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

Supreme Court, U.S.

FILED

7)

No. 96-1291

20 199/

JUN

IN THE

Supreme Court of the Gnited States

OCTOBER TERM, 1996

DOLORES M. OUBRE, ~

Petitioner,

v.

ENTERGY OPERATIONS, INC.,

Respondent.

On Writ of Certiorari to the United States

Court of Appeals for the Fifth Circuit

BRIEF AMICUS CURIAE OF

NATIONAL EMPLOYMENT LAWYERS ASSOCIATION

IN SUPPORT OF PETITIONER

THOMAS R. MEITES, Esq.

Counsel of Record

PAUL W. MOLLICA, Esq.

MEITES, FRACKMAN, MULDER

& BURGER

208 South LaSalle Street

Suite 1410

Chicago, Illinois 60604

(312) 263-0272

Attorneys for Amicus Curiae

Midwest Law Printing Co., Chicago 60610, (312) 321-0220

+4¥

QUESTION PRESENTED

Whether the petitioner ratified an otherwise invalid

release by retaining compensation paid and/or failing to

tender back said sums received pursuant to the terms of

her separation of employment, thus making the release

binding.

ii

LIST OF PARTIES

1. Dolores M. Oubre, Petitioner.

2. Entergy Operations, Inc., Respondent.

TABLE OF CONTENTS

PAGE

QUESTION PRESENTED .................0.:. i

EE ree ee ii

TABLE OF CONTENTS ...... ccc ccc ccccees iii

TABLE OF AUTHORITIES .................. iv

TEL Pacuc cece dededecboccedecs 1

EEE Ee 1

STATUTES AND CONSTITUTIONAL

PROVISIONS INVOLVED ............cccceees 1

INTEREST OF AMICUS CURIAE

AND SUMMARY OF ARGUMENT ............. 2

a a er 3

EE Se ee a 3

ARGUMENT:

Il. THE TENDER BACK AND RATIFICATION

DOCTRINES SHOULD NOT APPLY TO

WAIVERS OF ANTI-DISCRIMINATION

PEE sa veesecwoecucbédecececceces 7

Il. THE COURT SHOULD EXERCISE ITS EQ-

UITABLE POWER TO EXCUSE TENDER

BACK OF CONSIDERATION TO CHAL-

LENGE RELEASES OF ANTI-DISCRIMINA-

Bee EE coc cccccicccceccceces 12

Ill. RATIFICATION SHOULD NOT APPLY TO

RELEASES OF ANTI-DISCRIMINATION

CLAIMS BECAUSE THE EEOC CHARGE

FILING REQUIREMENTS PROVIDE THE

EXCLUSIVE TIMING RULES .......... 21

DEE bn Seedecescccecccncccccsccss 23

iv

TABLE OF AUTHORITIES

Caselaw PAGE

Alexander v. Gardner-Denver Co., 415 U.S.

SRG Sat id bee ceNeneeeeees oe 5, 8,9, 11

Alphonse v. Northern Telecom, Inc., 776

F. Supp. 1075 (E.D.N.C. 1991) ............. 17

Beadle v. City of Tampa, 42 F.3d 633 (11th

Cir.), cert. denied, 115 S. Ct. 2600 (1995) ...... 4

Bibel v. Ridgewood High School, No. 96 C 3110,

1996 WL 568785 (N.D. Ill. Oct. 3, 1996) ...... 18

Blackwell v. Cole Taylor Bank, No. 96 C 0902,

1997 WL 156483 (N.D. Ill. March 31, 1997) . 6, 18

Blakeney v. Lomas Information Systems, Inc.,

879 F. Supp. 645 (N.D. Tex.), aff'd,

65 F.3d 482 (5th Cir. 1995), cert. denied,

116 &. Ce. 1068 (1GBS) .. ww cece cece scene 17

Blistein v. St. John’s College , 860 F. Supp.

256 (D. Md. 1994), aff'd on other grounds,

74 F.3d 1459 (4th Cir. 1996) ............... 17

Bormann v. AT&T Communications, 875 F.2d

399 (2d Cir.), cert. denied, 493 U.S.

CE, tecnica eee eee aeeaec s 9,11

Collins v. Outboard Marine Corp., 808 F. Supp.

NT ne ecko teace 18

Coventry v. United States Steel Corp.,

856 F.2d 514 (3d Cir. 1988) ........ 4, 9, 10, 20

Daly v. Runyon, No. 95 C 5954, 1996

WL 754112 (N.D. Ill. Jan. 30, 1997) ......... 18

v

Delaware State College v. Ricks, 449 US.

EE ee a 22

D.H. Overmyer Co., Inc. v. Frick Co., 405

EE Se 19, 20

EEOC v. Associated Dry Goods Corp.,

Gee PP Bc GoGb deve cee ccccccs 18

EEOC v. Spiegel, Inc., No. 90 C 6363,

1993 WL 34749 (N.D. Ill. Feb. 9, 1993) ....... 18

Falk v. Levine, 60 F. Supp. 660 (D. Mass. 1945)... 14

FDIC v. Aetna Casualty & Surety Co.,

947 F.2d 196 (6th Cir. 1992)............... 21

Fleming v. United States Postal Service,

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

ee 6, 18

Fortino v. Quasar Co., 950 F.2d 389

Co EE 7,8

Fuentes v. Shevin, 407 U.S. 67 (1972) .. 8, 11, 19, 20

General Telephone Co. v. EEOC, 446 US.

DT tise neetudbebaeediee 6 6eccc ec 19

Gilmer v. Interstate/Johnson Lane aia

ET 6

Grillet v. Sears Roebuck & Co., 927 F.2d

ae 17

Harris v. Forklift Systems, Inc.,

ed oe eee eeeneoneess 2

Hazen Paper Co. v. Biggins, 508 U.S. 948 (1993) ... 2

Hogue v. Southern Ry. Co., 390 U.S. 526 (1968) . 16, 17

vi

Isaacs v. Caterpillar, Inc., 765 F. Supp.

1559 (C.D. Tl. 1991) .... 2. ee eee ee eee 18

Jordan v. Smithkline Beecham, Inc.,

No. 95-5707, 1997 WL 164277

(E.D. Pa. April 2, 1997) ........-----eeees

Lancaster v. Buerkle Buick Honda Co.,

~ 809 F.2d 539 (8th Cir.), cert. denied,

GD TR ED cece coset cecctcccccces

Landgraf v. USI Film Products,

th) | |, | 15

Local No. 391 v. Terry, 494 U.S. 558 (1990) ...... 15

Long v. Sears, Roebuck & Co., 105 F.3d

1529 (3d Cir. 1997)... 2... eee eee eee eens 21

McCray v. Casual Corner, Inc., 812 F. Supp.

1046 (C.D. Cal. 1992) ..... 2.0... cece eee eeee

McKennon v. Nashville Banner Co.,

115 S. Ct. 879 (1995) ..... 6. - eee ee ener 2, 6

Melendez v. Horizon Cellular Telephone Co.,

841 F. Supp. 687 (E.D. Pa. 1994) ............

Nigrelli v. Catholic Bishop of Chicago,

No. 84 C 5564, 1994 WL 240558

(N.D. Ill. May 27, 1994), aff'd,

68 F.3d 477 (7th Cir. 1995) .........0--5ees

Norton v. Houston Industries Inc.; 65 Empl.

Prac. Dec. (CCH) 943,252 (S.D. Tex. 1994) ....

Oberg v. Allied Van Lines, Inc., 59 Empl.

Prac. Dec. (CCH) 941,706 (N.D. Ill.

1992), aff'd, 11 F.3d 679 (7th Cir. 1993),

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

vii ~

Oberg v. Allied Van Lines, 11 F.3d 679

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

SEG Keeueh uses C¥eb doe ccovene 14

O'Connor v. Consolidated Coin Caterers Corp.,

es ee we

O'Hare v. Global Natural Resources, Inc.,

898 F.2d 1015 (5th Cir. 1990)

O’Shea v. Commercial Credit Corp.,

930 F.2d 358 (4th Cir.), cert. denied,

ee ow oc toe 9,

Pierce v. The Atchison, Topeka and Santa Fe

Ry. Co., 91 C 3776, 1993 WL 18437

(N.D. Ill. Jan. 26, 1993), aff'd in part,

vacated and remanded in part, 65 F.2d

562 (7th Cir. 1995), appeal after remand,

110 F.3d 431 (7th Cir. 1997) ...............

Pierce v. The Atchison, Topeka and Santa Fe

Ry. Co., 65 F.3d 562 (7th Cir. 1995),

appeal after remand, 110 F.3d 431

SRG ob botbbabeeteccece. 9, 10

Pierce v. The Atchison, Topeka and Santa Fe

Ry. Co., 110 F.3d 431 (7th Cir. 1997) ....... 3,4

Premier Electric Int’l Corp. v. Solar Devices,

Inc, 778 F.2d 71 (ist Cir. 1985) .............

Robinson v. Shell Oil Co., 117 S. Ct. 843 (1997) ....

Seward v. B.O.C. Div. of General Motors Corp.,

805 F. Supp. 623 (N.D. Ill. 1992) ...........

Shaheen v. B.F. Goodrich Co., 873

F.2d 106 (@th Cir. 19060) ..........ccccccces

viii

Stroman v. West Coast Grocery Co.,

884 F.2d 458 (9th Cir. 1989),

cert. denied, 498 U.S. 854 (1990) ......... 9, 10

Taxin v. Food Fair Stores, Inc.,

197 F. Supp. 827 (E.D. Pa. 1961) ........... 14

Tice v. American Airlines, Inc., No. 95 C 6890,

1997 WL 80911 (N.D. Ill. Feb. 21, 1997) ...... 18

Town of Newton v. Rumery,

COTE I Ciccce cob ecotececed ees 8

United States v0. Mezzanatto,

SO re, PEE Decco sederehescccones 7

United States for Use of Youngstown

Welding and Engineering Co. v. Travellers

Indemnity Co., 802 F.2d 1164 (9th Cir. 1986) ... 7

Wamsley v. Chaplin Refining & Chemicals Inc.,

11 F.3d 539 (5th Cir. 1993), cert. denied,

ot eB ll rrr 17

Widener v. Arco Oil and Gas Company,

717 F. Supp. 1211 (N.D. Tex. 1989) .......... i)

Wittorf v. Shell Oil Co., 37 F.3d 1151

ee SS, dc ede beoccoccces 6, 17

Wright v. Southwestern Bell Tele. Co.,

925 F.2d 1288 (10th Cir. 1991) ........... 9,10

Zipes v. Trans World Airlines, Inc.,

GE GR PE vc ccdbeccwstecvecccecs 23

ix

Statutes

a nT ae 1

Re Ex a a a a 1

EE er 15

Age Discrimination in Employment Act,

29 U.S.C. § 621 et seg. ............ 1, 3, 15, 22

Americans With Disabilities Act,

42 U.S.C. § 12101 et seg. ............... 6, 22

Civil Rights Act of 1964, 42 U.S.C.

EL 6, 15, 19, 22

Older Workers Benefit Protection Act of

1990, Pub. L. 101-433, Title II,

§ 201, 104 Stat. 983 (1990) ...............1,2

Other Authority

Dan B. Dobbs, HANDBOOK OF THE LAW

OF REMEDIES (1973) ............. 12, 13, 14

George E. Palmer, THE LAW OF

RESTITUTION (1978) ................. 13, 15

RESTATEMENT OF CONTRACTS § 481 (1932) . 12, 13

RESTATEMENT (SECOND) OF CONTRACTS

§ 384, cmt. b (1981) .......... 12, 13, 14, 15, 21

RESTATEMENT (SECOND) OF CONTRACTS

ES 21

RESTATEMENT OF RESTITUTION § 65,

a, ee 12, 14

1

OPINION BELOW

The opinion of the United States Court of Appeals for

the Fifth Circuit rendered November 6, 1996, is not

reported. The opinion of the United States District

Court, Eastern District of Louisiana, rendered May 28,

1996, is also not reported.

JURISDICTION

The United States Court of Appeals for the Fifth

Circuit issued its opinion and entered judgment on

November 6, 1996. The petitioner filed a timely Petition

for Writ of Certiorari within 90 days of the judgment

pursuant to 28 U.S.C. §§ 1254 and 2101(c) and Supreme

Court Rule 10(c). This Court has jurisdiction under 28

U.S.C. § 1254(b).

STATUTES AND CONSTITUTIONAL

PROVISIONS INVOLVED

This action involves the Age Discrimination in Employ-

ment Act (ADEA), 29 U.S.C. § 626, as amended by the

Older Workers Benefit Protection Act of 1990 (OWBPA),

Pub. L. 101-433, Title II, § 201, 104 Stat. 983 (1990),

now incorporated at 29 U.S.C. § 626(f).

2

INTEREST OF AMICUS CURIAE AND

SUMMARY OF ARGUMENT

The National Employment Lawyers Association (NELA)

is a voluntary membership organization of over 2,000

lawyers who represent employees in labor, employment

and civil rights disputes. NELA is one of the largest

organizations in the United States whose members liti-

gate and counsel individuals, employees and applicants

on claims arising out of the workplace. As part of its ad-

vocacy efforts, NELA has filed numerous amicus curiae

briefs before this Court, singly or jointly with other amici.

Some of the more recent cases are Robinson v. Shell Oil

Co., 117 S. Ct. 843 (1997); O’Connor v. Consolidated Coin

Caterers Corp., 116 S. Ct. 1307 (1996); McKennon v.

Nashville Banner Co., 115 S. Ct. 879 (1995); Harris v.

Forklift Systems, Inc., 510 U.S. 17 (1993); and Hazen

Paper Co. v. Biggins, 508 U.S. 948 (1993).

NELA has an interest in the issues raised in this

appeal because a substantial number of the cases in

which its members are involved pose the issue of wheth-

er a plaintiff must tender back consideration supposedly

received for a putative release or waiver of claims under

the federal anti-discrimination statutes before challeng-

ing its validity. Although this case arises under the

particular terms of the ADEA and the OWBPA, the issue

recurs under other federal employment laws such as

Title VII and the Americans With Disabilities Act. The

brief argues that equitable and public policy consider-

ations weigh against application of tender back and rati-

fication to releases of federal anti-discrimination claims

of all stripes.

The position NELA takes in the following brief has not

been approved or financed by petitioner or her counsel.

3

The written consents of both parties have been filed

with the Clerk of the Court pursuant to Supreme Court

Rule 37.3(a).

STATEMENT OF THE CASE

On September 26, 1995, petitioner Dolores Oubre, a

former employee of Entergy Operations, Inc., filed suit in

the United States District Court for the Eastern District

of Louisiana. She claimed that her former employer (the

respondent in this case) terminated her in violation of

the federal Age Discrimination in Employment Act, 29

U.S.C. § 621, et seq. (ADEA). The district court granted

summary judgment to the employer on May 23, 1996 on

the ground that the employee signed a release at the

time of her termination and ratified the release by

failing to return the benefits of her severance package.

The United States Court of Appeals for the Fifth Circuit

affirmed this decision by unpublished opinion on Novem-

ber 6, 1996.

INTRODUCTION

Will employers sometimes mislead, confuse or coerce

their employees into releasing their rights to sue under

the federal anti-discrimination laws? Let us look at three

such cases:

¢ Employee Pierce was offered a severance package

as part of a reduction in force, which included a

general release and waiver of claims. He had al-

ready filed an EEOC charge against the company,

alleging race and age discrimination, and asked a

company official whether the release would pre-

clude his discrimination claims. The official said he

did not believe it would and the company recon-

firmed that view later. Pierce had just one business

_ —_—.

, —

4

day to accept the package. A jury found that the

release signed by Pierce was not a knowing and

voluntary waiver of his discrimination claims.

Pierce v. The Atchison, Topeka and Santa Fe Ry.

Co., 110 F.3d 431 (7th Cir. 1997).

e Beadle was a police trainee. For religious reasons,

Beadle requested that he not be assigned Saturday

shifts, to observe his Sabbath. Beadle quit after the

police department said no. Under his contract,

Beadle was obliged to return $12,000 in training

expenses to the city after his “commencement of

full-time service as a police officer.” The city offered

to forgive repayment in exchange for a release of

all claims. As it turned out, Beadle probably owed

the city nothing under the contract because he had

not yet commenced full-time service. A magistrate

held that the release was not a knowing and

voluntary waiver of his religious discrimination

claims. Beadle v. City of Tampa, 42 F.3d 633 (11th

Cir.), cert. denied, 115 S. Ct. 2600 (1995).

¢ Employee Hallas, with 35 years of service, was

selected for lay-off. He filed an age discrimination

charge with the EEOC. Two months later, a com-

pany representative offered Hallas an “early retire-

ment” package on condition that he sign a release.

The employer presented the package as a “take it

or leave it” proposition and Hallas was not encour-

aged to seek an attorney’s advice. Hallas stood to

lose valuable medical benefits at once if he declined

the package. He signed the waiver. The Court of

Appeals found as a matter of law that Hallas did

not knowingly and voluntarily waive his age dis-

crimination claims. Coventry v. United States Steel

Corp., 856 F.2d 514 (3d Cir. 1988).

Such cases put in perspective exactly what is at stake

with the question presented to this Court. With their

5

tender back and ratification arguments, the employers

seek more than the right to acquire releases or waivers

of discrimination claims, a practice that this Court pre-

sumed was valid under Alexander v. Gardner-Denver

Co., 415 U.S. 36 (1974) and that Congress has autho-

rized in ADEA cases through the OWBPA. Rather, the

employers want this Court’s imprimatur on a doctrine

that renders releases or waivers “challenge-proof,” even

when they are clearly invalid and procured through op-

pression or trickery.

NELA hopes, with this brief, to demystify some of the

confusion surrounding the legal concepts of waiver,

tender back and ratification. In Section I of the argu-

ment, we establish that waivers are treated differently

at law than releases and that waivers should not be

subject to the rule of tender back that applies to re-

leases. In Section II, we show that tender back is not

required when the relief sought is equitable in na-

ture—which is true in federal anti-discrimination cases

generally—because courts have the equitable power to

fashion conditional decrees to provide a set-off in the

employer’s favor. Tender back should also be rejected for

substantial equitable reasons grounded in public policy,

namely the Congressional policy against workplace

discrimination and the imbalance of bargaining power in

at-will employment relationships. In Section III, concern-

ing the employers’ ratification argument, we demonstrate

how ratification conflicts with the charge-filing and con-

ciliation requirements under the anti-discrimination stat-

utes and should be rejected.

Properly understood, too, the issues in this case go

beyond claims under the ADEA. The issues of tender

back and ratification recur under other federal employ-

4

6

ment statutes, such as the Civil Rights Act of 1964 (Title

VII), 42 U.S.C. § 2000e et seq. and the Americans With

Disabilities Act (ADA), 42 U.S.C. § 12101 et seg.' And as

this Court has noted, “(t]he ADEA is but part of a wider

statutory scheme to protect employees in the workplace

nationwide.” McKennon v. Nashville Banner Publishing

Co., 115 S. Ct. 879, 884 (1995). The Court should avoid

setting a special rule under one particular civil rights

statute unless Congress affirmatively requires it. We

show below that the doctrines of tender back and rati-

fication are creatures of common law that clash with “the

congressional effort to eradicate discrimination in the

workplace,” McKennon, 115 S. Ct. at 884, and, according-

ly, that they should not apply to claims under the civil

rights statutes.”

1 See, e.g., Wittorf v. Shell Oil Co., 37 F.3d 1151 (5th Cir.

1994) (ratification under Americans With Disabilities Act);

Fleming v. United States Postal Service, 27 F.3d 259, 260-62

(7th Cir. 1994) (tender back requirement under Title VII), cert.

denied, 513 U.S. 1085 (1995); Jordan v. Smithkline Beecham,

164277, at *6 (E.D. Pa. April 2,

1997) (Title VII and 42 U.S.C. § 1981); Blackwell v. Cole

2 Alternatively, NELA that the Court re-

oo nein of eather entertadher

to statutes other than the ADEA. See Gilmer v. Interstate/

Johnson Lane Corp., 500 U.S. 20, 25 n.2 (1991) re-

7

ARGUMENT

I. THE TENDER BACK AND RATIFICATION DOC-

TRINES SHOULD NOT APPLY TO WAIVERS OF

ANTI-DISCRIMINATION RIGHTS

Lawyers, courts and commentators often speak of

“waivers” and “releases” as if they are the same thing.

They are not, and resolving the confusion is important in

this case. A release—as one district court put it—is “an

abandonment of a claim that might otherwise be en-

forced; it constitutes a defense to the assertion of a

claim.” McCray v. Casual Corner, Inc., 812 F. Supp.

1046, 1048 (C.D. Cal. 1992). Releases are a species of

contract which must be supported by consideration. See,

e.g., United States for Use of Youngstown Welding and

Engineering Co. v. Travellers Indemnity Co., 802 F.2d

1164, 1167 (9th Cir. 1986) (“a release must be supported

by consideration”); Premier Electric Int’l Corp. v. Solar

Devices, Inc, 778 F.2d 71, 73 (1st Cir. 1985) (“under fed-

eral law, a valid release must be supported by consid-

eration”). To determine the validity of a release, courts

rely on conventional contract principles of assent and

consideration, as well as the affirmative defenses of

fraud, unconscionability, duress and the like. Fortino v.

Quasar Co., 950 F.2d 389, 394-95 (7th Cir. 1991)

(Posner, J.) (contrasting releases with waivers).

A waiver is not a contract. Rather, it is a unilateral act

with juridical significance: a knowing and voluntary

renunciation of a legal right. See, e.g., United States v.

Mezzanatto, 115 S. Ct. 797, 801 (1995). Although waiv-

ers can be included as terms in contracts, they need not

be contractual and they are not judged by the contractu-

8

al standards of consideration and assent. Instead, courts

evaluate the validity of waivers based on whether they

were entered into knowingly and voluntarily. Fortino,

950 F.2d at 394-95.

This Court has wide experience with waivers, princi-

pally in the criminal procedural field but also occasional-

ly in civil cases. In Town of Newton v. Rumery, 480 U.S.

386, 397-98 (1987), the Court reviewed a written release-

dismissal agreement—in which a prosecutor agreed not

to charge a person for a crime in exchange for the per-

son’s agreement not to sue—under waiver principles to

determine whether it was voluntary, even though it was

in the form of a contract. In Fuentes v. Shevin, 407 US.

67, 94-6 (1972), the Court reviewed a putative waiver of

judicial process in a consumer installment contract to

decide whether the customer’s relinquishment of these

rights was voluntary, knowing, and intelligently made

under the circumstances.

This Court has previously indicated that relinquish-

ment of anti-discrimination claims under federal law be-

long in the waiver category rather than the contractual

category. In Alexander v. Gardner-Denver Co., 415 U.S.

36 (1974), the Court reviewed a putative waiver of Title

VII rights. There, the employer claimed that an employ-

ee’s union waived his right to bring a Title VII action in

its collective bargaining agreement. The Court rejected

that argument. On the other hand, it stated that “pre-

sumably an employee may waive his cause of action

under Title VII as part of a voluntary settlement.” Jd. at

52. This Court noted that “{iJn determining the effective-

ness of any such waiver, a court would have to determine

at the outset that the employee’s consent to the settle-

>. *

9

ment was voluntary and knowing.” Jd. at 52 n.15.° Ab-

sent from the Court’s opinion is any suggestion that

prior seeking judicial review of a waiver, the employee

must first tender back any consideration received.‘ In-

deed, if we comb this Court’s waiver cases, we will find

no requirement that a party challenging the validity of

the waiver must first restore the status quo ante. There

is no sign that Ms. Fuentes had to return the furniture

she bought on time to the creditor before a hearing on

the waiver. And it would have been absurd to require

that Mr. Rumery submit to rearrest and prosecution to

challenge his waiver of his civil rights claim.

To determine whether a waiver is valid, we look to a

variety of factors to determine whether the waiver was

The Atchison, Topeka and Santa Fe Ry. Co., 65 F.3d 562, 571

(7th Cir. 1995); Wright v. Southwestern Bell Tele. Co., 925

sources, Inc., 898 F.2d 1015, 1017 (5th Cir. 1990); Stroman ..

West Coast Grocery Co., 884 F.2d 458, 462 (9th Cir. 1989),

the validity of waivers. O'Shea v. Commercial

Credit Corp., 930 F.2d 358, 361 (4th Cir.), cert. denied, 502

U.S. 859 (1991); Shaheen v. B.F. Goodrich Co., 873 F.2d 105,

107 (6th Cir. 1989); Lancaster v. Buerkle Buick Honda Co.,

809 F.2d 539, 541 (8th Cir.), cert. denied, 482 U.S. 928 (1987).

* Indeed, not until 1989—fifteen years after Alexander—did

any federal court report an opinion imposing such an obliga-

tion in an discrimination case. Widener v. Arco

Oil and Gas , 717 F. Supp. 1211, 1217 (ND. Tex.

10

“truly voluntary,” rather than inquire into offer, accept-

ance and consideration as we do with contracts. Fortino,

950 F.2d at 394-95 (in distinguishing release from

waivers, court notes that while releases are subject only

to contract defenses, such as fraud and duress, waivers

are to be judged by whether the abandonment of the

claims was “truly voluntary”). A common articulation of

the waiver test appears in Coventry v. United States

Steel Corp., 856 F.2d 514 (3d Cir. 1988). There, faced

with a putative waiver of a Title VII claim, the Third

Circuit considered the following factors relevant to

whether the waiver was voluntary:

1) the plaintiff's education and business experience,

2) the amount of the time the plaintiff had posses-

sion of or access to the agreement before signing it,

3) the role of plaintiff in deciding the terms of the

agreement, 4) the clarity of the agreement, 5) wheth-

er the plaintiff was represented by or consulted with

an attorney, and 6) whether the consideration given

in exchange for the waiver exceeds employee benefits

to which the employee was already entitled by con-

tract or law.

Id. at 523 (quoting EEOC v. American Express Publish-

ing Corp., 681 F. Supp. 216, 219 (S.D.N.Y. 1988)). The

11

Looking upon these employer-employee agreements as

waivers, we can now appreciate why the tender back rule

should not bar challenges to their validity. The willing-

ness or ability of the employee to return consideration at

best only marginally bears on the critical issue of wheth-

er the original waiver was knowing and voluntary. In-

deed, economic considerations—that the employee cannot

afford to return the consideration—weigh at least as

heavily (and probably more so) in severance situations.

We also see that nothing in this Court’s waiver decisions,

such as Fuentes and Alexander, sets the stage for a

tender back rule. Finally, as shown above, Alexander

considered the relinquishment of anti-discrimination

rights an important enough event to require proof of an

individual, knowing and voluntary waiver. In sum, under

standard waiver analysis, a party should be able to sub-

mit a putative waiver to a court for review without first

returning the consideration. And as shown in the next

section, if the employee prevails in his challenge to the

waiver and on the merits of this claim, the court can use

its equitable powers to condition a decree upon the

return of consideration.

5 (continued)

(9th Cir. 1989), cert. denied, 498 U.S. 854 (1990); Bormann v.

AT&T Communications, 875 F.2d 399, 403 (2d Cir.), cert.

denied, 493 U.S. 924 (1989).

12

Il. THE COURT SHOULD EXERCISE ITS EQUITA-

BLE POWER TO EXCUSE TENDER BACK OF

CONSIDERATION TO CHALLENGE RELEASES

OF ANTI-DISCRIMINATION CLAIMS

Section I of this argument concluded that there is no

tender back barrier to testing the validity of a waiver. If

the Court nonetheless determines that contractual,

rather than waiver, standards apply to relinquishment

of claims under anti-discrimination statutes, then it

must confront the tender back issue. As we will see in

this section, several considerations grounded in equity

and public policy weigh against tender back in actions

involving releases of federal anti-discrimination claims.

First, tender back does not apply to actions seeking

equitable relief. The tender back rule was a creature of

law rather than equity. While a party at law seeking

rescission of a contract was generally required first to

offer to return anything received before commencing suit,

“{iJn equity, his failure to make such an offer before com-

mencing a suit for rescission did not preclude relief.”

RESTATEMENT (SECOND) OF CONTRACTS § 384 cmt.

b (1981). See also RESTATEMENT OF RESTITUTION

§ 65, cmt. d (1937) (“in equity, .. . . there need be no

offer to restore antecedent to the proceedings”); Dan B.

Dobbs, HANDBOOK OF THE LAW OF REMEDIES § 4.8

at 294 (1973) (plaintiff in equity “has no obligation before

suit to make restitution of goods or money he received

from the defendant”). The Restatement of Contracts de-

clares that the availability of equitable relief excuses the

tender back requirement:

Where specific restitution is allowable under the rule

stated in § 489, or where equitable relief of other

13

kinds is allowable, an offer to restore what has been

received by the injured party, is not a condition of

the right to a decree. The decree of the court will

impose such conditions on the defendant’s duty of

restitution with reference to the return of perfor-

mance or its value as justice requires, and if these

conditions are not complied with the plaintiff cannot

RESTATEMENT OF CONTRACTS § 481 (1932).

History tells us the difference between the rules at law

and equity in actions challenging contracts. At law, a

party who sought rescission of a contract was required to

tender back any consideration because, by so doing, the

“plaintiff rescinded [the contract] by his own act and

then based his case on a rescission that had been per-

fected before the action was commenced.” George E.

Palmer, THE LAW OF RESTITUTION § 3.11, at 295

(1978). On the other hand, if a party sought rescission of

a contract at equity, tender back was not required

because the rescission (and the obligation to return the

consideration) did not occur unti] the court issued its

decree. “Since rescission is not accomplished ‘in equity’

until the court so decrees, the plaintiff has no obligation

before suit to make restitution of goods or money he

received from the defendant.” Dobbs, supra, § 4.8 at 294.

Equity could afford to open its doors to contract

challenges because, unlike law, it had the power to

fashion a conditional decree at the-end of the proceeding

to require return of the consideration (or a set-off of any

monetary award) as a condition for an award of relief to

plaintiff. As the Restatement (Second) of Contracts

declares, in equity a “decree could be made conditional

on an offer {of tender]. At law, however, an offer was

14

traditionally regarded as a condition of the right to

commence an action based on recission.” RESTATEMENT

(SECOND) OF CONTRACTS § 384 cmt. b (1981). See also

RESTATEMENT OF RESTITUTION § 65 cmt. d (1937) (in

equity, where “a conditional decree can be rendered,

there need be no offer to restore antecedent to the pro-

ceedings”).

Of course, as one commentator notes, none of this

“mean(s] that the plaintiff is entitled to get back what he

gave and keep what he got, too. It means only that he

need not make formal tender before suit.” Dobbs, supra,

§ 4.8 at 294-95. Courts have plenary powers to fashion

an appropriate conditional decree on a finding of liability

to provide a set-off in the employer’s favor. “Once the

matter proceeds to trial, the judge must act to assure

that each party is restored to his pre-contract position,

at least as far as possible to do so.” Id. at 295. See, e.g.,

Taxin v. Food Fair Stores, Inc., 197 F. Supp., 827, 831

(E.D. Pa. 1961) (“[sJhould the plaintiffs ultimately obtain

a judgment against the defendants, the latter could be

protected by our crediting the amount they paid for the

release against the amount of that judgment”); Falk v.

Levine, 60 F. Supp. 660, 663 (D. Mass. 1945) (in a final

decree, equity court may “properly consider the question

of interest in ordering the restoration of a status quo”).

This is the answer settled upon by the Seventh Circuit

in ADEA cases. In Oberg v. Allied Van Lines, 11 F.3d

679, 685 (7th Cir. 1993), cert. denied, 511 U.S. 1108

(1994), the Court held that consideration paid to employ-

ees could be setoff at the conclusion of the case. So we

should not be concerned that the employer will not

ultimately receive equity in the form of a decree or setoff,

if it is so entitled.

15

The exception to tender back in equitable cases applies

conclusively to federal anti-discrimination statutes,

which provide for equitable as well as legal relief. 29

U.S.C. § 626(b) (courts may “grant such legal or equita-

ble relief as may be appropriate to effectuate the pur-

poses of the [ADEA]”); 42 U.S.C. § 2000e-5(g) (under

Title VII, court may order “equitable relief as the court

deems appropriate”). While this Court has never passed

on the question of whether Title VII actions are equita-

ble or legal for the purposes of the Seventh Amendment

jury right, Landgraf v. USI Film Products, 511 U.S. 240,

253 n.4 (1994), it has labeled Title VII backpay as equi-

table. Local No. 391 v. Terry, 494 U.S. 558, 571-72

(1990). Moreover, equitable relief for workplace discrimi-

nation may also include declaratory relief, injunction of

unlawful practices, reinstatement or promotions. See,

e.g., 42 U.S.C. § 2000e-5(g)(1) (setting forth various

remedies under Title VII). Any such relief could be

ordered in a conditional decree, requiring return of the

consideration.

Although Title VII was amended in 1991 to allow legal

relief (42 U.S.C. § 1981a), the merger of law and equity

in American courts erases the distinction between the

two broad categories of relief for tender back purposes.

The preference in cases seeking both kinds of relief

should be to follow equitv rather than law. RESTATE-

MENT (SECOND) OF CONTRACTS § 384 cmt. b (“(t]he

merger of law and equity and modern procedural reforms

have made this distinction undesirable, and the rule

stated in this Section reflects increasing criticism of this

rule at law”); Palmer, supra, § 3.11 at 297 (“though

acknowledging contrary authority, a court should hold

that the equity practice applies to all actions, without

16

regard to their historical origins in law and equity”). Em-

ployees with anti-discrimination claims should not be

denied their opportunity to seek equitable relief by oper-

ation of a rule that sprouted in legal soil.

Applying the equitable rule works especially well with

challenges to putative releases of anti-aiscrimination

claims. In Ms. Oubre’s case, as well as most others

reported, the severance or early retirement packages

offered as consideration for releases are almost always

money. Often, the severance is part of a reduction in

force, which cuts off the employee’s livelihood unexpect-

edly. The severance package is a lifeline to employees cut

adrift from their jobs, which will (one hopes) tide them

over until they find other work. This money, we might

expect, is often spent as a substitute for wages lost on

account of a sudden and unexpected period of unemploy-

ment: on living expenses, college tuition, mortgages and

the like. Employers do not face a comparable hardship of

having to meet expenses on a paycheck. Thus, any

prejudice to an employer of having to wait until the end

of the lawsuit to obtain a setoff for moneys paid for a

release is substantially outweighed by the harm to em-

ployees of having to tender the payments back before

even filing a lawsuit.

Second, the Court should also consider the retarding

effect that tender back would have on the enforcement of

the federal anti-discrimination laws. In Hogue v. South-

ern Ry. Co., 390 U.S. 526 (1968), the Court held that in

a Federal Employers’ Liability Act case, an employer

could not require return of a settlement amount (in that

case, just $105.00) as a precondition of suit. The Court

first noted that federal law applied to the issue (id. at

517). It then held that under federal law, tender back

17

was generally not required when there is a defense

alleged against enforcement of the contract, including

duress, fraud, and mutual mistake. Jd. Tender back, the

Court reasoned, would interfere with the railroad em-

ployees’ right to recover just compensation for their

injuries. Jd. at 518. The analysis is no less true under

the anti-discrimination statutes: tender back is an in-

surmountable obstacle for many who sign a release

during a reduction in force.

We do not have to speculate whether tender back

would damp down civil rights enforcement, because the

current split in the circuits furnishes a laboratory for

proving what will occur in a tender back regime. Since

the beginning of 1991—the year in which the Fourth and

Fifth Circuits, respectively in O’Shea v. Commercial

Credit Corp., 930 F.2d 358 (4th Cir.), cert. denied, 502

U.S. 859 (1991) and Grillet v. Sears Roebuck & Co., 927

F.2d 217, 220 (5th Cir. 1991), declared their adherence

to the tender back rule in ADEA cases—there have been

just six reported opinions in the district courts of those

two circuits involving challenges to releases in ADEA

cases, all of which foundered on tender back or ratifica-

tion.® By contrast, in the Seventh Circuit alone where

® In the Fourth Circuit: Blistein v. St. John’s College, 860 F.

Supp. 256 (D. Md. 1994) (enforcing release), aff'd on other

grounds, 74 F.3d 1459 (4th Cir. 1996); Alphonse v. Northern

Telecom, Inc., 776 F. Supp. 1075 (E.D.N.C. 1991) (enforcing

release). In the Fifth Circuit: Blakeney v. Lomas Information

Systems, Inc., 879 F. Supp. 645 (N.D. Tex.) (enforcing release),

aff'd, 65 F.3d 482 (5th Cir. 1995), cert. denied, 116 S. Ct. 1042

(1996); Wamsley v. Chaplin Refining & Chemicals Inc., 11

F.3d 539 (5th Cir. 1993) (enforcing release), cert. denied, 115

S. Ct. 1403 (1994); Wittorf v. Shell Oil Co., 37 F.3d 1151 (5th

Cir. 1994); Norton v. Houston Industries Inc., 65 Empl. Prac.

Dec. (CCH) 943,252 (S.D. Tex. 1994) (enforcing release).

18

there is no tender back rule for ADEA cases,’ there have

been ten challenges to such releases reported in the

same period, seven of which avoided dismissal or sum-

mary judgment.* This experience suggests that the rules

advocated by respondent indiscriminately discourage

even valid claims that an employer overreached in ob-

taining a release.

The release issue reaches beyond merely private dis-

putes between employers and employees. This Court and

Congress recognize that workplace discrimination is not

purely a private matter. These cases are imbued with a

public interest to enforce America’s anti-discrimination

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

denied, 511 U.S. 1108 (1993). But see Fleming v. United

States Postal Service, 27 F.3d 259 (7th Cir. 1994) (applying

tender back rule to Title VII claim).

* Blackwell v. Cole Taylor Bank, No. 96 C 0902, 1997 WL

156483 (N.D. Ill. Mar. 31, 1997) (no tender back required in

Title VII and ADEA case); Tice v. American Airlines, Inc., No.

95 C 6890, 1997 WL 80911 (N.D. Ill. Feb. 21, 1997) (no tender

back required); Daly v. Runyon, No. 95 C 5954, 1996 WL

754112 (N.D. Ill. Jan. 30, 1997) (finding no waiver of claim);

Bibel v. Ridgewood High School, No. 96 C 3110, 1996 WL

568785 (N.D. Ill. Oct. 3, 1996) (release enforced); EEOC v.

Spiegel, Inc., No. 90 C 6363, 1993 WL 34749 (N.D. Ill. Feb. 9,

1993) (release enforced); Pierce v. The Atchison, Topeka and

Santa Fe Ry. Co., 91 C 3776, 1993 WL 18437 (N.D. Ill. Jan.

26, 1993), aff'd in part, vacated and remanded in part, 65 F.2d

562 (7th Cir. 1995), appeal after remand, 110 F.3d 431 (7th

Cir. 1997) (release not enforced); Seward v. B.O.C. Div. of Gen-

eral Motors Corp., 805 F. Supp. 623 (N.D. Ill. 1992) (release

enforced); Oberg v. Allied Van Lines, Inc., 59 Empl. Prac. Dec.

(CCH) 941,706 (N.D. Ill. 1992) (release not enforced), aff'd, 11

F.3d 679 (7th Cir. 1993), cert. denied, 511 U.S. 1108 (1994);

Collins v. Outboard Marine Corp., 808 F. Supp. 590 (N.D. Il.

1992) (release not enforced); Isaacs v. Caterpillar, Inc. , 765 F.

Supp. 1559 (C.D. Ill. 1991) (release not enforced).

19

laws. EEOC v. Associated Dry Goods Corp., 449 U.S.

590, 602 (1981) (“[t]he private right of action remains an

important part of Title VII’s scheme of enforcement, . . .

[and] Congress considered the charging party a ‘private

attorney general,’ whose role in enforcing the ban on

discrimination is parallel to that of the Commission it-

self”); Alexander, 415 U.S. at 45 (“Congress gave private

individuals a significant role in enforcement process of

Title VII”). Although the EEOC has authority to institute

civil actions in federal courts on behalf of charging

parties (42 U.S.C. § 2000e-5(f)), this authority was

crafted “to supplement, not replace, the private action”

available to aggrieved persons. See General Telephone

’ Co. v. EEOC, 446 U.S. 318, 326 (1980). The nation’s

efforts to enforce anti-discrimination laws in the work-

place are compromised if employers can privately nego-

tiate an economic disincentive against victims who might

otherwise seek relief, and then enforce even unlawful

bargains on grounds of tender back or ratification.

Third, another public policy consideration opposed to

tender back is that releases of anti-discrimination claims

are often formed under conditions where there is a great

imbalance of bargaining power. The Court may recognize

the relevance of bargaining power from its two 1972

decisions about the standard that applies to enforcement

of a waiver of judicial process under state replevin

statutes: Fuentes v. Shevin, 407 U.S. 67, 94-5 (1972),

and D.H. Overmyer Co., Inc. v. Frick Co., 405 U.S. 174,

185-86 (1972). The Court noted in both cases that the

balance of bargaining power between contracting parties

is an important factor in assessing the knowing and

voluntary nature of the waiver. In Fuentes, the Court

considered in two consolidated appeals the due process

20

implications of replevin statutes that allowed creditors to

seize merchandise without notice and a hearing. The

creditors argued in each case thet the debtors signed

sales contracts that specifically allowed pre-judgment re-

possession. But the Court held that the contracts, under

the circumstances, did not present an effective waiver:

“There was no bargaining over contractual terms be-

tween the parties who, in any event, were far from equal

in bargaining power.” Fuentes, 407 U.S. at 95. By con-

trast, in D.H. Overmyer, the Court enforced a contrac-

tual waiver of prejudgment notice and hearing under a

financing contract. There, the defaulting party was a

major corporation. This was not a case of unequal bar-

gaining power or overreaching, the Court held, yet

“where the contract is one of adhesion, where there is

great disparity in bargaining power, and where the

debtor receives nothing for the [waiver] provision, other

legal consequences may ensue.” D.H. Overmyer, 405 U.S.

at 188. i.eleases of anti-discrimination claims will ordi-

narily fall more toward the Fuentes pole than the D.H.

Overmyer pole. In Ms. Oubre’s case and many others,

the waivers obtained from employees during reductions

in force are offered (as in Coventry) on a “take-it-or-

leave-it” basis to people whose primary source of income

is about to be cut off. The lack of bargaining power

under these circumstances is another powerful argument

against tender back.

For all of the above reasons, we urge the Court to find

that tender back does not apply to releases of anti-dis-

crimination claims as a matter of equity.

21

Ill. RATIFICATION SHOULD NOT APPLY TO RE-

LEASES OF ANTI-DISCRIMINATION CLAIMS

BECAUSE THE EEOC CHARGE FILING RE-

QUIREMENTS PROVIDE THE EXCLUSIVE TIM-

ING RULES

The principle of ratification states that where a con-

tracting party learns of a basis for invalidating a con-

tract (such as fraud or misrepresentation) but does not

take prompt steps to do so, the court may enforce the

contract in spite of the defects:

The power of a party to avoid a contract for misrep-

resentation or mistake is lost if after he knows of a

fraudulent misre»resentation or knows or has reason

to know of a aon-fraudulent misrepresentation or

mistake he does not within a reasonable time mani-

fest to the other party his intention to avoid it.

RESTATEMENT (SECOND) OF CONTRACTS § 381(2)

(1981). A typical formulation of this rule is found in

FDIC v. Aetna Casualty & Surety Co., 947 F.2d 196, 203

(6th Cir. 1992): “the power of avoidance may be forfeited

if the party who was induced by fraud to enter into the

agreement unreasonably delays avoiding the contract.”

The question presented in this case asks whether it is

proper to import this concept of “unreasonable delay”

into the anti-discrimination arena.

* The doctrines and policies of tender back and ratification are

very closely related and are often presented in tandem. See

Long v. Sears, Roebuck & Co., 105 F.3d 1529, 1536 (3d Cir.

1997) (reviewing tender back and ratification arguments);

Pierce, 65 F.3d at 572 n.2 (failure to return the consideration

where tender back was not required also did not constitute a

ratification). As with tender back, NELA urges that the rati-

fication rule be rejected because it would interfere with the en-

forcement of anti-discrimination statutes and insulate unfair

and oppressive releases from any judicial review.

22

Ratification should be rejected in the anti-discrimina-

tion context because Congress already established a com-

prehensive scheme for the timing of these complaints. If

an employee seeks to bring a federal employment dis-

crimination action, he or she must file a charge within

180 to 300 days of the alleged discriminatory practice.“

In the case of a reduction in force, for instance, this

means that employees must file a charge within 180 or

300 days of when the termination decision was communi-

cated to the employee. Delaware State College v. Ricks,

449 U.S. 250, 258 (1980). The statutes also provide for

investigation and conciliation by the EEOC" and, if that

fails, a private party has 90 days from receipt of the

EEOC’s final determination to file his or her own law-

suit.'? A ratification rule would short-circuit this careful-

ly crafted procedure whenever a judge could be persuad-

ed that it would have been “reasonable” for an employee

to file a charge or complaint before the time prescribed

by the statutes, as (for example) where the EEOC is still

investigating a matter.” Finally, a challenge to a mis-

leading or fraudulent release (which might otherwise

© 29 U.S.C. § 626(d) (charge filing requirements for ADEA);

42 U.S.C. § 2000e-5(e) (prescribing limitation period for Title

VII charges); 42 U.S.C. § 12117 (ADA limitations period

adopted from Title VII).

29 U.S.C. § 626(b) (conciliation under ADEA); 42 U.S.C.

§ 2000e-5(b) (conciliation under Title VII); 42 U.S.C. § 12117

(ADA procedures adopted from Title VII).

% 29 U.S.C. § 626(e) (limitations under ADEA); 42 U.S.C.

§ 2000e-5(f 1) (limitations under Title VII); 42 U.S.C. § 12117

(ADA procedures adopted from Title VII).

'’ An ADEA plaintiff may, but is not required to, file a civil

action 60 days after filing a charge. 29 U.S.C. § 626(d).

23

have provided a basis for equitable estoppel or tolling

under Title VII (Zipes v. Trans World Airlines, Inc., 455

U.S. 385, 393 (1982)) could, under the ratification doc-

trine, be held to come too late to be “reasonable” for

purposes of ratification. Such results would contravene

Congress’s express intentions and would sow doubt about

the proper limitations period for anti-discrimination

claims. For these reasons, ratification should be rejected.

CONCLUSION

For the foregoing reasons, NELA respectfully requests

that the judgment of the United States Court of Appeals

for the Fifth Circuit be reversed. We urge that this Court

reject the application of tender back and ratification to

putative waivers or releases of rights under the federal

anti-discrimination statutes.

Dated: June 20, 1997

Respectfully submitted,

THOMAS R. MEITES, Esq.

Counsel of Record

PAUL W. MOLLICA, Esq.

MEITES, FRACKMAN, MULDER

& BURGER

208 South LaSalle Street

Suite 1410

Chicago, Illinois 60604

(312) 263-0272

Attorneys for Amicus Curiae