Opposition Brief — Ameritech Corp. v. Raczak

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No. 96-2002

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In The

Supreme Court of the United States

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October Term, 1996

AMERITECH CORPORATION, AMERITECH SERVICES,

INC. and MICHIGAN BELL TELEPHONE CoO.,

Petitioners,

VS.

GARY RACZAK, et al.,

Respondents.

On Petition for a Writ of Certiorari to the United States

Court of Appeals for the Sixth Circuit

BRIEF FOR RESPONDENTS

RUDY J. HUIZENGA

Counsel of Record

HUIZENGA, HAGAN & HERGT, P.C.

Attorneys for Respondents

1415 Penobscot Building

Detroit, Michigan 48226

(313) 963-4200

72075

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ervices, inc.

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(800) 3 APFEAL « (800) 5 APPEAL « (800) BRIEF 21

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QUESTION PRESENTED

Whether the common law doctrines of ratification and

tender back can be utilized to enforce a waiver of ADEA rights

which is not in compliance with the Older Workers Benefit

Protection Act, 29 U.S.C. § 626(f).

ii

LIST OF PARTIES

The Petitioners are Ameritech Corporation, Ameritech

Services, Inc. and Michigan Bell Telephone Company.

Ameritech Corporation is the parent of Ameritech Services, Inc.

and Michigan Bell Telephone Company.

The Respondents are Gary Raczak, Carol Chandler, Bernard

Surma, Thomas Satkiewicz, Loraine Holmes, Gladys Moore,

Jean Kruse, Phyllis Tarpley, and Lou Ann Fox. Other plaintiffs

in the District Court proceedings are Dorothy Payne, George

Kinsela, Louise Ward Neal, Rex Staskal and Cathleen Longan.

ES NANO OT ARDS NR AE te OE re asily 2 entices eatin

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TABLE OF CONTENTS

Question Presented .............................

MN i so as sae sse sens cavcaceocscccc.

EE ee

I.

Il.

“An Individual May Not Waive” ADEA Rights

Unless The Requirements Of The OWBPA Are

ESE SN ORS a ee

Engrafting A “Tender Back” Requirement On To

The OWBPA Would Be Contrary To Its Intent And

Would Be Inequitable. ....................

A. Requiring Tender Back Is Contrary To The

Intent Of The Statute. .................

10

iv

Contents

Page

B. Engrafting A Tender Back Requirement On

The OWBPA Would Be Inequitable. ..... 13

ee PP rer ee re ree er re rr me ee rere 17

TABLE OF CITATIONS

Cases Cited:

Blistein v. St. John’s College, 74 F.3d 1459 (4th Cir. 1996)

Pe en ee ee en UR a eee 6,7

Hogue v. Southern Railway, 390 U.S. 516 (1968) ..... 12, 13

Howlett et al. v. Holiday Inns, Case No. 95-6236 (6th Cir.,

RUS TORE) a beck bean tae cekunaeneiewes 8,9, 15, 16

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

(ee khDCRRG ee ee ee eee ae 6

Oberg v. Allied Van Lines, !nc., 11 F.3d 679 (7th Cir. 1993),

cert. denied, 114 S. Ct. 2104 (1994) ............. 6

Oubre v. Entergy Operations, Inc., No. 96-1291 (cert.

pS ee a ee eee ee 17

Raczak v. Ameritech, 103 F.3d 1257 (6th Cir. 1997) .. 3, 12, 13

Smith v. Pinell, 597 F.2d 994 (Sth Cir. 1979) ........ 13

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Contents

Page

Wamsley v. Champion Refining and Chemicals, Inc., 11

F.3d 534 (5th Cir. 1993), cert. denied, 115 S. Ct. 1403

ub fin: AREER EET Ty EPEC eM te we ae Aa 6,7,9

Wasner v. American Motor Sales Corp., 597 F. Supp. 991

ee Oe BO kali dpe 13

Statutes Cited:

28 U.S.C. § 1251(1) 0... eee cee cece eee. l

29 U.S.C. § 621 ef OO, Fe Packie VER atime ae 2

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29 U.S.C. § 626(f)(3) 0... cece ccecceceee.... 1]

ee 0h Gh pacha neve eoask occ, 12

Other Authorities Cited:

Restatement (2d), Contracts, § 178 oj ore 12

Restatement (2d), Contracts, § 197 i: a re 12

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OPINIONS BELOW

The unreported Opinion of the District Court from which

appeal to the Sixth Circuit Court of Appeals was taken may be

found at 1994 WL 780899 (E.D. Mich. August 1, 1994). The

Sixth Circuit Court of Appeals Opinion is reported at 103 F.3d

1257.

STATEMENT OF JURISDICTION

The Sixth Circuit Court of Appeals made its ruling and

judgment on January 9, 1997. A petition for rehearing and

suggestion for rehearing en banc was denied on March 21, 1997.

The Petitioner then filed a Petition for Writ of Certiorari 90

days thereafter. The jurisdiction of this Court is based upon 28

U.S.C. § 1251(1).

STATUTORY PROVISION INVOLVED

Title II of the Older Workers Benefit Protection Act

(OWBPA), an amendment to the Age Discrimination And

Employment Act, 29 U.S.C. § 626(f).

STATEMENT OF THE CASE

The petition of Ameritech Corporation, et al. arises from

the Sixth Circuit's decision to not allow the Respondents’ failure

to tender back severance pay received in exchange for a waiver

not in compliance with the Older Workers Benefit Protection

Act to constitute a ratification of the noncomplying waiver. The

Respondents were terminated by Ameritech Services, Inc., and

Michigan Bell Telephone Company in November of 1992 as

part a massive company wide reduction in the workforce which

resulted in thousands of employees losing their jobs. The

Respondents’ filed charges of age discrimination with the Equal

2

Employment Opportunity Commission and alleged that the

information provided was insufficient and did not comply with

the provisions of the Older Workers Benefit Protection Act

(ADEA), 29 U.S.C. § 626(f). Counsel for Respondents also sent

a letter to Ameritech Corporation, Michigan Bell Corporation

and Ameritech Service, Inc., requesting that additional

information be provided to comply with the OWBPA. The

Petitioner denied this request, no additional information was

provided.

On June 28, 1993, the Respondents’ filed a Complaint in

United States District Court alleging that their termination

violated the Age Discrimination and Employment Act (ADEA),

29 U.S.C. § 621 et seq. Before any discovery was done the

defendants filed counterclaims against the Respondents and a

Motion for Summary Judgment claiming Plaintiffs’ claims

should be barred because they signed termination agreements

which contained a waiver of all their claims.

The Respondents requested limited discovery on the waiver

issue, at a scheduling conference with the District Court,

however, Petitioner’s strenuously objected claiming discovery

was unnecessary and the only records needed for consideration

of the Summary Judgment Motion were the severance documents

provided to the plaintiffs when terminated.

Thereafter, Respondent’s filed a Motion for Partial

Summary Judgment claiming the Petitioner’s had not complied

with the Older Workers Benefit Protection Act, thereby

invalidating the waivers. On August 1, 1994 the District Court

issued its Opinion denying the Petitioner’s Motion for Summary

Judgment and granting Respondents’ Motion for Partial

Summary Judgment. Judge Cohn found that since the OWBPA

specifically stated that the job titles of employees must be

provided the Petitioner was not in compliance by merely

3

providing salary grades. With respect to the common law

doctrines of ratification and tender back, J udge Cohn found that,

“It would be inequitable and contrary to the protective nature of

the OWBPA to require plaintiffs to tender back the consideration

received in exchange for executing waivers where the waivers

were obtained without compliance with the OWBPA. (Cohn Op.

at p. 21).

The Petitioners’ then filed a Motion for an Evidentiary

Hearing and a Motion for Certification of The Court’s August

1, 1994, Order for Interlocutory Appeal and to stay proceedings

pending appeal. On November 22, 1994, the District Court

denied Petitioner’s motion for an evidentiary hearing and to stay

proceedings, but did certify the August 1, 1994 Order as final.

The Sixth Circuit granted the Petitioners’ request for

interlocutory appeal January 31, 1995.

On January 9, 1997 the Sixth Circuit Court of Appeals issued

its Opinion Raczak v. Ameritech, 103 F.3d 1257 (6th Cir. 1997)

holding:

1. There should be further proceedings to determine

whether the information provided was understandable, “to

a worker trying to access whether age discrimination

actually occurred and trying to access what the prospects

of a suit would be whether or not discrimination actually

occurred”, 103 F.3d at p. 1264 reversing the lower court

ruling that failure to provide job title by itself made the

waivers unenforceable;

2. All three judges held there had been no ratification of

the waivers by the appellees failure to tender back the

severance pay received in exchange for signing them.

3. Judges Jones and Guy ruled that the money retained by

the employees would be deducted from any award to the

employees, while Judge Boggs 103 F.3d at p. 1268 indicated

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that the compensation received should be tendered back in

order for the Appellees to continue the lawsuit.

STATEMENT OF THE FACTS

The reduction in force plan used by both Michigan Bell

and Ameritech Services, Inc. (ASI) was called CRESP, the

Company Resizing Program. Both companies based their

procedure on annual bonus payments called merit awards at

Ameritech Services, Inc. and ICA awards at Michigan Bell. The

employees who received the lowest awards during the preceding

two years were placed in an at risk pool for termination. At ASI

the risk pool was made up of the bottom 30% of ranked

employees, and at Michigan Bell the bottom 20% of ranked

employees. Both ASI and Bell also had a process of excluding

employees from consideration for termination which included

recent promotion, and recent hire, along with other criteria. The

employees in the 20% and 30% risk groups were then sent on to

a second stage for further review, and were broken up into

smaller groups consisting of employees with similar skills,

experience and knowledge. The employees were ranked a second

time based upon job skills, performance, growth potential and

“breakthrough leadership criteria”. After rankings were done in

the subgroupings, lines were drawn to determine who would be

terminated pursuant to the resizing process.

Employees could voluntarily except Ameritech’s separation

package prior to the date in November on which terminations

would be announced. Many employees accepted separation

packages upon learning that they were in the at risk pool of

either 20% or 30% and therefore in jeopardy of being terminated.

In the Petition for Writ of Certiorari it is contended that

Raczak volunteered for early retirement. However, Mr. Raczak

was informed by his manager that he was selected for

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termination and under those circumstances he “volunteered” for

retirement. Subsequently, Raczak revoked the waiver which

Petitioner refuses to accept.

As part of the separation package the Petitioners’ were

required under the OWBPA to provide the ages and job titles of

employees selected and not selected for termination by Michigan

Bell and ASI. ASI included employees who had been selected

for termination by the CRESP procedure in the “not selected”

column, if they had agreed to the severance package prior to the

November termination date. Similarly, Michigan Bell included

in its “retained” category employees who had been selected for

termination but accepted the severance package prior to the

November termination date. Neither ASI nor Michigan Bell

informed terminated employees that the “not selected” category

included employees who had been selected for termination, or

that the “retained” category included employees who had been

selected for termination. Therefore, the employees did not know

at the time waivers were presented to them or, for more than a

year thereafter, the true definition of the categories, “not

selected” and “retained”. It was only through discovery

conducted later in cases brought on behalf of employees who

did not sign the waiver that this information was discovered.

Furthermore, the difference is Statistically significant for both

ASI and Michigan Bell. The discovery in other cases shows a

strong pattern of age discrimination which ASI and Michigan

Bell attempted to cover up by mischaracterizing information

provided to terminated employees.

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ARGUMENT

I.

“AN INDIVIDUAL MAY NOT WAIVE” ADEA RIGHTS

UNLESS THE REQUIREMENTS OF THE OWBPA ARE

MET.

Three of the five Appellate Courts deciding the tender back-

ratification issue have held there can be no ratification of a

waiver not in compliance with the OWBPA and tender back is

not required. The Seventh Circuit in Oberg v. Allied Van Lines,

Inc., 11 F.3d 679 (7th Cir. 1993), cert. denied, 114 S. Ct. 2104

(1994), and the Third Circuit in Long v. Sears Roebuck & Co.,

105 Fed. 1529 (3d Cir. 1997) petition for certiorari filed June 9,

1997 (docket No. pending), have taken the same position as the

Sixth Circuit in this case. The Fifth Circuit opinion of Wamsley

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

Cir. 1993), cert. denied, 115 S. Ct. 1403 (1995) and the Fourth

Circuit opinion of Blistein v. St. John’s College, 74 F.3d 1459

(4th Cir. 1996) hold that illegal waivers can be ratified and that

tender back is required prior to filing suit.

The essence of the Petitioners’ argument is that an individual

may waive ADEA rights even though the waiver does not comply

with the Older Workers Benefit Protection Act. Wamsley v.

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

1993) The Petitioner, Ameritech Corporation, et al. must take

the position as the Court did in Wamsley v. Champlin Refining

and Chemicals, Inc., supra, that although the waivers presented

to them were not in compliance with the OWBPA, the retention

of severance pay given in consideration for the waivers

constituted a “new promise” to waive their ADEA rights which

was not subject to the waiver requirements of the OWBPA. The

only way this result is obtained is by grafting onto the OWBPA

7

the common law doctrine of ratification and tender back even

though no mention is made of them in the statute, nor is there

any indication that a waiver can be effectuated except by meeting

the requirements of the statute.

Although the Petitioner concedes that the OWBPA

preempted the common law as to the adequacy of releases (p. 9

of Petition for Writ of Certiorari) it still asserts that the common

law of ratification and tender back has not been preempted

allowing releases which do not comply with the OWBPA to be

enforceable.

In explaining its holding, the Court in Wamsley put the

position the Petitioner must take in this case most succinctly in

Footnote 11 found on page 540 of its Opinion where it discusses

the “new promise” to waive ADEA rights:

As a new promise that created a new

obligation, it is not subject to the waiver

requirements of Section 626, and thus, such

requirements pose no bar to its enforcement.

(Emphasis added).

This is the core of Petitioner’s argument. This is the

foundation of Wamsley, supra, and Blistein v. St. John’s College,

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

On the contrary, the Older Worker’s Benefit Protection Act

says this: “An individual may not waive” claims under the ADEA

unless the eight requirements specified are met. The statute does

not indicate that it is a mere guideline which may or may not be

followed at the whim of the employer, it does not indicate that a

waiver may be valid if some of its requirements are met. It does

not indicate that a second, third, or fourth waiver may be valid

8

if it does not meet the requirements of the statute. It does not

indicate that a new nonconforming agreement may be valid even

though the old one is invalid. It does not say that an individual

may waive ADEA rights if he really wants to, intends to, and

never tries to enforce them, if the requirements of the statute

are not met. To the contrary, the statute says an individual may

not waive ADEA rights unless the statutory requirements are

met. The statute provides for no exceptions.

As stated in the recently decided Sixth Circuit case of

Howlett et al. v. Holiday Inns, Case No. 95-6236 (6th Cir., August

5, 1997):

Thus, it is clear from the statute that a former

employee could no more assent to the waiver

of his or her ADEA claims after having

signed the defective release than he or she

could at the time of signing it. Although

Congress utilized the familiar language of

the common law when it deemed that no

waiver would be “knowing and voluntary”

unless the eight OWBPA requirements were

met, it did not stop there; it also provided

that an individual may not waive an ADEA

claim unless the waiver is knowing and

voluntary. 29 U.S.C. § 626(f)(1). Allowing

an employee to ratify a release which violates

the OWBPA would directly contradict this

language.

(Emphasis added) (App. A at p. 6a). If the requirements of the

OWBPA are not met, there can be no waiver of ADEA rights. A

nonconforming “waiver” does not exist and cannot exist. The

individual’s rights under the ADEA still exist and are still

enforceable whether the individual wishes to exercise them or

not.

Do: tap oh Tat RAI Le Nita :

Fat 0 Rll alts Sar Ni lilt Mie

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The Petitioner in this case is asking this Court to rule that

an individual has waived ADEA rights even though the “waiver”

does not conform to the requirements of the OWBPA. The Court

in Wamsley indicated that void contracts cannot be ratified

because they are not contracts; without any antecedent contract

to ratify, there can be no ratification. 11 F.3d p. 539. However,

applying common law contract principals, the Court in Wamsley

decided that nonconforming waivers were not 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.

(Emphasis added) 11 F.3d p. 539. The problem with this

interpretation is that the OWBPA does not allow an employee

to waive rights without its requirements being met. The

individual does not decide whether his or her rights have been

waived. Rather, the Older Workers Benefit Protection Act does.

Again, that Act says, “An individual may not waive” ADEA

rights unless its requirements are met. It does not allow an

individual to waive ADEA rights of his or her own volition. An

individual may choose to not exercise ADEA rights, however,

this does not mean those rights have been waived.

Indeed, the entire purpose of the Older Workers Benefit

Protection Act would be subverted if this Court adopts the

position of the Petitioners in this case. By allowing

nonconforming waivers to be enforced, whether through the

doctrine of ratification or any other legal construct, this Court

would effectively repeal the Older Workers Benefit Protection

Act. As stated by the Court in Howlett et al., supra:

Congress had purposely interposed an

obstacle to application of the traditional

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ratification doctrine by requiring that a

knowing and voluntary waiver of an ADEA

claim cannot occur except in cases in which,

at a minimum, the eight OWBPA factors are

met.

(App. A at pp. 6a-7a).

The clear intent of the OWBPA is to protect employees from

waiving ADEA rights unless its provisions are met. The intent

of the Act must not be subverted by allowing the application of

the common law doctrine of ratification, or any other doctrine,

to create an unintended result — the enforcement of

noncomplying waivers.

Il.

ENGRAFTING A “TENDER BACK” REQUIREMENT

ON TO THE OWBPA WOULD BE CONTRARY TO ITS

INTENT AND WOULD BE INEQUITABLE.

A. Requiring Tender Back Is Contrary To The Intent Of The

Statute.

The Petitioner asserts that the failure of the respondents to

“tender back” the severance pay they received in exchange for

their noncomplying “waiver” must result in dismissal of the case

because it constitutes ratification. As stated above, the retention

of severance pay cannot serve to “ratify” an illegal waiver, nor

is it required that it be tendered back prior to instituting a lawsuit.

First of all, the statute itself does not make mention of

tendering back consideration prior to challenging or enforcing

a waiver. The statute does contain an enforcement provision

providing that in any dispute over whether the requirements of

Lf)

1]

the Act have been met, “the party asserting the validity of a

waiver shall have the burden of proving in a Court of competent

jurisdiction that a waiver was knowing and voluntary pursuant

to paragraph (1) or (2).” 29 U.S.C. § 626(f)(3). There is no

mention of tendering back consideration received prior to a

lawsuit. Furthermore, the statute places the burden of proof

Squarely on the party asserting the validity of the waiver, in this

case, the Petitioners. By requiring that consideration received

be tendered back to the Company beforehand, the Petitioner

demands respondents in essence post a bond prior to filing suit.

This would be done before any decision is made concerning the

validity of the waiver, before any discovery is taken by either

side, and before the case is even filed. If the Court adopts this

position, quite obviously, many plaintiffs would be prevented

from ever filing a lawsuit no matter how egregious the violation

of OWBPA and no matter how blatant the underlying age

discrimination that occurred.

Again, the “tender back” requirement is a common law

doctrine that the Petitioner asks this Court to engraft onto the

OWBPA. This the Court should not do so for the same reason it

should not allow noncomplying waivers to be ratified by

retention of severance pay; to do such a thing defeats the purpose

and intent of the statute. The retention of severance pay has no

affect on the existence or non existence of the plaintiffs’ ADEA

rights.

The only thing that effects ADEA rights is whether a waiver

meets the requirements of the OWBPA. If the waiver meets those

requirements, then an individual’s ADEA rights have been

waived; if not, an individual’s ADEA rights have not been

waived, and they may be enforced through the legal system.

If the defendant claims, as it does here, that the severance

pay received by the plaintiffs should be returned to them, let

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them sue the plaintiffs for the return of the money if a valid

theory of recovery exists. In fact, one does not. Even under

defendants’ common law theory, when a contract is void on the

ground of public policy it is unenforceable and the law leaves

the parties as it finds them. Restatement (2d), Contracts, § 178

(1997). Because the defendants’ counter-suit is based upon a

waiver not in compliance with the statute, it has no grounds to

seek return of the severance given to its employees. That is

because no waiver of ADEA rights ever existed, and does not

now exist. In this situation, restitution, or tender back is not

available even under the defendants’ common law theories.

Restatement (2d), Contracts, § 197 (1978).

In Raczak v. Ameritech, 103 F.3d 1257 (6th Cir. 1997), Judge

Jones, writing for the Court, points out that the Supreme Court

dealt with the tender back issue in Hogue v. Southern Railway,

390 U.S. 516 (1968) finding that no tender back would be

required of an employee challenging an illegal waiver. The

Hogue case, supra, dealt with an analogous situation. The

Federal Employer's Liability Act (FELA), 45 U.S.C. § 55, also

occupied the law of waivers pertaining to railroad employees.

The FELA occupied the law on waivers by prohibiting them

entirely with respect to railroad employees. The Older Workers’

Benefits Protection Act occupies the law on waivers pertaining

to ADEA rights by prohibiting them unless its requirements are

met. Both statutes are remedial in nature and in that case the

United States Supreme Court ruled:

There is no occasion to decide whether the

release here involved violated § 5. It is

sufficient for the purposes of this decision to

note that a rule which required a refund as a

prerequisite to institution of suit would be

“wholly incongruous with the general policy

of the Act to give railroad employees a right

i et ah iin ts hcih eect

aids asia eka Seti

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to recover just compensation for injuries

negligently inflicted by their employers”.

Dice v. Akron, C.&Y.R. Co., supra, 342 US

at 362, 72 S. Ct. at 314. Rather, it is more

consistent with the objectives of the Act to

hold, as we do, that it suffices that, except as

the release may otherwise bar recovery, the

sum paid shall be deducted from any award

determined to be due to the injured employee.

Cf. Callen v. Pennsylvania R. Co., 332 U.S.

625, 68 S. Ct. 296, 92 L. Ed. 242.

390 U.S. 516 at 517.

As indicated by Judge Jones, “the Hogue decision is the

only time the Supreme Court has spoken on the issue of tender

back requirements and should be followed by this Court” 103

F.3d p. 1270 Judge Jones pointed out that other courts applied

Hogue to bar tender back requirements in lawsuits involving

federal statutes other than FELA, citing Smith v. Pinell, 597

F.2d 994, 996 (Sth Cir. 1979), barring a tender back requirement

pursuant to the Jones Act, and Wasner v. American Motor Sales

Corp., 597 F. Supp. 991, 998 (E.D. Pa. 1984) holding that there

was no tender back requirement in a case involving the

Automobile Dealers Day In Court Act. The Court, therefore,

should follow its previous decision in Hogue and not require a

tender back, but rather allow the severance pay received to be

counted as a set-off against any damages plaintiffs are awarded

in this case.

B. Engrafting A Tender Back Requirement On The OWBPA

Would Be Inequitable.

A substantial deterrent to bringing a lawsuit under the

ADEA would result if the Court required a tender back of

severance pay, frustrating the intent of Congress as expressed

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in the Senate Committee Report indicating the OWBPA’s

objective was to “insure that older workers are not coerced or

manipulated into waiving their rights to seek legal relief under

the ADEA” (Senate Report pp. 101-263, p. 5). Requiring tender

back would allow the Petitioner to obtain the same objectives

sought by way of its ratification argument since most plaintiffs

would be unable to return the money received. Engrafting a

tender back requirement onto the OWBPA allows a company to

violate the law twice and get away with it; first by committing

age discrimination in the termination process, and second by

providing a nonconforming “waiver”. Surely, this is not the intent

of Congress. Employers are aware that many employees will

not be able to return severance pay since it is needed for living

expenses and, therefore, will not be able to enforce legal rights

under the ADEA no matter how egregiously violated. Since

employees covered by the ADEA are over age 40 they face an

uncertain future in the job market and often can only hope to be

under employed if successful at finding a job. In light of all of

these considerations, the lower court decision of Judge Avern

Cohn states that practical effect of a tender back requirement

makes it unlikely that employees will “be able to put their

severance payments aside for future tenders, or be able to come

up with the monies to make such a tender at such later time as

they acquire grounds to believe that a successful lawsuit might

be mounted in connection with their retirements.” (Cohn Op. at

27).

In addition, the terms of the termination agreement itself

makes return of the entire amount of severance pay inequitable.

Paragraph 14 of the Agreement drafted by Petitioner states:

The provisions of this agreement are

severable, if any provision or the scope of

any provision is found to be unenforceable

by a court of competent jurisdiction, the other

provisions or the effected provisions as

15

reduced in scope shall remain fully valid and

enforceable.

The Petitioner received a valid waiver of all of the

Respondent’s rights under State law and all of the Respondent’s

rights under Federal law except those rights under the ADEA

which were not waived by the nonconforming waiver. Pursuant

to the terms of its own agreement Petitioner received the benefit

of its bargain and the agreement should be enforced as written.

The Petitioner now wants to belatedly re-write its own

agreement to require re-payment of all severance pay provided

prior to suit. No such provision exists in the agreement. In fact,

the concept of tendering back consideration is not mentioned

anywhere in the termination agreement. It would not be fair to

impose this pre-suit requirement on Respondents at this late date.

With regard to the equities of allowing employees to pursue

enforcement of their ADEA rights while retaining severance pay

received in exchange for a noncomplying release, Judge Ryan

in Howlett et al. v. Holiday Inns, stated:

Notably, the OWBPA itself contains no

sanction for noncompliance. In other words,

although employers are charged with writing

valid releases, there is no automatic penalty

if they fail to do so. See 29 U.S.C.

§ 626(F)(3). Thus, the only external incentive

an employer has to comply with the OWBPA

is the savings gained by obtaining valid

releases. In the normal case, the cost to an

employer of paying an employee for the

release is less than the cost of litigating

potential ADEA claims; thus, the incentive

for employers to voluntarily comply with

the OWBPA.

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However, in cases where the employer knows

that it has impermissibly discriminated based

upon age and that the OWBPA information

will likely demonstrate such discrimination,

and we do not suggest that this is one of them,

the economic incentive to comply with the

OWBPA will be insufficient. In such a case,

the employer may gamble and decide not to

provide the OWBPAinformation, hoping

that an employee who does not know he or

she has been discriminated against will be

less likely to sue, and will also accept less

money for the ADEA waiver. The savings

in not having to pay the full settlement value

of a viable ADEA claim may outweigh the

risk of later not being able to enforce the

waiver. In this latter instance, the purpose

of the OWBPA to provide employees with

sufficient information to evaluate the worth

of potential ADEA claims would be

frustrated in the very case in which the

information is most important.

(Emphasis added) Howlett, et al., supra at App A. at pp. 8a-9a.

Thus, despite the Petitioner’s protestations to the contrary,

it is equitable to allow the Plaintiffs’ to retain severance pay

received and count it as a set off against any damages later

obtained in a lawsuit. Corporations should not be allowed to

both violate the law on waivers and discrimination because an

employee is unable to tender back severance pay. There can be

no question that the overriding intent of the OWBPA was to

attempt to equalize the bargaining power between corporations

and employees. The OWBPA does this and its effect should not

be undermined by yet another clever attempt to coerce employees

17

into giving up their rights under the ADEA by engrafting a tender

back requirement onto the Older Workers Benefit Protection Act.

CONCLUSION

The Court should reject the argument of the Petitioners in

this case for all the reasons stated herein. This case should be

joined with the case of Oubre v. Entergy Operations, Inc., No.

96-1291 (cert. granted April 21, 1997), because it presents the

same issue as this case. If not joined, the Respondents request

that the Court consider the arguments made by them when

deciding the Oubre case.

Respectfully submitted,

RUDY J. HUIZENGA

Counsel of Record

HUIZENGA, HAGAN & HERGT, P.C.

Attorneys for Respondents

1415 Penobscot Building

Detroit, Michigan 48226

(313) 963-4200

la

APPENDIX A — DECISION OF RONALD H. HOWLE TT,

ETAL. vs. HOLIDAY INNS, INC. OF THE UNITED STATES

COURT OF APPEALS FOR THE SIXTH CIRCUIT

FILED AUGUST 5, 1997

RECOMMENDED FOR FULL-TEXT PUBLICA TION

Pursuant to Sixth Circuit Rule 24

ELECTRONIC CITATION: 1997 FED App. 0232P (6th Cir.)

File Name: 97a0232p.06

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

RONALD H. HOWLETT; GRAVES

B. IVEY; SIEGFRIED K.

KONETZNY; JEFFREY E.

MCLAUGHLIN; HOMAYOON No. 95-6236

MESHGINPOOSH; TERRY PHILLIPS;

EDWARD RINCKEL; FREDERICK C.

ROOZEN; CHRISTOPHER R. RYAN;

RENE H. SCHIEGG; FRED

WRIGHT,

Plaintiffs-Appellees,

v.

HOLIDAY INNS, INC., a

Tennessee corporation, |

Defendant-Appellant.

Appeal from the United States District Court

for the Western District of Tennessee at Memphis.

No. 92-02885--Julia §. Gibbons, Chief District Judge.

Argued: September 18, 1996

Decided and Filed: August 5, 1997

2a

Appendix A

Before: GUY and RYAN, Circuit Judges; JARVIS, Chief

District Judge.

COUNSEL

ARGUED: Beth M. Rivers, WAHL & RIVERS, Detroit,

Michigan, for Appellee. Frederick J. Lewis, McKNIGHT,

HUDSON, LEWIS & HENDERSON, Memphis, Tennessee, for

Appellant. ON BRIEF: Rudy J. Huizenga, HUIZENGA,

HAGAN, HERGT & RIVERS, Detroit, Michigan, Gerald D.

Wahl, Detroit, Michigan, Beth M. Rivers, WAHL & RIVERS,

Detroit, Michigan, for Appellee. Thomas L. Henderson,

Frederick J. Lewis, Rhonda M. Taylor, MCKNIGHT, HUDSON,

LEWIS & HENDERSON, Memphis, Tennessee, for Appellant.

OPINION

RYAN, Circuit Judge. We are called upon to decide

whether terminated employees who sue their former

employers under the Age Discrimination in Employment Act

(ADEA), 29 U.S.C. §§ 621-634, must first tender back any

portion of the incentive payment they received for their

general promise not to sue on any matter relating to the

termination. We hold that because each “Separation

Agreement and General Release” signed by the plaintiffs

does not contain the minimum information required by the

ADEA to be enforceable, it cannot subsequently be

validated by the employee by retaining the consideration

received for the releases. Therefore, we further hold that

plaintiffs may prosecute their ADEA action without

"The Honorable James H. Jarvis, II, Chief United States District

Judge for the Eastern District of Tennessee, sitting by designation.

3a

Appendix A

returning any of the severance money given them by

defendant. Therefore, we shall affirm the district court’s

order denying summary judgment.

I.

Plaintiffs are former upper-level management employees

of Holiday Inns, Inc. In 1991, Holiday Inns was acquired

by a British corporation, and after a corporate restructuring,

plaintiffs lost their jobs. Each plaintiff signed an individual

separation and release agreement in exchange for an

unspecified sum of money. The agreement provides, in

pertinent part:

Employee forever and unconditionally releases the

Released Parties from any and all claims . . . related in

any way to anything occurring up to and including the

date hereof. Without limiting the generality of the

foregoing, this Agreement applies to any and all claims

which in any way result from, arise out of, or relate to

Employee’s employment, termination or resignation

from employment with the Company or any of the

Released Parties, including but not limited to, any and

all claims which could have been asserted under any

fair employment, contract or tort laws, ordinance [sic],

including Title VII of the Civil Rights Act of 1964, the

Tennessee Anti-Discrimination Act, the Employee

Retirement Income Security Act, or under any of the

Company’s employee benefit, compensation, bonus,

performance, award, severance, or vacation pay plans

Each plaintiff was instructed that he had 72 hours to sign

and return the agreement in order to be eligible for the

incentive. Nowhere does the agreement explicitly refer to

ADEA claims.

In 1992, plaintiffs sued, alleging that their termination

violated the ADEA; however, they did not return any

portion of the incentive payments which they had received

from Holiday Inns or offer to do so. The defendant moved

4a

Appendix A

for summary judgment, arguing that, even if the release is

defective under the ADEA, plaintiffs had ratified it by

keeping the incentive money they were paid and were

therefore barred from pursuing any employment-related

claim. The district court held otherwise, reasoning that the

purposes of the ADEA would be frustrated by a tender-back

requirement. Recognizing the split among the circuits on

this question and the absence of controlling authority in this

circuit, the district court then certified its order denying

summary judgment for interlocutory appeal.

II.

A.

Under the Older Workers Benefit Protection Act

(OWBPA) amendment to the ADEA, there are eight

minimum requirements an ADEA release must meet before

it can be considered “knowing and voluntary.” 29 U.S.C.

§ 626(f). Paraphrasing, they are:

(1) The release must be written in a manner calculated

to be understood by the employee signing the release,

or the average individual eligible to participate;

(2) the release must specifically refer to the ADEA;

(3) the release must not purport to encompass claims

that may arise after the date of signing;

(4) the employer must provide consideration for the

ADEA claim above and beyond that to which the

employee would otherwise already be entitled;

(5) the employee must be advised in wniting to consult

with an attorney;

(6) the employee must be given at least 21 or 45 days

to consider signing, depending on whether the incentive

is offered to a group;

Sa

Appendix A

(7) the release must allow the employee to rescind the

agreement up to 7 days after signing; and

(8) if the release is offered in connection with an exit

incentive or group termination program, the employer

must provide information relating to the job titles and

ages of those selected (or eligible) for the program, and

the corresponding information relating to employees in

the same job titles for those who were not selected (or

not eligible) for the program.

29 U.S.C. § 626(f)(1). Holiday Inns acknowledges that

none of the foregoing requirements were met with respect to

the release in question, save possibly the first. Thus, under

the terms of the ADEA, the release signed by the plaintiffs

was not knowing and voluntary; therefore, it was not valid.

Nevertheless, Holiday Inns argues, plaintiffs have

Subsequently knowingly and voluntarily ratified the

defective contract of release by not returning the

consideration paid for the releases. Holiday Inns relies

heavily upon decisions in the Fourth and Fifth Circuits in

which these courts have read the OWBPA amendment as

retaining the common-law doctrine of ratification. See

Blistein v. St. John’s College, 74 F.3d 1459, 1465-66 (4th

Cir. 1996); Blakeney v. Lomas Info. Sys., Inc., 65 F.3d

482, 485 (Sth Cir. 1995), cert. denied, 116 S. Ct. 1042

(1996). These courts have ruled that, despite Signing a

release that does not comply with the ADEA, an employee

who keeps the incentive paid for the ADEA waiver has

ratified the contract, and is thereby bound by it. Blistein, 74

F.3d at 1465-66; Blakeney, 65 F.3d at 485. These courts

reason that the OWBPA amendment merely codified the

common-law elements of “knowing and voluntary,” leaving

the doctrine of ratification intact. See Blistein, 74 F.3d at

1465-66; Wamsley v. Champlin Ref. and Chems., Inc., 11

F.3d 534, 538-39 (5th Cir. 1993).

Additionally, the Wamsley court looked to the OWBPA’s

legislative history to determine that applying the ratification

6a

Appendix A

doctrine was consistent with the purposes of the ADEA.

That is, the congressional committee that proposed the

OWBPA amendment to the ADEA discussed several of the

common-law instances in which a voidable contract could be

ratified, such as instances in which the original contract was

procured through fraud, duress, coercion, or mistake, id. at

539 n.8, thus suggesting that Congress viewed

noncompliance with the OWBPA requirements in the same

light, id. Also, the Wamsley court reasoned that, if

employees were excused from tendering back the

consideration paid for waiving ADEA claims when such

claims are later brought anyway, employers would be

deterred from offering private agreements which settle

potential claims, thereby defeating one of the purposes of

the ADEA. /7d. at 539.

The difficulty with the defendant’s argument and with the

reasoning of the Blistein, Blakeney, and Wamsley decisions,

we think, is that they fail to address the straightforward

language of the statute. The OWBPA unambiguously states

at section 626(f)(1) that an individual “may not waive”

ADEA claims unless the OWBPA requirements are met.

There is no hint of any exception.

Thus, it is clear from the statute that a former employee

could no more assent to the waiver of his or her ADEA

claims after having signed the defective release than he or

she could at the time of signing it. Although Congress

utilized the familiar language of the common law when it

deemed that no waiver would be “knowing and voluntary"

unless the eight OWBPA requirements were met, it did not

stop there; it also provided that an individual may not waive

an ADEA claim unless the waiver is knowing and voluntary.

29 U.S.C. § 626(f)(1). Allowing an employee to ratify a

release which violates the OWBPA would directly contradict

this language.

Congress has purposely interposed an obstacle to

application of the traditional ratification doctrine by

requiring that a knowing and voluntary waiver of an ADEA

7a

Appendix A

claim cannot occur except in cases in which, at a minimum,

the eight OWBPA factors are met. The common law would

invalidate a contract as not being knowing or voluntary if it

were secured through fraud, duress, coercion, or mistake.

But, under the common law, such an invalid contract could

be ratified by the retention of the consideration once the

fraud, duress, coercion, or mistake was uncovered. The

rationale for this rule is that, by keeping the consideration

after the voidability of the contract is discovered, the

promisor makes a new contract, this time knowing all the

facts and circumstances. He renews his promise and keeps

the consideration, forming a new contract, because the

element which made the original contract invalid is no

longer present. Wamsley, 11 F.3d at 540 (citing the

Restatement (Second) of Contracts §§ 2 and 19 (1981), and

1 Samuel Williston, Williston on Contracts § 98 (1957)).

But, in this case, the invalidating flaw has nor been

eliminated. The OWBPA information still has not been

Supplied. It is as if, under a common-law analysis, the

fraud, duress, coercion, or mistake infected the new,

Supposedly ratified contract as well. Thus, even under this

analysis, the employee cannot validate the noncomplying

release simply by retaining the consideration.

The overarching purpose of the OWBPA amendment is to

provide employees with information giving them “the ability

to assess the value of the right to sue for a possibly valid

discrimination claim.” Raczak v. Ameritech Corp., 103

F.3d 1257, 1262 (6th Cir. 1997), petition for cert. filed, 66

U.S.L.W. 3001 (U.S. June 18, 1997) (No. 96-2002).

These plaintiffs are in no better position now to make this

assessment than they were when they signed the releases.

See Long v. Sears Roebuck & Co., 105 F.3d 1529, 1542 (3d

Cir. 1997), petition for cert. filed, 65 U.S.L.W. 3840 (U.S.

June 9, 1997) (No. 96-1988). Although the Wamsley court

rejects this analysis, claiming that the “new” promise is

somehow “not subject to the waiver requirements of [the

OWBPA],” it provides no justification for such an

exception. Wamsley, 11 F.3d at 540 n.11. The new

8a

Appendix A

promise still purports to be a release from ADEA claims and

is still, by the terms of the OWBPA, invalid if it does not

contain the information Congress has required.

B.

Nevertheless, the fact that the terminated employees

cannot ratify a defective ADEA waiver merely allows them

to pursue their ADEA claims. It does not, by itself, require

that they be allowed to retain the consideration paid for an

in. alid bargain. Although Holiday Inns argues that

equitable principles require the return of this money in

exchange for which there was no valid promise, we are

constrained from providing such relief by the purposes of

the OWBPA and, more importantly, practical

considerations.

Notably, the OWBPA itself contains no sanction for

noncompliance. In other words, although employers are

charged with wniting valid releases, there is no automatic

penalty if they fail to do so. See 29 U.S.C. § 626(f)(3).

Thus, the only external incentive an employer has to comply

with the OWBPA is the savings gained by obtaining valid

releases. In the normal case, the cost to an employer of

paying an employee for the release is less than the cost of

litigating potential ADEA claims; thus the incentive for

employers to voluntarily comply with the OWBPA.

However, in cases where the employer knows that it has

impermissibly discriminated based upon age and that the

OWBPA information will likely demonstrate such

discrimination, and we do not suggest that this is one of

them, the economic incentive to comply with the OWBPA

will be insufficient. In such a case, the employer may

gamble and decide not to provide the OWBPA information,

hoping that an employee who does not know he or she has

been discriminated against will be less likely to sue, and will

also accept less money for the ADEA waiver. The savings

in not having to pay the full settlement value of a viable

ADEA claim may outweigh the risk of later not being able

9a

Appendix A

to enforce the waiver. In this latter instance, the purpose of

the OWBPA to provide employees with sufficient

information to evaluate the worth of potential ADEA claims

would be frustrated in the very case in which the

information is most important.

In the case before us, as in most instances, there has been

no determination of the amount of the consideration

allocable to the ADEA waiver and the amount paid for other

potential claims. As the separation and release agreement

indicates, Holiday Inns’ former employees explicitly

released the defendant from liability for multiple claims,

and, since ADEA liability was not specified, we may infer

that Holiday Inns has paid for the release of a number of

other claims. It would be extremely difficult, if not

impossible, for the district court to identify all the potential

theories of liability that these former employees have waived

in consideration for money payments. And it would be

impossible to assign meaningful values to all those potential

claims and then apportion some of the consideration for the

ADEA claims, and the rest for the remaining claims. See

Long, 105 F.3d at 1543-44.

Lastly, also as a practical matter, we note that the eight

OWBPA requirements should not be difficult for an

employer to meet. Although questions may arise as to

whether the information provided by the employer can be

understood by the average individual eligible to participate

in the severance program, or as to what constitutes a “job

title," see Raczak, 103 F.3d at 1262, courts should read

these requirements in a common-sense manner and not

dogmatically. When the provided information reasonably

assists the employee in determining whether he or she

wishes to waive a potential ADEA claim, then summary

judgment may be appropriate in favor of the employer.

Thus, Holiday Inns can hardly complain about the inequity

of losing the benefit of its bargain, when it did not even

attempt to comply with the minimal requirements of the

OWBPA. And, we will not impose the impossible task on

district courts of separating out the consideration paid for

10a

Appendix A

ADEA waivers from that paid for all other claims,

especially in light of the relative ease with which employers

could avoid such complications by complying with the

OWBPA.

Il.

For the foregoing reasons, the district court’s order

denying summary judgment is AFFIRMED, and the case is

REMANDED for further proceedings.

LO be a PRT IE VEE Hs

woes Sah ee , ;

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