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Bormann v. at & T Communications Inc.

decided: May 25, 1989.

ROBERT E. BORMANN, DOMENICK R. FERRANTINO, TIMOTHY J. FERRITER, HARRY M. GARDNER, RONALD A. JACOBSEN, JAMES W. MEYERS, HELMUT SAARTS, CORNELIUS J. SMITH, KARL ORTLER, ALBERT J. TAGGI, NEVILLE SMITH AND THOMAS J. MCGUIRE, PLAINTIFFS-APPELLANTS,
v.
AT & T COMMUNICATIONS, INC., DEFENDANT-APPELLEE



Appeal from judgment of United States District Court for the Southern District of New York, Charles L. Brieant, Ch. J., holding that appellants' unsupervised waiver of their employment barred their subsequent suit for age discrimination.

Author: Feinberg

FEINBERG, Circuit Judge

Plaintiffs, 12 former second-level managers of AT & T Communications, Inc. (AT & T), appeal from a judgment of the United States District Court for the Southern District of New York, Charles L. Brieant, Ch.J., dismissing their claims under the Age Discrimination in Employment Act, 29 U.S.C. §§ 621-634 (ADEA). The dismissal was based upon appellants' knowing and voluntary waiver of their right to sue AT & T for age discrimination. For reasons given below, we affirm.

Background

During a significant reduction in force in 1986, AT & T eliminated appellants' second-level managerial positions in White Plains and New York City. In preparation for the reductions, AT & T developed a Termination Payment Plan for Surplus Management Employees ("The Plan"), which provided for separation payments to surplus management employees who were not placed in other available positions at AT & T by their separation date. The Plan provided departing employees with two termination payment options. Under the first option, a plan participant could choose to receive a lump sum termination payment equal to 5% of the manager's base pay per year multiplied by the number of years of net credit service up to a maximum of 20 years. Under the second option, a manager could choose to receive only 3%, rather than 5%, of base pay in applying this formula. Thus, under the first option, an employee with 20 or more years of service would receive a termination payment equal to a year's base pay. Under the second option, such an employee would receive a payment of only 60% of annual base pay. However, in order to receive the higher percentage under the first option, AT & T required a manager to sign a "full Legal release," which provided that the employee give up "all claims - and causes of action" relating to the employee's employment or termination of employment, including any rights under laws that prohibit discrimination on the basis of age. The company advised those considering the options that "you may wish to consult your attorney." (emphasis in original). No release was required from those choosing the second, lower option.

In October 1985, representatives from AT & T's Regional Personnel Department in Oakton, Virginia conducted a series of five meetings in New York City and White Plains to discuss the force reduction program and termination pay options ("Oakton meetings"). Following these meetings, all appellants chose the first option and signed the separation agreements and releases in late 1985 and early 1986. Since each appellant had been at AT & T for more than 20 years and each received a salary of approximately $50,000, the additional consideration for choosing the first option was approximately $20,000 for each appellant. All appellants were discharged in early 1986.

In June 1987, appellants sued AT & T for age discrimination under the ADEA. In its answer and counterclaim, AT & T pleaded the separation agreements and releases as an affirmative defense that barred appellants' suit.

On the basis of this defense, in December 1987, AT & T moved for summary judgment. In an opinion dated March 28, 1988, the district court concluded that "an unsupervised waiver of rights can be a bar to a private action under the ADEA, so long as it is knowingly and voluntarily given." However, the court denied AT & T summary judgment because there was a dispute over whether responsible AT & T personnel had stated or implied that "the releases were of doubtful legal enforceability," thus, in effect, persuading appellants to sign the documents on the misrepresentation that they could not, or would not, be enforced. The district court ordered a separate trial on this issue pursuant to Fed.R.Civ.P 42(b).

The trial took place in November 1988, at which time the court heard 13 witnesses. At the close of the trial, the court found that appellants had failed to provide "sufficient evidence of misrepresentations rising to the level which would justify reasonable reliance [on the alleged false assurances] in light of the language of the instruments." Having decided this disputed issue of fact, the district court concluded that because the releases were signed knowingly, voluntarily and for valuable consideration, appellants had waived their right to sue AT & T for age discrimination. This appeal followed.

Discussion

Appellants make a number of arguments in this court, but the strongest is that the district court erred in concluding that an unsupervised waiver of rights can bar a private action under the ADEA, so long as it is knowingly and voluntarily given. By "unsupervised," appellants mean a release entered into without the prior approval of a court or the Equal Employment Opportunity Commission (EEOC), the agency now administering the ADEA.

The issue of whether an unsupervised waiver of rights is permissible under the ADEA has been addressed by other courts of appeals. There is a "general consensus that the private settlement of claims is not inconsistent with the ADEA," Coventry v. United States Steel Corp., 856 F.2d 514, 517 (3rd Cir. 1988), even though the ADEA incorporates by reference the enforcement provisions of the Fair Labor Standards Act (FLSA), 29 U.S.C. §§ 216, 217, and private waiver of claims under the latter act has been precluded by such Supreme Court decisions as Brooklyn Sav. Bank v. O'Neil, 324 U.S. 697, 89 L. Ed. 1296, 65 S. Ct. 895 (1945), and D.A. Schulte, Inc. v. Gangi, 328 U.S. 108, 90 L. Ed. 1114, 66 S. Ct. 925 (1946). See Lancaster v. Buerkle Buick Honda Co., 809 F.2d 539, 540 (8th Cir.) (no absolute bar to release of claims under the ADEA), cert. denied, 482 U.S. 928, 96 L. Ed. 2d 699, 107 S. Ct. 3212 (1987); Runyan v. National Cash Register Corp., 787 F.2d 1039, 1041-43 (6th Cir.) (in banc) (same), cert. denied, 479 U.S. 850, 93 L. Ed. 2d 114, 107 S. Ct. 178 (1986). Two district courts from this circuit have also reached similar conclusions. See EEOC v. American Express Publishing Corp., 681 F. Supp. 216, 219 (S.D.N.Y. 1988) (assuming that unsupervised waivers are permissible); DiMartino v. City of Hartford, 636 F. Supp. 1241, 1248 (D.Conn. 1986) (holding that the ADEA does not bar "voluntary and knowing" settlement of claims). The discussion in these cases of the reasons why the FLSA analogy does not control settlement of ADEA claims, a proposition with which we agree, has been ample, and we see no need to add to it.

In addition, we find persuasive the Third Circuit's analysis in Coventry, which focuses on a comparison of the ADEA and Title VII, 42 U.S.C. § 2000e et seq. 856 F.2d at 522. Under Title VII, an employee may validly waive a claim of discrimination so long as the waiver is made "knowingly and willfully." Id. (citing Alexander v. Gardner-Denver Co., 415 U.S. 36, 52 & n. 15, 39 L. Ed. 2d 147, 94 S. Ct. 1011 (1974)). Given that Congress intended that claims under both statutes be expeditiously resolved, Coventry, 856 F.2d at 522 n. 8, and that Congress gave the statutes a common scheme for achieving the goal of voluntary compliance, DiMartino, 636 F. Supp. at 1247, we find analogizing the ADEA to Title VII appropriate in this context.

Appellants contend that recent actions by Congress indicate that these courts have misconstrued congressional intent in holding that an unsupervised waiver of rights is permissible under the ADEA. Appellants refer first to an EEOC final rule that would have permitted the unsupervised waiver of rights under the ADEA and to congressional action cutting off appropriations for enforcement of that rule. See Department of Commerce, Justice, and State, The Judiciary and Related Appropriations Act, 1989, Pub.L. No. 100-459, 102 Stat. 2186, 2216 (1988); Continuing Appropriations, Fiscal Year 1988, Pub.L. No. 100-202, 101 Stat. 1329, 1329-31 (1987). Appellants also point to two bills recently introduced in the House and Senate that would strictly limit the use of unsupervised waivers. See Age Discrimination in Employment Waiver Protection Act, S. 54, 101st Cong., 1st Sess., 135 Cong.Rec. 5357 (daily ed. January 25, 1989); 135 Cong. Rec. E816 (daily ed. March 15, 1989) (statement of Rep. Hawkins introducing House version ...


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