Adams v. Moore Business Forms , 224 F.3d 324 ( 2000 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
CHARLES J. ADAMS; DAVID N.
BOSLEY; MARK J. CERULLO; DELORES
A. HEAVNER; MONA JANE MACKEY;
BRIAN L. MCCORD; GERALD R.
MOORE; JOHN B. MOORE; REBECCA
A. MOORE; DAVID J. PERRY; JANET
L. QUEEN; ROBERT W. SIMS; NANCY
STREETS; CHARLES B. WILFONG,
Plaintiffs-Appellants,
No. 99-2168
and
LEAHBELLE COGAR,
Plaintiff,
v.
MOORE BUSINESS FORMS,
INCORPORATED,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of West Virginia, at Elkins.
Robert Earl Maxwell, Senior District Judge.
(CA-96-103-2)
Argued: June 6, 2000
Decided: August 24, 2000
Before NIEMEYER and WILLIAMS, Circuit Judges, and Robert
R. BEEZER, Senior Circuit Judge of the United States Court of
Appeals for the Ninth Circuit, sitting by designation.
_________________________________________________________________
Affirmed by published opinion. Judge Niemeyer wrote the opinion,
in which Judge Williams and Senior Judge Beezer joined.
_________________________________________________________________
COUNSEL
ARGUED: Charles F. Donnelly, DONNELLY & CARBONE,
P.L.L.C., Charleston, West Virginia, for Appellants. Robert Patrick
Heary, COHEN, SWADOS, WRIGHT, HANIFIN, BRADFORD &
BRETT, L.L.P., Buffalo, New York, for Appellee. ON BRIEF: Mark
Wesley Carbone, DONNELLY & CARBONE, P.L.L.C., Charleston,
West Virginia, for Appellants. Laurence B. Oppenheimer, COHEN,
SWADOS, WRIGHT, HANIFIN, BRADFORD & BRETT, L.L.P.,
Buffalo, New York, Robert M. Steptoe, Jr., Michael J. Florio, STEP-
TOE & JOHNSON, Clarksburg, West Virginia, for Appellee.
_________________________________________________________________
OPINION
NIEMEYER, Circuit Judge:
In connection with its closing of a manufacturing plant in Buckhan-
non, West Virginia, Moore Business Forms, Inc. offered employees
who were to lose their jobs a severance and benefits package in
exchange for releases of claims that they might have in connection
with their employment or the plant's closing. After signing the
releases and receiving cash benefits ranging from approximately
$3,500 to $30,000 each, as well as noncash benefits, 14 employees
now claim that the releases they signed are void due to the releases'
failure to conform with both federal statutory requirements for a
release of claims under the Age Discrimination in Employment Act
of 1967 ("ADEA"), 29 U.S.C. § 621 et seq., and state regulations
implementing the West Virginia Human Rights Act, W. Va. Code
§ 5-11-1 et seq.
These 14 employees filed this action to pursue claims against
Moore for age discrimination, breach of contract, misrepresentation,
wrongful discharge, and unlawful discharge. The district court entered
summary judgment against the employees, finding that the releases
2
they signed complied with the relevant federal and state requirements
and constituted valid waivers of all of the employees' claims. We
affirm.
I
On July 28, 1994, Moore Business Forms, Inc. ("Moore"), a manu-
facturer of business forms, notified the more than 190 employees at
its Buckhannon plant that Moore would be closing the facility. Moore
offered the employees a severance support program that would pro-
vide the employees with benefits of one week of pay for each com-
pleted year of service up to 10 years, two weeks of pay for each year
of service in excess of 10 years, continued health and life insurance,
job placement services, and continued access to Moore's "employee
assistance program." To obtain these benefits, an employee was
required to sign an agreement purporting to release Moore from any
claim related to the employee's employment or loss of employment.
The agreement states:
In consideration of Your receipt of the payments and bene-
fits described above, You hereby release, and agree not to
sue, the Company . . . with respect to any claim, whether
known or unknown, which You have, or may have, related
to Your employment with the Company or termination of
such employment (the "Claims"), including all Claims of
unlawful discrimination on account of sex, race, age, dis-
ability, veteran's status, national origin or religion; all
Claims based upon any federal, state or local equal employ-
ment opportunity law, including the Civil Rights Act of
1964, as amended, the Age Discrimination in Employment
Act, as amended by the Older Workers Benefit Protection
Act, Executive Order 11246, the Rehabilitation Act of 1973,
as amended, the Equal Pay Act of 1973, the Vietnam Era
Veteran Readjustment Assistance Act of 1974, the Drug-
Free Workplace Act of 1988, the Americans With Disabili-
ties Act of 1990, and the Civil Rights Act of 1991; all
Claims under the Worker Adjustment and Retraining Notifi-
cation Act, and any state or local plant closing statute; all
Claims for violation of any agreement or representation,
express or implied, made prior to or simultaneously with
3
this Agreement; and all Claims based upon wrongful termi-
nation of employment and similar or related Claims.
Fourteen employees who had signed releases and received benefits
and one who had not signed a release filed suit against Moore on July
17, 1996, in the Circuit Court of Upshur County, West Virginia, and
Moore removed the action to federal court. In their amended com-
plaint, the employees alleged age discrimination, breach of contract,
misrepresentation, wrongful discharge, and unlawful discharge arising
out of the closing of the Buckhannon plant. Neither before suit nor in
bringing suit did the 14 employees who received benefits in exchange
for executing the releases tender back to Moore the benefits they had
received.
On Moore's motion for summary judgment, the district court dis-
missed the age-discrimination claims of four employees because they
were under 40 years old, and it dismissed the age-discrimination, mis-
representation, and wrongful-discharge claims of two other employ-
ees because they were barred by the statute of limitations. After
permitting limited discovery on the remaining claims and receiving
briefing on the issue of whether the releases were supported by con-
sideration (i.e., benefits to which the employees would otherwise not
have been entitled), the court granted Moore's motion for summary
judgment with respect to all claims of those employees who had
signed releases, finding that they had validly waived their right to
bring the claims. The district court dismissed the claim of the one
employee who had not signed the release after she and Moore reached
a settlement. This appeal followed.
The appealing employees (hereinafter "the Employees"), all of
whom signed releases, contend that they did not waive their right to
bring age-discrimination claims because the releases they signed did
not comply with either the statutory requirements for a release of
claims under the ADEA, 29 U.S.C. § 621 et seq., or the West Virginia
Human Rights Commission's requirements for the waiver of claims
under the West Virginia Human Rights Act, W. Va. Code § 5-11-1 et
seq. The Employees argue also that, because the releases did not com-
ply with federal and state requirements for waiver of age-
discrimination claims, they are void and therefore also ineffective as
4
waivers of their common-law claims for breach of contract, misrepre-
sentation, wrongful discharge, and unlawful discharge.
II
The Employees contend first that the releases they gave do not
comply with federal statutory requirements for waiver of ADEA
claims. The ADEA, as amended by the Older Workers Benefit Protec-
tion Act ("OWBPA"), 29 U.S.C. § 626(f), furnishes specific require-
ments for a release of claims under the ADEA. As the Supreme Court
has stated, "The policy of the OWBPA is . . . clear from its title: It
is designed to protect the rights and benefits of older workers . . . .
The OWBPA implements Congress' policy via a strict, unqualified
statutory stricture on waivers . . . ." Oubre v. Entergy Operations,
Inc., 522 U.S. 422, 427 (1998). In Oubre, the Court rejected the sug-
gestion that an "employee's mere retention of moneys [could] amount
to a ratification" of a release that would otherwise be invalid because
of its failure to comply with the OWBPA's requirements. Id. at 428.
Oubre thus overruled Blistein v. St. John's College, 74 F.3d 1459 (4th
Cir. 1996), insofar as Blistein held that an employee could relinquish
the right to bring an ADEA claim by accepting benefits offered in
exchange for a release that failed to comply with the OWBPA's
waiver requirements.* See id. at 1466.
_________________________________________________________________
*The Supreme Court in Oubre left open the issue of whether an
employee who brings an ADEA claim after receiving consideration for
signing a purported release of such a claim may either forfeit his right
to ongoing reciprocal benefits from the employer or be required to pay
restitution to the employer. See Oubre, 432 U.S. at 428; id. at 432-33
(Breyer, J., concurring) (noting that the OWBPA's provisions "are con-
sistent with viewing an invalid release as voidable, rather than void," that
"[a]pparently, five or more Justices take this view of the matter," and that
"treating the contract as voidable could permit an employer to recover his
own reciprocal payment (or to avoid his reciprocal promise) where doing
so seems most fair, namely, where that recovery would not bar the
worker from bringing suit"). To the extent that this court's decision in
Blistein is consistent with Justice Breyer's observations about the Court's
holding in Oubre, therefore, it remains good law. See Blistein, 74 F.3d
at 1466 (concluding that a release that is invalid under the OWBPA is
voidable, not void, and finding no evidence that Congress intended for
employees "to have it `both ways,'" that is, to retain the benefits paid by
an employer to secure a release of an ADEA claim and yet to bring such
a claim).
5
The OWBPA provides that "[a]n individual may not waive any
right or claim under [the ADEA] unless the waiver is knowing and
voluntary," and "a waiver may not be considered knowing and volun-
tary unless at a minimum" it satisfies certain enumerated require-
ments. 29 U.S.C. § 626(f)(1). The Employees do not dispute in this
appeal that the agreements they signed satisfy almost all of the
OWBPA's enumerated requirements: they are written in a manner
calculated to be understood, see id. § 626(f)(1)(A); they specifically
refer to claims arising under the ADEA, see id . § 626(f)(1)(B); they
do not purport to waive claims arising after the date of their execu-
tion; see id. § 626(f)(1)(C); they are supported by consideration, see
id. § 626(f)(1)(D); they include written advice to consult with an
attorney prior to executing them, see id.§ 626(f)(1)(E); they provide
the Employees 45 days to consider the agreements, see id.
§ 626(f)(1)(ii); and they provide the Employees seven days in which
to revoke the agreements after signing them, see id. § 626(f)(1)(G).
The Employees stake their position that the releases are invalid on
the argument that the releases failed to conform with the OWBPA's
informational requirements. The OWBPA requires that an employee
terminated as part of an "employment termination program" be pro-
vided information as to "any class, unit, or group of individuals cov-
ered by [the employment termination] program .. . and the job titles
and ages of all individuals eligible or selected for the program, and
the ages of all individuals in the same job classification or organiza-
tional unit who are not eligible or selected for the program." 29
U.S.C. § 626(f)(1)(H); see also 29 C.F.R. § 1625.22(f)(1)(iii)(A). In
requiring employers to provide this information, Congress intended
that employees, when deciding whether to waive discrimination
claims, have the information necessary to assess the value of the
rights that they would be giving up. See Raczak v. Ameritech Corp.,
103 F.3d 1257, 1262-63 (6th Cir. 1997); Griffin v. Kraft Gen. Foods,
Inc., 62 F.3d 368, 373 (11th Cir. 1995).
The Employees argue that Moore failed to satisfy these informa-
tional requirements because "[a]t no time were [the Employees]
informed of the ages of those individuals at the other facility [who]
would . . . be performing the work that was formerly done at the
Buckhannon facility." Although Moore provided the Employees with
the job titles and ages of all employees at the Buckhannon plant, the
6
Employees contend that, because Moore may have transferred work
from the Buckhannon plant to another facility, the company was
required under the OWBPA to give the Employees information con-
cerning the ages and job classifications of workers at any facility to
which work was transferred. Moore contends, on the other hand, that
the OWBPA merely required it to provide information about employ-
ees at the Buckhannon plant.
Thus, the question raised by the Employees' challenge to the
releases they signed in this case requires us to determine the scope of
the relevant "job classification or organizational unit," as those terms
are used in the statute, to determine whether Moore supplied the
Employees with the required information. 29 U.S.C.§ 626(f)(1)(H).
The statute does not define "job classification" or "organizational
unit," but the EEOC's interpretive regulations state that "the scope of
the terms . . . `job classification,' and `organizational unit' is deter-
mined by examining the `decisional unit' at issue." 29 C.F.R.
§ 1625.22(f)(1)(iii)(C). The "decisional unit," in turn, is described as
"that portion of the employer's organizational structure from which
the employer chose the persons who would be offered consideration
for the signing of a waiver and those who would not be offered con-
sideration for the signing of a waiver." 29 C.F.R.
§ 1625.22(f)(3)(i)(B). The regulations explain that "[t]he term `deci-
sional unit' has been developed to reflect the process by which an
employer chose certain employees for a program and ruled out others
from that program," id., but they note that "as the decisional unit is
typically no broader than the facility, in general the disclosure need
be no broader than the facility," 29 C.F.R. § 1625.22(f)(3)(ii)(B). The
regulations explain further that "if an employer seeks to terminate
employees by exclusively considering a particular portion or sub-
group of its operations at a specific facility, then that subgroup or por-
tion of the workforce at that facility will be considered the decisional
unit." 29 C.F.R. § 1625.22(f)(3)(ii)(D). And, "if the employer ana-
lyzes its operations at several facilities then by the nature of that
employer's decision-making process . . . the decisional unit would
include all considered facilities." 29 C.F.R.§ 1652.22(f)(3)(ii)(E).
While the decisional unit is thus "typically" confined to the facility
at which the terminations occur, it could extend beyond that facility
7
if, for example, the employer actually considered employees at
another facility for layoff before selecting the group of employees to
whom it would offer the employment termination program. See 29
C.F.R. § 1625.22(f)(3)(ii)(E). Because the purpose of providing
employees with information about fellow employees before they sign
waivers of discrimination claims is to ensure a"knowing and volun-
tary" waiver, 29 U.S.C. § 626(f)(1), the employees must be provided
with the age and job-title information that would be relevant if the
employees were to bring an age discrimination claim arising out of
their termination. See, e.g., Allen v. Diebold, Inc., 33 F.3d 674, 678
(6th Cir. 1994) ("[P]laintiffs in a plant closing case must show that
an employer's decisions regarding which factories to close or down-
size were based on consideration of the ages of the workers at those
factories"). This interpretation of 29 U.S.C.§ 626(f)(1)(H)(ii) com-
ports with the EEOC's regulations and serves the purpose of the statu-
tory provision by ensuring that an employee faced with a decision
whether to sign a release will be furnished with information necessary
to evaluate any potential discrimination claim before deciding to sign
the release.
In this case, it is undisputed that Moore supplied the employees at
the Buckhannon plant with the job classifications and ages of all
employees at the plant. Moore takes the position that its Buckhannon
facility was a "stand-alone" facility and that the employees at that
plant constituted the relevant "decisional unit." It maintains that the
employment decisions concerning the Buckhannon plant were inde-
pendent of any decisions about other plants.
The Employees have failed to produce any evidence challenging
Moore's assertion that, in making the decision to close the Buckhan-
non plant, Moore did not consider layoffs or plant closings at other
locations. One employee did testify about an incentive program insti-
tuted by Moore in late 1993 or early 1994, which tied raises at the
Buckhannon plant to productivity goals. She testified that the employ-
ees were told at that time, "[t]he future of this plant depends on your
. . . meeting these [production goals]." She also testified that Moore
told the Buckhannon employees that the incentive program was "a
competition to see which plants [would] stay open and which plants
[would] close." This employee further testified that the Buckhannon
plant performed very well in the incentive program but was closed
8
anyway. In addition to this testimony about the incentive program, the
Employees testified that Moore transferred certain manufacturing
equipment from the closed Buckhannon facility to another plant. The
Employees assert that this evidence demonstrates that Moore consid-
ered closing other plants in conjunction with its decision to close the
Buckhannon facility.
This evidence, however, is only speculative, and any connection
between the incentive program and Moore's decision to close the
Buckhannon plant is lacking. Moreover, the record contains no evi-
dence suggesting that Moore considered employees at other plants for
layoff or considered other plants for closure in conjunction with its
decision to close the Buckhannon plant. Moore's interest in "downsiz-
ing" is the only reason for closing the Buckhannon plant that is indi-
cated in the record.
In the absence of evidence that Moore considered, as part of its
decision to close the Buckhannon plant, other plants or other employ-
ees, the district court properly determined that the decisional unit for
purposes of applying 29 U.S.C. § 626(f)(1)(H)(ii) was the group of
employees at the Buckhannon plant. Accordingly, we affirm the dis-
trict court's conclusion that the releases signed by the Employees are
not invalid by reason of the Employees' having been given informa-
tion only about their fellow employees at the Buckhannon plant.
III
The Employees also contend that the releases they signed did not
comply strictly with the regulations promulgated by the West Virginia
Human Rights Commission to govern waiver of claims under the
West Virginia Human Rights Act. See W. Va. Code § 5-11-1 et seq.;
W. Va. Code State R. tit. 77, § 6-1 et seq .
The West Virginia Human Rights Act makes it unlawful for any
covered employer to "deny or limit . . . employment . . . because of
. . . age." W. Va. Code § 5-11-9(2). It authorizes the West Virginia
Human Rights Commission ("the Commission") to promulgate legis-
lative rules implementing the Commission's powers and authority.
See W. Va. Code § 5-11-8(h). Pursuant to this authorization, the
Commission promulgated regulations setting forth criteria for waiver
9
and release of an individual's right to pursue a claim before the Com-
mission. See W. Va. Code State R. tit. 77,§§ 6-1 to 6-8. Those regu-
lations, which are "modeled on the provisions governing waiver and
release set forth in the [OWBPA]," provide a list of conditions that
must be met before a release will be enforced as a knowing and vol-
untary waiver of a claim under the West Virginia Human Rights Act.
W. Va. Code State R. tit. 77, § 6-1.
As is true with respect to the OWBPA waiver requirements, the
Employees do not dispute that the release form provided by Moore
complied with the lion's share of the waiver requirements laid out in
the State regulations. They point to two aspects of the release, how-
ever, which were not in strict compliance with the regulations'
criteria. First, whereas the regulations specify that a waiver must con-
tain the toll-free number of the state bar association, see W. Va. Code
State R. tit. 77, § 6-3.2.3, the release form provided by Moore con-
tains only the statement, initialed by each employee, that "[b]y sign-
ing this Agreement and initialing [this] . . . statement[ ], you expressly
acknowledge and agree that . . . you have been advised to consult an
attorney prior to signing this Agreement." Second, whereas the regu-
lations require that a waiver "specifically refer[ ] to rights or claims
arising under the West Virginia Human Rights Act," see W. Va. Code
State R. tit. 77, § 6-3.2.2, the release form provided by Moore and
signed by the employees only states that the employees "hereby
release, and agree not to sue [Moore] . . . with respect to . . . all
Claims of unlawful discrimination on account of . . . age . . . [and]
all Claims based upon any federal, state or local equal employment
opportunity law." (Emphasis added).
We are not persuaded that either of these technical deviations in the
releases signed by the Employees amounts to a sufficiently substan-
tive violation of the Commission's regulations to render the releases
invalid. The West Virginia regulations clearly intend to have employ-
ees consult attorneys before waiving rights, and while Moore's
release form did not provide the bar association's telephone number,
it specially directed the employee to consult an attorney. Similarly,
while the release form did not refer by name to any West Virginia
statute, it did refer to state and local age-discrimination and equal-
employment-opportunity laws. For these reasons, we conclude that
the releases substantially complied with the criteria for a knowing and
10
voluntary waiver of claims under the West Virginia Human Rights
Act. See Spradling v. Blackburn, 919 F. Supp. 969, 975 n.13 (S.D. W.
Va. 1996) (suggesting that a release of claims under the West Virginia
Human Rights Act was enforceable, among other reasons, because it
"substantially complie[d] with the regulatory requirements").
Even if we were to find that the release forms were invalid under
West Virginia law, the Employees' challenge fails because the
Employees did not tender back to Moore the benefits that they
received in exchange for signing the releases. West Virginia adheres
to the principle that "one who seeks to avoid the effect of a release
or compromise of a claim, demand, or cause of action. . . must first
return or tender the consideration, whether money or property, paid
him in connection with his execution of the settlement or release."
Crawford v. Ridgely, 100 S.E.2d 665, 669 (W. Va. 1957); see also
Carroll v. Fetty, 2 S.E.2d 521, 524-25 (W. Va. 1939) (noting that a
release obtained by duress is voidable, but that"tender is a condition
precedent to a successful attack on it").
The Employees argue that the Supreme Court's decision in Oubre
v. Entergy Operations, Inc., 522 U.S. 422 (1998), interpreting the
waiver provisions of the OWBPA, on which the West Virginia regu-
lations are modeled, forecloses the application of West Virginia's
tender-back requirement to claims governed by the state regulations.
This argument fails for two reasons. First, Oubre limited its holding
to the waiver of claims under the ADEA, expressly excepting other
claims. See id. at 428 (limiting holding to OWBPA requirements for
waiving ADEA claims and refusing to address the"validity of the
[release] as to other claims"). Moreover, as we need not mention, it
falls to West Virginia's legislature to pass state laws and to the West
Virginia courts to interpret them. The mere fact that a State models
its regulations on a federal statute does not cede to the United States
Supreme Court the State's authority to interpret its own laws. Cf.
Murdock v. City of Memphis, 87 U.S. (20 Wall.) 590, 632-33 (1875).
Second, we are not persuaded that the rationale behind the Oubre
decision is applicable to West Virginia's statutory and regulatory
regime. Whereas the Supreme Court in Oubre was interpreting an
explicit congressional mandate that "[a]n individual may not waive
any right or claim under this chapter unless the waiver is knowing and
11
voluntary" and, "at a minimum," complies with the statutorily enu-
merated list of requirements, 29 U.S.C. § 626(f)(1), our examination
of West Virginia's Human Rights Act reveals no similar provision
governing waiver of claims under that Act, see W. Va. Code § 5-11-
1 et seq. The technical requirements relied upon by the Employees are
to be found not in the statute, but in the West Virginia Human Rights
Commission's regulations, which explicitly note their limited applica-
bility as "criteria for regulating the voluntary release or waiver of an
individual's right to pursue a claim before the West Virginia Human
Rights Commission." W. Va. Code State R. tit. 77, § 6-1.1 (emphasis
added). We find no indication that these regulations would be con-
strued to foreclose application of the State's common-law tender-back
rule to actions in court challenging the validity of releases of claims
under the State's Human Rights Act. See Spradling, 919 F. Supp. at
975 n.13 ("The regulations, by their own terms, do not have any effect
on the validity of a waiver when a plaintiff gets to file suit in the first
instance in a West Virginia circuit court").
IV
Because we have concluded that the releases signed by the
Employees complied with the OWBPA and with the regulations of
the West Virginia Human Rights Commission and that the Employees
cannot pursue their state discrimination claims without tendering back
benefits, we need not address the Employees' argument that the
releases' failure to conform with those requirements renders them
void as to all other claims purportedly waived, an argument that
would likely fail anyway. See Blistein v. St. John's College, 74 F.3d
1459, 1466 (4th Cir. 1996) ("[A]n employee who unknowingly and
involuntarily enters into a retirement agreement, as those terms are
defined by OWBPA, has a voidable, not a void, contract"); see also
Oubre v. Entergy Operations, Inc., 522 U.S. 422, 428 (1998) (limiting
holding to statutory compliance with OWBPA for purposes of ADEA
claims and refusing to address the "validity of the [release] as to other
claims"). And the Employees have not argued that the releases are
invalid on any other grounds, for example, under West Virginia's
common-law standards for duress or fraud. Therefore, because the
Employees accepted valuable severance benefits in exchange for their
agreements not to sue Moore "with respect to any claim, whether
known or unknown . . . related to [their] employment with [Moore],"
12
we conclude that the district court properly granted Moore's motion
to dismiss the Employees' common-law claims of breach of contract,
misrepresentation, wrongful discharge, and unlawful discharge.
For the foregoing reasons, the judgment of the district court is
AFFIRMED.
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