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Howlett v. Holiday Inns, Inc.,
120 F.3d 598 (6th 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:
- The release must be written clearly and in a manner calculated to be easily
understood by the employee signing the release.
- The release must specifically refer to the ADEA.
- The release must not purport to encompass claims that may arise after the
date of signing.
- The employer must provide consideration for the ADEA claim above and beyond
that to which the employee would otherwise be entitled.
- The employee must be advised in writing to consult with an attorney.
- The employee must be given at least 21 to 45 days to consider signing, depending
on whether the incentive is offered to a group.
- The release must allow the employee to rescind the agreement up to
seven days after signing.
- 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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