Amicus Curiae Brief — Allied Van Lines, Inc. v. Oberg

No. 93-1605 7

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L VWiria

IN THE

Siyprene Cmut of the United States

OCTOBER TERM, 1993

ALLIED VAN LINES, INC.,

Petitioner,

Vv.

GERALD OBERG, ef al.,

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Seventh Circuit

BRIEF AMICUS CURIAE OF THE

EQUAL EMPLOYMENT ADVISORY COUNCIL

IN SUPPORT OF PETITIONER

DouGLAs S. MCDOWELL

ANN ELIZABETH REESMAN *

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

WILSON - Eras PrinTiNG Co., Inc. - 789-0096 - WASHINGTON, D.C. 20001

TABLE OF CONTENTS

STATEMENT OF THE CASE ..0002o...-occccccescccscececeeeeeee -

SUMMARY OF REASONS FOR GRANTING THE

IEE keciesennenreeeserviohesitleniathdesiscdsathciasinsinahibiasendieninanemnee

REASONS FOR GRANTING THE WRIT ...................

I, THE COURT OF APPEALS’ HOLDING THAT

A POTENTIAL ADEA PLAINTIFF WHO

SIGNS A RELEASE OF CLAIMS NEVER-

THELESS MAY DECLARE THE RELEASE

VOID AND BRING AN ADEA LAWSUIT

WITHOUT FIRST TENDERING BACK THE

CONSIDERATION CONFLICTS DIRECTLY

WITH THE FIFTH CIRCUIT’S DECISION IN

WAMSLEY v. CHAMPLIN REFINING AND

CHEMICALS, INC., CREATING UNCER-

TAINTY IN THE LAW ON AN ISSUE OF

SUBSTANTIAL IMPORTANCE...

A. The Decision Below Conflicts Directly With

The Fifth Circuit’s Rule

B. As The Fifth Circuit Correctly Observed, The

Seventh Circuit’s Ruling Will Discourage

Employers From Voluntarily Making Such

POR resaa So ae: Rae 2 WO So El ee

C. The Conflict Between The Circuits Causes

Substantial Uncertainty In The Law.........

D. Unlike The Seventh Circuit, The Fifth Cir.-

cuit Correctly Concluded That A Release That

May Not Comply With The Older Workers

Benefit Protection Act Is Ratified If The

Plaintiff Keeps The Consideration .........._.

ii

TABLE OF CONTENTS—Continued

Page

Il. THE DECISION BELOW INCORRECTLY

APPLIES THIS COURT’S DECISION IN

HOGUE v. SOUTHERN R. CO. TO DENY

EMPLOYERS THE CERTAINTY GRANTED

BY THE RATIFICATION/TENDER BACK

OU RENTED weisuisivinssitarehcheectnaitullantiiddiantinndadabenbeimanes 13

A. Hogue Interprets The FELA, Which Provides

A Type Of Workers’ Compensation For Rail-

WOR BOD caccntcecdansdninaheastanasanintautcestnscs 13

B. Because Of The Significant Differences In-

volved, Hogue Is Inapposite To The Case At

Bar. As Hogue’s Damages Could Not Be Less

Than Already Received—No Tender Back

WEEE BONIINT cnccceccereinvactiontiaaean 15

CPO ARRIIIINIIY oss0 0 csersesersessnsepsnessevecuenesabelsbescenaitoianeiieeiann 18

iii

TABLE OF AUTHORITIES

CASES Page

Adams v. Brown-Forman Corp., 963 F.2d 323

(lith Cir. 1992) .. oa nee 6 AVN ee 3

Anderson v. Stauffer Chemical Co., 965 F.2d 397

oo ER ers ee 17

Astoria Federal Savings & Loan Association v.

Solimino, 111 S. Ct. 2166 (1991)... 4,12

Cirillo v. Arco Chemical Co., 862 F.2d 448 (3d Cir.

ES ae Sate eal oe ae 3

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

(11th Cir.), cert. denied, 113 S. Ct. 412 (1992). 3, 9-10

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

ES a ae ea ee 3

Grillet v. Sears, Roebuck and Co., 927 F.2d 217

RSA ge a A a a ele a a 10

Hazen Paper Co. v. Biggins, 118 S. Ct. 1701

(1998) ....... . 3

Hogue v. Southern R. Co. be 390 U. S. 516 (1968). 5-6,

13-16, 18

Krienke v. Illinois Central R.R., 249 F.2d 840 (7th

Cir. 1957) . a 15

La Montagne v v. , American ‘Convenience Products,

Inc., 750 F.2d 1405 (7th Cir. 1984) ...... 17

Lancaster v. Buerkle Buick Honda Co., 809 F.2d

539 (8th Cir.), cert. denied, 482 U.S. 928 (1987) 3

McLaughlin v. Richland Shoe, 486 U.S. 128 (1988) 4

O'Shea v. Commercial Credit Corp., 930 F.2d 358

(4th Cir.), cert. denied, 112 S. Ct. 177 (1991) 3,9

Public Employees Retirement System of Ohio v.

Betts, 492 U.S. 158 (1989) ! 4

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

a 14-15

Runyan »v. National Cash Register Corp., 787 F.2d

1039 (6th Cir.), cert. denied, 479 U.S. 850

(1986) Nats BS 3

Sinkler v. Missouri Pacific RR. 356 US. 326

| a 14, 17

St. th Honor Center v. Hicks, 113 S. Ct. 2742

iv

TABLE OF AUTHORITIES—Continued

Page

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

Be Ge itrabetrnccentintarclttidnntbil dn cittedesceteadle 4

Wamsley v. Champlin Refining and Chemicals, Inc.,

11 F.8d 584 (5th Cir. 1998) ..........000000.. 8, 5-13, 16

Webb v. Illinois Central R.R., 352 U.S. 512 (1957).. 15

STATUTES

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

EEE EE REC eae ee ee SNORT Cee 2,4

ES EEE ae a ee er ee 7,17

i ETE TERRE LIES AC 17

Federal Employers’ Liability Act, 45 U.S.C. § 51

ead aetetectdlhackiciidcittdecadimiesinsinichndentstuntsaimienibnediietan’ 6, 18-17

tL a RAT Sa pan Oe ee eee te 15

| SERRE Ser aera aes 5a AR meee 15

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

STINET ccdicpuidtdbeemmanindibiestinhiientidinenstenceciianiaiadid 2, 5, 7, 11-13

LEGISLATIVE HISTORY

S. Rep. No. 460, 60th Cong., Ist Sess. 3 (1907)...... 17

MISCELLANEOUS

Glen D. Nager and Steven T. Catlett, Employees

Can’t Have Their Cake and Eat It Too: Estop-

ping Age Discrimination Complainants Who

Have Signed Releases, 19 Employee Rel. L.J.

Ee IEEE -cisnsencetcnttisinnsncnntbiericdbnaidividatetenidelabebeniilamaingiies 10

IN THE

Supreme Court of the United States

OcToBER TERM, 1993

No. 93-1605

ALLIED VAN LINES, INC.,

- Petitioner,

GERALD OBERG, et al.,

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Seventh Circuit

BRIEF AMICUS CURIAE OF THE

EQUAL EMPLOYMENT ADVISORY COUNCIL

IN SUPPORT OF PETITIONER

The Equal Employment Advisory Council respectfully

submits this brief amicus curiae. The written consents of

both parties have been filed with the Clerk of this Court.

The brief supports the petition for a writ of certiorari.

INTEREST OF THE AMICUS CURIAE

The Equal Employment Advisory Council (“EEAC”

or “Council”) is a voluntary association of employers

organized in 1976 to promote sound approaches to the

elimination of employment discrimination. Its member-

ship includes nearly 300 major U.S. corporations, as well

as several associations which themselves have hundreds of

corporate members. EEAC’s directors and officers in-

clude many of industry’s leading experts in the field of

2

equal employment opportunity. Their combined experi-

ence gives the Council a unique depth of understanding

of the practical, as well as legal, considerations relevant

to the proper interpretation and application of equal em-

ployment policies and requirements. EEAC’s members

are firmly committed to the principles of nondiscrimina-

tion and equal employment opportunity.

All of EEAC’s members, and the constituents of its

association members, are subject to the Age Discrimina-

tion in Employment Act, 29 U.S.C. § 621 ef seq.

(ADEA), as well as other equal employment statutes and

regulations. As employers, and as potential respondents

to ADEA charges and other employment-related claims,

EEAC’s members are interested in encouraging the volun-

tary resolution of such claims.

Thus, the issue presented in this appeal is extremely

important to the nationwide constituency that EEAC rep-

resents. In essence, Respondents entered into a contract,

declared the contract void, yet kept the benefit of the

contract they say does not exist. Specifically, Respondents

accepted special severance benefits in exchange for sign-

ing a general release of claims, including ADEA claims,

and a covenant not to sue. They claim the release is

void, yet have continued to retain the benefits even while

filing suit under the ADEA. The court below ruled that

because the releases arguably did not meet the minimum

standards established in Section 201 of the Older Work-

ers Benefit Protection Act (OWBPA), 29 U.S.C.

§ 626(f), Appellees were neither required to tender back

the benefits as a prerequisite to filing suit nor deemed to

have ratified the releases by retaining the consideration.

Pet. App. 12a.' The court treats the consideration as a

1 Citations to the Appendix to the Petition for a Writ of Cer-

tiorari are noted as Pet. App. ———. The opinion of the Court

of Appeals for the Seventh Circuit below, reported at 11 F.3d

679, is reproduced as Pet. App. la-12a. The opinion of the dis-

trict court, reproduced at Pet. App. 13a-34a, and an oral ruling of

the district court, reproduced at Pet. App. 35a-65a, are not re-

ported.

3

gratuity, which clearly was not contemplated by the

original agreement.

This holding casts serious doubts on the finality of re-

leases of claims and covenants not to sue under the

ADEA. It allows plaintiffs to argue that their release is

void and to sue the employer, but at the same time keep

the benefit of the contract. As a result, employers who

would not offer additional severance pay, early retirement

incentives, and other termination benefits without the pro-

tection of a release, are likely to consider discontinuing

such programs. Each discontinued program will harm

the vast majority of individuals who receive such benefits

and have no interest in filing discrimination charges.

Because of its interest in the application of the nation’s

civil rights laws, EEAC has, since its founding in 1976,

filed over 335 briefs as amicus curiae in cases before this

Court, the United States Circuit Courts of Appeals and

various state supreme courts. As part of this amicus

activity, EEAC has participated in this case before the

Seventh Circuit as well as in numerous other cases in-

volving the validity of waivers under the ADEA.’ In ad-

dition, EEAC has briefed a number of employment issues

in this Court under the ADEA.’

———

2 See, e.a., Oberg v. Allied Van Lines, Pet. App. la (ratification/

tender back): Wamsley v. Champlin, 11 F.3d 534 (5th Cir. 1993)

(reproduced at Pet. App. 72a) (ratification/tender back); Forbus

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

(11th Cir. June 22, 1992), cert. denied, 113 S. Ct. 412 (1992)

(ratification/tender back); Adams v. Brown-Forman Corp., 963

F.2d 323 (11th Cir. 1992) (EEOC supervision not needed) ; O’Shea

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

112 S. Ct. 177 (1991) (ratification/tender back); Cirillo v. Arco

Chem. Co., 862 F.2d 448 (3d Cir. 1988) (EEOC supervision not

needed); Lancaster v. Buerkle Buick Honda Co., 809 F.2d 539

(8th Cir.), cert. denied, 482 U.S. 928 (1987) (same); Runyan v.

National Cash Register Corp., 787 F.2d 1039 (6th Cir.), cert. de-

nied, 479 U.S. 850 (1986) (same).

3E.q., Hazen Paper Co. v. Biggins, 113 8. Ct. 1701 (1993)

(liquidated damages); Gilmer v. Interstate/Johnson Lane Corp.,

4

Thus, EEAC has an interest in, and a familiarity with,

the issues and policy concerns presented to the Court in

this case. Indecd, because of its significant experience in

these matters, EEAC is uniquely situated to brief this

Court on matters not previously brought to its attention

by the parties.

STATEMENT OF THE CASE

In December 1990, Allied Van Lines (“Allied”) under-

went a general reduction in force in which over 60 em-

ployees were terminated, including Respondents. Pet.

App. 2a. Allied offered departing employees their choice

of two severance pay packages. One package offered two

weeks’ salary. The other provided approximately twenty

weeks of additional pay in exchange for executing a

“Severance Agreement.” Jd. The Severance Agreement

included a general release, including a release of claims

under the Age Discrimination in Employment Act, 29

U.S.C. § 621 et seq. (ADEA), and an agreement not to

assert such claims. Pet. App. 3a, n.1. It also contained

a commitment to return the benfits paid in the event of a

breach of the agreement. Pet. App. 3a, n.2.

Respondents all chose to sign the Agreement and take

the additional severance benefit. Pet. App. 2a. They also

received continuing health benefits and pension contribu-

tions. Pet. App. 3a. Despite their having sued Allied,

none of the Respondents has returned, or has offered to

return, any of these benefits. Pet. App. 4a.

Shortly after receiving their last benefit payments from

Allied, Plaintiffs filed ADEA charges against Allied

500 U.S. 20 (1991) (enforceability of arbitration agreement) ;

Astoria Fed. Savs. & Loan Ass'n v. Solimino, 111 S. Ct. 2166

(1991) (effect of unreviewed state agency finding); Public Em-

ployees Retirement Sys. of Ohio v. Betts, 492 U.S. 158 (1989)

(applicability to employer-provided benefits) ; McLaughlin v. Rich-

land Shoe, 486 U.S. 128 (1988) (liquidated damages) ; TransWorld

Airlines, Inc. v. Thurston, 469 U.S. 111 (1985) (liquidated dam-

ages).

5

with the Equal Employment Opportunity Commission

(“EEOC”), claiming that they had been replaced by

younger employees. Pet. App. 3a-4a. Before the EEOC

completed its investigation, all three filed a class action

complaint under the ADEA. Pet. App. 4a. Allied moved

to dismiss, or in the alternative for summary judgment,

arguing that Plaintiffs had ratified the releases by retain-

ing the benefits and by failing to tender back the con-

sideration. Jd. The district court below denied the mo-

tion, and the Seventh Circuit affirmed. Allied now has

petitioned this Court for a writ of certiorari.

SUMMARY OF REASONS FOR GRANTING THE WRIT

The decision of the Seventh Circuit below allows Re-

spondents to sign a contract, declare it void, and refuse

to return the consideration. They have retained this bene-

fit under false pretenses by treating the contract as if it

never existed. The decision below conflicts directly with

the decision of the Fifth Circuit in Wamsley v. Champlin

Refining and Chemicals, Inc., 11 F.3d 534 (Sth Cir.

1993). Indeed, the Fifth Circuit specifically expressed

its disagreement with the decision below. Jd. at 540 n.11

and 541 n.13. In Wamsley, the Fifth Circuit concluded

that a release that may not meet the minimum require-

ments of the Older Workers Benefit Protection Act, 29

U.S.C. § 626(f), is ratified if the plaintiff keeps the con-

sideration. Thus, a potential plaintiff wishing to repudiate

the release must first tender back the consideration. The

Fifth Circuit also correctly observed that the Seventh Cir-

cuit’s approach undoubtedly would discourage employers

from offering releases and thus lucrative severance benefits

and other incentives given in exchange.

This conflict creates substantial uncertainty in the law

on an issue of substantial importance, particularly for

employers doing business in both the Fifth and Seventh

Circuits and elsewhere.

In addition, the Seventh Circuit misapplied this Court’s

1968 decision in Hogue v. Southern R. Co., 390 USS.

6

516 (1968), under the Federal Employees Liability Act,

45 U.S.C. § 51 et seq., to infer federal common law pre-

cluding ratification of ADEA releases and eliminating the

tender back requirement. As the Fifth Circuit recognized

in Wamsley, Hogue is not analogous because of the sig-

nificant differences between the FELA and the ADEA.

There was no dispute that Hogue ultimately would be

due at least as much compensation as he already had

received. The dispute was over whether his injuries were

greater than originally perceived. The case involved a

mutual mistake of fact, not a wholesale breach of a

promise not to sue.

For these reasons, this Court should grant the petition,

adopt the reasoning of the Fifth Circuit and reverse the

decision below.

REASONS FOR GRANTING THE WRIT

I. THE COURT OF APPEALS’ HOLDING THAT A

POTENTIAL ADEA PLAINTIFF WHO SIGNS A

RELEASE OF CLAIMS NEVERTHELESS MAY

DECLARE THE RELEASE VOID AND BRING AN

ADEA LAWSUIT WITHOUT FIRST TENDERING

BACK THE CONSIDERATION CONFLICTS DI-

RECTLY WITH THE FIFTH CIRCUIT’S DECISION

IN WAMSLEY v. CHAMPLIN REFINING AND

CHEMICALS, INC., CREATING UNCERTAINTY

IN THE LAW ON AN ISSUE OF SUBSTANTIAL

IMPORTANCE

A. The Decision Below Conflicts Directly With The

Fifth Circuit’s Rule

In Wamsley v. Champlin Refining and Chemicals, Inc.,

11 F.3d 534 (Sth Cir. 1993),* a case substantially similar

to this one, the Fifth Circuit ruled that an employee who

has executed a release of claims including claims under

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

*The Wamsley decision is reproduced as Appendix H to the

Petition (Pet. App. 72a-86a).

7

§ 621 et seq., must tender back the consideration in order

to avoid the release. Jd. at 542. By retaining the con-

sideration, the Fifth Circuit held, the employee by his

conduct ratifies an otherwise voidable contract. Jd. at

540.

In so doing, the Fifth Circuit specifically acknowledged

that “we find ourselves in respectful disagreement with

the Seventh Circuit’s recent decision in Oberg v. Allied

Van Lines... .” Id. at 540 n.11. Indeed, the Fifth

Circuit considered, and rejected, each of the positions

taken by the Seventh Circuit below.

B. As The Fifth Circuit Correctly Observed, The

Seventh Circuit’s Ruling Will Discourage Employers

From Voluntarily Making Such Offers

The Fifth Circuit decision points out that an interpreta-

tion making void defective ADEA releases “would be in-

consistent with one of the expressed purposes of the

ADEA: to ‘help employers and workers find ways of

meeting problems arising from the impact of age on em-

ployment.’” 11 F.3d at 539 (Pet. App. 80a) (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 private agreements which resolve age related

employment problems without the inevitable delays and

costs associated with litigation.” Jd. Accordingly, the

Fifth Circuit continued:

Were employers forced to assume the risk that non-

compliance with all of [the] statutory requirements

of section 626(f)(1) renders a waiver agreement for

which they have paid valuable 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 Allied, many

employers who are faced with the necessity of workforce

reductions offer lucrative severance benefits, far in excess

8

of any to which the employees otherwise would be legally

entitled, to ease the impact of lost employment. These

programs offer substantial financial benefits. Some em-

ployers, depending upon financial circumstances and other

considerations, also offer early retirement incentives and

other voluntary termination programs in lieu of layoffs.

Because these employers voluntarily are offering bene-

fits considerably greater than they are legally obligated to

pay, they frequently require that the employees who

choose to receive these additional benefits execute a re-

lease of claims in return. Of course, an employee cannot

be forced to sign a release against his or her will, but

those who do not sign will not receive the additional bene-

fit. In this manner, the employer buys peace, and em-

ployees who choose to participate receive a substantial

benefit.

The decision below, as the Fifth Circuit noted, would

allow disgruntled former employees to renege on the

commitment they made while retaining the consideration

paid to them in exchange for that commitment. Merely

by alleging that the minimum requirements of the

OWBPA were not met, they could circumvent their prom-

ise and plunge the employer into litigation. Indeed, the

decision below encourages plaintiffs and their counsel

knowingly to sign releases that do not comply with the

OWBPA in order to receive benefits to which they are

not otherwise entitled, even though they have no intention

of honoring the release agreement.

This unfair result so limits the utility of waivers that

they would become virtually useless to employers. As the

Fifth Circuit recognized, it follows that employers who

choose not to provide additional severance benefits with-

out a release in return simply will cease offering such

benefits.

Since force reductions still may be a financial necessity

or business option from time to time, however, layoffs

will still occur—but without the additional severance ben-

9

efits offered in the past. As a consequence, the many

employees who face layoffs but have no grounds to chal-

lenge their terminations will be deprived of a substantial

payment that might mean the difference between financial

security and financial peril.

C. The Conflict Between The Circuits Causes Substan-

tial Uncertainty In The Law

The wholesale disagreement between the Fifth and Sev-

enth Circuits on the ratification/tender back issue causes

substantial uncertainty for the major employers who are

EEAC’s members. Many of these employers have opera-

tions in numerous states. Thus, it is not unusual for the

same employer to do business in Louisiana, Mississippi or

Texas, which comprise the Fifth Circuit, and also in

Illinois, Indiana and Wisconsin, in the Seventh Circuit.

The conflict between the Fifth Circuit’s Wamsley deci-

sion and the Seventh Circuit’s decision below results in an

untenable situation for employers who do business in both

circuits. An employer implementing a corporate-wide

force reduction, for example, may find it worthwhile to

offer generous severance benefits to employees in Dallas

who sign releases, but not to offer similar benefits to em-

ployees in Chicago who do so, since the Chicago employ-

ees can keep the consideration and proceed with ADEA

lawsuits. Some employers may opt to avoid this inequity

by ceasing to offer special severance benefits in either

circuit.

Employers doing business in other circuits also face in-

consistency in the law surrounding releases. In cases aris-

ing prior to the effective date of the OWBPA, two other

circuits issued conflicting opinions. The Fourth Circuit,

in O’Shea v. Commercial Credit Corp., 930 F.2d 35%,

(4th Cir.), cert. denied, 112 S. Ct. 177 (1991), ruled

that the ratification/tender back doctrine applies to bar

an ADEA claim where the employee has failed to return

the consideration. Conversely, in Forbus v. Sears, Roe-

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

10

113 S. Ct. 412 (1992), the Eleventh Circuit ruled to the

contrary.°

Accordingly, employers who are considering offering

severance benefits or exit incentives in exchange for a

release are left with no clear direction. They know the

enumerated OWBPA requirements for a valid release of

ADEA claims. Yet they also know, as one commentator

has stated, that “[t]he nature of some of the OWBPA

conditions . . . may make achieving-and proving-com-

pliance more difficult than it seems and could undermine

the certainty and expense control that a release agreement

is designed to afford.” Glen D. Nager and Steven T. Cat-

lett, Employees Can’t Have Their Cake and Eat It Too:

Estopping Age Discrimination Complainants Who Have

Signed Releases, 19 Employee Rel. L. J. 295, 296-97

(1993). For example, a prospective plaintiff can raise

a factual issue concerning the validity of the release

merely by alleging, as the plaintiffs did in Wamsley, that

they were told orally they had less time than the statu-

tory minimum to consider and sign the release. Yet, the

courts of appeals differ greatly on whether the plaintiff

will be permitted to retain the benefits of his bargain

while repudiating the obligations.

D. Unlike The Seventh Circuit, The Fifth Circuit Cor-

rectly Concluded That A Release That May Not

Comply With The Older Workers Benefit Protec-

tion Act Is Ratified If The Plaintiff Keeps The

Consideration

Section 201 of the Title II of the Older Workers Bene-

fit Protection Act (OWBPA) amended the ADEA to es-

5 Indeed, this conflict already has subjected the same company

to opposing decisions. Compare Forbus v. Sears, Roebuck and Co.,

958 F.2d 1036 (11th Cir.) (tender back not required/no ratifica-

tion), cert. denied, 113 S. Ct. 412 (1992), with Grillet v. Sears,

Roebuck and Co., 927 F.2d 217 (5th Cir. 1991) (release ratified

due to failure to tender back consideration). Both of these cases

involved ADEA releases executed before the effective date of the

OWBPA, and both involved Sears, Roebuck and Company.

11

tablish minimum standards for a waiver of claims. 29

U.S.C. § 626(f).° The statutory language states that:

An individual may not waive any right or claim under

this chapter unless the waiver is knowing and volun-

tary. . . [A] waiver may not be considered knowing

and voluntary unless at a minimum [it meets the es-

tablished standards].

Id. Because of the “may not waive” language, the Sev-

enth Circuit below concluded that a waiver that did not

meet the minimum standards was incapable of being rati-

fied. Pet. App. 6a.

In a carefully reasoned analysis, the Fifth Circuit dis-

agreed that this language precludes ratification. As the

Fifth Circuit explained:

We do not interpret the language of section 626

(f£)(1) to mean that a waiver which fails to meet the

requirements of subsections (A) through (H) is void

of legal effect. Rather, we interpret it to mean that

such waivers are not knowing and voluntary and thus

are subject to being avoided at the election of the

employee. This interpretation comports with the lan-

guage of section 626(f)(1) and is supported by the

legislative history of the OWBPA.

11 F.3d at 539 (Pet. App. 79a).

Accordingly, the Fifth Circuit reasoned, an arguably

defective release can be ratified through subsequent con-

duct. As the Fifth Circuit pointed out:

*The requirements include: (1) an understandable 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

consult an attorney and the requisite period of time to make and

revoke a decision, and a seven-day revocation period. 29 U.S.C.

§ 626(f) (1). There are additional requirements where the waiver

“is requested in connection with an exit incentive or other employ-

ment termination program offered to a group or class of employ-

ees.” Id.

12

Note that the court is not enforcing the promises con-

tained in any of the allegedly voidable waiver agree-

ments as such. What the court is enforcing is a new

promise, evidenced by subsequent conduct, to be

bound by the terms of the original waiver agreements.

Therefore, that the original waiver agreements may

not have been in compliance with § 626 is of no con-

sequence.

11 F.3d at 540 (Pet. App. 81a-82a n.11). The Seventh

Circuit, in contrast, held in effect that a waiver that fails

to meet the minimum OWBPA standards is void ab initio

rather than voidable and thus cannot be ratified. Never-

theless, the Seventh Circuit allowed the plaintiffs to re-

tain the consideration they received.’

As the Fifth Circuit noted, the Seventh Circuit’s hold-

ing below fails to take into consideration several key ele-

ments indicating that Congress intended potentially defec-

tive ADEA waivers to be voidable, not void. Neither the

statute nor the legislative history of OWBPA bars appli-

cation of the ratification/tender back doctrine. 11 F.3d

at 539 n.8 (Pet. App. 79a n.8).- Under well-accepted

principles of statutory interpretation, “where a common-

law principle is well established . . . the courts may take

it as given that Congress has legislated with an expecta-

tion that the principle will apply except when a statutory

purpose to the contrary is evident.” Astoria Fed. Sav. &

Loan Ass’n v. Solimino, 111 S. Ct. 2166, 2169-70 (1991)

(citations and quotations omitted).

Moreover, Section 626(f)(1)(G) specifically provides

for a seven day revocation period following execution of

7 Indeed, the dispute over whether a contract is void (and can-

not be ratified) or voidable (and can be ratified) may be a bit too

esoteric. Under either analysis, the plaintiff is trying unjustly

to keep the proceeds of a contract which he says does not exist.

But the money would not have been received by the plaintiff unless

he had agreed to the contract in the first place. A typical em-

ployer will conclude that the situation is obviously unfair and will

have to consider whether to give additional severance pay under

such circumstances. See part I.B. above.

13

the agreement, during which the agreement is neither

effective nor enforceable. 29 U.S.C. § 626(f)(1)(G).

If failure to comply with another requirement made the

agreement void, there would be no need for this section.

11 F.3d at 539 (Pet. App. 80a).

Thus, EEAC urges the Court to grant the petition and

reverse the Court below, adopting instead the analysis

used by the Fifth Circuit in Wamsley.

II. THE DECISION BELOW INCORRECTLY APPLIES

THIS COURT’S DECISION IN HOGUE v. SOUTH-

ERN R. CO. TO DENY EMPLOYERS THE CER-

TAINTY GRANTED BY THE RATIFICATION/

TENDER BACK DOCTRINE

The court below misapplied this Court’s decision in

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

reach the conclusion that the common law ratification/

tender back doctrine should not apply to ADEA releases.

Indeed, the Fifth Circuit in Wamsley considered and re-

jected the applicability of Hogue to the issue presented

here, specifically disagreeing with the court below. 11

F.3d 534, 540-42 and n.13 (Pet. App. 82a-86a).

A. Hogue Interprets The FELA, Which Provides A

Type Of Workers’ Compensation For Railroad

Employees

Hogue involved a claim under the Federal Employers’

Liability Act, 45 U.S.C. $51 et seq. (FELA). In Hogue,

a worker who injured his knee while working for the de-

fendant railroad relied on the railroad’s doctor’s assur-

ances that his injury was only a bruise. He signed a re-

lease in exchange for $105. Later, after two operations

including removal of his kneecap, he sought to reopen

the claim but did not return the original $105. When the

railroad sought to enforce the release, this court con-

cluded that “a tender back is . . . not requisite when it is

pleaded that the carrier and the employee entered into

the release from mutual mistake as to the nature and ex-

14

tent of the employee's injuries.” Hogue, 390 U.S. at 517

(emphasis added )."

The Court’s ruling in Hogue is not surprising. The

FELA provides a cause of action closely approximating

workers compensation 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., 356 U.S. 326, 329 (1958). As the Court has

explained, “[tlhe cost of human injury, an inescapable

expense of ranroading, must be borne by someone, and

the FELA seeks to adjust that expense equitably between

the worker and the carrier.” /d. It would have made no

sense to make Hogue give back the $105, as all agreed

he was entitled to at least that much compensation.

The FELA effectuates this purpose by providing a

remedy for an injured worker in virtually any situation

where the employer's negligence was even remotely 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

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

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

® While the FELA is not a true “workers compensation” scheme

imposing liability without fault, Rogers v. Missouri Pac. R.R., 352

U.S. 500, 509 (1957), it is “an avowed departure from the rules of

the common law .. .” Sinkler v. Missouri Pac. R.R., 356 U.S. 326,

329 (1958) (citing Rogers, 352 U.S. at 507-509).

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

Every common carrier by railroad while engaging in commerce

. 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, works, boats, wharves, or other equipment.

15

that employer negligence played 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 probability, attribute the result to other

causes, including the employee's contributory negli-

gence. Judicial appraisal of the proofs to determine

whether a jury question is presented is narrowly lim-

ited to the single inquiry whether, with reason, the

conclusion may be drawn that negligence of the em-

ployer played any part at all in the injury or death.”

Rogers v. Missouri Pac. R.R., 352 U.S. 500, 506-07

(citations omitted) (emphasis added). See also Webb v.

Illinois Cent. R.R., 352 U.S. 512, 516 (1957): Krienke

v. Illinois Central R.R., 249 F.2d 840, 844 (7th Cir.

1957). Traditional common law defenses such as con-

tributory negligence, assumption of the risk, and the fel-

low servant doctrine are unavailable 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

negligence of the employer played a small part in the in-

jury|.” Rogers, 352 U.S. at 508 (emphasis added).

Thus, entitlement to damages for an FELA claim is sig-

nificantly less difficult to establish than in other fault-

based litigation.

B. Because Of The Significant Differences Involved,

Hogue Is Inapposite To The Case At Bar. As Hogue’s

Damages Could Not Be Less Than Already Received

—No Tender Back Was Needed

The court below grafted the Hogue holding onto a sit-

uation far different from the one that Hogue actually ad-

dressed. Because the actual issues, as well as the two stat-

utes in question, have virtually nothing in common, the

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).

16

decision below incorrectly applied Hogue to the situation

presented here.

In Hogue, the “mutual mistake” was as to the nature

and extent of the injuries. 390 U.S. at 516. Liability was

not at issue. The issue to be resolved was the extent of

Southern Railway's liability beyond the first $105. Thus,

Hogue was entitled at least to the $105 under all circum-

stances, and there was no reason to require that he tender

back the first installment. Indeed, tender back was not

even a legitimate issue.””

In contrast, while Respondents could have chosen to

retain their rights to assert the liability of Allied Van

Lines in the instant case, they voluntarily chose to forego

that option in return for a large amount of money. Re-

spondents were not entitled to the amount at issue except

as consideration for their agreement to release all claims

and covenant not to sue. The consideration was not in

satisfaction of any existing predetermined obligation.

There was no common agreement that the plaintiffs were

entitled to a minimum specific amount as compensation

for an admitted statutory injury, and there was no mistake

of fact as to the amount due. In contrast to Hogue, there

is a substantial question whether Respondents were vic-

tims of age discrimination at all or would be entitled to

any compensation from Allied on their age discrimination

claims. Rather than face the uncertainty of litigation,

Respondents agreed to accept this consideration.

Moreover, as the Fifth Circuit pointed out in Wamsley,

the court below followed Hogue without considering the

differences between the FELA and the ADEA. 11 F.3d

534, 541 n.13 (Pet. App. 85a). Instead, it relied solely

on the general observation that both are “remedial” stat-

utes and thus should be treated alike. Unlike the “re-

source allocation” approach taken by the FELA, however,

12 Notably, moreover, the employer in Hogue did not file a brief

or present argument on the “tender back” issue. Hogue, 390 U.S.

at 516.

17

the ADEA provides a remedy only where an employer

has engaged in an unlawful employment practice. 29

U.S.C. § 623(a). The FELA was intended to “adjust ]

the losses and injuries inseparable from industry and com-

merce 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 contrast, the ADEA’s prohibitions are in-

tended “to promote 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 arising

from the impact of age on employment. 29 U.S.C.

§ 621(b) (emphasis added).

Indeed, to prevail in an ADEA claim for discrimina-

tory termination, for example, “the plaintiff must ulti-

mately prove that she was discharged because of her age.”

Anderson v. Stauffer Chem. Co., 965 F.2d 397, 400

(7th Cir. 1992). Unlike the FELA—where the plaintiff

need only show that the employer’s conduct played only

the “slightest” part in the injury—the plaintiff in an

ADEA case must prove “that age was a ‘determining

factor’ or a ‘but for’ element in the employer’s decision.”

Id. (quoting La Montagne v. American Convenience

Products, Inc., 750 F.2d 1405. 1409 (7th Cir. 1984) ).

Cf. St. Mary’s Honor Center v. Hicks, 113 §. Ct. 2742,

2751 (1993) (“[W]e have no authority to impose lia-

bility upon an employer for alleged discriminatory em-

ployment practices unless an appropriate factfinder deter-

mines, according to proper procedures, that the employer

has unlawfully discriminated.” ) (emphasis in original).

Thus, while the FELA effectively allocates damages to

the employer based on ability to pay, 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 plaintiffs age was involved in

the employer’s action. Accordingly, as a practical matter,

recovery by a railroad employee who is injured on the

18

job is far more probable than an employee who claims

that an adverse employment action was based on age.

Thus, Hogue is decidedly inapposite to the case pres-

ently before this Court, and its use by the Seventh Cir-

cuit is having a decidedly negative impact on the con-

tinued use of severance pay. While Hogue may represent

“federal common law” under the FELA, it does not fol-

low that Hogue should be applied to every situation where

the obligation to tender back consideration for a release

is the issue. For the reasons stated above, it should not

be applied in the circumstances presented in this case.

CONCLUSION

For the foregoing reasons, EEAC respectfully submits

that the petition for a writ of certiorari should be granted.

Respectfully submitted,

DOUGLAS S. MCDOWELL

ANN ELIZABETH REESMAN *

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