Friday, June 13, 2014

Settlement and the Older Workers Benefit Protection Act


         When completing employment settlement or separation agreements for employees over 40 years old, an employment attorney might feel tempted to simply recycle the language which the attorney has used in prior settlement agreements, in order to ensure that the agreement complies with the provisions of the Older Workers Benefit Protection Act (“OWBPA”).  However, a recent United States District Court decision out of the District of Colorado discusses several different ways in which employees can challenge the legal sufficiency of such language, and therefore the binding effect of the underlying agreement, and its waiver of claims.  Indeed, as the plaintiff-employee’s challenges, in that case, to an employer’s OWBPA language was successful in at least some regards, the case serves as a useful lesson, for employees’ and employers’ counsel alike, about the importance of making sure that OWBPA language is worded correctly, so as to ensure enforceability of the underlying agreement.

I.                   Attorney Consultation
            In Foster v. Mountain Coal Co., LLC, No. 12-CV-03341-LTB-MJW, 2014 U.S. Dist. LEXIS 67637 (D. Colo. May 16, 2014), the Court held that a severance agreement did not comply with the OWBPA, because it did not state that the employee-plaintiff should consult an attorney before signing the severance agreement.  As the severance agreement merely stated that the employee “may” consult with a lawyer, rather than stating that the employee “should” or “ought” to do so, the release was held not to be enforceable, and the Court held that the plaintiff-employee could proceed with a claim under the Age Discrimination in Employment Act (“ADEA”), as well as claims under state law.
            The Court noted that the OWBPA “provides that a waiver is not valid unless the individual executing the release is ‘advised in writing to consult with an attorney prior to executing the agreement.’” Foster, 2014 U.S. Dist. LEXIS 67637 at *18 (quoting 29 U.S.C. § 626(f)(1)(E) (emphasis added in Court’s opinion; emphasis is not in statute).  In holding that the language of the separation agreement at hand did not meet that requirement, the Court noted as follows:
The language does not advise Plaintiff Fisk to consult with an attorney prior to signing the Agreement, or even that he ‘should’ or ‘ought to’ consult with an attorney before signing the Agreement. Instead it provides in passive language and in past tense that Plaintiff Fisk had the ‘opportunity for consideration and consultation with attorney,’ and that Plaintiff Fisk ‘may discuss the Agreement with his[] attorney.’
I read the statutory language as requiring the waiver to affirmatively advise the employee to consult with an attorney, or that the employee is affirmatively advised that he ‘should’ or ‘ought’ to consult with an attorney. See Am. Airlines, 133 F.3d at 118. This is so because the provisions of the OWBPA are precise, ‘strict, unqualified’ requirements for employers imposed by Congress, and courts cannot relax requirements that Congress lawfully imposes. Oubre, 522 U.S. at 427. The word ‘advise’ means ‘to give advice to,’ ‘caution,’ ‘warn,’ ‘recommend,’ or ‘inform.’ Merriam-Webster’s Collegiate Dictionary 19 (11th ed. 2004); see also Cole v. Gaming Entm't, LLC, 199 F. Supp. 2d 208, 214 (D. Del. 2002). The language in the Agreement is passive and does not ‘advise’ Plaintiff Fisk to do anything. Additionally, portions of it are in the past tense, and past directives are also insufficient. The language does not ‘give advice to,’ ‘caution,’ ‘warn,’ ‘recommend,’ or ‘inform’ Plaintiff Fisk to consult with an attorney; it only makes Plaintiff Fisk aware of a right that he has, but does not ‘advise,’ him to take advantage of, act on, or take any action regarding that right. Am. Airlines, 133 F.3d at 118. An employee, such as Plaintiff Fisk, is not required to infer the right to consult an attorney from language such as ‘may’ or ‘has had.’ See Cole, 199 F. Supp. 2d at 214. Additionally, Defendants argue that the fact that Plaintiff Fisk saw a workers' compensation attorney satisfies this requirement. However, the language mandates strict compliance, which the Agreement did not satisfy.
As the Agreement fails to advise Plaintiff Fisk to consult with an attorney prior to signing it, as explicitly required by the statute, the release is invalid and cannot be enforced against Plaintiff Fisk. Accordingly, Defendants are not entitled to summary judgment on Plaintiff Fisk’s ADEA claim.
Foster, 2014 U.S. Dist. LEXIS 67637 at *18-20. 
II.               Decisional Unit
            In Foster, since the plaintiff-employee had been fired as a part of a group termination, the Court also considered the provisions of the OWBPA (29 U.S.C. § 626(f)(1)(H)) which require that the employer provide the employee with detailed information concerning a group termination program.  Foster, 2014 U.S. Dist. LEXIS 67637 at *20-21.  The plaintiff claimed that he either did not receive, or did not recall receiving, the required information at the time of his termination and receipt of the Agreement – rather, he claimed that he received that information at a later time. Id. at 21.  The employer, in rebuttal, pointed to the testimony of plaintiff’s supervisor, who claimed that each employee was given an envelope containing both the agreement and the required disclosures. Id. at 22.  Since the plaintiff testified that he did not remember whether he received the document at the time in question, as compared to the supervisor’s testimony which was couched in certain terms, the Court held that no reasonable jury could find for the plaintiff-employee on this point, and that the Court could not conclude that there was a genuine issue of material fact on this point. Id. at 23-24.
            The Plaintiff-employee also challenged whether the notice in question adequately described the relevant decisional unit. Id. at *31.  As the Court noted, the OWBPA and its regulations provide that “flexible, manipulable, subjective criteria – even criteria couched in purportedly quantified terms, such as ‘performance’ rankings – are impermissible means of creating a decisional unit”, and “given the concerns regarding an employer’s incentive to manipulate statistics and the relevant decisional pool, the regulations understandably prohibit an employer from arguing, tautologically, that its ‘decisional unit’ is simply ‘the employees it decided were eligible.’” Id. at 30.  Here, on the other hand, the Court noted that the decisional unit which the employer used, the “Production Group”, could be objectively defined, and was not based upon a “subjective criteria based on flexible or manipulable terms,” and that “basing a decision on a group, such as the Production Group, does not pose the risks the regulations are designed to prevent.” Id. at *31-32.
III.            Eligibility Factors
Ms. Foster also challenged whether the employer’s notice had adequately described the relevant factors.  As the Court briefly discussed:
Section 626(f)(1)(H) requires employers to provide employees who are terminated as part of a termination program, such as a RIF, with information about the program. In particular, employers must supply the terminated employee with the criteria for eligibility for the program and with lists of the ages and positions of both, employees who were terminated through the program, and those who were retained. Id. § 626(f)(1)(H)(i, ii). An ‘employment termination program’ takes place when a group or class of employees are involuntarily terminated and ‘offered additional consideration for their decision to sign a waiver.’ 29 C.F.R. § 1625.22(f)(1)(iii)(A). ‘Typically, an involuntary termination program is a standardized formula or package of benefits that is available to two or more employees.’ Id. § 1625.22(f)(1)(iii)(B).

Foster, 2014 U.S. Dist. LEXIS 67637 at *32-33.  The Court concluded that the employer had satisfied both provisions, as the disclosure in question “clearly state[d] its eligibility criteria”, and it also “included the required list which provided the job titles and ages of the employees terminated with the decisional units, as well as the job titles and ages of all retained employees within the decisional units.” Id. at *33.  Similarly, the Court rejected the employee’s argument that the employer was required to provide the criteria for selection in the RIF program.  As the court noted, with citation to case law:
Instead, the OWBPA requires only the disclosure of the eligibility factors for a Severance Plan. See id. § 1625.22(f)(1)(iii)(A, B) (defining ‘program’ as the package of benefits offered, not the involuntary termination program); see also Recchia v. Kellogg Co., 951 F. Supp. 2d 676 (D. N.J. 2013); Rupert v. PPG Indus., Inc., Nos. 07-0705, 08-0616, 2009 U.S. Dist. LEXIS 16639, 2009 WL 596014, at *56-57 (W.D.Pa. Feb. 26, 2009) (following the EEOC regulations and finding that ‘program’ refers to the benefits plan); Ricciardi v. Elec. Data Sys. Corp., No. 03-5285, 2007 U.S. Dist. LEXIS 11758, 2007 WL 576323, at *4 (E.D. Pa. Feb. 20, 2007) (holding that a release needed to include only the criteria for eligibility in the severance plan, not the criteria for termination).

Foster, 2014 U.S. Dist. LEXIS 67637 at *33-34.
IV.             State Anti-Discrimination Claims: Failure to Tender Back Consideration
            In Foster, the employer argued that the plaintiff’s claims under state law had to be dismissed under Colorado’s “ tender back” doctrine, because he had retained the $8,800 severance payment which had been paid to him to release those claims, and that the plaintiff had to tender that amount back to the employer before he could challenge his waiver of those claims. Id. at 35.  While the employer cited case law from the Tenth Circuit to support its position, Bennett v. Coors Brewing Co., 189 F.3d 1221, 1228 (10th Cir. 1999), the Court in Foster found the citation to that case to be “misplaced”, as that opinion had dealt with state common law claims, and not, as here, with claims of discrimination under the Colorado Anti-Discrimination Act. Foster, 2014 U.S. Dist. LEXIS 67637 at *35-36.  The Court looked to a Supreme Court opinion, Oubre v. Energy Ops., Inc., 522 U.S. 422, 427, 118 S. Ct. 838, 139 L. Ed. 2d 849 (1998), which had rejected an employer’s argument that claims under the ADEA could be barred by the tender back doctrine.  As the Court in Foster noted:
There, as here, the employer moved for summary judgment, contending that the employee had ratified a release of all claims against the employer by failing to return the monies she had received. [Oubre, 522, U.S. at 422]. The Court held that the release signed by the plaintiff did not comply with the OWBPA’s specific requirements regarding releases covering ADEA claims. Id.; see also 29 U.S.C. §§ 626(f)(1)(B), (F), (G). The Supreme Court concluded that because it failed to comply with the OWBPA, the release should not bar the plaintiff’s ADEA claim, even if the employee retained the monies she received in exchange for the release. Id. at 842.
In so holding, the Court reasoned that enforcement of the tender back and ratification rules ‘would frustrate the statute's practical operation,’ and explained that:
In many instances a discharged employee likely will have spent the monies received and will lack the means to tender their return. These realities might tempt employers to risk noncompliance with the OWBPA’s waiver provisions, knowing it will be difficult to repay the monies and relying on ratification. We ought not to open the door to an evasion of the statute by this device.
Foster, 2014 U.S. Dist. LEXIS 67637 at *36-37.  Noting that Colorado courts had an “expressed desire and intention to look to federal cases for guidance in applying the Colorado Anti-Discrimination Act”, the Court in Foster extended the reasoning of Oubre to this case, and held that the plaintiff’s state law claims were not barred by the tender back doctrine. Id. at 37-38.  Thus, the Court also denied the employer’s motion for summary judgment as to the plaintiff’s state law claims. Id. at *39.
V.                Conclusion: Importance of Strict Compliance with OWBPA
            While most of Mr. Foster’s arguments discussed above were rejected by the Court, the fact that he won at least one of those arguments with regard to his ADEA claims was enough for those claims to survive summary judgment.  The relevant paragraph of the Court’s opinion makes this point very clearly and succinctly:
[B]ecause I concluded that Defendants failed to show that all the strict statutory requirements of the OWBPA were met, summary judgment on Plaintiff Fisk’s ADEA claims is denied. See Butcher v. Gerber Prods. Co., 8 F. Supp. 2d 307, 314 (S.D. N.Y. 1998) (‘The absence of even one of the OWBPA’s requirements invalidates a waiver.’) Furthermore, because the release is invalid, discussion of its validity under the totality of the circumstances approach is not warranted.

Foster, 2014 U.S. Dist. LEXIS 67637 at *34-35.  Further, as the above discussion demonstrates, it was that same shortcoming (failure to follow the OWBPA’s requirements strictly), which ultimately led to the plaintiff’s state law claims surviving as well, notwithstanding the fact that the employee did not pay back to the employer the underlying settlement monies, which he had been paid following his execution of the underlying settlement agreement.  Thus, to repeat the admonition at the opening of this post, the importance of strict compliance with the OWBPA’s provisions, and the consequences for failure to do so, simply cannot be overstated.

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