The opinion of the court was delivered by: LAWRENCE M. MCKENNA
Plaintiff Barnett Frumkin commenced this action in February 1991. The Complaint, filed on February 1, 1991, alleges violations of the Age Discrimination in Employment Act, 29 U.S.C. §§ 621-634 (the "ADEA"), as well as New York State laws prohibiting fraud and negligent misrepresentation. Federal subject matter jurisdiction is founded on 28 U.S.C. § 1331 and principles of pendent (or "supplemental") jurisdiction. On April 30, 1991, Defendant International Business Machines (hereinafter "IBM") filed an Answer asserting both affirmative defenses to the allegations of the Complaint and a counterclaim for breach of a purported release signed by Plaintiff. Plaintiff filed no reply to the counterclaim.
For the reasons that follow, Defendant's motion addressed to the Complaint is granted, and the Complaint is dismissed on the alternative grounds (1) that the federal cause of action is time-barred and federal subject matter jurisdiction over the state law claims is lacking, or (2) that Plaintiff signed a valid waiver releasing Defendant from liability arising out of the employment relationship. Defendant's motion for summary judgment on the counterclaim is denied, and the counterclaim is dismissed for lack of federal subject matter jurisdiction. Plaintiff's cross-motion is denied in its entirety.
Disputed and Undisputed Facts
Except as otherwise noted, the following recital of the factual background of this lawsuit is drawn from the allegations of the Complaint filed by Plaintiff in February 1991, and from Plaintiff's Statement pursuant to Local Rule 3(g) and Affidavits in Opposition to Defendant's motion.
Plaintiff was born on March 7, 1926, and was at all times relevant to the Complaint a person over forty years of age and thus a protected individual within the meaning of the ADEA. Plaintiff was initially employed by Defendant in 1955 and remained in Defendant's employ through the time of his retirement; by 1975, Plaintiff held a Masters Degree in Business Administration and by 1979 had achieved the position of second level manager in Defendant's "Facilities Planning and Requirements" department, with supervisory responsibility for three first level managers and approximately thirty employees who reported indirectly to him. Plaintiff retained the second manager's position and his supervisory duties until 1986, when a decision was made to reorganize the Department of Facilities Planning and Requirements; Plaintiff then became a member of the staff of the newly created "Headquarters Facilities Oversight Department." The Complaint alleges that in early 1988, Plaintiff applied for a position as Manager of IBM's North East regional office for the "Field Real Estate" organization but was advised by his immediate superior, Ruth Johnston-Hugret, that "the Defendant 'wanted a younger person' than plaintiff to fill the position." (Compl. P 9.)
In the early spring of 1988, in connection with the announcement of another reorganization and the imminent relocation of Ms. Johnston-Hugret, Plaintiff expressed an interest in being considered for a position in the Travel Management Systems Department. Plaintiff alleges in affidavit testimony that in or around April 1988 he received and accepted an offer to become the Manager of Travel Management Systems, and that he "looked forward to the formal announcement and the challenge of a new position with a wider range of responsibilities" (Frumkin Aff. P 14); the Complaint alleges more ambiguously that "Plaintiff indicated that he would be interested in accepting the position described." (Compl. P 12.) In any event, the announcement of Plaintiff's relocation was made in August 1988, at which time Plaintiff was informed that his new title would be "Acting" Manager of Travel Management Systems. Some time shortly following the announcement, Plaintiff began work in his new capacity. Plaintiff's affidavit testimony characterizes his duties at Travel Management Systems as "largely routine"; Plaintiff alleges that as "Acting" Manager of the Department, he was prohibited by his new manager, Donald Gorr, from dealing directly with the two major travel agencies for which his department was responsible, and that "this restraint was clearly a diminution of the authority and scope of the [Manager's] job" that had been held by his immediate predecessor. (Frumkin Aff. PP 17, 18.)
Although no mention of this occurrence appears in the Complaint, Defendant alleges--and Plaintiff does not dispute--that in August 1988 Plaintiff received from Donald Gorr a packet of materials outlining the provisions of IBM's "Financial Assistance Program" (the "FAP"), under which employees voluntarily retiring or resigning from the company could elect to receive, in exchange for signature of a release agreement waiving claims against Defendant, a special payment of up to two times their annual salary, plus transitional benefits and certain other benefits connected with career and outplacement assistance. (Def.'s Rule 3(g) Statement PP 14, 15.) That packet included a document characterized by Defendant as "a copy of the general release agreement [which] employees choosing to separate or retire under FAP were to sign," (Def.'s Rule 3(g) Statement P 16), and an "interest form" to be signed by November 30, 1988. (Def.'s Rule 3(g) Statement P 17.) With respect to the "general release," Plaintiff asserts that the document included in the packet he received from Donald Gorr in August 1988 was not captioned a "release," and that it differed in several significant respects from the release Plaintiff eventually signed on January 5, 1989. (Pl.'s Rule 3(g) Statement PP 2-3.)
The position of Acting Manager, Travel Management Systems, was allegedly eliminated in October 1988, in connection with yet another reorganization at IBM, and Plaintiff was offered and accepted reassignment as Manager of the smaller, newly created Travel Measurement Analysis Department. Reassignment to Travel Measurement Analysis quickly became a source of much frustration and unhappiness to Plaintiff. According to the allegations of the Complaint, "the new position and duties were substantially below plaintiff's managerial capabilities and former duty assignments . . . . Not only did the new managerial job offer plaintiff no real challenge or career path . . . but the new position was two full salary levels below plaintiff's prior position." (Compl. PP 19, 20.) In affidavit testimony that is not entirely consistent with these allegations, Plaintiff asserts that no grade level was in fact ever assigned to his new position; rather, "Mr. Giue (Plaintiff's second line manager) told me that the grade level could be as much as two levels below my current status, but that my salary would not be decreased." (Frumkin Aff. P 24.) Plaintiff alleges that the potential diminution of his salary grade threatened to place him above the top salary scale for the level assigned, which effectively would have precluded further salary raises, although it would not have resulted in any diminution of his pay. Within several weeks of undertaking his new responsibilities as Manager of the Travel Measurement Analysis Department, Plaintiff "knew [his] career at IBM was at an end." (Frumkin Aff. P 34.) Plaintiff alleges that he was disappointed with his position, but he believed that IBM had done its best for him, and he "understood that sometimes these things happen in business." (Frumkin Aff. P 35.)
Plaintiff found potential new employment outside of IBM in November 1988 and informed Donald Gorr that he would be accepting the FAP and beginning a new job in December. It was agreed between Plaintiff and Gorr that Plaintiff would remain on the IBM payroll through the month of December 1988, and would formally accept the FAP and early retirement beginning in January 1989. Defendant alleges, and Plaintiff does not dispute, that on January 5, 1989, in the presence of Donald Gorr, Plaintiff read and signed a one-page document purporting to release Defendant, its employees and agents from any claims arising out of Plaintiff's employment at IBM, and acknowledging receipt of a "lump-sum financial assistance payment" of $ 178,001.40. It is undisputed that Plaintiff received, and has retained, that sum of money.
The Complaint alleges that sometime in or around February 1989, following his departure from IBM, plaintiff became aware for the first time that the Travel Management Systems Department had been "re-established," and that the position held by Plaintiff "prior to demotion" had been filled by a "substantially younger man with many years less in the employ of Defendant, at a much lower salary than [Plaintiff] had been paid in the position." (Compl. P 29.)
In mid-April 1989, Plaintiff filed with the Equal Employment Opportunity Commission (the "EEOC") a charge of discrimination in employment in violation of the ADEA. On February 27, 1990, the EEOC issued a reviewable determination concluding that "the evidence obtained during the investigation does not establish a violation of the statute," and advising that absent the submission, on or before March 14, 1990, of a request for review, that determination would become final on March 15, 1990, and the charge would be dismissed. The final paragraph of the EEOC determination advises that "if the Charging Party wishes to pursue his claim in court under the ADEA, the lawsuit must be brought within two years of the alleged discriminatory act[,] October 1, 1988[,] or within three years in cases of willful violations." (Christensen Aff., Ex. "A".)
As previously noted, Plaintiff commenced this action by the filing of a Complaint in the Southern District of New York on February 1, 1991. The gravamen of Plaintiff's claim under the ADEA is that Defendant's decision to eliminate Travel Management Systems and plaintiff's position as Acting Manager of that department was not made in good faith but was, rather, "a ploy to induce Plaintiff to retire" so that he could be replaced by a younger employee at a lower salary. (Compl. PP 25, 26.) Plaintiff alleges that he would not have accepted the FAP had he known or had reason to believe that his former job and functions in the Travel Management Systems Department had not been abolished, and he asserts that Defendant, through its agents, officers, and personnel managers, was well aware of his reluctance to retire and knew that he would have been eager to resume his duties, but did not inform him of the re-creation of the department. Plaintiff alleges that the explanation offered by Defendant for the re-establishment of the Department and the position--i.e. Donald Gorr's unforeseen physical inability to perform the functions previously assigned to Plaintiff and redistributed to Gorr in connection with the October reorganization--is merely a pretext for discriminatory motive. According to the allegations of the Complaint, "Defendant's actions, and inactions when it had an affirmative duty to act, constitute a violation of the provisions of the [ADEA]," (Compl. P 35), and by virtue of such violation Plaintiff has suffered, and continues to suffer, "economic damage, mental anguish and hardship, in excess of the sum of $ 750,000.00," including, inter alia, past and future compensation, lost life insurance and disability benefits, lost pension and 401(k) plan benefits, expenses of seeking other employment, and counsel fees and expenses of the instant action. (Compl. P 36.)
Defendant's Motion Addressed to the Complaint Time Bar
The limitations period for a cause of action brought pursuant to the ADEA is set forth in Section 7(e) of the Act, 29 U.S.C. § 626(e), incorporating the statute of limitations provisions of the Portal-to-Portal Act, 29 U.S.C. § 255(a), under which an action "shall be forever barred unless commenced within two years after the cause of action accrued, except that a cause of action arising out of a willful violation may be commenced within three years after the cause of action accrued . . . ." Reasoning--apparently on the basis of the October 1988 reorganization at IBM and the EEOC Determination previously cited herein--that any cause of action for age discrimination would have accrued on the first day of October, 1988, Defendant alleges that Plaintiff's federal claim was already time-barred when it was commenced on February 1, 1991, more than two years after the statutory period began to run. In opposition to Defendant's statute of limitations argument, Plaintiff asserts that the limitations period applicable to his federal claim is the longer three year period available for willful violations of the ADEA; in any event, Plaintiff argues, the ADEA cause of action accrued not in October of 1988, but rather in February of 1989, the month in which Plaintiff first learned of his replacement in the Travel Management Systems Department, and "the first opportunity [Plaintiff] had to know that he had been defrauded out of his career because of his age." (Pl.'s Mem. in Opp'n at 7.)
When Did the Cause of Action Accrue?
The analysis of Plaintiff's federal age discrimination claim for statute of limitations purposes must begin with a description of the conduct, purportedly proscribed by the ADEA, of which Plaintiff complains. Although the Complaint does not particularize those sections of the Act in violation of which Defendant is alleged to have acted or neglected a duty to act, Plaintiff appears to intend an allegation that his retirement pursuant to the terms of the FAP was coerced in violation of the general proscriptions of 29 U.S.C. § 623(a), which provides:
It shall be unlawful for an employer--
(1) to fail or refuse to hire or to discharge any individual or otherwise discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's age; . . .
Paragraphs 25 through 28 of the Complaint, insofar as they allege that Defendant's decision to eliminate Plaintiff's position was undertaken in a bad faith effort to induce Plaintiff's retirement and replace him with a younger employee, may fairly be read to intend an allegation that Defendant's activities in procuring that retirement were not entitled to immunity from the proscriptions of the ...