Howlett v. Holiday Inns, Inc.,
120 F.3d 598 (6^th Cir. (Tenn.) Aug. 5, 1997)

The Plaintiffs in this case were former upper-level management of the Defendant, Holiday Inns, Inc. Holiday Inns was acquired by a British corporation, and after a corporate restructuring, the Plaintiffs lost their jobs. Each Plaintiff signed an individual separation and release agreement in exchange for an unspecified sum of money. The agreement released the employer from any claims arising out of or relating to the employee’s employment, termination, or resignation. Each employee was told that he or she had seventy-two hours to sign and return the agreement in order to be eligible for the incentive. Nowhere did the agreement explicitly refer to ADEA claims. The Plaintiffs signed the agreement and took the payment.

Subsequently, the Plaintiffs sued under the ADEA; they did not, however, return any portion of the incentive payments which they had received from the Defendant. The district court held that a requirement to tender back retirement incentive money would frustrate the purposes of the ADEA. The district court then noted that there was a split among the circuits on this issue and that there was no controlling authority in the Sixth Circuit. The court, therefore, denied summary judgment and certified the issue for interlocutory appeal.

The Sixth Circuit took up the issue and noted that, under the Older Workers Benefit Protection Act amendment to the ADEA, there are eight minimum requirements an ADEA release must meet before it can be considered "knowing and voluntary." Paraphrasing these requirements, they are:

1. The release must be written clearly and in a manner calculated to be easily understood by the employee signing the release.

2. The release must specifically refer to 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 be entitled.

5. The employee must be advised in writing to consult with an attorney.

6. The employee must be given at least 21 to 45 days to consider signing, depending on whether the incentive is offered to a group.

7. The release must allow the employee to rescind the agreement up to seven days after signing.

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 selected for the program, and the corresponding information relating to employees in the same job titles who were not selected for the program.

Holiday Inn acknowledged that it had met none of the above-listed requirements with respect to the release, save possibly the first. Thus, the release was not valid under the ADEA. Nonetheless, Holiday Inns argued that the Plaintiffs subsequently knowingly and voluntarily ratified the defective contracts by not returning the consideration paid. To this effect, the Defendant argued that, when Congress codified the common-law elements of knowing and voluntary in the Act, it left the common-law doctrine of ratification intact by not explicitly addressing that doctrine. The Sixth Circuit disagreed, pointing out that the OWBPA unambiguously states that an individual may not waive ADEA claims unless the OWBPA requirements are met. The court said there was no hint of any exception to this requirement.

The court held that to allow an employee to ratify a release which violated the OWBPA would directly contradict the language in the statute which said that no waiver would be deemed knowing and voluntary unless it met the eight requirements. The Court of Appeals also noted that Congress purposely interposed an obstacle to application of the traditional ratification doctrine by requiring a waiver to comply with the eight-part test. This being the case, the Court of Appeals ruled that the employees were free to pursue their ADEA claims.

The Court of Appeals declined to require the Plaintiffs to repay the money that they had been paid for the invalid bargain they struck with Holiday Inn. The Court of Appeals so held because in this case there was no determination of the amount of the consideration allocable to the ADEA waiver and the amount paid for other potential claims. The court found that it would be extremely difficult, if not impossible, for the district court to identify all the potential theories of liability that the former employees waived in return for the payment. Furthermore, it would be impossible to assign meaningful values to all those potential claims and then apportion some of the money to the ADEA claims.

Having so held, the Sixth Circuit affirmed the district court’s order denying summary judgment to the Defendant and remanded the case for further proceedings.

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