The opinion of the court was delivered by: SAND
The Court has before it Defendant Johnson & Higgins' ("J&H") Motion for Partial Summary Judgment against the Equal Employment Opportunity Commission ("EEOC") pursuant to Fed. R. Civ. P. 56(b) seeking a dismissal of Plaintiff's claims for monetary and injunctive relief on the basis of waivers of rights signed by the retired directors of J&H. For the following reasons, Defendant's Motion is denied.
On December 23, 1994, the EEOC had filed a Motion for Partial Summary Judgment alleging that Defendant's mandatory, pre-65 retirement policy for its employee-directors violated the Age Discrimination in Employment Act of 1967 ("ADEA"), 29 U.S.C. § 621 et seq.. On June 12, 1995, this Court found for Plaintiff on that Motion and entered a judgment against Defendant. Equal Employment Opportunity Commission v. Johnson & Higgins, Inc., 887 F. Supp. 682 (S.D.N.Y. 1995). On July 6, 1995, this Court also entered an Order permanently enjoining Defendant from enforcing its unlawful retirement policy and directing the parties to enter into discovery to determine money damages.
Prior to the affirmance of that decision by the Court of Appeals for the Second Circuit on August 8, 1996, EEOC v. Johnson & Higgins, Inc., 91 F.3d 1529 (2d Cir. 1996), J&H obtained signed instruments of Waiver, Release and Assignment ("waivers") from the thirteen former employee-directors
retired since 1991 whose rights were held to have been violated. (Def.'s Notice of Mot. Ex. A) The waivers offered each of the retired employee-directors one thousand dollars [$ 1000] "and other good and valuable considerations" in exchange for, inter alia, a waiver of any rights or claims under the ADEA. On the strength of those waivers, Johnson & Higgins brought the instant Motion for summary judgment as to the issue of damages. Since the filing of this Motion on the damages issue, however, the ex-employee-directors have filed affidavits repudiating their waivers. (LeCount-McClanahan Aff. of April 9, 1998) Although there is a variation in the language of these repudiations, their essence is that the waivers were not knowingly and voluntarily given because, inter alia, the signers acted on the advice of counsel for Johnson & Higgins, who had a conflict of interest; they were the product of economic duress and were signed in an atmosphere of acute peer pressure and undue influence from the Johnson & Higgins "clubby" culture, where the Board of Directors operated in unison and dissent was not tolerated. (Tr. of 4/13/98 at 21 & 50)
EEOC opposes the instant Motion on several grounds. The EEOC asserts that these waivers of rights to backpay in excess of $ 3 million dollars for each employee-director, executed in consideration of $ 1,000 are, as a matter of law, not "knowing and voluntary" because they do not satisfy the minimum requirements of 29 U.S.C. § 626(f)(1)(D), which provide that a waiver is knowing and voluntary only if given in exchange for "consideration in addition to anything of value to which the individual already is entitled." EEOC argues that, as a matter of law and logic, one thousand dollars is not and cannot constitute a reasonable level of consideration to recompense individuals for multi-million dollar losses of salary owed.
Further, EEOC contends that, by virtue of the presence of attorney conflict of interest, economic duress and undue influence, the reasons set forth in the repudiation affidavits, the waivers were not "knowing and voluntary" within the meaning of the Older Workers Benefit Protection Act ("OWBPA"), 29 U.S.C. § 626(f)(1) et seq., which imposes specific requirements for releases covering ADEA claims. (LeCount-McClanahan Aff.)
Moreover EEOC asserts the waivers are ineffective because, once an EEOC complaint is filed, private parties lose any right to control the litigation, which becomes the exclusive prerogative of the EEOC and not of the putative beneficiaries. EEOC contends that, at a minimum, after this Court's 1995 finding of liability, the EEOC was a necessary party in any settlement negotiations and that its total exclusion from the waiver-signing process vitiates the waivers.
Summary judgment is appropriate when, viewing the evidence in a light most favorable to the non-moving party, there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Brown v. City of Oneonta, 106 F.3d 1125, 1130 (2d Cir. 1997); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). This device is a "drastic procedural weapon because its prophylactic function, when exercised, cuts off a party's right to present his case to the jury." Garza v. Marine Trans. Lines, Inc., 861 F.2d 23, 26 (2d Cir. 1988) (citation omitted). The role of the court is not to resolve disputed facts, but rather to determine whether the record as a whole supports any issues that require a trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986). "Only disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment. Factual disputes that are irrelevant or unnecessary will not be counted." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). Used properly, Rule 56 is a sharp procedural weapon to ward off wasteful trials and "to isolate and dispose of factually unsupported claims," Celotex at 323-24 (1986).
The case before us is unusual given the changing stance toward this action taken by the retirees whose rights the EEOC seeks to champion.
Their apparent shift of attitude is at the heart of this Motion, which goes to the meaning of knowing and voluntary under the OWBPA. The main issue, which is a matter of first impression before this Court, is whether summary judgment can be found for the Defendant on the basis of waivers of millions of dollars in potential damages, signed in exchange for $ 1,000 after a finding of liability, when these waivers were subsequently repudiated. The Defendant has the burden of showing the validity and applicability of the waivers. We therefore turn our attention to requirements for valid waivers under the OWPBA, 29 U.S.C. 626(f) et seq.
To inform our inquiry into the validity of the waivers under the statute itself, we are guided by the approach in Cirillo v. Arco Chem. Co., 862 F.2d 448 (3d Cir. 1988) (under the "totality of the circumstances approach," waiver found to be valid). Cirillo, which preceded the enactment of the OWBPA, moved away from an analysis of waivers based on contract principles alone to adopt a "totality of the circumstances" approach, which called for careful evaluation of the waiver itself and an examination of the complete circumstances and context in which it was executed. Id. at 450. It is this "totality of the circumstances" test which was embraced by Congress and has been invoked by courts in analyzing waivers of ADEA claims. Senate Report at 1537; see Livingston v. Adirondack Beverage Co., 141 F.3d 434, 1998 WL 169916 (2d Cir. 1998) (applying "totality of the circumstances test" to determine whether release of a Title VII claim is knowing and voluntary).
The "totality of the circumstances" inquiry takes into consideration: 1) the plaintiff's education and business experience, 2) the amount of time the plaintiff had possession of or access to the agreement before signing it; 3) the role of plaintiff in deciding the terms of the agreement, 4) the clarity of the agreement, 5) whether the plaintiff was represented by or consulted with an attorney, and 6) whether the consideration given in exchange for the waiver exceeds employee benefits to which the employee was already entitled by contract or law. Bormann v. AT&T Communications, Inc., 875 F.2d 399, 403 (2d Cir. 1989). Although this test is helpful to ...