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

ENTERGY OPERATIONS, INC.,

Respondent.

On Writ of Certiorari to the

United States Court of Appeals

for the Fifth Circuit

BRIEF AMICI CURIAE OF THE

EQUAL EMPLOYMENT ADVISORY COUNCIL,

THE CHAMBER OF COMMERCE

OF THE UNITED STATES

AND THE EDISON ELECTRIC INSTITUTE

IN SUPPORT OF RESPONDENT

STEPHEN A. BOKAT

ROBIN S. CONRAD

SussAN L. MAHALLATI

NATIONAL CHAMBER

LITIGATION CENTER, INC.

1615 H Street, N.W.

Washington, D.C. 20062

(202) 463-5837

Attorneys for Amicus Curiae

The Chamber of Commerce

of the United States

of America

EDWARD H. COMER

J. BRUCE BROWN

EDWARD N.BOMSEY

EDISON ELECTRIC INSTITUTE

701 Pennsylvania Ave., N.W.

Washington, D.C. 20004-2696

(202) 508-5621

Attorneys for Amicus Curiae

ANN ELIZABETH REESMAN *

ERIN QUINN GERY

McGUINEss & WILLIAMS

1015 Fifteenth Street, N.W.

Suite 1200

Washington, D.C. 20005

(202) 789-8600

Attorneys for Amicus Curiae

Equal Employment

Advisory Council

TABLE OF CONTENTS

Page

TABLE OF AUTHORITIES 20202222... eee eccceeeeeeees iii

INTEREST OF THE AMICI CURIAE ....... 1

STATEMENT OF THE CASE gggz 5

SUMMARY OF ARGUMENT ....00 6

0 ⁵ A iii a 8

AN ADEA CLAIMANT WHO FAILS TO TEN.

DER BACK CONSIDERATION PAID FOR A

RELEASE THAT DOES NOT MEET THE

OWBPA REQUIREMENTS RATIFIES A VOID-

ABLE CONTRACT AND CANNOT CHALLENGE

(% ̃ —— ——— 8

A. Under Established Principles of Contract Law,

Which Apply to Contracts for the Release of

Employment Discrimination Claims, an Individ-

ual Cannot Both Repudiate the Contract and

Retain the Consideration .......... 8

B. This Court’s Decision in Hogue v. Southern

Railway Co. Is Not Applicable to Employment

Discrimination Cases 11

1. Hogue Interprets the FELA, Which Facili-

tates Tort Recovery for Injured Railroad

Employees « 11

2. Because of the Significant Differences In-

volved, Hogue Is Inapposite to the Case at

C. The Older Workers Benefit Protection Act Does

Not Abrogate the Common Law Doctrine of

RY TEER ene ee ace 17

1. OWBPA’s Statutory Language Does Not

Preclude Ratification ‘i 8 20

ii

TABLE OF CONTENTS—Continued

2. Since Congress Did Not Indicate That

OWBPA Was Intended to Supplant the

Common Law, It Should Not Be Read as

Doing So

8. Application of the Ratification/Tender Back

Doctrine Is Consistent With the a = of

the ADEA

008090000 .———..9——— —

iii

TABLE OF AUTHORITIES

FEDERAL CASES Page

Allied Van Lines v. Oberg, No. 98-1605 (U.S.),

cert. denied, 114 8. Ct. 2104 (1994) 0.000000... 4

Anselmo v. Manufacturers Life Insurance Co., 771

CE 10

Astoria Federal Savings & Loan Association v.

Solimino, 501 U.S. 104 (1991 24

Blakeney v. Lomas Info. System, Inc., 65 F.3d 482

(5th Cir. 1995), cert. denied, 116 S. Ct. 1042

eee eee 6, 10

Blistein v. St. John’s College, 74 F.3d 1439 (4th

D . 6, 10, 21, 27

In re Boston Shipyard Corp., 886 F.2d 451 (Ist

J 90

CONRAIL v. Gottshall, 114 8. Ct. 2396 (1994) 12, 13

Cannon v. University of Chicago, 441 U.S. 677

CEE ee 25

Constant v. Continental Telegraph Co., 745 F.

e 25

Deren v. Digital Equipment Corp., 61 F.3d 1 (Ist

Cir. 1995) — 0

Di Rose v. PR Management Corp., 691 F.2d 628

(2d Cir. 1982), cert. denied, 461 U.S. 915

EEE x

Ferguson v. Runyon, 1997 U.S. App. LEXIS 12492

re xx y

Fleming v. United States Postal Service AMF

O’Hare, 27 F.3d 259 (7th Cir. 1994), cert. de-

nied, 513 U.S. 1085 (1995) 2.0000. 6, 8, 9, 13, 29

Forbus v. Sears, Roebuck & Co., 958 F.2d 1036

(11th Cir.), cert. denied, 506 U.S. 955 (1992) 4, 10,

14, 21

Gilmer v. Interstate/Johnson Lane Corp., 500 U.S.

ac eee 4, 25

Griffin v. Kraft General Foods, 62 F.3d 868 (11th

— 7. 28

Hazen Paper Co. v. Biggins, 507 U.S. 604 (1993) 4, 15-16

Hogue v. Southern R. Co., 390 U.S. 516 (1968)....7, 11-12,

14-16

iv

TABLE OF AUTHORITIES—Continued

Page

Isaacs v. Caterpillar, Inc., 765 F. Supp. 1359 (C.D.

GR . ea en 21

K Mart Corp. v. Helton, No. 96-98 (U.S.), cert.

denied, 117 S. Ct. 447 (1996) ............................... 4

Lockheed Corp. v. Spink, 116 8. Ct. 1783 (1996) 4

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

Cir. 1997), petition for cert. filed, 60 U.S.L.W.

3840 (U.S. June 9, 1997) (No. 96-1988) 4, 10, 14,

23, 28

Morta v. Korea Insurance Corp., 840 F.2d 1452

LS Ee ere ee 90

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

1993), cert. denied, 511 U.S. 1108 (1994) 4, 10, 13, 21

O’Connor v. Consolidated Coin Caterers Corp.,

1010.899090 90.————————8— 4

O’Shea v. Commercial Credit Corp., 734 F. Supp.

218 (D. Md. 1990), aff'd, 930 F.2d 358 (4th

Cir.), cert. denied, 502 U.S. 859 (19917 4, 24

PMX Industrial, Inc. v. LEP Profit Int'l, 31 F.3d

200 323 3233 ———— 8

Raczak v. Ameritech Corp., 103 F.3d 1257 (6th

Cir. 1997), petition for cert. filed, 66 U. S L. W.

3001 (U.S. June 18, 1997) (No. 96-2002) 4. 10, 14, 28

Reid v. IBM Corp., 74 FEP Cases (BNA) 332

. 17

Rogers v. Missouri Pacific R. R. Co., 352 U.S. 500

1 12-13

Sinkler v. Missouri Pacific R.R. Co., 356 U.S. 326

EE ee Se ee on ee 12, 15

Somervell v. Baxter Healthcare Corp., 1997 U.S.

Dist. LEXIS 7885 (D.D.C. June 4, 1997) 10

St. Marys Honor Ctr. v. Hicks, 113 8. Ct. 2742

Ec 16

Sutter Home Winery, Inc. v. Vintage Selections,

Ltd., 971 F.2d 401 (9th Cir. 1992) 9

Trans World Airlines, Inc. v. Thurston, 469 U.S.

een — , 4

United States v. Texarkana Trawlers, F.2d 297

(5th Cir.), cert. denied, 488 U.S. 943 (1988) 9

*

TABLE OF AUTHORITIES—Continued

Page

United States v. Texas, 507 U.S. 529 (1993) 7, 24

WCLR Radio Station v. Rengers, 486 U.S. 1020

—

AE 4

Wagner v. Nutrasweet Co., 95 F.3d 527 (7th Cir.

r 9

Wamsley v. Champlin Refining & Chemicals, 11

F.3d 534 (5th Cir. 1993), cert. denied, 115 S. Ct.

F EEE See: Ae A passim

Widener v. ARCO Oil & Gas Co., 717 F. Supp. 1211

e ee ee ee 1 24

Williams v. Phillips Petroleum Co., 23 F.3d 930

(5th Cir.), cert. denied, 513 U.S. 1019 (1994) .. 6,10

FEDERAL STATUTES

Age Discrimination in Employment Act (ADEA),

29 U.S.C. § 621 et seq. 2, 6, 10, 15-16, 24

r ...... 15, 26

r ...... 15-16

Federal Employers Liability Act (FELA),

a 3 11-13, 15-16

Z ieee = 13

45 U.S.C. § 54 1 — 1 13

45 U.S.C. § 55 ......... 1 25

Older Workers Benefit Protection Act (OWBPA),

Ee 7, 17, 19, 20, 24

IZ. ODD cccccccccescceesecescessnnees 1 22

29 U.S.C. 8 626 (f) (1) (H) (ii)

LEGISLATIVE HISTORY

134 Cong. Rec. H10,154 (daily ed. Oct. 12, 1988) 18

134 Cong. Rec. 814,509 (daily ed. Oct. 4, 1988) 18

135 Cong. Rec. 8168 (daily ed. Jan. 25, 1989) 18, 23

135 Cong. Rec. H697 (daily ed. Mar. 15, 1989) 18

136 Cong. Rec. 813,611 (daily ed. Sept. 24, 1990) 19

136 Cong. Rec. $13,808 (daily ed. Sept. 25, 1990) 22

H.R. Rep. No. 221, 101st Cong., Ist Sess. 3 (1989) 18

H.R. Rep. No. 664, 101st Cong., 2d Sess. 5 (1990) 19, 23

S. Rep. No. 79, 101st Cong., Ist Sess. 3 (1989)... 18

S. Rep. No. 263, 101st Cong., 2d Sess. 31 (1990) 18-19,

23, 25

vi

TABLE OF AUTHORITIES—Continued

MISCELLANEOUS

Glen D. Nager & Steven T. Catlett, Employees Can't

Have Their Cake and Eat It Too: Estopping Age

Discrimination Complainants Who Have Signed

Releases, 19 Employee Rel. L.J. 295 (1993)

Sutherland Stat. Const. § 50.01 at 90 (5th ed.

... c ˙

Waiver of Rights and Claims Under the Age Dis-

crimination in Employment Act (ADEA), 62

Fed. Reg. 10787 (1997) (to be codified at 29

C.F.R. pt. 1625) (proposed Mar. 10, 1997)

Page

BRIEF AMICI CURIAE OF THE

EQUAL EMPLOYMENT ADVISORY COUNCIL,

THE CHAMBER OF COMMERCE

OF THE UNITED STATES

AND THE EDISON ELECTRIC INSTITUTE

IN SUPPORT OF RESPONDENT

The Equal Employment Advisory Council (EEAC),

the Chamber of Commerce of the United States (the

Chamber), and the Edison Electric Institute (EEI)

respectfully submit this brief as amici curiae. Let-

ters of consent from both parties have been filed with

the Clerk of the Court. The brief supports the posi-

tion of Respondent Entergy Operations, Inc. before

the Court.

INTEREST OF THE AMICI CURIAE

The Equal Employment Advisory Council (EEAC)

is a nationwide association of employers organized in

1976 to promote sound approaches to the elimination

of employment discrimination. Its membership in-

cludes 300 major U.S. corporations. EEAC’s direc-

tors and officers include many of industry’s foremost

experts in the field of equal employment opportunity.

Their combined experience gives EEAC valuable in-

sight into the practical, as well as legal, issues sur-

rounding the proper interpretation and application of

fair employment laws and policies. EEAC’s members

are firmly committed to the principles of nondiscrimi-

nation and equal employment opportunity.

The United States Chamber of Commerce is the

largest federation of business companies and associa-

tions in the world. The Chamber represents an under-

lying membership of more than three million busi-

1 Counsel for EEAC, the Chamber, and EEI authored the brief

in its entirety. No person or entity, other than EEAC, the Cham-

ber, EEI, their members, or their counsel, made a monetary con-

tribution to the preparation or submission of the brief.

2

nesses and organizations of every size, in every sector

and region. An important function of the Chamber is

to represent the interests of its members in court on

employment law issues of national concern to the busi-

ness community.

Amicus Edison Electric Institute (CEE), is the

association of investor-owned electric utilities in the

United States and their industry associates world-

wide. EEI’s C.. members serve 99% of all cus-

tomers served by the investor-owned segment of the

electric utility industry. They generate about 78%

of all the electricity generated by electric utilities, and

service 76% of all ultimate customers in the nation.

EEI members, who employ hundreds of thousands of

employees, are now restructuring their companies as

competition in the provision of electricity to end-use

customers is being introduced in the states. Resolution

of the issues raised in this case will have a significant

impact on every EEI member. EEI is a frequent

advocate on behalf of its members’ interests in con-

nection with important issues of law and policy that

arise before courts, legislative bodies and regulatory

agencies.

EEAC’s members, as well as many of the Chamber’s

and EEI’s members, are all employers subject to the

Age Discrimination in Employment Act of 1967

(ADEA), 29 U.S.C. § 621 et seg. (as amended), as

well as other employment laws and regulations. As

employers, and as potential respondents to ADEA

charges and other employment related claims, these

companies are interested in encouraging the voluntary

resolution of such claims—both actual and potential

—without the costs, risks, and other burdens asso-

ciated with litigation.

When implementing workforce reductions, many em-

ployers offer special, added benefits to departing em-

ployees who agree to release legal claims they might

otherwise assert against the employer. Individuals

—

3

who voluntarily accept this option by signing general

releases receive enhanced severance benefits—e.g.,

supplemental cash payments, extended health care

coverage, additional pension benefits, and the like—

over and beyond any benefits the employer has com-

mitted to provide upon termination of their employ-

ment. In return, the employer gains relief from the

lingering uncertainties and potential liabilities it

otherwise would face until expiration of the filing

dates for all possible claims relating to the individ-

ual’s employment. Because of the significant, mutual

advantages they afford to both employees and em-

ployers, such release-for-consideration agreements are

used widely in implementing workforce reduction pro-

grams throughout the United States.

Thus, the issues presented in this case are extremely

important to the nationwide employer constituencies

that EEAC, the Chamber, and EEI represent. Peti-

tioner and her amici urge this Court to permit former

employees, who have signed releases and accepted con-

sideration in exchange, to sue their employers under

the ADEA without returning the consideration they

received. Such a rule of law would cast serious doubt

on the finality of releases of claims under the ADEA.

As a result, employers who would not offer additional

severance pay, early retirement incentives, and other

termination benefits without the protection of a re-

lease are likely to consider discontinuing such pro-

grams. Each discontinued program will harm the

vast majority of individuals who elect to receive such

benefits and have no interest in filing discrimination

charges.

Because of its interest in the application of the na-

tion’s fair employment laws, EEAC has filed briefs as

amicus curiae in a variety of cases before this Court,

the United States Courts of Appeal; and various state

supreme courts. As part of this amicus activity,

4

EEAC has filed briefs with all of the circuit courts

of appeals that have addressed this issue.“ In addi-

tion, EEAC“ and the Chamber have participated in

cases in this Court regarding the proper interpreta-

tion of the ADEA.

EEAC also served on the Equal Employment Op-

portunity Commission’s Older Workers Benefit Pro-

tection Act Negotiated Rulemaking Advisory Com-

mittee. The Committee held meetings over an eight-

month period and crafted a consensus document in

the form of a proposed rule interpreting Title II of

the OWBPA, which the Commission has published for

notice and comment. Waiver of Rights and Claims

Under the Age Discrimination in Employment Act

(ADEA), 62 Fed. Reg. 10787 (1997) (to be codified

* Raczak v. Ameritech Corp., No. 94-8033 (6th Cir.) (petition

for leave to appeal pursuant to Rule 1292(b)); Raczak v. Ameri-

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

Corp., No. 95-1082 (6th Cir.) (on petition for rehearing); Long v.

Sears, Roebuck & Co., 105 F.3d 1529 (3d Cir. 1997) ; Oberg v. Allied

Van Lines, 11 F.3d 679 (7th Cir. 1993), cert. denied, 511 U.S.

1108 (1994); Wamsley v. Champlin Ref. & Chems., 11 F.3d 534

(5th Cir. 1995), cert. denied, 115 S. Ct. 1403 (1995); Forbus v.

Sears, Roebuck & Co., 958 F.2d 1036 (11th Cir.), reh’g denied

(Iith Cir. June 22, 1992), cert. denied, 506 U.S. 955 (1992);

O’Shea v. Commercial Credit Corp., 930 F.2d 358 (4th Cir.), cert.

denied, 502 U.S. 859 (1991).

Allied Van Lines v. Oberg, No. 93-1605 (U.S.), cert. denied, 114

S. Ct. 2104 (1994) (application of ratification/tender back princi-

ples to ADEA releases); K Mart Corp. v. Helton, No. 96-98 (U.S.),

cert. denied, 117 S. Ct. 447 (1996) (representative action proce-

dure); O’Connor v. Consolidated Coin Caterers Corp., 116 S. Ct.

1307 (1996) (comparator within protected class); Lockheed Corp.

v. Spink, 116 S. Ct. 1783 (1996) (pension accrual); Hazen Paper

Co. v. Biggins, 113 S. Ct. 1701 (1993) (definition of “willful” vio-

lation); Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20

1991) (arbitrability).

*K Mart Corp. v. Helton, No. 96-98 (U.S.), cert. denied, 117

S. Ct. 447 (1996); Hazen Paper Co. v. Biggins, 113 S. Ct. 1701

(1993); Trans World Airlines, Inc. v. Thurston, 469 U.S. 111

(1983) (standard for computing liquidated damages); WCLR

Radio Station v. Rengers, 486 U.S. 1020 (1988) (damages).

5

at 29 C. F. R. pt. 1625) (proposed Mar. 10, 1997).°

Thus, EEAC, the Chamber, and EEI have an in-

terest in, and a familiarity with, the issues and policy

concerns presented to the Court in this case. Indeed,

because of their experience in these matters, EEAC,

the Chamber, and EEI are well situated to brief the

Court on the impfications of the issues beyond the

immediate concerns of the parties to the case.

STATEMENT OF THE CASE

Petitioner Dolores Oubre is a former employee of

Respondent Entergy Operations, Inc. (Entergy).

J. A. A-17.“ After receiving a low performance rank-

ing for 1994, she and others with similarly low rank-

ings were offered two options. Jd. One choice was to

attempt to improve their performance ratings. J.A.

A-18. The other was to take a voluntary severance

package in exchange for a release of claims. Id.

The release, which is set forth in full at J.A.

A-18-19 and J.A. A-61-62, covered “any and all

claims, demands, damages, actions, or causes of action

occurring on or before the date of the execution of

this Release . that I may have against Entergy

Operations, Ine. . . which in any way relate to my

employment by or my separation from the company.”

J.A. A-61. Oubre understood the terms, and indeed

consulted two attorneys about the release. J.A. A-19.

She accepted the package and signed the release. J.A.

A-18. Oubre received everything due to her, and has

not returned any money to Entergy. J.A. A-19.

Thereafter, Oubre sued Entergy, claiming that she

was constructively discharged in violation of the

ADEA. J.A. A-4-8. Oubre contended that the release

she had signed was unenforceable because it did not

5 The Committee agreed not to address in the proposed rule the

issue presented to the Court in this case.

6 J.A. refers to the Joint Appendix filed by the parties.

6

meet the requirements of the Older Workers Benefit

Protection Act, 29 U.S.C. § 626(f). J.A. A-19.

The district court granted summary judgment in

favor of Entergy. Based on the Fifth Circuit’s deci-

sions in Wamsley v. Champlin Refining & Chemicals,

11 F.3d 534 (5th Cir. 1993), cert. denied, 115 S. Ct.

1403 (1995), and Blakeney v. Lomas Information

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

denied, 116 S. Ct. 1042 (1996), the district court con-

cluded that Oubre had ratified an otherwise voidable

waiver by retaining the benefits. J.A. A-20. The

Fifth Circuit affirmed. J.A. A-23. Oubre petitioned

this Court for a writ of certiorari, which was granted

as to the third question presented. 114 S. Ct. 1466

(1997).

SUMMARY OF ARGUMENT

“A party may not rescind a contract without re-

turning to the other party any consideration received

under it.” Fleming v. United States Postal Serv.

AMF O'Hare, 27 F.3d 259, 260 (7th Cir. 1994),

cert. denied, 513 U.S. 1085 (1995). Retention of the

consideration paid results in ratification of an other-

wise voidable contract, including a contract to release

statutory claims arising out of the employment rela-

tionship. E.., Deren v. Digital Equip. Corp., 61 F.3d

1 (Ist Cir. 1995) ; Williams v. Phillips Petroleum Co.,

23 F.3d 930, 937 (5th Cir.), cert. denied, 513 U.S.

1019 (1994).

The Fifth Circuit below, as well as the Fourth

Circuit, correctly apply these basic principles to pre-

clude a former employee from bringing suit under

the Age Discrimination in Employment Act, 29 U.S.C.

§ 621 et seg., when that person has executed a release

of ADEA claims and retained the consideration paid

for the release. Wamsley v. Champlin Refining &

Chems., 11 F.3d 534 (5th Cir. 1993), cert. denied,

115 S. Ct. 1403 (1995) ; Blistein v. St. John’s College,

— —

7

74 F.3d 1439, 1466 (4th Cir. 1996). This Court’s

decision in Hogue v. Southern R. Co., 390 U.S. 516

(1968), which dealt with very different circumstances

under a very different statute, does not apply.

Moreover, the waiver provisions of the Older Work-

ers Benefit Protection Act, 29 U.S.C. § 626(f)

(OWBPA), which set standards for an irrevocable

release, do not abrogate the common law doctrine of

ratification. To challenge a release, even one that

arguably does not meet OWBPA’s minimum require-

ments, a prospective plaintiff still must tender back

the consideration.

Nothing in the statutory language of OWBPA

allows a plaintiff to challenge a release as invalid

while keeping the consideration received for signing

the release. The legislative history likewise is silent.

Since statutes in derogation of the common law must

“speak” to the question, United States v. Texas, 507

U.S. 529, 534 (1993), OWBPA cannot be read to

supplant the common law doctrine of ratification.

Moreover, application of the ratification/tender back

doctrine is consistent with the purposes of the ADEA

and OWBPA, as well as with sound public policy.

Precluding ratification would substantially undermine

an employer’s reason for offering consideration in

exchange for a release. Accordingly, such a rule

would be likely to reduce substantially the amount

employers would be willing to pay for releases.

8

ARGUMENT

AN ADEA CLAIMANT WHO FAILS TO TENDER

BACK CONSIDERATION PAID FOR A RELEASE

THAT DOES NOT MEET THE OWBPA REQUIRE-

MENTS RATIFIES A VOIDABLE CONTRACT AND

CANNOT CHALLENGE ITS VALIDITY

A. Under Established Principles of Contract Law, Which

Apply to Contracts for the Release of Employment

Discrimination Claims, an Individual Cannot Both

Repudiate the Contract and Retain the Consideration

“The principle that a release can be rescinded only

upon a tender of any consideration received is not a

peculiarity . . .; it is a general principle of contract

law, and would surely be a component of any federal

common law of releases.” Fleming v. United States

Postal Serv. AMF O’Hare, 27 F.3d 259, 260-61 (7th

Cir. 1994), cert. denied, 513 U.S. 1085 (1995) (cita-

tions omitted). A release or waiver of claims is a

contract. PMX Jndus., Inc. v. LEP Profit Int'l, 31

F.3d 701, 703 (8th Cir. 1994). An agreement to

waive or release claims is voidable when it has been

procured by circumstances that would make an ordi-

nary contract voidable (i. e., misrepresentation, duress

or undue influence). DiRose v. PK Management

Corp., 691 F.2d 628, 633 (2d Cir. 1982), cert. denied,

461 U.S. 915 (1983) (holding that contract induced

by duress is voidable, not void).

The avoidance of obligations under a voidable con-

tract, however, is not automatic. The party seeking

to avoid the contract must do two things: (1) act

quickly to rescind the contract once the circumstances

making the agreement voidable are discovered (e. g.,

misrepresentation), or removed (e.g., duress); and

(2) return the consideration received for the contract.

An otherwise voidable agreement—including a release

of employment claims—may become a binding con-

9

tract by conduct that is inconsistent with an intent

to rescind the agreement. Sutter Home Winery, Inc.

v. Vintage Selections, Ltd., 971 F.2d 401, 409 n.7

(9th Cir. 1992) (after accepting the benefits of an

agreement for four years, party may no longer avoid

the agreement based on claimed duress). Rescission

does not simply terminate a contract after a particu-

lar date; it “unmakes” the contract so that the parties

return as quickly and as nearly as possible to- their

respective pre-contract conditions. See, United States

v. Texarkana Trawlers, 846 F.2d 297, 304 (5th Cir.),

cert. denied, 488 U.S. 943 (1988) (party seeking

rescission of contract must return proceeds); Jn re

Boston Shipyard Corp., 886 F.2d 451, 455 (1st Cir.

1989) (acquiescing in a contract after the oppor-

tunity to avoid it, or failing to return benefits con-

ferred under a contract, results in ratification of a

voidable contract even if agreement was obtained

under duress); Morta v. Korea Ins. Corp., 840 F.2d

1452, 1455 (9th Cir. 1988) (plaintiff was obligated

to return the money he received for signing the re-

lease as a prerequisite to rescission ).

Courts apply this basic contract principle to re-

leases of employment claims. See, e.g., Deren v. Digi-

tal Equip. Corp., 61 F.3d 1, 2 (1st Cir. 1995) (hold-

ing that plaintiffs’ ERISA suit was barred under a

contract waiving all claims, because plaintiffs’ delay

between accepting severance benefits and bringing

suit ratified the release contract notwithstanding the

allegedly coercive terms under which plaintiffs origi-

nally signed the agreement); Fleming, 27 F.3d at

260-61 (Title VII settlement agreement could not be

rescinded without tendering back the consideration

received); Ferguson v. Runyon, 1997 U.S. App.

LEXIS 12492, *4 (7th Cir. May 22, 1997) (Title VII

suit could not be brought without returning to em-

ployer consideration received for settlement); Wag-

10

ner v. Nutrasweet Co., 95 F.3d 527, 532 (7th Cir.

1996) (Title VII and Equal Pay Act claims require

tender back where consideration for release sur-

passed payment to which employee otherwise was

entitled); Williams v. Phillips Petroleum Co., 23 F.3d

930, 937 (5th Cir.), cert. denied, 513 U.S. 1019

(1994) (plaintiffs who did not return the consider-

ation for their releases thereby ratified otherwise

voidable releases and could not pursue employment

claims under the WARN Act even assuming the re-

leases were not knowing and voluntary); Anselmo v.

Manufacturers Life Ins. Co., 771 F.2d 417, 420 (8th

Cir. 1985) (release of liability under employment

compensation contract was ratified by acquiescence

and accepting the severance benefits paid in ex-

change) ; Somervell v. Baxter Healthcare Corp., 1997

U.S. Dist. LEXIS 7885, *14 (D.D.C. June 4, 1997)

(barring suit under the ADA because plaintiff rati-

fied unsigned release by retaining consideration).

The Fifth Circuit below, as well as the Fourth

Circuit, correctly apply this rule to cases brought

under the Age Discrimination in Employment Act,

29 U.S.C. § 621 et seg. Wamsley v. Champlin Ref.

& Chems., 11 F.3d 534 (5th Cir. 1993), cert. denied,

115 S. Ct. 1403 (1995) ; Blakeney v. Lomas Info. Sys.,

Inc., 65 F.3d 482 (5th Cir. 1995), cert. denied, 116

S. Ct. 1042 (1996); Blistein v. St. John’s College,

74 F.3d 1439, 1466 (4th Cir. 1996). The Third,

Sixth, Seventh, and Eleventh Circuits do not. Long

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

1997), petition for cert. filed, 60 U.S.L.W. 3840

(June 9, 1997) (No. 96-1988); Raczak v. Ameritech

Corp., 103 F.3d 1257 (6th Cir. 1997), petition for

cert. filed, (June 18, 1997) (No. 96-2002); Oberg v.

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

denied, 511 U.S. 1108 (1994); Forbus v. Sears, Roe-

11

buck & Co., 958 F.2d 1036 (11th Cir.), cert. denied,

506 U.S. 955 (1992).

For the reasons set forth below, the view taken by

the Fourth and Fifth Circuits is better.

B. This Court’s Decision in Hogue v. Southern Railway

Co. Is Not Applicable to Employment Discrimination

Cases

Petitioner and her amici urge this Court to apply

Hogue v. Southern R. Co., 390 U.S. 516 (1968), in

which the Court declined to require a tender back in

the context of a release of claims under the Federal

Employers Liability Act, 45 U.S.C. §51 (FELA), to

reach a similar result under the ADEA. As the Fifth

Circuit properly concluded in Wamsley v. Champlin

Ref. & Chems., 11 F.3d 534 (5th Cir. 1993), cert.

denied, 115 S. Ct. 1403 (1995), Hogue addressed a

different issue under significantly different circum-

stances and thus is inapposite to the issue presently

before the Court.

I. Hogue /nterprets the FELA, Which Facilitates

Tort Recovery for Injured Railroad Employees

The FELA claim in Hogue involved a worker who

injured his knee while working for the defendant

railroad. Relying on the railroad’s doctor’s assur-

ances that his injury was only a bruise, the worker

signed a release in exchange for $105. Later, after

two operations, including the removal of his kneecap,

he sought to reopen his claim and seek additional

compensation without returning the original $105.

When the railroad sought to enforce the release,

this Court concluded that a tender back is . not

requisite when it is pleaded that the carrier and the

employee entered into the release from mutual mis-

take as to the nature and extent of the employee's

12

injuries.” Hogue, 390 U.S. at 517 (emphasis

added).

The Court's ruling in Hogue is not surprising, given

the purposes of the FELA. The FELA provides a

cause of action closely approximating workers com-

pensation for railroad employees injured on the job.“

The FELA “was a response to the special needs of

railroad workers who are daily exposed to the risks

inherent in railroad work and are helpless to provide

adequately for their own safety.” Sinkler v. Missouri

Pac. R.R. Co., 356 U.S. 326, 329 (1958). As the

Court has explained, “[t]he cost of human injury,

an inescapable expense of railroading, must be borne

by someone, and the FELA seeks to adjust that ex-

pense equitably between the worker and the carrier.”

Id.

The FELA effectuates this purpose by providing

a remedy for an injured worker in virtually any situ-

ation where the employer’s negligence was even re-

motely a contributing cause of the injury.’

Under this statute the test of a jury case is

simply whether the proofs justify with reason

the conclusion that employer negligence played

Instead, the Court directed, the original amount should be de-

ducted from the ultimate award. Hogue, 390 U.S. at 518.

* The FELA is not a true “workers compensation” scheme im-

posing liability without fault. CONRAIL v. Gottshall, 114 S. Ct.

2396, 2404 (1994); Rogers v. Missouri Pac. R.R. Co., 352 U.S. 500,

509 (1957). Nevertheless, as discussed below, a “relaxed standard

of causation applies.” CONRAIL, 114 S. Ct. at 2404.

* The operative provision, 45 U.S.C. § 51 states:

Every common carrier by railroad while engaging in com-

merce . . shall be liable in damages to any person suffering

injury while he is employed by such carrier in such commerce

for such injury or death resulting in whole or in part from

the negligence of any of the officers, agents, or employees of

such carrier, or by reason of any defect or insufficiency, due

to its negligence, in its cars, engines, appliances, machinery,

track, roadbed, work, boats, wharves or other equipment.

13

any part, even the slightest, in producing the

injury or death for which damages are sought.

It does not matter that, from the evidence, the

jury may also with reason, on grounds of prob-

ability, attribute the result to other causes, in-

cluding the employee’s contributory negligence.

Judicial appraisal of the proofs to determine

whether a jury question is presented is narrowly

limited to the single inquiry whether, with reason,

the conclusion may be drawn that negligence of

the employer played any part at all in the injury

or death.

Rogers v. Missouri Pac. R.R. Co., 352 U.S. 500, 506-

07 (1957) (citations omitted) (emphasis added). See

also, CONRAIL v. Gottshall, 114 S. Ct. 2396, 2404

(1994) (quoting Rogers). The traditional common

law defenses of contributory negligence, assumption

of the risk, and the fellow servant doctrine are un-

available under the FELA.” Instead, t] he burden

of the employee is met, and the obligation of the

employer to pay damages arises, when there is proof,

even though entirely circumstantial, from which the

jury may with reason make that inference [that neg-

ligence of the employer played a small part in the

injury].” Rogers, 352 U.S. at 508 (emphasis added).

Thus, liability for a FELA claim is significantly less

difficult to establish than in other fault-based

litigation.

2. Because of the Significant Differences Involved,

Hogue Js Inapposite to the Case at Bar

The Seventh Circuit in Oberg v. Allied Van Lines,

11 F.3d 679 (7th Cir. 1993), cert. denied, 114 S. Ct.

10 45 U.S.C. §53 (contributory negligence); 45 U.S.C. § 54 (as-

sumption of the risk); 45 U.S.C. § 51 (fellow servant doctrine).

™ Notably, another panel of the Seventh Circuit has questioned

Oberg, stating [t Ihe idea behind these cases . . is a little obscure

to us.” Fleming v. United States Postal Serv. AMF O'Hare, 27

F.3d 259, 261 (7th Cir. 1994).

14

2104 (1994), and the Eleventh Circuit in Forbus v.

Sears, Roebuck & Co., 958 F.2d 1036 (11th Cir.),

cert. denied, 506 U.S. 955 (1992), as well as the

panel majorities in Raczak v. Ameritech Corp., 103

F.3d 1257 (6th Cir. 1997), petition for cert. filed

(June 18, 1997) (No. 96-2002), and Long v. Sears,

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

tion for cert. filed, 65 U.S.L.W. 3840 (June 9, 1997)

(No. 96-1988), all rely on the Hogue holding to con-

clude that employees who have failed to tender back

consideration received for signing a release may none-

theless sue their employers for age discrimination

under the ADEA. Because the actual issues, as well

as the two statutes in question, have virtually nothing

in common, the decision in Hogue is inapplicable to

the situation presented here. Wamsley v. Champlin

Ref. & Chems., 11 F.3d 534, 540-542 (5th Cir. 1993),

cert. denied, 115 S. Ct. 1403 (1995) ; Raczak v. Ameri-

tech Corp., 103 F.3d 1257, 1266-68 (Boggs, J., dis-

senting) ; Long v. Sears, Roebuck & Co., 105 F.3d 1529,

1549 (3d Cir. 1997) (Greenberg, J., dissenting).

In Hogue, the existence of liability was not at issue.

“The fact of the injury was never in doubt.” Raczak,

103 F.3d at 1267 (Boggs, J., dissenting). Given the

“mutual mistake” as to the nature and extent of the

injuries, the issue to be resolved was the extent of

Southern Railway’s liability beyond the first $105.

390 U.S. at 516. Because Hogue was entitled to the

$105 in any event, there was no reason to require

that he tender it back. Indeed, the employer in Hogue

“confessed error” at ever having made the argument,

and did not file a brief or p- esent argument on the

“tender back“ issue before this Court. Id.

In ADEA cases, there is substantial controversy

over the legitimacy of the underlying claim. For

example, in contrast to Hogue, there is a real question

15

as to whether Respondent Entergy discriminated

against Petitioner Oubre on the basis of age in the

instant case, and thus whether she suffered an injury

at all due to age discrimination, or would be entitled

to any compensation from Entergy. Unlike Hogue,

the money initially paid to Petitioner was not in

satisfaction of any acknowledged liability, but rather,

consideration given in exchange for her agreement

to waive and release all claims.

As the Fifth Circuit pointed out in Wamsley, the

Seventh Circuit in Oberg, in adopting the reasoning

of the Eleventh Circuit in Forbus, followed Hogue

without considering the differences between the FELA

and the ADEA. 11 F.3d at 541 n.13. Instead, the

Seventh Circuit relied solely on its perception that

both are “remedial!” statutes and concluded that they

thus should be treated alike.

Unlike the “resource allocation” approach taken

by the FELA, however, the ADEA provides a remedy

only where an employer has discriminated on the

basis of age. 29 U.S.C. § 623 (a); Hazen Paper Co. v.

Biggins, 507 U.S. 604, 610 (1993) (“In a disparate

treatment case, liability depends on whether the pro-

tected trait (under the ADEA, age) actually moti-

vated the employer’s decision.”). The FELA was

intended to adjust [] the losses and injuries insepa-

rable from industry and commerce to the strength of

those who in the nature of the case ought to share

the burden,” S. Rep. No. 460, 60th Cong., Ist Sess. 3,

quoted in Sinkler, 356 U.S. at 330 (1958). By con-

trast, the ADEA’s prohibitions are intended “to pro-

mote employment of older persons based on their

ability rather than age; to prohibit arbitrary age

discrimination in employment; [and] to help employ-

ers and workers find ways of meeting problems aris-

ing from the impact of age on employment.” 29

U.S.C. § 621(b) (emphasis added).

16

Moreover, to prevail on an ADEA claim for dis-

criminatory termination, for example, the plaintiff

must prove that he was discharged “because of” his

age. 29 U.S.C. § 623 (a) (1). Unlike the FELA—

where the plaintiff need only show that the employer's

conduct played only the “slightest” part in the in-

jury—the plaintiff in an ADEA case must prove

“that the employee’s protected trait actually played

a role in [the employer’s decision making process]

and had a determinative influence on the outcome.”

Hazen Paper Co., 507 U.S. at 610. Cf. St. Mary’s

Honor Ctr. v. Hicks, 113 S. Ct. 2742, 2751 (1993)

([Wie have no authority to impose liability upon

an employer for alleged discriminatory employment

practices unless an appropriate factfinder determines,

according to proper procedures, that the employer has

unlawfully discriminated.”) (emphasis in original).

Thus, while the FELA imposes liability any time

the employer’s negligence played the slightest part in

causing injury, the ADEA imposes liability only

where the plaintiff proves not only that the employer’s

conduct affected the plaintiff, as under the FELA,

but also that the plaintiff’s age had a determinative

role in the employer’s action. Accordingly, as a prac-

tical matter, recovery by a railroad employee who is

injured on the job is far more probable than by an

employee who claims that an adverse employment

action was based on age.

Thus, Hogue is decidedly inapposite to the case

presently before this Court. It does not represent

“federal common law“ but rather is an interpretation

of the specific terms of the FELA. As the Fifth

Circuit stated in Wamsley:

What Congress did under the FELA was some-

thing it has not yet done under the ADEA, that

is, to legislatively facilitate an employee/claim-

ant’s recovery. Until Congress demonstrates its

17

desire to promote “liberal,” “unburdened and ex-

peditious recoveries” to claimants under the

ADEA, Grillet will remain sound authority and

unaffected by Hogue.

11 F.3d at 541-42. Indeed, one federal judge aptly

has noted, “it seems to me far-fetched to infer that

the Supreme Court abrogated the ratification doctrine

and tender back requirement for all federal remedial

statutes in all cases through the medium of a three-

paragraph per curiam opinion like Hogue.” Reid v.

IBM Corp., 74 FEP Cases (BNA) 332, 344 (S.D.N.Y.

1997).

The better view is that Hogue does not supplant

the general common law doctrine of ratification/

tender back and should not be applied in the circum-

stances presented in this case.

C. The Older Workers Benefit Protection Act Does Not

Abrogate the Common Law Doctrine of Ratification

As the Fourth and Fifth Circuit Courts of Appeals

have held correctly, the outcome of a case in which

a potential plaintiff has executed a release and re-

tained the consideration should not differ where the

case involves application of the waiver provisions of

the Older Workers Benefit Protection Act, 29 U.S.C.

§ 626(f) (OWBPA). While Section 201 of Title II

of the OWBPA sets standards for a non-voidable,

“knowing and voluntary” waiver of claims under the

ADEA, it does not displace the common law rule of

ratification of a voidable agreement.

OWBPA was compromise legislation developed

after years of discussion and numerous revisions.

In 1988, during the waning days of the 100th Con-

gress, legislation was introduced in both Houses to

mandate supervision of ADEA waivers by the Equal

Employment Opportunity Commission (EEOC), the

federal agency with ADEA enforcement authority.

Under both bills, every release covering age discrimi-

18

nation claims would have had to be supervised by the

EEOC unless the individual already had asserted a

“bona fide claim” of age discrimination against the

employer. S. 2856, 100th Cong., 2d Sess., 134 Cong.

Rec. $14,509 (daily ed. Oct. 4, 1988); H.R. 5500,

100th Cong., 2d Sess., 134 Cong. Rec. H10,154 (daily

ed. Oct. 12, 1988). Congress adjourned without act-

ing on either bill.

When the 101st Congress convened in 1989, ADEA

waiver bills again were introduced in both Houses,

this time differing slightly from their predecessors

and from each other. The Senate bill, S. 54, retained

the EEOC supervision requirement. S. 54, 101st

Cong., Ist Sess., 135 Cong. Rec. 8168 (daily ed. Jan.

25, 1989). The House counterpart, H.R. 1432, would

have required instead that an ADEA release be ap-

proved by a court before signature. H.R. 1432, 101st

Cong., Ist Sess., 135 Cong. Rec. H697 (daily ed.

Mar. 15, 1989). As reported out of committee in

1989, the Senate version still required EEOC super-

vision where no “bona fide” claim had been made.

S. Rep. No. 79, 101st Cong., Ist Sess. 3 (1989). The

House version, on the other hand, would have per-

mitted no waivers other than in settlement of a “bona

fide claim.” H.R. Rep. No. 221, 101st Cong., Ist

Sess. 3 (1989). No further action was taken.

When Congress reconvened in 1990, rather than

pursuing the previous bill language, the Senate Com-

mittee on Labor and Human Resources decided to

add waiver provisions to S. 1511, a pending bill to

amend the ADEA with respect to employee benefits.

S. Rep. No. 263, 101st Cong., 2d Sess. 31 (1990).

As the Committee Report on that legislation explains,

the new waiver language “represents a change from

the approach taken in the Waiver Protection Act

(S. 54) that was reported out of the Committee last

year.” Id. at 31.

19

Indeed, the new waiver language added to S. 1511,

styled “Title II—Waiver of Rights or Claims,” pro-

vided a significantly different set of standards for

irrevocable waivers of ADEA claims than did its

predecessor bills. Most importantly, the bill elimi-

nated the requirement for EEOC supervision and

assertion of a “bona fide claim.” In their place was

an entirely new mandate involving a considerably

different set of requirements.”

In April 1990, the House Education and Labor

Committee met to consider H.R. 3200, the House

companion bill to S. 1511. There, the 1989 House

waiver bill, H.R. 1432, was added to the Committee

bill. H.R. Rep. No. 664, 101st Cong., 2d Sess. 5

(1990). Thus the House bill lacked the newer modi-

fications added b by the Senate Labor Committee.”

In the fall of 1990, the Senate passed S. 1511,

containing the waiver standards as modified. 136

Cong. Rec. $13,611 (daily ed. Sept. 24, 1990). Shortly

thereafter, the House passed S. 1511 in-the same

form as it had passed the Senate. That legislation

became the Older Workers Benefit Protection Act.

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

To summarize, OWPBA’s waiver provisions began

as a proposal to mandate government supervision of

private agreements, and evolved into a list of mini-

mum requirements for making such agreements irre-

vocable. As discussed below, however, nothing in the

statutory language suggests that OWPBA allows an

12 For this reason, legislative history of prior versions is of little

use in interpreting the final bill. Although the Senate Committee on

Labor and Human Resources incorporated by reference the “need

for the legislation” from a previous report, it did so only as to that

section of the report, and only to the extent that it was consistent

with the current version. S. Rep. No. 263, 2 2d Sess.

15 (1990).

18 Accordingly, none of the House proceedings other than final

debate and passage are helpful legislative history for the bill.

20

individual who has signed a_ potentially revocable

release to keep the consideration while challenging the

release.

1. OWBPA’s Statutory Language Does Not Preclude

Ratification

Section 201 of the Older Workers Benefit Protection

Act (OWPBA), Pub. L. No. 101-433 (Oct. 16, 1990),

29 U.S.C. § 626 (f), provides that: ö

An individual may not waive any right or elaim

under this chapter unless the waiver is knowing

and voluntary... [A] waiver may not be con-

sidered knowing and voluntary unless at a mini-

mum [it meets the enumerated requirements].

Id. The basic prerequisites are: (1) an understand-

able written agreement; (2) with a direct reference

to the ADEA; (3) that operates only retroactively;

(4) in exchange for consideration. In addition the

individual must be given (5) written advice to con-

sult an attorney; (6) twenty-one days to make the

decision; and (7) a seven day revocation period. 29

U.S.C. § 626 (f) (1). In addition, where the waiver

is “requested in connection with an exit incentive or

other employment termination program offered to a

group or class of employees,” each individual must

be afforded forty-five days to make a decision, and

must be given substantial information about the pro-

gram, eligibility requirements, and the individuals

who may and may not be participating. Id.

Although the OWBPA contains a number of spe-

cific requirements, neither its language nor its history

state that the employee may set aside the release and

keep the consideration. [ Neither the language nor

the purpose of the OWBPA indicates a congressional

desire to deprive an employee of the ability to ratify

a waiver that fails to meet the requirements of the

OWBPA.” Wamsley, 11 F.3d at 539-40. If anything,

the language of OWBPA more likely suggests that

21

noncomplying waivers are merely voidable, at the

option of the individual, not void ab initio. Blistein v.

St. John’s College, 74 F.3d 1439, 1466 (4th Cir.

1996); Wamsley, 11 F.3d at 539. As the Fourth

Circuit explained:

From Congress’ reliance upon the terms “know-

ing” and “voluntary,” which parallel the com-

mon law concepts of fraud, duress and mistake,

it is apparent that Congress was defining only

those circumstances in which a contract would

be voidable, not when it would be void. See

S. Rep. No. 263 at 31-32, reprinted in 1990 U.S.

Code Cong. & Admin. News at 1509, 1537 (re-

ferring to “the absence of fraud, duress, coercion,

or mistake of material fact” in discussion of the

‘knowing and voluntary’ issue). For, at com-

mon law, fraud, duress and mistake did not void

a contract, but rather, only rendered that con-

tract voidable. Wamsley, 11 F.3d at 538 (citing

Restatement (Second) of Contracts § 7 emt. b).

Blistein, 74 F.3d at 1466.

The Seventh Cireuit, in Oberg v. Allied Van Lines,

11 F.3d 679 (7th Cir. 1993), cert. denied, 114 S. Ct.

2104 (1994), incorrectly viewed OWBPA’s “may not

waive” language to mean that releases that did not

meet the minimum OWBPA standards were void and

incapable of being ratified under any circumstances.

11 F.3d at 683."

The EEOC’s proposed regulations interpreting the OWBPA

likewise reflect this point. The proposal provides, “Other facts and

circumstances bear on the question of whether the waiver is know-

ing and voluntary, as, for example, if there is a material mistake,

omission, or misstatement in the information furnished by the

employer to an employee in connection with the waiver.” 62 Fed.

Reg. 10787, 10790 (1997).

10 Inexplicably, the Seventh Circuit relied on Forbus v. Sears,

Roebuck & Co., 958 F.2d 1036 (11th Cir.), cert. denied, 113 8. Ct.

412 (1992), and Isaacs v. Caterpillar, Inc., 765 F. Supp. 1359 (C.D.

III. 1991), for this proposition. Both of those cases arose prior to

22

In fact, a clarification given on the Senate floor by

the bill’s sponsors shortly after passage suggests that

Congress did intend to give individuals the latitude

to forego the Act’s specific requirements if they choose

to do so. Section 201 (f) (1) (F), one of the specific

requirements for a “knowing and voluntary waiver,

requires that an indivilual be given either 21 or

45 days to consider the agreement, depending upon

the type of program involved. 29 U.S.C. § 626(f)

(1)(F). A colloquy between Senator Metzenbaum,

the bill’s chief Senate sponsor, and Senator Hatch

indicates that the Senators intended to allow indi-

viduals to waive the Act’s protections and take less

than the minimum stated time to sign. Senator Hatch

asked whether the minimum time periods could be

shortened at the individual’s option. Senator Metzen-

baum responded:

n employee may determine that he

= — a wish to wait the full 21 or 45

days, and may desire to enter into the agree-

ment prior to that time. A shorter period of time

is permissible as long as the employee 8 decision

to accept such shorter period of time is knowing

and voluntary.

136 Cong. Rec. 813,808 (daily ed. Sept. 25, 1990)

(statement of Sen. Metzenbaum). This colloquy

demonstrates that Congress intended for individuals

to be able to waive the minimum requirements if they

so desire.

Thus, nothing in either the language or the legis-

lative history of OWBPA precludes application of

the doctrine of ratification.”

pastage of the OWBPA, however, and neither case addresses the

“may not waive” language. oe

10 Intriguingly, the Third Circuit majority in Long and -

ernment in its brief to the Court in this case attempt to construct

a legislative basis for their position by mischaracterizing a letter

}

23

2. Since Congress Did Not Indicate That OWBPA

Was Intended to Supplant the Common Law, It

Should Not Be Read as Doing So

Since neither OWBPA nor its legislative history

addresses the issue of ratification, it is presumed

that Congress intended the common law doctrine to

submitted to Congress by a major corporation while OWBPA was

under consideration. Long, 105 F.3d at 1540 n. 19; Brief of the

United States and the Equal Employment Opportunity Commission

(hereinafter EEOC Brief) at 24. The EEOC brief contends that

“it was understood that the OWBPA would permit an employee who

signed an invalid waiver to pursue his or her ADEA claim while

retaining the separation benefits paid under the waiver.” The

agency bases its conclusion on a letter from IBM to the Senate

Labor Subcommittee, quoted in minority views to two Congressional

Committee reports. H.R. Rep. No. 664, 101st Cong., 2d Sess. 87

(1990) (dissenting views); S. Rep. No. 263, 101st Cong., 2d Sess.

64 (1990) (minority view). The EEOC brief summarizes the IBM

letter thus: “At least one corporation raised the concern that it

would have to bear the high costs of litigating ADEA claims even

where it had paid significgnt consideration for releases as part of a

departure program.” EEOC Brief at 24.

In reality, IBM was responding to S. 54, a very early waiver bill,

that would have forbidden ony waiver of ADEA claims unless it

was either in settlement of a “bona fide claim” of age discrimina-

tion or supervised by the EEOC. 135 Cong. Rec. 8168 (daily ed.

Jan. 25, 1989). Expressing concern that the waiver bill would cause

employers to eliminate or reduce programs offering additional bene-

fits to departing workers, the Committee reports accurately quote

IBM as saying,

IBM considers the right to require an enforceable release of

all employment-based claims in exchange for the significant

consideration given as part of such programs an important one.

There is reason an employer should be expected to make

these signi t payouts and then have to bear the high costs

of litigating ADEA claims with the recipients.

H.R. Rep. 664 at 87; S. Rep. 263 at 64 (quoting Letter of J.G.

Parkel, IBM Corp., to Hon. Howard M. Metzenbaum, Chairman,

Sen. Lab. Subcomm., Mar. 21, 1989, reprinted in Waivers Under the

Age Discrimination in Employment Act: Joint Hearing Before the

Select Comm. on Aging and the Subcomm. on Employment Oppor-

tunities of the House Comm. on Educ. and Lab., 101st Cong., Ist

Sess. 142 (1989)). Nothing in the letter suggests that IBM had

any intention of both making significant payouts in exchange for a

release and still having to litigate with the recipients.

24

stand. It is a basic tenet of statutory construction

that “[a]bsent an indication that the legislature in-

tends a statute to supplant common law, the courts

should not give it that effect.” Sutherland Stat. Const.

5 50.01 at 90 (5th ed. 1992). As this Court has

noted :

longstanding is the principle that “([s]tatutes

which invade the common law. .. are to be read

with a presumption favoring the retention of

long-established and familiar principles, except

when a statutory purpose to the contrary is evi-

dent.” . . In such cases, Congress does not write

upon a clean slate. . . . In order to abrogate a

common law principle, the statute must “speak

directly” to the question addressed by the com-

mon law.

United States v. Texas, 507 U.S. 529, 534 (1993)

(citations omitted). Accord, Astoria Fed. Sav. &

Loan Ass’n v. Solimino, 501 U.S. 104, 108 (1991)

(“where a common-law principle is well established

. . . the courts may take it as given that Congress

has legislated with an expectation that the principle

will apply except when a statutory purpose to the

contrary is evident.”). The “may not waive” lan-

guage, the only words that even arguably touch on

this issue, falls far short of the standard established

by this Court in United States v. Texas for statutory

abrogation of a common law principle. Since the

OWBPA does nothing of the sort, the common law

rule applies.

This conclusion is supported further by the fact

that the only published decisions addressing the

tender back issue in the ADEA context when the

OWBPA was passed applied the ratification doctrine.

O’Shea v. Commercial Credit Corp., 734 F. Supp. 218

(D. Md. 1990), aff'd, 980 F.2d 358 (4th Cir.), cert.

denied, 502 U.S. 859 (1991); Widener v. ARCO Oil

& Gas Co., 717 F. Supp. 1211 (N.D. Tex. 1989);

25

Constant v. Continental Tel. Co., 745 F. Supp. 1874

(C.D. Ill. 1990). Since Congress did not address the

ratification/tender back doctrine directly, it can be

presumed that Congress knew of this precedent and

allowed it to stand. Cf. Cannon v. University of

Chicago, 441 U.S. 677, 696-97 (1979). Indeed, where

Congress intended to adopt a standard different from

that applied in case law on a particular issue, it noted

the case and expressed its disapproval. E. g., S. Rep.

No. 263, 101st Cong. 2d Sess. 32 (1990).

The FELA amply demonstrates how Congress does

address this issue when it chooses to do so. The

FELA explicitly provides that any contract seeking

to limit an employer’s FELA liability is void, but

allows a setoff for money previously paid by the em-

ployer. 45 U.S.C. § 55.° The ADEA contains no such

provision. Had Congress wanted to include language

in OWBPA declaring void and incapable of ratifica-

tion a release that does not meet all of the statutory

requirements, it clearly could have done so. It did not.

3. Application of the Ratification/Tender Back Doc-

trine Is Consistent With the Purposes of the ADEA

and OWBPA as Well as Public Policy

As this Court has noted, “out of court dispute res-

olution - . « is consistent with the statutory scheme

established by Congress [in the ADEA].” Gilmer v.

Interstate Johnson Lane Corp., 500 U.S. 20, 29

45 U.S.C. § 55 states:

Any contract, rule, regulation or device whatsoever, the pur-

pose or intent of which shall be to enable any common carrier

to exempt itself from any liability created by this chapter, shall

to that extent be void: Provided, That in any action brought

against any such common carrier under or by virtue of any of

the provisions of this chapter, such common carrier may set

off therein any sum it has contributed or paid to any insurance,

relief benefit, or indemnity that may have been paid to the

injured employee for the person entitled there to on account

of the injury or death for which said action was brought.

26

(1991). As the Fifth Circuit pointed out in Wamsley,

an interpretation of the OWBPA precluding ratifica-

tion of defective ADEA releases “would be inconsist-

ent with one of the expressed purposes of the ADEA:

to ‘help employers and workers find ways of meet-

ing problems arising from the impact of age on

employment.“ 11 F.3d at 539 (quoting 29 U.S.C.

§ 621(b)). “The simplest and easiest way to further

this purpose,” the Fifth Circuit stated, “is to give

effect to the private agreements which resolve age

related employment problems without the inevitable

delays and costs associated with litigation.” Id. Ac-

cordingly, the Fifth Circuit continued,

Were employers forced to assume the risk that

noncompliance with all of [the] statutory re-

quirements of section 626 (f) (1) renders a

waiver agreement for which they have paid valu-

able consideration void and thus, not capable of

being ratified, clearly they would be disinclined

to propose such solutions.

Id.

The Fifth Circuit is quite correct. Like Entergy,

many employers who are faced with the necessity of

workforce reductions offer special severance benefits

to ease the impact of lost employment. The benefits

provided by these programs often are quite substantial

and far in excess of any to which the employees other-

wise would be entitled. Some employers, depending

upon financial circumstances and other considerations,

also offer early retirement incentives and other volun-

tary termination programs in lieu of layoffs.

Because these employers voluntarily are offering

benefits considerably more than they are legally obli-

gated to pay, they frequently require that the em-

ployees who choose to receive these additional benefits

execute a release of claims in return. The Equal Em-

ployment Opportunity Commission estimates that

more than 13,700 employers a year offer programs

27

involving benefits in exchange for waivers. Waivers

of Rights and Claims Under the Age Discrimination

in Employment Act, 62 Fed. Reg. 10787, 10789 (to

be codified at 29 C.F.R. pt. 1625) (proposed Mar. 10,

1997). Of course, employees cannot be forced to sign

releases against their will, but those who do not sign

do not receive the additional benefits. In this manner,

the employer buys peace, and employees who choose

to participate receive substantial additional benefits.

Absent a tender back requirement, disgruntled

former employees are free to ignore their part of the

bargain, while retaining the consideration paid to

them in exchange. As the Fourth Circuit observed

disapprovingly in Blistein, such a rule would

allow [them] to have it ‘both ways,’ to retain the

benefits that they received pursuant to their retire-

ment agreements, yet to challenge, through suits

against their unsuspecting employers, the very agree-

ments under which those benefits were extended.”

74 F.3d at 1466.

Such latitude creates a substantial disincentive for

employers to offer such benefits. Even for those em-

ployers that continue to do so, the lack of certainty

will substantially reduce the amount they are willing

to pay for a partial release.

Moreover, the minimum requirements of the

OWBPA are hardly the “cookbook” that Petitioner’s

amicus American Association of Retired Persons

(AARP) perceives them to be. Brief of the AARP

at 16. The various requirements are capable of suffi-

cient different interpretations to generate substantial

uncertainty even for an employer that meticulously

has attempted to meet them. As one commentator has

stated, It he nature of some of the OWBPA condi-

tions. . may make achieving—and proving—com-

pliance more difficult than it seems and could under-

mine the certainty and expense control a release

28

ment is desi to afford.” Glen D. Nager &

— T. „ A Can't Have Their Cake

and Eat It Too: Estopping Age Discrimination Com-

plainants Who Have Signed Releases, 19 Employee

Rel. L.J. 295, 296-97 (1993). Indeed, the minimum

OWBPA requirements are ambiguous enough that the

EEOC convened a negotiated rulemaking committee

to draft proposed rules interpreting them. Waiver of

Rights and Claims Under the Age Discrimination in

Employment Act, 62 Fed. Reg. 10787, 10788 (1997)

(to be codified at 29 C.F.R. pt. 1625) (proposed Mar.

a * f tential plaintiffs

it is surprisi easy for potential plainti

» a a fess m4 2 short of the OWBPA

standards. For example, they may disagree with the

scope of the “organizational unit,” identified by the

employer to comply with 29 U.S.C. § 626(f) (1) (H)

(ii). Griffin v. Kraft Gen. Foods, 62 F.3d 368 (11th

Cir. 1995). Cf. Long v. Sears, Roebuck & Co. They

may differ on whether the employer provided the right

type of information as to the “job title” or “job clas-

sification” of eligible and ineligible employees, as they

did in Raczak v. Ameritech. Several courts of appeals

already have reached the conclusion that OWBPA

compliance is a complex factual issue. Raczak, 103

F.3d at 1262 („[Wie hold that the terms job title,

‘job classification,’ and ‘organization unit’ should be

interpreted on a case-by-case basis, with an eye to the

purposes of the Act, rather than a dogmatic exercise

in definition.”); Kraft, 62 F.3d at 373. Naturally,

“it is in the interest of the worker trying to void the

release to quibble with whatever definition was used

by the company.” Raczak at 1263. pat

Indeed, a prospective plaintiff can cast on

the validity of the release merely by alleging, as plain-

18 Not surprisingly, the Committee was unable to reach consensus

on the ratification/tender back issue, and thus no rule is proposed

on that point. Id.

29

tiffs did in Wamsley, that they were told orally they

had less time than the statutory minimum to con-

sider and sign the release, even though the documents

allowed the full statutory period. 11 F.3d at 537.

Any of these challenges will plunge the employer into

litigation over the validity of the release—precisely

the result the employer had hoped to avoid by pur-

chasing a release.

This scenario—all too real—would so limit the

utility of waivers that they would become virtually

useless to employers. As Seventh Circuit Chief Judge

Posner observed in Fleming, “[n]ot even plaintiffs

are helped in the long run by a rule allowing them

to have their cake and eat it, for a defendant will not

pay as much for a release that the plaintiff can chal-

lenge without having to repay the money as the price

of maintaining the challenge.” 27 F.3d at 261. Even

more likely, as the Fifth Circuit recognized in

Wamsley, it follows that employers who choose not to

provide additional severance benefits without a re-

lease in return simply will cease offering such bene-

fits.

Since reductions in force still may be a financial

necessity or business option from time to time, how-

ever, layoffs will still oceur but without the addi-

tional benefits offered in the past. As a consequence,

the many employees who face layoffs but have no

grounds to challenge their terminations will be de-

prived of a substantial payment that might mean the

difference between financial security and financial

peril.

determined to be invalid, but no tender is required,

the employer is placed in the worst possible position—

30

it is out the consideration, but still must defend itself

in litigation. If the release is determined to be invalid

and tender is required, then the parties are simply

restored to the status quo ante—the employer has its

money back, but has no protection against the forth-

coming litigation that the former employee is now

free to bring.

Similarly, the contention that prospective plaintiffs

should not be expected to return the benefits because

they need the money, or already have spent it, loses

sight of the fact that this is consideration for a

promise, not money to which they otherwise are

entitled.

Tender back of consideration paid for a release is

a basic tenet of contract law that is not inconsistent

with the true purposes of the ADEA. While the

OWBPA provides for minimum requirements for an

irrevocable release, nothing in either statute sug-

gests that either party can revoke the deal and keep

the consideration. Elimination of the rule may result

in employers offering less—if any—severance benefits

and hurt those older workers who look forward to

retirement with an extra “golden parachute” from

the company.

CONCLUSION

For the foregoing reasons, the amici curiae Equal

Employment Advisory Council, the Chamber of Com-

merce of the United States, and the Edison Electric

Institute respectfully submit that the decision of the

court below should be affirmed.

1 The argument of Petitioner’s amicus the National Employment

Lawyers Association that “waivers should not be subject to the rule

of tender back that applies to releases” does not withstand scrutiny.

Brief of National Employment Lawyers Association at 5. If this

were correct, then it would seem to follow that releases such as the

operative document in the instant case would not be subject to the

OWBPA requirements that apply to waivers.

STEPHEN A. BOKAT

ROBIN S. CONRAD

SussAN L. MAHALLATI

NATIONAL CHAMBER

LITIGATION CENTER, INC.

1615 H Street, N.W.

Washington, D.C. 20062

(202) 463-5337

Attorneys for Amicus Curiae

The Chamber of Commerce

of the United States

of America

EDWARD H. COMER

J. BRUCE BROWN

EDWARD N. BOMSEY

EDISON ELECTRIC INSTITUTE

701 Pennsylvania Ave., N.W.

Washington, D.C. 20004-2696

(202) 508-5621

Attorneys for Amicus Curiae

Edison Electric Institute

31

Respectfully submitted,

ANN ELIZABETH REESMAN *

ERIN QUINN GERY

McGUINEss & WILLIAMS

1015 Fifteenth Street, N.W.

Suite 1200

Washington, D.C. 20005

(202) 789-8600

Attorneys for Amicus Curiae

Equal Employment

Advisory Council

* Counsel of Record