-
USCA1 Opinion
United States Court of Appeals
For the First Circuit
____________________
No. 97-1363
AMERICAN AIRLINES, INC.,
Plaintiff, Appellee,
v.
RADAMES CARDOZA-RODRIGUEZ, MARTA ELAINE COLL-FIGUEROA,
ISABEL DE LA PAZ, MARIA D. GARCIA-CACERES, ERNESTO LOPEZ-GARCIA
ANA L. MARIN DE RIVERO, CARMEN ANA MARTINEZ-RIVERA
CARMEN ALICIA MATTOS, GUILLERMO ORTIZ-ROSA, MARGARITA SANTIAGO-NEGRON
AND MARGARITA ZEQUEIRA-JULIA,
Defendants, Appellants.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Juan M. Perez-Gimenez, U.S. District Judge] ___________________
____________________
Before
Stahl, Circuit Judge, _____________
Bownes, Senior Circuit Judge, ____________________
and Lynch, Circuit Judge. _____________
____________________
Ivan A. Ramos, with whom Ramos & Ramos-Camara, was on brief for _____________ _____________________
appellants.
Terence G. Connor, with whom Laura F. Patallo, Morgan, Lewis & __________________ ________________ ________________
Bockius LLP, Carlos A. Rodriguez-Vidal, and Goldman Antonetti & ____________ ___________________________ _____________________
Cordova, were on brief for appellee. _______
____________________
January 7, 1998
____________________
STAHL, Circuit Judge. Defendants-appellants STAHL, Circuit Judge. _______________
Radames Cardoza-Rodriguez et al., ("employees") appeal from __ ___
the district court's issuance of a declaratory judgment in
favor of plaintiff-appellee American Airlines ("American")
enforcing releases of age discrimination forms executed by
appellants and dismissing their counterclaims under the Age
Discrimination in Employment Act of 1967 ("ADEA"), 29 U.S.C.
621 et seq. and Puerto Rico Law 100. We reverse in part __ ___
and vacate and remand in part the district court's
declaration that the releases at issue are enforceable.
Nonetheless, we affirm the district court's grant of summary
judgment on the employees' counterclaim, finding the
employees' ADEA claims time-barred.
I. I. __
Background Background __________
Because the district court issued the declaratory
judgment on plaintiff's motion for summary judgment, we
recite the facts in a light most favorable to the non moving
party, the employees. DeNovellis v. Shalala, 124 F.3d 298, __________ _______
305 (1st Cir. 1997).
On September 21, 1994, as part of a workforce
reduction program, American offered certain reservation,
ticket, and cargo agents in the Commonwealth of Puerto Rico,
the opportunity to participate in a Voluntary Early
Retirement Program ("VERP"). The VERP provided for the
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addition of five years to each employee's actual age for
purposes of calculating retirements benefits, five years
additional credited service, cash bridge payments of $400 per
month until the employee became eligible to receive benefits,
immediate retirement medical benefits and travel benefits.
To be eligible to participate in the VERP an employee had to
be at the maximum pay scale in their job classification and
at least forty-five years of age.
American informed the employees of the program's
details by providing various VERP-related documents. The
introduction to the "Terms and Conditions" booklet describing
the program warned the employees to read the materials
carefully, and provided a participation deadline of November
11, 1994, with a seven day rescission period after an
election to participate. In order to participate, an
employee was required to sign a "Voluntary Early Retirement
Election Form" attesting that the decision was "completely
voluntary, final and irrevocable," that he or she had been
given forty-five days to make the election, and that all
rights to reemployment with American were being relinquished.
The election form also stated that, on an employee's last day
of work, he or she would be required to sign a "Complete
Release of All Claims," absolving American of all employment-
related liability including, specifically, "age
discrimination claims."
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The VERP election form required each employee to
attest to having read the entire release form prior to
electing to retire early. By the terms of the release, the
employee agreed not to bring any legal proceeding against
American in any court, administrative agency, or tribunal,
that the employee would forfeit the extra retirement benefits
if the employee breached a material release term, and also
provided the party successfully enforcing the release costs
and attorney's fees. The release contained a provision
stating: "I have had reasonable and sufficient time and
opportunity to consult with an independent legal
representative of my own choosing before signing this
Complete Release of All Claims." Although the VERP
documentation advised the employee to discuss the program
with their families and to "consult a financial advisor,"
neither the release nor any of the VERP documentation
explicitly advised the employees to consult an attorney prior
to executing the release or electing to retire. The only
mention of independent legal advice was contained in the
release, which was not to be signed until the employee's last
day of work. Each employee signed the release on his or her
last day of work.
The appellants elected to participate in the early
retirement program on various dates throughout the election
period. The earliest election occurred on October 11, 1994,
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the latest on December 13, 1994. The VERP also provided that
the employees' termination dates would depend on the
restructuring process; therefore, after their election, the
employees continued to work. Over the next ten months,
American began to terminate them individually. The earliest
termination occurred on December 30, 1994, while the latest
did not occur until September 29, 1995. After each
termination, American paid the VERP's enhanced retirement
benefits. For several months (the precise period is unclear
from the record), each of the appellants accepted and
retained these benefits.
On October 27, 1995, over a year after the
appellants elected to participate in the VERP, they began to
file administrative age discrimination claims with both the
Puerto Rico Anti-Discrimination Unit ("ADU") and the Equal
Employment Opportunity Commission ("EEOC") variously claiming
that their election to participate in the VERP was
involuntary and that American had discriminated against them
on the basis of age. In general, the complaints alleged that
certain management employees had led older employees to
believe that American planned to move the operations in the
reservation and cargo departments to another location or
subcontract to an outside company, placing their jobs in
jeopardy. However, once the employees elected to retire,
American asked them to train new, younger replacements to
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fill their jobs. The claimed threatened job losses never
materialized.
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II. II. ___
Prior Proceedings Prior Proceedings _________________
On April 18, 1996, American Airlines responded to
the appellants' ADU filings by initiating the instant
declaratory judgment action. See 28 U.S.C. 2201. In its ___
pleadings, American asked the district court to issue an
order declaring the rights and obligations of the parties in
connection with the VERP under the Employee Retirement Income
Security Act of 1974, 29 U.S.C. 1132(a)(3).1 Subsequently,
____________________
1. Although neither party has addressed the issue, it is
our duty to inquire sua sponte into our subject matter
jurisdiction. In re Recticel Foam Corp., 859 F.2d 1000, ___________________________
1002 (1st Cir. 1988). American brought this declaratory
judgment action under ERISA, which provides for a civil
action:
by a . . . fiduciary (A) to enjoin any
act or practice which violates the terms
of the plan, or (B) to obtain other
appropriate equitable relief (i) to
redress such violations or (ii) to
enforce any provisions . . . of the terms
of the plan.
29 U.S.C. 1132(a)(3). American seeks a declaration of the
parties' obligations under the plan in light of the release.
We need not confront the question of whether 1132(a)(3)
directly authorizes a declaratory judgment in this context.
Compare Winstead v. J.C. Penny Co., Inc., 933 F.2d 576, 578- _______ ________ ____________________
79 (7th Cir. 1991) ( 1132(a)(3) allows a fiduciary to
obtain a declaration regarding its obligations under the
terms of a plan), with Gulf Life Ins. Co. v. Arnold, 809 ____ ___________________ ______
F.2d 1520, 1523 (11th Cir. 1987) ( 1132(a)(3) does not
allow an insurer to obtain a clarification of its duty to
pay severance programs). In Franchise Tax Bd. v. Laborers _________________ ________
Vacation Trust, 463 U.S. 1 (1983) the Supreme Court stated: ______________
Federal courts have regularly taken
original jurisdiction over declaratory
judgment suits in which, if the
-7- 7
American moved under Fed. R. Civ. P. 67 to have the court
approve the deposit of future payments of the employees'
retirement benefits into a court-designated bank account (the
"court registry"). The court granted that motion, and, since
May 1996, American has paid the monthly payments due under
the VERP into an interest-bearing account.
The employees counterclaimed against American for
age discrimination under the ADEA, the Older Workers Benefits
Protection Act ("OWBPA"), 29 U.S.C. 626(f), and 29 L.P.R.A.
146 et seq., known colloquially as Puerto Rico "Law 100." __ ___
Evidently, once the district court allowed American to
deposit the employees' retirement benefits into the court
registry, a number of the original employee counterclaimants
abandoned their claims. Of the twenty-one employees who
____________________
declaratory judgment defendant brought a
coercive action to enforce its rights,
that suit would necessarily present a
federal question.
Id. at 19; see also id. at 19 n.19 (discussing jurisdiction ___ ___ ____ ___
in declaratory judgment actions involving patent
infringement); cf. Colonial Penn Group, Inc. v. Colonial ___ __________________________ ________
Deposit Group, 834 F.2d 229, 234 (1st Cir. 1987) (quoting ______________
Franchise Tax Bd., 463 U.S. at 19, and dismissing ____________________
declaratory judgment action where threatened coercive action
was based on state law). Here, the underlying controversy,
whether characterized as the employees' right to sue under
American's retirement plan, see 29 U.S.C. 1132(a)(1)(B), ___
or as a claim under the ADEA and OWBPA, clearly presents a
wholly federal question. As a result, American's request
for a declaratory judgment "arises under" 28 U.S.C. 1331.
-8- 8
brought the original counterclaim, only eleven remain in the
case on appeal.
On July 22, 1996, American moved for summary
judgment requesting a declaration that: (1) the employees had
ratified the release agreement under both federal and local
law; and (2) the defendants could not maintain any claims
relating to their early retirement. American also moved for
summary judgment on the employees' counterclaim arguing,
inter alia, that the employees administrative filings had _____ ____
been untimely. The court granted American's motion, and on
January 27, 1997, issued a declaratory judgment that:
(1) Defendants have ratified the release
agreements entered into by them in
connection with their acceptance of early
retirement benefits from American;
(2) the release agreements preclude
defendants from raising any claims
against American relating to their
employment or retirement, including the
claims for age discrimination under the
[ADEA, OWBPA, and Puerto Rico Law],
(3) Defendants failed to file their
claims of age discrimination with the
EEOC and Puerto Rico's Anti-
Discrimination Unit within the applicable
limitations period.
In light of this declaration, the district court granted
American's motion for summary judgment on the employees' ADEA
and Law 100 counterclaims. This appeal followed.
III. III. ____
Standard of Review Standard of Review __________________
-9- 9
We "review a district court's grant of summary
judgment de novo." Marrero-Garcia v. Irizarry, 33 F.3d 117, . _______ ______________ ________
119 (1st Cir. 1994). Summary judgment is appropriate when
"the pleadings, depositions, answers to interrogatories, and
admissions on files, together with the affidavits, if any,
show that there is no genuine issue as to any material fact
and that the moving party is entitled to judgment as a matter
of law." Fed. R. Civ. P. 56(c). In reviewing an award of
summary judgment, we must scrutinize the record in the light
most amiable to the party opposing the motion, indulging all
reasonable inferences in that party's favor. Griggs-Ryan v. ___________
Smith, 904 F.2d 112, 115 (1st Cir.1990). Notwithstanding the _____
liberality of this standard, the nonmovant cannot simply rest
on unsworn allegations. Morris v. Gov't Dev. Bank of Puerto ______ _________________________
Rico, 27 F.3d 746, 748 (1st Cir. 1994). "[T]o defeat a ____
properly supported motion for summary judgment, the nonmoving
party must establish a trial-worthy issue by presenting
'enough competent evidence to enable a finding favorable to
the nonmoving party.'" LeBlanc v. Great American Ins. Co., 6 _______ _______________________
F.3d 836, 842 (1st Cir. 1993) (quoting Goldman v. First Nat'l . _______ ___________
Bank of Boston, 985 F.2d 1113, 1116 (1st Cir. 1993)). ________________
Finally, "[a]n appellate panel is not restricted to the
district court's reasoning but can affirm a summary judgment
on any independently sufficient ground." Mesnick v. General . _______ _______
Elec. Co., 950 F.2d 816, 822 (1st Cir. 1991). _________
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IV. IV. ___
Discussion Discussion __________
Here, we are faced with two distinct questions.
First, was the district court's declaration that the
employees' release operated as a bar to their ADEA and Law
100 claims correct? Second, if the release does not bar
their claims, are the employees' claims nonetheless barred as
a matter of law? We answer the first question in the
negative, disagreeing with the district court's determination
that the employees' release bars their ADEA counterclaims.
We agree, however, that the statute of limitations bars the
employees' counterclaim.
1. Is the Release Enforceable? _______________________________
American presents two alternative arguments that
the release the employees signed is enforceable: (1) the
release complied with the OWBPA, 29 U.S.C. 626(f) or, (2)
if the release is invalid under the OWBPA, by refusing to
return the enhanced retirement benefits they received under
the VERP, the employees ratified the release. We disagree.
We find that the employees' release of their ADEA claims did
not comply with the OWBPA and that the ratification doctrine
-12- 12
does not apply to invalid ADEA waivers.2 We consider their 2
arguments in turn.
____________________
2. We emphasize that our holding is limited to releases of
ADEA claims that are invalid under the OWBPA. We do not
decide or express any opinion on whether the employees
validly released their non-ADEA claims. See infra part IV.2. ___ _____
-13- 13
a. Compliance with the OWBPA ____________________________
Although the district court did not reach this
issue, American contends that we can affirm the court's
declaration because the releases the employees signed are
valid under the OWBPA. We disagree.
For an employee's waiver of ADEA rights to be
enforceable, it must be "knowing and voluntary." See, e.g., ___ ____
Long v. Sears Roebuck & Company, 105 F.3d 1529, 1534 (3d Cir. ____ _______________________
1996). Prior to the enactment of the OWBPA, courts split
over how to determine whether a waiver of rights was knowing
and voluntary. Some courts used "ordinary contract
principles" such as fraud, duress, mutual mistake, or lack of
consideration, see O'Shea v. Commercial Credit Corp., 930 . ___ ______ _________________________
F.2d 358, 362 (4th Cir.), cert. denied, 112 S. Ct. 177 _____ ______
(1991); Shaheen v. B.F. Goodrich Co., 873 F.2d 105, 107 (6th . _______ __________________
Cir. 1989); Moore v. McGraw Edison Co., 804 F.2d 1026, 1033 _____ _________________
(8th Cir. 1986), while others formulated a "totality of
circumstances" test, see Bormann v. AT&T Communications, ___ _______ _____________________
Inc., 875 F.2d 399, 403 (2d Cir.), cert. denied, 493 U.S. 924 ____ _____ ______
(1989); Coventry v. U.S. Steel Corp., 856 F.2d 514, 518 (3d ________ _______________
Cir. 1988). To resolve this split, Congress enacted the
OWBPA, 29 U.S.C. 626(f), which amended the ADEA by
mandating that a waiver of ADEA claims contain certain
minimum information to constitute a "knowing and voluntary"
waiver:
-14- 14
(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 claims arising under 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
writing to consult with an attorney prior _____
to executing the agreement; __________________________
(6) the employee must be given at least
45 days to consider signing if the
incentive is offered to a group;
(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 eligible for
the program, and the corresponding
information relating to employees in the
same job titles who were not eligible for
the program.
See 29 U.S.C. 626(f)(1)(A)-(H) (emphasis added). ___
The OWBPA also explicitly places the burden on the
party asserting the validity of a waiver to demonstrate that
the waiver was "knowing and voluntary." See Id. 626(f)(3); ___ ___
Raczak v. Ameritech Corp., 103 F.3d 1257, 1261 (6th Cir. ______ ________________
-15- 15
1997). To prevail on a motion for summary judgment,
therefore, American needed to demonstrate that there was no
genuine issue of material fact as to whether the VERP
complied with each of the section 626(f) requirements. See ___
Griffin v. Kraft General Foods, Inc., 62 F.3d 368, 371-72 _______ __________________________
(11th Cir. 1995).
Surprisingly, the VERP documents comprising the
agreement did not specifically advise the employees to
consult with an attorney prior to executing the release. See ___
29 U.S.C. 626(f)(1)(E).3 Although each employee
acknowledged on the VERP election form having read the
release before making his or her election, the only reference
to consulting legal counsel appears in the release itself,
which was not to be executed until the employee actually left
work a number of months later. When the employees elected to
retire, however, they promised to sign the release on their
termination date as a condition of receiving benefits. The
release states only: "I have had reasonable and sufficient
time and opportunity to consult with an independent legal
____________________
3. On appeal, American argues that the VERP informed the
employees that:
[E]ach employee should obtain whatever advice he or she
required including consultation with personal attorneys
or advisors and should make an informed and voluntary
choice whether to participate in the plan.
Although American cites to documentation to support this
contention, nowhere except in the release does the cited
material mention private legal counsel.
-16- 16
representative of my own choosing before signing this
Complete Release of All Claims." The VERP Agreement itself,
although it advised employees to consult financial and tax
advisors, to seek advice from local personnel
representatives, and to attend retirement seminars,4 said
nothing about seeking independent legal advice prior to
making the election to retire and agreeing to execute the
release as the statute dictates.
Given the burden OWBPA places on employers to
demonstrate their agreements contain the required
information, the reference contained in the release is
insufficient to satisfy 626(f)(1)(E). "Congress's intent
in enacting 626 was to compel employers to provide data so
that an employee considering waiving ADEA rights could
assess, with the assistance of counsel, the viability of an _______________________________
ADEA claim." Raczak, 103 F.3d at 1259 (emphasis supplied). ______
For this purpose, section 626(f)(1)(E) provides that a waiver
is not knowing and voluntary unless "the individual is
advised in writing to consult with an attorney prior to
executing the agreement." To advise is to "caution," "warn,"
or "recommend." See Webster's Third New World International ___ _______________________________________
Dictionary 32 (1986). This statutory requirement could not __________
be more clear, nor its purpose more central to the statutory
____________________
4. It also advised divorced employees to consult an ________
attorney regarding the effects of certain payment options.
-17- 17
scheme at issue, especially in light of Congress's concern
with discrimination in the suspect context of group exit
programs.5
American argues that the waiver form complied with
the OWBPA because there is no dispute that the employees were
fully aware that only persons in their classifications who
were over the age of 45 and at the highest pay rates were
____________________
5. The legislative history of the OWBPA states:
In the context of ADEA waivers, the Committee
recognizes a fundamental distinction between
individually tailored separation agreements and
employer programs targeted at groups of employees.
. . .
During the past decade, in particular, employers
faced with the need to reduce workforce size have
resorted to standardized programs designed to
effectuate quick and wholesale reductions. The
trademark of involuntary termination programs is a
standardized formula or package of employee benefits
that is available to more than one employee. The
trademark of voluntary reduction programs is a
standardized formula or package of benefits designed
to induce employees voluntarily to sever their
employment. In both cases, the terms of the programs
generally are not subject to negotiation between the
parties. In addition, employees affected by those
programs have little or no basis to suspect that
action is being taken based on their individual
characteristics. Indeed, the employer generally
advises them that the termination is not a function
of their individual status. Under these ______________
circumstances, the need for adequate information and ______________________________________________________
access to advice before waivers are signed is ______________________________________________________
especially acute. _________________
S. Rep. No. 101-263, at 32 (1990), reprinted in 1990 _____________
U.S.C.C.A.N. 1509, 1537-38 (emphasis added).
-18- 18
eligible, that they were releasing age claims in exchange for
enhanced benefits, and that they were provided with all the
advice the statute required. We disagree. The fact that the
employees may have known they were waiving rights in exchange
for enhanced retirement benefits does not satisfy section
626(f)(1)(E). We read section 626(f)(1)(E) to mean what it
says: employers must advise employees in writing to consult
an attorney prior to executing a release of ADEA claims. The
failure to advise the employees to consult with counsel goes
to the heart of the statute's purpose.6 Because American
failed to directly advise their employees to consult a lawyer
before making the election, we rule, as a matter of law, that
____________________
6. In light of the OWBPA's imprecise terms, some violations
may be so technical as to be de minimis, and thus may not
invalidate an otherwise valid release of ADEA claims. See ___
Raczak, 103 F.2d at 1260. American's failure adequately to ______
advise the employees to obtain counsel is in no way de
minimis.
-19- 19
American failed to meet its burden under the OWBPA.7 See 29 ___
U.S.C. 626(f)(1).
b. Ratification of the Employees' ADEA Waiver _____________________________________________
As we have said, the district court did not decide
whether the release complied with OWBPA. Rather, it held
that the employees' acceptance of enhanced retirement
benefits, as well as their opposition to the court's order to
deposit the disputed retirement funds into the court's
registry pending the outcome of this litigation, constituted
a ratification of the original release agreement. We
disagree.
In the past, we have applied the ratification
doctrine to enforce an otherwise invalid release on the
ground that "'[a] contract or release, the execution of which
is induced by duress, is voidable, not void, and the person
____________________
7. As the employees point out, the waiver is also deficient
in another manner. The waiver broadly prohibits employees
from maintaining "any legal proceedings of any nature
whatsoever against American et al. before any court or __ __
administrative agency" and requires them to "direct that
agency or court to withdraw from or dismiss the matter with
prejudice" if the agency assumes jurisdiction on their
behalf. Section 626(f)(4), however, states: "No waiver may
be used to justify interfering with the protected right of an
employee to file a charge or participate in an investigation
or proceeding conducted by the Commission." Cf. E.E.O.C. v. ___ ________
Astra U.S.A., Inc., 94 F.3d 738, 744 (1st Cir. 1996) ("[A]ny __________________
agreement that materially interferes with communication
between an employee and the Commission sows the seeds of harm
to the public interest"); E.E.O.C. v. Cosmair, Inc., 821 F.2d ________ _____________
1085, 1089-90 (5th Cir. 1987)(holding pre-OWBPA that an
employee cannot waive the right to file a charge with the
EEOC).
-20- 20
claiming duress must act promptly to repudiate the contract
or release or he will be deemed to have waived his right to
do so.'" In re Boston Shipyard Corp., 886 F.2d 451, 455 (1st ___________________________
Cir. 1989) (quoting Di Rose v. PK Management Corp., 691 F.2d _______ ___________________
628, 633-34 (2d Cir. 1982)). The related tender-back
doctrine requires a party seeking to avoid a contract based
on duress to first return any consideration received. See ___
Deren v. Digital Equipment Corp., 61 F.3d 1, 1 (1st Cir. _____ ________________________
1995). American asserts that the employees' retention of the
enhanced benefits received from the VERP ratified the invalid
waiver. The retention of benefits is relevant, however, only
if the ratification and tender-back doctrines apply to
waivers of ADEA claims after the adoption of the OWBPA.
The circuits are split on whether the acceptance of
benefits ratifies an otherwise invalid waiver of ADEA
claims.8 A majority, both before and after OWBPA's
enactment, have held that neither ratification nor tender-
back is appropriate when employees have signed an invalid
ADEA waiver. See Howlett v. Holiday Inns, Inc., 120 F.3d ___ _______ ___________________
598, 601-03 (6th Cir. 1997) (post-OWBPA); Long v. Sears ____ _____
Roebuck & Co., 105 F.3d 1529, 1533 (3d Cir. 1997) (post- ______________
OWBPA); Oberg v. Allied Van Lines, Inc., 11 F.3d 679 (7th _____ _______________________
____________________
8. This issue has been argued before the Supreme Court and a
decision is currently pending. See Oubre v. Energy ___ _____ ______
Operations, Inc., 1996 WL 28508 (E.D. La.), aff'd, 102 F.3d ________________ _____
551 (5th Cir. 1996), cert. granted, 117 S. Ct. 1466 (1997)). _____ _______
-21- 21
Cir. 1993) (post-OWBPA), cert. denied, 511 U.S. 1108 (1994); ____________
Forbus v. Sears, Roebuck & Co., 958 F.2d 1036 (11th Cir. ______ ______________________
1992) (holding, pre-OWBPA, that the ADEA displaced the
tender-back doctrine); cf. Raczak v. Ameritech Corp., 103 ___ ______ ________________
F.3d 1257, 1260 (6th Cir. 1997)(affirming without a majority
rationale the district court's refusal to apply ratification
doctrine to an invalid ADEA waiver). In addition, a district
court in this circuit has sided with the majority view. See ___
Soliman v. Digital Equip. Corp., 869 F. Supp. 65 (D. Mass. _______ ___________________
1994). The Fourth and Fifth Circuits and some district
courts, however, have held that a waiver that does not comply
with the OWBPA is voidable, rather than void; thus, a
plaintiff who retains retirement benefits ratifies the
invalid waiver. See Blistein v. St. John's College, 74 F.3d ___ ________ __________________
1459, 1466 (4th Cir. 1996); Blakeney v. Lomas Info. Sys., 65 ________ ________________
F.3d 482, 484 (5th Cir. 1995); see also Hodge v. New York ___ ____ _____ ________
College of Podiatric Medicine, 940 F. Supp. 579, 582 _________________________________
(S.D.N.Y. 1996); Bilton v. Monsanto Co., 947 F. Supp. 1344 ______ ____________
(E.D. Mo. 1996). The arguments for and against
incorporating the ratification and tender-back doctrines into
the ADEA have been thoroughly reviewed in these cases, and we
will not repeat their analysis fully.
The decisions in favor of ratification primarily
argue that, because Congress used "the terms 'knowing' and
'voluntary,' which parallel the common-law concepts of fraud,
-22- 22
duress, and mistake, it is apparent that Congress was
defining only those circumstances in which a contract would
be voidable, not when it would be void." Blistein, 74 F.3d ________
at 1466. A voidable contract can, of course, be ratified by
subsequent conduct. See id. Accordingly, in the absence of ___ ___
any language in the statute indicating that a waiver that
contravenes the OWBPA cannot be ratified, the common-law rule
still operates. See Wamsley v. Champlin Ref. & Chems. Inc., ___ _______ ____________________________
11 F.3d 534, 539-40 (5th Cir. 1993).
The majority view rests on two primary arguments:
(1) the plain language of OWBPA and its legislative history
indicate that Congress did not intend ratification to apply
to releases that are invalid under OWBPA, see Long, 105 F.3d ___ ____
at 1537; and (2) the OWBPA displaced the common-law tender-
back doctrine under Hogue v. Southern Ry. Co., 390 U.S. 516 _____ ________________
(1968). We reject the view adopted by the Fourth and Fifth
Circuits and adopt the majority position. At common law, a
waiver of rights was simply a contract, subject to defenses
like duress or mistake. When Congress enacted the OWBPA,
however, it specifically rejected using ordinary contract
principles to govern the validity of ADEA waivers. Long, 105 ____
F.3d at 1539 (reviewing legislative history); see also S. ___ ____
Rep. No. 101-293, see supra note 4, at 32 (disapproving of ___ _____
the approach adopted in Lancaster v. Buerkle Buick Honda Co., _________ _______________________
809 F.2d 539 (8th Cir. 1987)). Instead, Congress enacted a
-23- 23
"floor" of specific procedures an employer must follow before
an employee's waiver is effective. See S. Rep. No. 101-293, ___
supra note 4, at 32 (noting that the OWBPA "establishes _____
specified minimum requirements that must be satisfied before
a court may proceed to determine factually whether the
execution of a waiver was 'knowing and voluntary'"). Section
626(f)(1) states a clear rule: an individual "may not waive"
an ADEA claim unless the waiver is "knowing and voluntary."
And a waiver is not knowing and voluntary unless the employer
complies with the eight OWBPA requirements. See id. ___ ___
Incorporating the ratification doctrine into this
statutory scheme would emasculate the Act. "Through the
OWBPA Congress sought to insure that employees faced with
deciding whether to sign an ADEA waiver and forego an ADEA
claim be provided with sufficient information to allow them
to evaluate the merits of that claim." Long, 105 F.3d at ____
1542. The ratification doctrine rests on a fiction that the
retention of benefits by the injured party forges a new
contract once the fraud has been discovered. Id. at 1539. ___
An employee, however, "could no more assent to the waiver of
his ADEA claim after having signed the defective release than _____
he could at the time of signing it." Howlett, 120 F.3d at ____________ _______
601 (emphasis in original). To allow the simple retention of
benefits to validate a noncomplying waiver would mean that
-24- 24
OWBPA applied to the first contract, but not to the fictional
second contract. See Long, 105 F.3d at 1540. ___ ____
When, as here, an employer fails in the simple task
of advising its employees to consult an attorney prior to
electing to retire, the employee is more likely to face a
critical decision without the knowledgeable guidance
necessary to assess whether he or she is possibly a victim of
age discrimination. If the ratification doctrine is
incorporated into this scheme, an employer could obtain
waivers without advising the employee to consult an attorney
and then put the employee to the difficult choice of giving
up essential benefits in order to protect his or her rights.
The very problem that Congress enacted the OWBPA to remedy
could thus resurface, albeit through the back door.
Therefore, incorporating the ratification doctrine into the
OWBPA could act to undermine the incentives for employers to
follow OWBPA's procedures and deter the prosecution of
meritorious claims. Cf. Hogue v. Southern Ry. Co., 390 U.S. ___ _____ ________________
516 (1968) (holding that the Federal Employer Liability Act
displaced the common-law tender-back requirement).9
____________________
9. American relies on Deren v. Digital Equip. Corp., 61 F.3d _____ ____________________
1 (1st Cir. 1995) in contending that ratification is
appropriate unless Congress indicates a clear intent to the
contrary. Such reliance is misplaced. In Deren, the court _____
held that an employee's waiver of ERISA claims was ratified
by his retention of benefits for three and one-half years.
Unlike the ADEA waivers here, however, the validity of an
ERISA waiver is governed by federal common-law principles,
see Smart v. Gillette Co. Long-Term Disability Plan, 70 F.3d ___ _____ _______________________________________
-25- 25
The conflict between common-law ratification and
the statutory scheme at issue here is particularly stark when
an employer seeks to induce an employee to accept early
retirement. Here, the employees voluntarily agreed to retire
in exchange for enhanced benefits without which, American
assures us, they would have remained on the job at American's
highest pay scale. Courts applying the ratification doctrine
to ADEA claims have stated that the employees must be
required to restore the status quo by tendering-back the
benefits they received for waiving their claims. See ___
Blakeney, 65 F.3d at 485. This position is arguably ________
plausible in the context of a unilateral termination when an
employee receives severance benefits an employer would not
have paid but for the release. See, e.g., Wamsley, 11 F.3d ____ ____ _______
at 72. In the context of a voluntary retirement program,
however, tendering back the benefits received does not
restore the status quo.
For instance, American does not contend that the
employees should, as a precondition to suing, refuse their
retirement benefits and seek reinstatement. American does
not, in other words, contemplate the restoration of the
status quo. Rather, American wants to use the ratification
doctrine to retain the economic benefit of the employees'
____________________
173, 178 (1st Cir. 1995), rather than a detailed set of
statutory procedures. Therefore, Deren does not require the _____
incorporation of the ratification doctrine into the OWBPA.
-26- 26
decisions to retire early -- a decision obtained by American
in violation of the OWBPA. As the Forbus court noted, this ______
result could "encourage egregious behavior on the part of
employers in forcing certain employees into early retirement
for the economic benefit of the company." 958 F.2d at 1041.
We therefore join the majority of courts which have
considered the issue and conclude that an employee's
retention of benefits does not act to ratify a waiver of ADEA
claims that fails to comply with the OWBPA.10 Thus, we
reverse the district court's declaration that the release
precludes defendants from raising age discrimination claims
under the ADEA.
____________________
10. Our holding is limited only to waivers that violate
OWBPA's requirements. Whether the ratification and tender-
back doctrines apply to a waiver that complies with the OWBPA
but is not "knowing and voluntary" for a different reason,
see Reid v. IBM Corp., 1997 WL 357969, at *4 (S.D.N.Y 1997), ___ ____ _________
is a separate question, one we need not reach today.
-27- 27
2. Ratification of the Employees' Law 100 Waivers _________________________________________________
Our rejection of the ratification doctrine in the
ADEA context has implications for whether, as the district
court s judgment declares, the release bars non-ADEA claims.
Though cursory mention of state law was made in the summary
judgment motions, both parties centered their arguments on
the question of whether the release, as a whole, was subject
to the ratification doctrine under federal and Puerto Rico
law. The district court opinion is unclear as to whether the
release, despite the employees' invalid waiver of ADEA
claims, nonetheless would bar their Puerto Rico Law 100
claims, as well as any other claims relating to their
employment. In reaching a conclusion that it does, the court
merely stated: "The result is the same under Puerto Rico
law."
In Long, the Third Circuit, facing the same ____
problem, explained:
[T]he district court rested its grant of
summary judgment as to all claims on its
finding that the release as a whole was
voidable and had been ratified . . . .
Our holding, confined as it is to ADEA
releases invalid under OWBPA, does not
automatically dispose of the remainder of
[the employee's] claims as might be the
case if we had rested our decision on the
void/voidable distinction.
105 F.3d at 1544-45. To ensure that the parties had an
adequate opportunity to litigate this issue, the Long court ____
vacated the district court's entry of summary judgment on the
-28- 28
non-ADEA claims and remanded for further consideration. Id. ___
at 1545. We think the same prudent approach is warranted
here. While we express no opinion on the issue, we vacate
the district court's declaration that the release bars non-
ADEA claims and remand that issue for further consideration
consistent with our opinion.11 Cf. Eagle-Picher Industries, ___ ________________________
Inc. v. Liberty Mut. Ins. Co., 829 F.2d 227, 246 (1st Cir. ____ ____________________
1987) (vacating language in final judgment and remanding for
further consideration).
V. V. __
Monetary Benefits Deposited in the Court Registry Monetary Benefits Deposited in the Court Registry _________________________________________________
In May 1996, the district court ordered the deposit
of the employees' retirement benefits into an interest-
bearing account pursuant to Fed. R. Civ. P. 67. During the
____________________
11. As already noted, we affirm the court's dismissal of
ADEA and Law 100 claims because they are barred by the
statute of limitations. See infra. The statute of ___ _____
limitations does not, however, provide an independent basis
for affirming the district court's declaratory judgment. The
district court s declaratory judgment had three parts: (1)
that the release was ratified, (2) that the release precludes
all employment related claims (including ADEA claims), and ___
(3) that the employees age discrimination claims are time-
barred. On appeal, we must determine if the trial court's
declaratory judgment, a final ruling that is res judicata in
any future litigation concerning this release, is correct in
all respects. See 10A Charles A. Wright, et al., Federal ___ _______
Practice and Procedure, 2771 (1983)("A declaratory ________________________
judgment is binding on the parties before the court and is
res judicata in subsequent proceedings as to the matters
declared. . . ."). The statute of limitations is relevant
only to the third part of the district court s declaratory
judgment. Therefore, we must reach the ratification issue
despite the fact that the employees counterclaim is barred
by the limitations period.
-29- 29
pendency of this action, these funds have been accumulating.
The question remains as to their proper disposition. The
record reflects that American choose not to address this
issue on summary judgment and neither party raises it on
appeal. Therefore, we do not reach this issue. We note,
however, that these funds are due to the employees unless
there exists a basis for their retention. We leave this for
the district court to determine on remand in a manner
consistent with this opinion.
VI. VI. ___
Statutes of Limitations Statutes of Limitations _______________________
The district court granted American summary
judgment on the ground that the applicable limitations
periods barred all of the employees' counterclaims. We
affirm as to the federal claims, although we clarify that
four of the employees' Law 100 claims were not barred by the
statute of limitations.
1. The ADEA Claims __________________
In "deferral states" (states which have enacted
employment discrimination laws) such as Puerto Rico,
employees must file charges of unlawful age discrimination in
employment with the EEOC within 300 days "after the alleged
unlawful practice occurred." 29 U.S.C. 626(d). American
contends that the employees filed their claims with the ADU
and the EEOC outside the 300-day time limit imposed by the
-30- 30
ADEA. We agree. To determine the timeliness of the
employee's complaint, we must specifically identify when the
unlawful practice that the employees claim violated the ADEA
occurred. See Lorance v. A.T. & T. Techs., 490 U.S. 900, 904 ___ _______ ________________
(1989). The gravamen of the employees' complaint is that
American misled them into believing that they were faced with
an impossible choice: retire with enhanced benefits or face
termination when American eliminated the cargo and
reservations operations in San Juan. In Vega v. Kodak ____ _____
Caribbean Ltd., 3 F.3d 476 (1st Cir. 1993), we explained that ______________
such a "take it or leave it" choice that discriminates on the
basis of age is unlawful.
To transform an offer of early retirement
into a constructive discharge, a
plaintiff must show that the offer was
nothing more than a charade, that is, a
subterfuge disguising the employer's
desire to purge the plaintiff from the
ranks because of his age. . . . [A]
plaintiff who has accepted an employer's
offer to retire can be said to have been
constructively discharged when the offer
presented was, at rock bottom, a choice
between early retirement with benefits or
discharge without benefits . . . .
Id. at 480 (citations and internal quotations omitted). If ___
the VERP was a charade, then American discriminated against
the employees by providing them no choice but to participate
in an early retirement program offered only to older
employees. As the alleged discriminatory act, this
constructive discharge triggered the limitations period. See ___
-31- 31
Young v. Nat'l Ctr. for Health Servs. Research, 828 F.2d 235, _____ _____________________________________
238 (4th Cir. 1987); cf. Kimzey v. Wal-Mart Stores, Inc., 107 ___ ______ _____________________
F.3d 568, 573 (8th Cir. 1997) (applying rule in Title VII
case). It follows that, at the latest, the applicable
statutes began to run when each employee accepted the VERP.
All the employees accepted the VERP more than 300 days prior
to filing their administrative claims.12 Therefore, the
employees claims are time-barred.
The employees' arguments to the contrary are
flawed. The employees first argue that the statute did not
____________________
12. The defendants/employees have provided a table titled
"Summary of Relevant Dates" that set forth the applicable
election and filing dates for calculating the limitations
periods. American has not disputed the accuracy of these
dates.
VERP ADU Days VERP ADU Days
Employee Accepted Filing Post VERP Employee Accepted Filing Post VERP
Cardoza-Rodriguez 10/18/94 10/29/95 376
Coll-Figueroa 10/28/94 10/27/95 364
De La Paz 10/11/94 10/27/95 381
Garcia-Caceres 10/12/94 11/15/95 399
De Rivero 10/14/94 10/27/95 378
Martinez-Rivera 12/12/94 10/27/95 318
Mattos 11/3/94 10/27/95 356
Ortiz-Rosa 10/18/94 11/15/95 393
Santiago-Negron 10/21/94 10/30/95 374
Zequiera-Julia 12/13/94 10/27/95 317
Lopez-Garcia 11/10/94 11/15/95 370
-32- 32
start to run until they actually left American's employ after
electing to retire early. This argument is meritless. In
Delaware State College v. Ricks, 449 U.S. 250, 257 (1980) the ______________________ _____
Supreme Court held that a plaintiff's Title VII claim accrued
when the employee was denied tenure due to alleged race
discrimination, not when his actual employment contract
expired one year later. Because the allegedly unlawful act
was the denial of tenure, the termination date itself was
merely the "inevitable consequence" of prior discrimination
and thus did not trigger the statute of limitations. Id. at ___
257-58. Here, the employees' job termination was similarly
the inevitable result of their decision to participate in the
VERP.
The employees' contend that their discrimination
claims did not accrue until younger workers actually replaced
them. This argument fails because a prima facie age
discrimination claim does not necessarily require replacement
by a younger worker. See Sanchez v. Puerto Rico Oil Co., 37 ___ _______ ___________________
F.3d 712, 719 n.7 (1st Cir. 1994) (citing cases). Instead,
when an employer implements a reduction-in-force, "the
[employee] may demonstrate either that the employer did not
treat age neutrally or that younger persons were retained in
the same position." Hildalgo v. Overseas Condado Ins. ________ _______________________
Agencies, Inc., 120 F.3d 328, 333 (1st Cir. 1997)(internal _______________
quotations omitted). We have stated categorically:
-33- 33
"[W]hen an employee knows that he has
been hurt and also knows that his
employer has inflicted the injury, it is
fair to begin the countdown toward
repose. And the plaintiff need not know
all the facts that support his claim in
order for countdown to commence."
Morris, 27 F.3d at 750. When the employees signed the VERP, ______
they knew that the program was offered only to employees over
forty-five years of age. And it was then, the employees
allege, that American presented them with a "take it or leave
it" choice between early retirement and losing their jobs.
As a result, by the time the employees were allegedly
pressured into accepting early retirement, they had
sufficient information to bring their discrimination claim.
See id. ___ ___
In this case, the limitations period commenced when
the employees elected to participate in the VERP. Thus,
unless there exists a basis for equitable modification of the
limitations period, all the employees' ADEA claims are barred
as a matter of law.
2. Equitable Estoppel and Tolling _________________________________
The employees contend that the doctrines of
equitable estoppel and equitable tolling should save their
claims.13 We reject the application of these doctrines here.
____________________
13. The ADEA filing period is akin to a statute of
limitations and thus, subject to equitable modification. See ___
Mercado-Garcia v. Ponce Federal Bank, 979 F.2d 890, 895 (1st ______________ __________________
Cir. 1992).
-34- 34
Equitable estoppel is invoked when an employee is
aware of his ADEA rights, but does not make a timely filing
due to his reasonable reliance on his employer's deceptive
conduct. Kale v. Combined Ins. Co. of America, 861 F.2d 746, ____ ____________________________
752 (1st Cir. 1988). The employees have failed to allege
such conduct here. Rather, they have simply parroted the
same events that gave rise to their underlying claim: that
American misled them as to the reason for the VERP. There is
no evidence that American caused the employees to delay
bringing their lawsuit, or otherwise "lulled the plaintiff[s]
into believing that it was not necessary for [them] to
commence litigation." Dillman v. Combustion Eng., Inc., 784 _______ _____________________
F.2d 57, 60 (2d Cir. 1986). Thus, equitable estoppel is not
warranted.
Equitable tolling is appropriate when the plaintiff
demonstrates "excusable ignorance" of his statutory rights.
Kale, 861 F.2d at 752. Equitable tolling does not apply, ____
however, if an employee is actually or constructively aware
of his or her ADEA rights. Id. at 753. An employee has ___
actual knowledge of his rights if he "learns or is told of
his ADEA rights, even if he becomes only generally aware of
the fact there is a statute outlawing age discrimination."
Id. ___
In this case, each employee signed the VERP
election form, which contained a paragraph attesting that he
-35- 35
or she had read the release. The release stated that the
employees were releasing American from any age discrimination
claims he or she may have had. Therefore, the employees had
actual knowledge of their ADEA rights. In addition, the
employees have alleged here that, shortly after inducing them
to sign the VERP, American went on a "recruitment frenzy of
new reservation agents" and announced that the cargo
department would remain in Puerto Rico despite American's
earlier claims. In light of these facts, the employees'
claim that their "excusable" ignorance caused them to wait
far longer than 300 days to pursue their claims is
untenable.14 See Cada v. Baxter Healthcare Corp., 920 F.2d ___ ____ ________________________
446, 452 (7th Cir. 1990) (holding that equitable tolling was
not warranted when the employee discovered, three weeks after
receiving notice of his termination, that a younger employee
would replace him).
3. The Puerto Rico Law 100 Claims _________________________________
The employees contend that their Law 100 claims are
not barred by the statute of limitations. In pertinent part,
____________________
14. The employees allude to the theory of continuing
violations, which applies when a plaintiff alleges repetitive
instances of discrimination perpetuated over time. See Havens ___ ______
Realty Corp. v. Coleman, 455 U.S. 363, 380 (1982); United Air ____________ _______ __________
Lines, Inc. v. Evans, 431 U.S. 553, 558 (1977). The ____________ _____
employees have, however, failed properly to allege any
factual basis for finding an act of discrimination within the
limitations period. This claim therefore fails as a matter
of law.
-36- 36
Law 100 forbids adverse employment actions based on any one
of several protected characteristics, including age. See ___
P.R. Laws Ann. tit. 29, 146 (1985); Sanchez, 37 F.2d at _______
723. Under substantive Puerto Rico law generally, actions
for civil liability based on fault commence "from the time
the aggrieved person had knowledge thereof." P.R. Laws Ann.
tit. 31, 5298 (1991); Rodriguez v. Nazario De Ferrer et _________ _____________________
al., 121 P.R. Dec. 347, P.R. Offic. Trans. No. CE-86-417, at ___
9 (P.R. 1988).
In Olmo v. Young & Rubicam of P.R., Inc., 110 P.R. ____ ______________________________
Dec. 740 (P.R. 1981), the Supreme Court of Puerto Rico held
that the one year statute of limitations in Article 1868 of
the Puerto Rico Civil Code applied to Law 100 claims. Like
ADEA claims, a cause of action under Law 100 accrues when an
employee becomes aware of his injury through receipt of a
termination notice.15 See Rodriguez, P.R. Offic. Trans. No. ___ _________
____________________
15. The employees cite Sanchez v. A.E.E., 97 J.T.S. 45 _______ ______
(1997) for the proposition that the statute of limitations
under Law 100 begins to run from the last day that an
employee was employed. American contests this reading,
asserting that the case dealt with a hostile and persistent
sexual harassment work atmosphere, was issued without a
formal opinion, and thus, has no precedential value. We
direct the employees' attention to U.S. Ct. of App. 1st Cir.
Rule 30.7, 28 U.S.C.A. (West 1997):
Whenever an opinion of the Supreme Court of Puerto
Rico is cited in a brief and oral argument which
does not appear in the bound volumes in English, an
official, certified or stipulated translation
thereof with three conformed copies shall be filed.
-37- 37
CE-86-417, at 9; see also Montalban v. Puerto Rico Marine ___ ____ _________ ___________________
Management, Inc., 774 F. Supp. 76, 77 (D.P.R. 1991)(applying _________________
Puerto Rico law). Therefore, in the context of a
constructive discharge, the date the employee elects to
retire triggers the Law 100 limitation period. All of the
employees' claims, with the exception of four discussed below
(Coll-Figuera, Martinez-Rivera, Mattos, and Zequiera-Julia),
are thus barred by statute of limitations as a matter of law.
The remaining four employees' Law 100 claims are
not time-barred; they fail on the merits as a matter of law.
To survive summary judgment, an employee must submit at least
some evidence upon which a jury could properly proceed to
find an employer guilty of age discrimination. See De ___ __
Arteaga v. Pall Ultrafine Filtration Corp., 862 F.2d 940, 941 _______ _______________________________
(1st Cir. 1988) (affirming summary judgment on Law 100
complaint for lack of evidence). With respect to the
remaining four employees, the record is devoid of any ___
competent evidence demonstrating that they were victims of
age discrimination. These four employees have failed
individually to submit even sworn affidavits attesting that
they suffered age discrimination. Rather, they appear to
rely wholly on the general allegations contained in their
____________________
The employees have not complied with this rule. Thus, we
decline their invitation to find that the Supreme Court of
Puerto Rico has overruled Rodriguez. _________
-38- 38
complaint and the affidavits of their fellow employees. Such
evidence cannot withstand a motion for summary judgment. See ___
Fed. R. Civ. P. 56(c); see also Mesnick, 950 F.2d at 822 (an , ___ ____ _______
appellate panel can affirm on any independently sufficient
ground).
VIII. VIII. _____
In conclusion, we hold that the release violated
the OWBPA and that the employees' retention of benefits does
not act to ratify a waiver that failed to comply with the
OWBPA. We therefore reverse that portion of the district
court's judgment declaring that the employees' retention of
benefits ratified the release of their ADEA claims. We
vacate and remand to the district court to further consider
the issue of whether the release bars non-ADEA claims. We
affirm the district court's entry of summary judgment on the
employees' counterclaims.
Affirmed in part; reversed in part; vacated and ___________________________________________________
remanded in part. No costs. _________________
-39- 39
Document Info
Docket Number： 97-1363
Filed Date： 1/8/1998
Precedential Status： Precedential
Modified Date： 9/21/2015