embrace even the more

demanding ‘totality of the circumstances’ test.” Long v. Sears Roebuck &

Co., 105 F.3d 1529, 1538 (3d Cir. 1997).

¥ AARP concurs with the amicus curiae brief of the National Employment

Lawyers Association (NELA) that there is a significant distinction between

“waivers” and “releases,” despite the fact that some, including many courts,

use the terms interchangeably. Brief of NELA at 6. The OWBPA regulates

“waivers” of ADEA rights and claims. While a waiver may be a term

within a contractual agreement, a waiver is not a contract and contractual

principles should be irrelevant in determining whether or not a waiver is

valid and therefore enforceable.

Congress has affirmatively and specifically enacted.” Mobil

Oil Corp. v. Higginbotham, 436 U.S. 618, 625 (1978).

A. The Plain Language of the OWBPA Demonstrates

ae oe Intent To the Common

w vers, Including Princi of

Ratification and Tender Back. -

This Court has long recognized that "[i]n order to abrogate

a common law principle, the statute must ‘speak directly’ to

the question addressed by the common law." United States v.

Texas, 507 U.S. 529, 534 a a Mobil Oil Corp. v.

Higginbotham, 436 U.S. 618, 625 (1978). The specific

question addressed by the principles of ratification and tender

back is whether an employee may waive any right or claim

under the ADEA merely by failing to return the benefits

received in exchange for the waiver. Congress could not have

spoken any more directly to this question when it declared

that "[a}n individual may not waive any right or claim under

this Act unless the waiver is knowing and voluntary." 29

U.S.C. § 626(f)(1) (emphasis added).

[Cjourts must presume that a legislature says in a

Statute what it means and means in a statute what it

Says there . . . . When the words of a statute are

unambiguous, then, this first canon is also the last;

‘judicial inquiry is complete.’

Connecticut Nat’l Bank v. Germain, 503 U.S. 249, 254

(1992) quoting Rubin v. United States, 449 U.S. 424, 430

(1981). With the language “an individual may not waive,”

Congress e ly divested individuals of any power to

waive the OWBPA's protections or its requirements.

In addition to the explicit language in § 626(f)(1),

Congress set forth a bottom line that all waivers must satisfy

to be legally enforceable. Congress mandated that "a waiver

-~ 7

may not be considered knowing and voluntary unless at a

minimum” all of the statutory requirements are met.”

Because the OWBPA establishes minimum or threshold

requirements, Griffin v. Kraft Gen. Foods, Inc., 62 F.3d 368,

373 (11th Cir. 1995), absolute technical compliance with its

provisions is required. The absence of even one of the

OWBPA's requirements invalidates a waiver. Collins v.

* Section 626(f)(1) of the ADEA, as added by the OWBPA, requires that

a waiver of “any right or claim” contain the following:

(A) the waiver is in writing and in plain language;

(B) the waiver specifically refers to rights or claims under the

ADEA;

(D) the waiver is in exchange for valuable consideration in

addition to any benefits or amounts to which the

individual already is entitled;

(E) the individual is advised in writing to consult with an

attorney prior to signing the agreement containing the

waiver;

(F) the individual is given at least 21 days within which to

consider the agreement; however, if the waiver is

requested in connection with a group termination

program, each individual must be given at least 45 days

to consider the agreement;

(G) if a waiver is requested in connection with an exit

incentive or other employment termination program

offered to a group or class of employees, then at the

outset of the 45-day period the employer must inform

each eligible employee, in writing, of the class of

employees who are eligible, the specific eligibility

requirements, any applicable time limits on participation,

the job titles and ages of all employees eligible or

selected for the program, and the ages of all employees

in the same job classification or organizational unit who

are not eligible or selected; and

(H) the individual must be given at least 7 days to revoke the

agreement after signing it.

Outboard Marine Corp., 808 F. Supp. 590, 594 (N.D. Ill. 1992)

("Under the OWBPA, a release cannot be deemed knowing and

voluntary unless all of the technical requirements of the

OWBPA have first been satisfied.") (emphasis added). See

also Soliman v. Digital Equip. Corp., 869 F. Supp. 65, 69 n.13

oe hoa 1994) (““OWBPA .. . establishes a floor, not a

ceiling.”).

Congress recognized a single exception to its mandate that

waivers of ADEA rights and claims must satisfy all of the

OWBPA’s requirements to be enforceable. Congress only

excused waivers “in settlement of a charge filed with the Equal

Employment Opportunity Commission, or an action filed in

court by the individual or the individual’s representative,” 29

U.S.C. § 626(f)(2), from meeting all of the OWBPA’s

requirements. Such waivers need only meet criteria (A)

through (E), 29 U.S.C. § 626(f)(2)(A), and a modified version

of criterion (F).*

Despite Congress’ clear intent to create a single exception,

the Respondent would have this Court judicially engraft two

others through the doctrines of ratification and tender back.

Moreover, the exceptions these doctrines would add have the

potential to swallow the rule established by the OWBPA.

These doctrines effectively require enforcement of a waiver

without any regard to whether it meets any of the OWPBA’s

criteria. These doctrines enforce waivers whenever an

individual accepts consideration and does not tender it back

prior to bringing an age discrimination lawsuit. These

doctrines render the content of the waiver, and, thus, the

OWBPA itself, irrelevant.

“Where Congress explicitly enumerates certain exceptions

to a general prohibition, additional exceptions are not to be

implied, in the absence of a contrary legislative intent.” Andrus

* The individual must be provided a “reasonable,” but unspecified, period

of time within which to consider the settlement agreement, 29 U.S.C.

§ 626(f)(2)(B), as opposed to the 21-day and 45-day periods specified in

§§ 626(f)(1)(F)(i) and (F)(ii) for all other waivers.

v. Glover Constr. Co., 446 U.S. 608, 616-17 (1980), citing

Continental Casualty Co. v. United States, 314 U.S. 527, 533

(1942). Since Congress has clearly stated that the only

circumstance in which a waiver need not meet all of the

OWBPA’s requirements is when the waiver is in settlement of

a pending EEOC charge or court action, no other exceptions

may be implied.

Finally, Congress spoke loudly and clearly in expressing its

intent to abrogate contract principles through the OWBPA’s

specific provisions that supplant and exceed common law

requirements concerning waivers. For example, the

requirement that the waiver be in writing, 29 U.S.C.

§ 626(f)(1)(A), overrules decisions enforcing oral waivers. See,

e.g., Taylor v. Gordon Flesche Co., 793 F.2d 858, 862 (7th Cir.

1986). The requirement that the waiver be written in a manner

“calculated to be understood by the average individual eligible

to ——. 29 U.S.C. § 626 (f)(1)(A), overrules cases

holding that if the plaintiff understood the waiver, whether

anyone else would have understood it is irrelevant. See Runyan

v. Nat’l Cash Register Corp., 787 F.2d 1039, 1044 (6th Cir.

1986) (en banc). The requirement that waivers specifically

refer to the ADEA overrules cases that enforced waivers that

did not refer to the statute. See, e.g, Lancaster v. Buerkle

Buick Honda Co., 809 F.2d 539, 540 (8th Cir. 1987). The

provisions requiring written advice to consult with a lawyer and

providing a revocation period were unheard of at common law.

Because of its special concern for employees terminated in

reductions in force, Congress added two additional

requirements for group terminations -- the extension of the time

for the employee’s consideration of the waiver from 21 to 45

days and the disclosure of job titles and ages of affected

employees. These requirements constitute a complete

departure from the common law.

In addition, under common law, an employee challenging

a waiver had the burden of showing that it was not "knowing

and voluntary." See, e.g., Harrison v. Arlington Ind. School

Dist., 717 F. Supp. 453, 455 (N.D. Tex.), aff'd without op., 891

F.2d 904 (5th Cir. 1989). The OWBPA shifts this burden to

the employer. See 29 U.S.C. § 626(f)(3). “The requirements

established in order for releases to be ‘knowing and voluntary’

under the OWBPA clearly exceed the protections available

under the common law.” Long v. Sears Roebuck & Co., 105

F.3d 1529, 1539 (3d Cir. 1997).

The statutory text could not be clearer, nor could the

legislative intent. Congress stated that only when each of the

OWBPA’s requirements is met will a waiver be considered

valid and enforceable. If a waiver fails to comply with even

one of these conditions, then “[n]o matter how many times

parties may try to ratify such a contract, the language of the

OWBPA, ‘an individual may not waive,’ forbids any waiver.”

Oberg v. Allied Van Lines, Inc., 11 F.3d 679, 683 (7th Cir.

1993), cert. denied, 511 U.S. 1108 (1994).

B. The Doctrines of Ratification and Tender Back Are

At Direct Odds With the Purposes of the ADEA, As

Amended by the OWBPA.

“[W]hen a statutory purpose to the contrary is evident,

common law principles may not be applied.” Jsbrandtsen Co.

v. Johnson, 343 U.S. 779, 783 (1952). See also Astoria Fed.

Sav. & Loan Ass'n v. Solimino, 501 U.S. 104, 108 (1991). The

impact that common law principles would have on a federal

statute’s purpose and objectives determines whether they may

be imposed on the statute. Hogue v. Southern Ry. Co., 390

U.S. 516, 518 (1968). Hogue, the only S Court decision

to consider a “tender back” requirement for waivers of claims

under a federal remedial statute, rejected the doctrine. After

determining the impact on the purpose and objectives of the

Federal Employees Liability Act (FELA), 45 U.S.C. § 51 ef

seq. (1939), the Court ruled that a tender requirement would be

“wholly incongruous with the general policy of the Act.” 390

U.S. at 518. Ratification and tender back requirements would

—— purposes of the ADEA, as amended by the

Congress enacted the ADEA to eliminate arbi age

discrimination in the workplace. Oscar Mayer & Co. v. Evans,

441 U.S. 750, 756 (1979); 29 U.S.C. § 621(b). The Act’s

objectives are to deter discrimination and to compensate

victims for injuries caused by the ibited discrimination.

McKennon v. Nashville Banner Pub. Co., 115 S. Ct. 879, 884

(1995). The “vital element” that allows these objectives to be

realized is that § 626(c) of the ADEA grants an age

discrimination victim “a right of action to obtain the authorized

relief.” Jd at 884. Congress enacted the OWPBA to protect

that “vital element” from overreaching employers.

The of the OWBPA amendments to the ADEA is

to" “ensure{ | that older workers are not coerced or manipulated

into waiving Ne 203, ISlet Cone. relief under the ADEA."

S. Rep. No. 263, 101st Sess. 2 (1990). Congress

ped a eb pe wan ha en

practices by requiring employers to draft and seek waivers in

strict compliance with the Act’s provisions. The legislative

history of the OWBPA makes clear that Congress did not want

an older worker to be precluded from pursuing a meritorious

ADEA claim unless she has knowingly and voluntarily

relinquished the right to do so.

In order to employees’ right to seek relief under the

ADEA, the OWBPA restricts an employer’s use of waivers as

a defense to an ADEA claim. statute requires, at a

minimum, that the waiver comply with the technical

requirements of the Act. Cognizant that an employer's

abusive and unfair practices may result in an ee’s

involuntary or uninformed waiver —y ADEA rights,”

desi the OWBPA to ensure that the door to

ADEA claims remains open to all but those who and

voluntary choose to close it. “The objectives of the AD

furthered when even a single employee establishes that an

specifying that a waiver must be knowing and voluntary, the legislation

provides further requirements. Although some of these requirements may

be further indicia of whether a waiver is knowing or voluntary, each

requirement set forth in the bill must be satisfied independent of the

knowing and voluntary factor for any waiver to be lawful.”).

Y HR. Rep. No. 664, 101st Cong., 2d Sess. 22-23 (1990).

S. Ct. at 885. If an ee fails to bring a claim of age

discrimination because cannot afford to tender back the

consideration received for an invalid waiver, the of the

* See, e.g, Forbus v. Sears Roebuck & Co., 958 F.2d 1036, 1041 (11th Cir.

1992) (“Forcing older employees to tender back their benefits in order to

attempt to regain their jobs would have a crippling effect on the ability of

such employees to challenge releases based on misrepresentation or

duress.”); Raczak v. Ameritech Corp., 103 F.3d 1257, 1270 (6th Cir. 1997)

(“A tender-back requirement would deter meritorious ADEA filings.”);

Isaacs v. Caterpillar, Inc., 765 F. Supp. 1359, 1367 (C.D. Ill. 1991) (Hogue

rests on view that a tender requirement would deter meritorious challenges

to waivers in FELA lawsuits; a tender requirement will have just as

crippling an effect on ADEA challenges); Soliman v. Digital Equip. Corp.,

869 F. Supp. 65, 70 (D. Mass. 1994) (“To require plaintiff to tender back

_ the benefits he has received as a precondition of going forward with his

lawsuit would likely chill his prospects of prosecuting what may be a

meritorious claim.”); Carr v. Armstrong Air Conditioning, Inc., 817 F.

Supp. 54, 58 (N.D. Ohio 1993) (a tender requirement would deter

meritorious challenges to waivers in ADEA claims).

Isaacs v. Caterpillar, 765 F. Supp. 1359, 1367 (C.D. Ill. 1991).

Moreover, Congress explained the need for protective

waiver provisions, stating:

S. . No. 79, 101st ., Ist Sess. 9 (1989), adopted by

ie in S. Rep. er § 101st Cong. 2d Sess. 15 (1990);

H.R. Rep. No. 664, 101st Cong., 2d Sess. 23 (1990) (citations

omitted).

vulnerable to coercive and abusive waiver practices and clearly

affect their ability to challenge an employer’s

policies or If ratification and tender back are

i on the OWBPA, many employees will have

little choice but to let ’ discriminatory policies and

practices and unpunished. “No matter how

i releases might violate the requirements of the

[ PA], employees would be precluded from challenging

iven when were

ate Caterpillar 165 F. Supp. 1359, 1367 (C.D. Ill. 1991).

Given the likelihood that an older employee would be

tender back requirement would effectively pertnit employers

‘0 Seriiats ieee Eocaahes tte ANOA and

the OWBPA altogether, without fear of repercussion.

Even if Congress had not abrogated the common law and

. ied this area of the law” with the OWBPA, Oberg v.

Allied Van Lines, Inc., 11 F.3d 679 (7th Cir. 1993), cert.

denied, 511 U.S. 1108 (1994), and even if contract law

appmed 0 (Seas, Ge pertinent sections of Go Reststenens

(Second) of Contracts demonstrate that employers whose

waiver agreements violate the OWBPA may ‘

policy harmed by enforcement of the agreement.” Town of

Newton v. Rumery, 480 U.S. 386, 392 (1987), citing

Restatement (Second) of Contracts § 178(1).2 Any interest in

imposing ratification and tender back on the OWBPA clearly

is outweighed by what will result if illegal waivers are enforced

-- employers will have a license to discriminate based on age

without repercussion, and thousands of older workers will lose

their ght to seek redress against unlawful discrimination.

The Restatement (Second) of Contracts explains why

contractual terms that violate public policy may not be

enforced:

In general, parties may contract as they wish, and

courts will enforce their agreements without

passing on their substance. Sometimes, however,

* A public policy against the enforcement of promises or other terms may

be derived by the court from

(a) legislation relevant to such a

policy, or

(b) the need to protect some aspect of

the public welfare . . . .

Restatement (Second) of Contracts § 179.

acy ap og eect te

contract is outweighed some overriding

interest of society and will refuse to enforce a

the promisor as such. Two reasons lie behind this

reluctance. First, a refusal to enforce the promise

may be an appropriate sanction to discourage

undesirable conduct, either by the parties

themselves or by others. Second, enforcement of

the promise may be an inappropriate use of the

judicial process in carrying out an umsavory

transaction.

Restatement (Second) of Contracts, Chapter 8, Unenforceability

on Grounds of Public Policy, Introductory Note. .

In enacting the OWBPA, C decided that protecting

older workers from unfair and abusive waiver practices

“outweighed” any interest in gi effect to employers’ and

employees’ “freedom of contract.” ing to enforce invalid

waivers is an “ jate sanction” to discourage employers

from ignoring the OWBPA.

The Restatement identifies four factors to consider “[ijn

weighing a public policy against enforcement of a term.

These factors are:

(a) the strength of that policy as manifested by

legislation or judicial decisions,

(b) the likelihood that a refusal to enforce the

term will further that policy,

and the extent to which it was deliberate, and

(d) the directness of the connection between

that misconduct and the term.

Restatement (Second) of Contracts § 178 (3).

These four factors command that a waiver that violates the

OWBPA, which is the “term” at issue, may not be enforced

as a matter of public policy.

First, the OWBPA is an exceptionally strong expression of

the public policy against the “manipulation of older workers”

based on their “lack of information or expertise.” S. Rep. No.

79, 101st Cong., 1st Sess. 9-12 (1989).

Second, rejecting the doctrines of ratification and tender

back as a means for employers to enforce their illegal waivers

advances the OWPBA’s of protecting individuals from

being coerced or into waiving their ADEA rights

or claims. Without these doctrines to fall back on,

will have greater incentive to comply with the

requirements of the OWBPA. All that the employer as the

drafter of the waiver needs to do to obtain an enforceable

waiver of ADEA rights and claims is simply to follow the

statute’s “cookbook” requirements.” When an employer drafts

a waiver in accordance with the minimum standards,

the legislative intent that an employee’s decision to waive her

ADEA rights be “knowing and voluntary” will be advanced.

Third, the OWBPA’s legislative history amply documents

the employer overreaching and other misconduct that

Congress to enact waiver legislation.” Not surprisingly,

are allegations of coercion and misrepresentation in this case.

i A waiver of ADEA rights or claims is usually a “term” in a separation

agreement.

1 “Employers should not need the ratification doctrine in order to ensure

that their releases are effective: they need to comply with the OWBPA.”

Long v. Sears Roebuck & Co., 105 F.3d 1529, 1543 (3d Cir. 1997).

4 “The House and Senate hearing records are replete with evidence of

older workers who have been manipulated or coerced into waiving their

rights under the ADEA.” H.R. Rep. No. 221, 101st Cong., Ist Sess. 10

(1989).

Finally, a direct relationship exists between the employer’s

misconduct and the i waiver. As stated above,

provided employers clear instructions for drafting a valid

waiver. elttenadaiedierdan

The Restatement not only establishes that waivers that

violate the OWBPA are unenforceable on grounds of public

policy, it also negates a tender back Section 197,

entitled “Restitution Generally Una vailable.” provides

Except as stated in Sections 198 and 199

[Restitution in Favor of Party who Is Excusably

Ignorant or Is Not Equally in the Wrong, and

Restitution Where Party Withdraws if Situation Is

under or in return for a that is

unenforceable on grounds of c policy unless

denial of restitution would cause

forfeiture

Comment:

a. Rationale. In general, if a court will not, on

grounds of public policy, aid a promisee by

enforcing the promise, it will not aid him by

mn en any tg a

has rendered in return for the unenforceable

promise. Neither will it aid the promisor by

allowing a claim in restitution for

that he rendered under the unenforceable

promise. /t will simply leave both parties as it

finds them, even though this may result in one of

them retaining a benefit that he has received as a

result of the transaction.

Restatement (Second) of Contracts § 197 (emphasis added).

In short, the common law rule as distilled by the

Restatement is that an employer, having created a waiver which

violates the OWBPA, cannot seek return (restitution) of the

consideration = for the waiver. Nor can the employer

enforce the defective waiver. Instead, the employer’s remedy

is a set off of the amount of consideration paid for the waiver

against any judgment for the employee”

Iii. THE OWBPA WAS ENACTED TO PROTECT

EMPLOYEES FROM OVERREACHING

EMPLOYERS.

In determining whether or not the principles of ratification

and tender back may be used to enforce waivers that do not

comply with the OWBPA, it is critical to remember that, first

and foremost, the OWBPA was enacted to protect employees

from abusive and unfair waiver practices.

The OWBPA was designed to protect employees

negotiating with employers, not to protect employers

from overreaching plaintiffs. Employers are, by far, in

a better position to protect their own interests than are

older employees.

Long, 105 F.3d at 1543. However, the principles of ratification

and tender back benefit employers over employees, the

intended beneficiaries of the OWBPA, in two very significant

ways.

First, ratification and tender back do not return the parties

to the status quo, as many employers est. these

doctrines provide a significant windfall to employers.

Consideration for a waiver agreement provides an employer

with benefits that far exceed a defense against future age

discrimination lawsuits. The employer is able to terminate a

typically long-term, highly-paid employee and will no longer

have to pay her salary and benefits. employer is able to

reduce the size of its work force, which often is one of its main

See Long, 105 F.3d at 1543; Oberg, 11 F.3d at 684; Fleming v. U.S.

Postal Service AMF O'Hare, 27 F.3d 259, 261 (7th Cir. 1994), cert. denied,

513 U.S. 1085 (1995).

objectives.” The amount the employer pays the employee also

“typically incorporates consideration for multiple factors not

challenged in an age case: waivers for other violations of law

or contract, rolled-in vacation and sick time, and a public

relations benefit to the employer that itself may deter other

litigation.” Long, 105 F.3d at 1544.

Although an employee receives some benefits that she

might not ordinarily receive when she signs a waiver, she gives

up a substantial amount in return. In addition to her right to

relief under the ADEA and other statutes, the employee loses

her job, her salary and continued benefits. Moreover, if the

employee returns the consideration, she is “deprived of money

paid to induce him to retire, yet he or she is not restored to

employment; all he or she gets is the rescission of his or her

release.” Jsaacs v Caterpillar, Inc., 765 F.Supp. at 1367.

In addition, it cannot be said that an individual who is

permitted to challenge age discrimination without first

returning the benefits receives a “windfall.” If the waiver is

declared invalid and the individual prevails in the suit, the

benefits the individual received can be offset against the

recovery” If the waiver is upheld, the employer received what

it paid for - a valid defense against the merits of the lawsuit”

Finally, if the waiver is struck down and the employee loses her

lawsuit on the merits, the employer may complain that it paid

for a waiver that failed. However, such a complaint should not

fall on sympathetic ears since it was the employer whose faulty

‘¥ “The purpose of [early retirement] programs is to induce people to retire

earlier than they otherwise would have done. Such early retirement is an

economic benefit to the company. To get it, the company offers the

employee money for leaving early.” /saacs v Caterpillar, Inc., 765 F. Supp.

at 1367.

Y Hogue, 390 U.S. at 518; Forbus, 958 F.2d at 1041.

i A waiver is no guarantee that a suit will not be filed; it simply is a

defense against a suit once filed. /saacs v. Caterpillar, 702 F. Supp. 711,

715 (C. D. Ill. 1988).

drafting of the waiver subjected it to suit. After all, the

employer only had to comply with the OWPBA’s provisions

and the waiver would have done its job.

Second, permitting ratification and tender back would allow

employers to discriminate based on age without repercussion.

By capitalizing on older loyees’ economic vulnerability,

employers may coerce employees into signing waivers that

clearly violate the OWBPA in order to buy silence against

complaints of age discrimination. Indeed, the Respondent in

this case admits that its waiver does not ly with the

OWBPA. Yet, it claims it is not subject aan for its

alleged discriminatory practices. If ratification and tender back

override the OWBPA, employers, like the t here,

will have no incentive to comply with the OWBPA’s waiver

provisions.

Ratification and tender back unjustly enrich employers at

the expense of the older employees for whose benefit the

OWBPA was enacted. Ratification and tender back encourage

employers to violate the OWBPA while buying immunity from

challenges to their discriminatory policies and practices. These

common law principles may not be imposed on the ADEA, as

amended by the OWBPA.

CONCLUSION

For the foregoing reasons, AARP respectfully submits that

the judgment of the United States Court of Appeals for the

Fe Cou Gane Se nee a eS eo

rule that Congress abrogated the common law principles 0

ratification and tender back when it enacted the OWBPA’s

comprehensive and remedial rules governing waivers of ADEA

rights and claims.

Respectfully submitted,

Cathy Ventrell-Monsees*

Laurie McCann

Thomas Osborne

American Association

of Retired Persons