American Airlines, Inc. v. Cardoza-Rodriguez

United States Court of Appeals
For the First Circuit

No. 97-1363

AMERICAN AIRLINES, INC.,

Plaintiff, Appellee,

v.

RADAMES CARDOZA-RODRIGUEZ, MARTA ELAINE COLL-FIGUEROA,
ISABEL DE LA PAZ, MARIA D. GARCIA-CACERES, ERNESTO LOPEZ-GARCIA
ANA L. MARIN DE RIVERO, CARMEN ANA MARTINEZ-RIVERA
CARMEN ALICIA MATTOS, GUILLERMO ORTIZ-ROSA, MARGARITA SANTIAGO-NEGRON
AND MARGARITA ZEQUEIRA-JULIA,

Defendants, Appellants.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF PUERTO RICO

[Hon. Juan M. Perez-Gimenez, U.S. District Judge]

Before

Stahl, Circuit Judge,

Bownes, Senior Circuit Judge,

and Lynch, Circuit Judge.

Ivan A. Ramos, with whom Ramos & Ramos-Camara, was on brief for

appellants.
Terence G. Connor, with whom Laura F. Patallo, Morgan, Lewis &

Bockius LLP, Carlos A. Rodriguez-Vidal, and Goldman Antonetti &

Cordova, were on brief for appellee.

January 7, 1998

STAHL, Circuit Judge. Defendants-appellants
STAHL, Circuit Judge.

Radames Cardoza-Rodriguez et al., ("employees") appeal from

the district court's issuance of a declaratory judgment in

favor of plaintiff-appellee American Airlines ("American")

enforcing releases of age discrimination forms executed by

appellants and dismissing their counterclaims under the Age

Discrimination in Employment Act of 1967 ("ADEA"), 29 U.S.C.

621 et seq. and Puerto Rico Law 100. We reverse in part

and vacate and remand in part the district court's

declaration that the releases at issue are enforceable.

Nonetheless, we affirm the district court's grant of summary

judgment on the employees' counterclaim, finding the

employees' ADEA claims time-barred.

I.
I.

Background
Background

Because the district court issued the declaratory

judgment on plaintiff's motion for summary judgment, we

recite the facts in a light most favorable to the non moving

party, the employees. DeNovellis v. Shalala, 124 F.3d 298,

305 (1st Cir. 1997).

On September 21, 1994, as part of a workforce

reduction program, American offered certain reservation,

ticket, and cargo agents in the Commonwealth of Puerto Rico,

the opportunity to participate in a Voluntary Early

Retirement Program ("VERP"). The VERP provided for the

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addition of five years to each employee's actual age for

purposes of calculating retirements benefits, five years

additional credited service, cash bridge payments of $400 per

month until the employee became eligible to receive benefits,

immediate retirement medical benefits and travel benefits.

To be eligible to participate in the VERP an employee had to

be at the maximum pay scale in their job classification and

at least forty-five years of age.

American informed the employees of the program's

details by providing various VERP-related documents. The

introduction to the "Terms and Conditions" booklet describing

the program warned the employees to read the materials

carefully, and provided a participation deadline of November

11, 1994, with a seven day rescission period after an

election to participate. In order to participate, an

employee was required to sign a "Voluntary Early Retirement

Election Form" attesting that the decision was "completely

voluntary, final and irrevocable," that he or she had been

given forty-five days to make the election, and that all

rights to reemployment with American were being relinquished.

The election form also stated that, on an employee's last day

of work, he or she would be required to sign a "Complete

Release of All Claims," absolving American of all employment-

related liability including, specifically, "age

discrimination claims."

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The VERP election form required each employee to

attest to having read the entire release form prior to

electing to retire early. By the terms of the release, the

employee agreed not to bring any legal proceeding against

American in any court, administrative agency, or tribunal,

that the employee would forfeit the extra retirement benefits

if the employee breached a material release term, and also

provided the party successfully enforcing the release costs

and attorney's fees. The release contained a provision

stating: "I have had reasonable and sufficient time and

opportunity to consult with an independent legal

representative of my own choosing before signing this

Complete Release of All Claims." Although the VERP

documentation advised the employee to discuss the program

with their families and to "consult a financial advisor,"

neither the release nor any of the VERP documentation

explicitly advised the employees to consult an attorney prior

to executing the release or electing to retire. The only

mention of independent legal advice was contained in the

release, which was not to be signed until the employee's last

day of work. Each employee signed the release on his or her

last day of work.

The appellants elected to participate in the early

retirement program on various dates throughout the election

period. The earliest election occurred on October 11, 1994,

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the latest on December 13, 1994. The VERP also provided that

the employees' termination dates would depend on the

restructuring process; therefore, after their election, the

employees continued to work. Over the next ten months,

American began to terminate them individually. The earliest

termination occurred on December 30, 1994, while the latest

did not occur until September 29, 1995. After each

termination, American paid the VERP's enhanced retirement

benefits. For several months (the precise period is unclear

from the record), each of the appellants accepted and

retained these benefits.

On October 27, 1995, over a year after the

appellants elected to participate in the VERP, they began to

file administrative age discrimination claims with both the

Puerto Rico Anti-Discrimination Unit ("ADU") and the Equal

Employment Opportunity Commission ("EEOC") variously claiming

that their election to participate in the VERP was

involuntary and that American had discriminated against them

on the basis of age. In general, the complaints alleged that

certain management employees had led older employees to

believe that American planned to move the operations in the

reservation and cargo departments to another location or

subcontract to an outside company, placing their jobs in

jeopardy. However, once the employees elected to retire,

American asked them to train new, younger replacements to

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fill their jobs. The claimed threatened job losses never

materialized.

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II.
II.

Prior Proceedings
Prior Proceedings

On April 18, 1996, American Airlines responded to

the appellants' ADU filings by initiating the instant

declaratory judgment action. See 28 U.S.C. 2201. In its

pleadings, American asked the district court to issue an

order declaring the rights and obligations of the parties in

connection with the VERP under the Employee Retirement Income

Security Act of 1974, 29 U.S.C. 1132(a)(3).1 Subsequently,

1. Although neither party has addressed the issue, it is
our duty to inquire sua sponte into our subject matter
jurisdiction. In re Recticel Foam Corp., 859 F.2d 1000,

1002 (1st Cir. 1988). American brought this declaratory
judgment action under ERISA, which provides for a civil
action:

by a . . . fiduciary (A) to enjoin any
act or practice which violates the terms
of the plan, or (B) to obtain other
appropriate equitable relief (i) to
redress such violations or (ii) to
enforce any provisions . . . of the terms
of the plan.

29 U.S.C. 1132(a)(3). American seeks a declaration of the
parties' obligations under the plan in light of the release.
We need not confront the question of whether 1132(a)(3)
directly authorizes a declaratory judgment in this context.
Compare Winstead v. J.C. Penny Co., Inc., 933 F.2d 576, 578-

79 (7th Cir. 1991) ( 1132(a)(3) allows a fiduciary to
obtain a declaration regarding its obligations under the
terms of a plan), with Gulf Life Ins. Co. v. Arnold, 809

F.2d 1520, 1523 (11th Cir. 1987) ( 1132(a)(3) does not
allow an insurer to obtain a clarification of its duty to
pay severance programs). In Franchise Tax Bd. v. Laborers

Vacation Trust, 463 U.S. 1 (1983) the Supreme Court stated:

Federal courts have regularly taken
original jurisdiction over declaratory
judgment suits in which, if the

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American moved under Fed. R. Civ. P. 67 to have the court

approve the deposit of future payments of the employees'

retirement benefits into a court-designated bank account (the

"court registry"). The court granted that motion, and, since

May 1996, American has paid the monthly payments due under

the VERP into an interest-bearing account.

The employees counterclaimed against American for

age discrimination under the ADEA, the Older Workers Benefits

Protection Act ("OWBPA"), 29 U.S.C. 626(f), and 29 L.P.R.A.

146 et seq., known colloquially as Puerto Rico "Law 100."

Evidently, once the district court allowed American to

deposit the employees' retirement benefits into the court

registry, a number of the original employee counterclaimants

abandoned their claims. Of the twenty-one employees who

declaratory judgment defendant brought a
coercive action to enforce its rights,
that suit would necessarily present a
federal question.

Id. at 19; see also id. at 19 n.19 (discussing jurisdiction

in declaratory judgment actions involving patent
infringement); cf. Colonial Penn Group, Inc. v. Colonial

Deposit Group, 834 F.2d 229, 234 (1st Cir. 1987) (quoting

Franchise Tax Bd., 463 U.S. at 19, and dismissing

declaratory judgment action where threatened coercive action
was based on state law). Here, the underlying controversy,
whether characterized as the employees' right to sue under
American's retirement plan, see 29 U.S.C. 1132(a)(1)(B),

or as a claim under the ADEA and OWBPA, clearly presents a
wholly federal question. As a result, American's request
for a declaratory judgment "arises under" 28 U.S.C. 1331.

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brought the original counterclaim, only eleven remain in the

case on appeal.

On July 22, 1996, American moved for summary

judgment requesting a declaration that: (1) the employees had

ratified the release agreement under both federal and local

law; and (2) the defendants could not maintain any claims

relating to their early retirement. American also moved for

summary judgment on the employees' counterclaim arguing,

inter alia, that the employees administrative filings had

been untimely. The court granted American's motion, and on

January 27, 1997, issued a declaratory judgment that:

(1) Defendants have ratified the release
agreements entered into by them in
connection with their acceptance of early
retirement benefits from American;

(2) the release agreements preclude
defendants from raising any claims
against American relating to their
employment or retirement, including the
claims for age discrimination under the
[ADEA, OWBPA, and Puerto Rico Law],

(3) Defendants failed to file their
claims of age discrimination with the
EEOC and Puerto Rico's Anti-
Discrimination Unit within the applicable
limitations period.

In light of this declaration, the district court granted

American's motion for summary judgment on the employees' ADEA

and Law 100 counterclaims. This appeal followed.

III.
III.

Standard of Review
Standard of Review

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We "review a district court's grant of summary

judgment de novo." Marrero-Garcia v. Irizarry, 33 F.3d 117,
.

119 (1st Cir. 1994). Summary judgment is appropriate when

"the pleadings, depositions, answers to interrogatories, and

admissions on files, together with the affidavits, if any,

show that there is no genuine issue as to any material fact

and that the moving party is entitled to judgment as a matter

of law." Fed. R. Civ. P. 56(c). In reviewing an award of

summary judgment, we must scrutinize the record in the light

most amiable to the party opposing the motion, indulging all

reasonable inferences in that party's favor. Griggs-Ryan v.

Smith, 904 F.2d 112, 115 (1st Cir.1990). Notwithstanding the

liberality of this standard, the nonmovant cannot simply rest

on unsworn allegations. Morris v. Gov't Dev. Bank of Puerto

Rico, 27 F.3d 746, 748 (1st Cir. 1994). "[T]o defeat a

properly supported motion for summary judgment, the nonmoving

party must establish a trial-worthy issue by presenting

'enough competent evidence to enable a finding favorable to

the nonmoving party.'" LeBlanc v. Great American Ins. Co., 6

F.3d 836, 842 (1st Cir. 1993) (quoting Goldman v. First Nat'l
.

Bank of Boston, 985 F.2d 1113, 1116 (1st Cir. 1993)).

Finally, "[a]n appellate panel is not restricted to the

district court's reasoning but can affirm a summary judgment

on any independently sufficient ground." Mesnick v. General
.

Elec. Co., 950 F.2d 816, 822 (1st Cir. 1991).

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IV.
IV.

Discussion
Discussion

Here, we are faced with two distinct questions.

First, was the district court's declaration that the

employees' release operated as a bar to their ADEA and Law

100 claims correct? Second, if the release does not bar

their claims, are the employees' claims nonetheless barred as

a matter of law? We answer the first question in the

negative, disagreeing with the district court's determination

that the employees' release bars their ADEA counterclaims.

We agree, however, that the statute of limitations bars the

employees' counterclaim.

1. Is the Release Enforceable?

American presents two alternative arguments that

the release the employees signed is enforceable: (1) the

release complied with the OWBPA, 29 U.S.C. 626(f) or, (2)

if the release is invalid under the OWBPA, by refusing to

return the enhanced retirement benefits they received under

the VERP, the employees ratified the release. We disagree.

We find that the employees' release of their ADEA claims did

not comply with the OWBPA and that the ratification doctrine

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does not apply to invalid ADEA waivers.2 We consider their
2

arguments in turn.

2. We emphasize that our holding is limited to releases of
ADEA claims that are invalid under the OWBPA. We do not
decide or express any opinion on whether the employees
validly released their non-ADEA claims. See infra part IV.2.

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a. Compliance with the OWBPA

Although the district court did not reach this

issue, American contends that we can affirm the court's

declaration because the releases the employees signed are

valid under the OWBPA. We disagree.

For an employee's waiver of ADEA rights to be

enforceable, it must be "knowing and voluntary." See, e.g.,

Long v. Sears Roebuck & Company, 105 F.3d 1529, 1534 (3d Cir.

1996). Prior to the enactment of the OWBPA, courts split

over how to determine whether a waiver of rights was knowing

and voluntary. Some courts used "ordinary contract

principles" such as fraud, duress, mutual mistake, or lack of

consideration, see O'Shea v. Commercial Credit Corp., 930
.

F.2d 358, 362 (4th Cir.), cert. denied, 112 S. Ct. 177

(1991); Shaheen v. B.F. Goodrich Co., 873 F.2d 105, 107 (6th
.

Cir. 1989); Moore v. McGraw Edison Co., 804 F.2d 1026, 1033

(8th Cir. 1986), while others formulated a "totality of

circumstances" test, see Bormann v. AT&T Communications,

Inc., 875 F.2d 399, 403 (2d Cir.), cert. denied, 493 U.S. 924

(1989); Coventry v. U.S. Steel Corp., 856 F.2d 514, 518 (3d

Cir. 1988). To resolve this split, Congress enacted the

OWBPA, 29 U.S.C. 626(f), which amended the ADEA by

mandating that a waiver of ADEA claims contain certain

minimum information to constitute a "knowing and voluntary"

waiver:

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(1) The release must be written in a
manner calculated to be understood by the
employee signing the release, or the
average individual eligible to
participate;

(2) the release must specifically refer
to claims arising under 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 already be entitled;

(5) the employee must be advised in
writing to consult with an attorney prior

to executing the agreement;

(6) the employee must be given at least
45 days to consider signing if the
incentive is offered to a group;

(7) the release must allow the employee
to rescind the agreement up to 7 days
after signing; and

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

See 29 U.S.C. 626(f)(1)(A)-(H) (emphasis added).

The OWBPA also explicitly places the burden on the

party asserting the validity of a waiver to demonstrate that

the waiver was "knowing and voluntary." See Id. 626(f)(3);

Raczak v. Ameritech Corp., 103 F.3d 1257, 1261 (6th Cir.

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1997). To prevail on a motion for summary judgment,

therefore, American needed to demonstrate that there was no

genuine issue of material fact as to whether the VERP

complied with each of the section 626(f) requirements. See

Griffin v. Kraft General Foods, Inc., 62 F.3d 368, 371-72

(11th Cir. 1995).

Surprisingly, the VERP documents comprising the

agreement did not specifically advise the employees to

consult with an attorney prior to executing the release. See

29 U.S.C. 626(f)(1)(E).3 Although each employee

acknowledged on the VERP election form having read the

release before making his or her election, the only reference

to consulting legal counsel appears in the release itself,

which was not to be executed until the employee actually left

work a number of months later. When the employees elected to

retire, however, they promised to sign the release on their

termination date as a condition of receiving benefits. The

release states only: "I have had reasonable and sufficient

time and opportunity to consult with an independent legal

3. On appeal, American argues that the VERP informed the
employees that:

[E]ach employee should obtain whatever advice he or she
required including consultation with personal attorneys
or advisors and should make an informed and voluntary
choice whether to participate in the plan.

Although American cites to documentation to support this
contention, nowhere except in the release does the cited
material mention private legal counsel.

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representative of my own choosing before signing this

Complete Release of All Claims." The VERP Agreement itself,

although it advised employees to consult financial and tax

advisors, to seek advice from local personnel

representatives, and to attend retirement seminars,4 said

nothing about seeking independent legal advice prior to

making the election to retire and agreeing to execute the

release as the statute dictates.

Given the burden OWBPA places on employers to

demonstrate their agreements contain the required

information, the reference contained in the release is

insufficient to satisfy 626(f)(1)(E). "Congress's intent

in enacting 626 was to compel employers to provide data so

that an employee considering waiving ADEA rights could

assess, with the assistance of counsel, the viability of an

ADEA claim." Raczak, 103 F.3d at 1259 (emphasis supplied).

For this purpose, section 626(f)(1)(E) provides that a waiver

is not knowing and voluntary unless "the individual is

advised in writing to consult with an attorney prior to

executing the agreement." To advise is to "caution," "warn,"

or "recommend." See Webster's Third New World International

Dictionary 32 (1986). This statutory requirement could not

be more clear, nor its purpose more central to the statutory

4. It also advised divorced employees to consult an

attorney regarding the effects of certain payment options.

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scheme at issue, especially in light of Congress's concern

with discrimination in the suspect context of group exit

programs.5

American argues that the waiver form complied with

the OWBPA because there is no dispute that the employees were

fully aware that only persons in their classifications who

were over the age of 45 and at the highest pay rates were

5. The legislative history of the OWBPA states:

In the context of ADEA waivers, the Committee
recognizes a fundamental distinction between
individually tailored separation agreements and
employer programs targeted at groups of employees.
. . .
During the past decade, in particular, employers
faced with the need to reduce workforce size have
resorted to standardized programs designed to
effectuate quick and wholesale reductions. The
trademark of involuntary termination programs is a
standardized formula or package of employee benefits
that is available to more than one employee. The
trademark of voluntary reduction programs is a
standardized formula or package of benefits designed
to induce employees voluntarily to sever their
employment. In both cases, the terms of the programs
generally are not subject to negotiation between the
parties. In addition, employees affected by those
programs have little or no basis to suspect that
action is being taken based on their individual
characteristics. Indeed, the employer generally
advises them that the termination is not a function
of their individual status. Under these

circumstances, the need for adequate information and

access to advice before waivers are signed is

especially acute.

S. Rep. No. 101-263, at 32 (1990), reprinted in 1990

U.S.C.C.A.N. 1509, 1537-38 (emphasis added).

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eligible, that they were releasing age claims in exchange for

enhanced benefits, and that they were provided with all the

advice the statute required. We disagree. The fact that the

employees may have known they were waiving rights in exchange

for enhanced retirement benefits does not satisfy section

626(f)(1)(E). We read section 626(f)(1)(E) to mean what it

says: employers must advise employees in writing to consult

an attorney prior to executing a release of ADEA claims. The

failure to advise the employees to consult with counsel goes

to the heart of the statute's purpose.6 Because American

failed to directly advise their employees to consult a lawyer

before making the election, we rule, as a matter of law, that

6. In light of the OWBPA's imprecise terms, some violations
may be so technical as to be de minimis, and thus may not
invalidate an otherwise valid release of ADEA claims. See

Raczak, 103 F.2d at 1260. American's failure adequately to

advise the employees to obtain counsel is in no way de
minimis.

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American failed to meet its burden under the OWBPA.7 See 29

U.S.C. 626(f)(1).

b. Ratification of the Employees' ADEA Waiver

As we have said, the district court did not decide

whether the release complied with OWBPA. Rather, it held

that the employees' acceptance of enhanced retirement

benefits, as well as their opposition to the court's order to

deposit the disputed retirement funds into the court's

registry pending the outcome of this litigation, constituted

a ratification of the original release agreement. We

disagree.

In the past, we have applied the ratification

doctrine to enforce an otherwise invalid release on the

ground that "'[a] contract or release, the execution of which

is induced by duress, is voidable, not void, and the person

7. As the employees point out, the waiver is also deficient
in another manner. The waiver broadly prohibits employees
from maintaining "any legal proceedings of any nature
whatsoever against American et al. before any court or

administrative agency" and requires them to "direct that
agency or court to withdraw from or dismiss the matter with
prejudice" if the agency assumes jurisdiction on their
behalf. Section 626(f)(4), however, states: "No waiver may
be used to justify interfering with the protected right of an
employee to file a charge or participate in an investigation
or proceeding conducted by the Commission." Cf. E.E.O.C. v.

Astra U.S.A., Inc., 94 F.3d 738, 744 (1st Cir. 1996) ("[A]ny

agreement that materially interferes with communication
between an employee and the Commission sows the seeds of harm
to the public interest"); E.E.O.C. v. Cosmair, Inc., 821 F.2d

1085, 1089-90 (5th Cir. 1987)(holding pre-OWBPA that an
employee cannot waive the right to file a charge with the
EEOC).

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claiming duress must act promptly to repudiate the contract

or release or he will be deemed to have waived his right to

do so.'" In re Boston Shipyard Corp., 886 F.2d 451, 455 (1st

Cir. 1989) (quoting Di Rose v. PK Management Corp., 691 F.2d

628, 633-34 (2d Cir. 1982)). The related tender-back

doctrine requires a party seeking to avoid a contract based

on duress to first return any consideration received. See

Deren v. Digital Equipment Corp., 61 F.3d 1, 1 (1st Cir.

1995). American asserts that the employees' retention of the

enhanced benefits received from the VERP ratified the invalid

waiver. The retention of benefits is relevant, however, only

if the ratification and tender-back doctrines apply to

waivers of ADEA claims after the adoption of the OWBPA.

The circuits are split on whether the acceptance of

benefits ratifies an otherwise invalid waiver of ADEA

claims.8 A majority, both before and after OWBPA's

enactment, have held that neither ratification nor tender-

back is appropriate when employees have signed an invalid

ADEA waiver. See Howlett v. Holiday Inns, Inc., 120 F.3d

598, 601-03 (6th Cir. 1997) (post-OWBPA); Long v. Sears

Roebuck & Co., 105 F.3d 1529, 1533 (3d Cir. 1997) (post-

OWBPA); Oberg v. Allied Van Lines, Inc., 11 F.3d 679 (7th

8. This issue has been argued before the Supreme Court and a
decision is currently pending. See Oubre v. Energy

Operations, Inc., 1996 WL 28508 (E.D. La.), aff'd, 102 F.3d

551 (5th Cir. 1996), cert. granted, 117 S. Ct. 1466 (1997)).

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Cir. 1993) (post-OWBPA), cert. denied, 511 U.S. 1108 (1994);

Forbus v. Sears, Roebuck & Co., 958 F.2d 1036 (11th Cir.

1992) (holding, pre-OWBPA, that the ADEA displaced the

tender-back doctrine); cf. Raczak v. Ameritech Corp., 103

F.3d 1257, 1260 (6th Cir. 1997)(affirming without a majority

rationale the district court's refusal to apply ratification

doctrine to an invalid ADEA waiver). In addition, a district

court in this circuit has sided with the majority view. See

Soliman v. Digital Equip. Corp., 869 F. Supp. 65 (D. Mass.

1994). The Fourth and Fifth Circuits and some district

courts, however, have held that a waiver that does not comply

with the OWBPA is voidable, rather than void; thus, a

plaintiff who retains retirement benefits ratifies the

invalid waiver. See Blistein v. St. John's College, 74 F.3d

1459, 1466 (4th Cir. 1996); Blakeney v. Lomas Info. Sys., 65

F.3d 482, 484 (5th Cir. 1995); see also Hodge v. New York

College of Podiatric Medicine, 940 F. Supp. 579, 582

(S.D.N.Y. 1996); Bilton v. Monsanto Co., 947 F. Supp. 1344

(E.D. Mo. 1996). The arguments for and against

incorporating the ratification and tender-back doctrines into

the ADEA have been thoroughly reviewed in these cases, and we

will not repeat their analysis fully.

The decisions in favor of ratification primarily

argue that, because Congress used "the terms 'knowing' and

'voluntary,' which parallel the common-law concepts of fraud,

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duress, and mistake, it is apparent that Congress was

defining only those circumstances in which a contract would

be voidable, not when it would be void." Blistein, 74 F.3d

at 1466. A voidable contract can, of course, be ratified by

subsequent conduct. See id. Accordingly, in the absence of

any language in the statute indicating that a waiver that

contravenes the OWBPA cannot be ratified, the common-law rule

still operates. See Wamsley v. Champlin Ref. & Chems. Inc.,

11 F.3d 534, 539-40 (5th Cir. 1993).

The majority view rests on two primary arguments:

(1) the plain language of OWBPA and its legislative history

indicate that Congress did not intend ratification to apply

to releases that are invalid under OWBPA, see Long, 105 F.3d

at 1537; and (2) the OWBPA displaced the common-law tender-

back doctrine under Hogue v. Southern Ry. Co., 390 U.S. 516

(1968). We reject the view adopted by the Fourth and Fifth

Circuits and adopt the majority position. At common law, a

waiver of rights was simply a contract, subject to defenses

like duress or mistake. When Congress enacted the OWBPA,

however, it specifically rejected using ordinary contract

principles to govern the validity of ADEA waivers. Long, 105

F.3d at 1539 (reviewing legislative history); see also S.

Rep. No. 101-293, see supra note 4, at 32 (disapproving of

the approach adopted in Lancaster v. Buerkle Buick Honda Co.,

809 F.2d 539 (8th Cir. 1987)). Instead, Congress enacted a

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"floor" of specific procedures an employer must follow before

an employee's waiver is effective. See S. Rep. No. 101-293,

supra note 4, at 32 (noting that the OWBPA "establishes

specified minimum requirements that must be satisfied before

a court may proceed to determine factually whether the

execution of a waiver was 'knowing and voluntary'"). Section

626(f)(1) states a clear rule: an individual "may not waive"

an ADEA claim unless the waiver is "knowing and voluntary."

And a waiver is not knowing and voluntary unless the employer

complies with the eight OWBPA requirements. See id.

Incorporating the ratification doctrine into this

statutory scheme would emasculate the Act. "Through the

OWBPA Congress sought to insure that employees faced with

deciding whether to sign an ADEA waiver and forego an ADEA

claim be provided with sufficient information to allow them

to evaluate the merits of that claim." Long, 105 F.3d at

1542. The ratification doctrine rests on a fiction that the

retention of benefits by the injured party forges a new

contract once the fraud has been discovered. Id. at 1539.

An employee, however, "could no more assent to the waiver of

his ADEA claim after having signed the defective release than

he could at the time of signing it." Howlett, 120 F.3d at

601 (emphasis in original). To allow the simple retention of

benefits to validate a noncomplying waiver would mean that

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OWBPA applied to the first contract, but not to the fictional

second contract. See Long, 105 F.3d at 1540.

When, as here, an employer fails in the simple task

of advising its employees to consult an attorney prior to

electing to retire, the employee is more likely to face a

critical decision without the knowledgeable guidance

necessary to assess whether he or she is possibly a victim of

age discrimination. If the ratification doctrine is

incorporated into this scheme, an employer could obtain

waivers without advising the employee to consult an attorney

and then put the employee to the difficult choice of giving

up essential benefits in order to protect his or her rights.

The very problem that Congress enacted the OWBPA to remedy

could thus resurface, albeit through the back door.

Therefore, incorporating the ratification doctrine into the

OWBPA could act to undermine the incentives for employers to

follow OWBPA's procedures and deter the prosecution of

meritorious claims. Cf. Hogue v. Southern Ry. Co., 390 U.S.

516 (1968) (holding that the Federal Employer Liability Act

displaced the common-law tender-back requirement).9

9. American relies on Deren v. Digital Equip. Corp., 61 F.3d

1 (1st Cir. 1995) in contending that ratification is
appropriate unless Congress indicates a clear intent to the
contrary. Such reliance is misplaced. In Deren, the court

held that an employee's waiver of ERISA claims was ratified
by his retention of benefits for three and one-half years.
Unlike the ADEA waivers here, however, the validity of an
ERISA waiver is governed by federal common-law principles,
see Smart v. Gillette Co. Long-Term Disability Plan, 70 F.3d

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25

The conflict between common-law ratification and

the statutory scheme at issue here is particularly stark when

an employer seeks to induce an employee to accept early

retirement. Here, the employees voluntarily agreed to retire

in exchange for enhanced benefits without which, American

assures us, they would have remained on the job at American's

highest pay scale. Courts applying the ratification doctrine

to ADEA claims have stated that the employees must be

required to restore the status quo by tendering-back the

benefits they received for waiving their claims. See

Blakeney, 65 F.3d at 485. This position is arguably

plausible in the context of a unilateral termination when an

employee receives severance benefits an employer would not

have paid but for the release. See, e.g., Wamsley, 11 F.3d

at 72. In the context of a voluntary retirement program,

however, tendering back the benefits received does not

restore the status quo.

For instance, American does not contend that the

employees should, as a precondition to suing, refuse their

retirement benefits and seek reinstatement. American does

not, in other words, contemplate the restoration of the

status quo. Rather, American wants to use the ratification

doctrine to retain the economic benefit of the employees'

173, 178 (1st Cir. 1995), rather than a detailed set of
statutory procedures. Therefore, Deren does not require the

incorporation of the ratification doctrine into the OWBPA.

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26

decisions to retire early -- a decision obtained by American

in violation of the OWBPA. As the Forbus court noted, this

result could "encourage egregious behavior on the part of

employers in forcing certain employees into early retirement

for the economic benefit of the company." 958 F.2d at 1041.

We therefore join the majority of courts which have

considered the issue and conclude that an employee's

retention of benefits does not act to ratify a waiver of ADEA

claims that fails to comply with the OWBPA.10 Thus, we

reverse the district court's declaration that the release

precludes defendants from raising age discrimination claims

under the ADEA.

10. Our holding is limited only to waivers that violate
OWBPA's requirements. Whether the ratification and tender-
back doctrines apply to a waiver that complies with the OWBPA
but is not "knowing and voluntary" for a different reason,
see Reid v. IBM Corp., 1997 WL 357969, at *4 (S.D.N.Y 1997),

is a separate question, one we need not reach today.

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27

2. Ratification of the Employees' Law 100 Waivers

Our rejection of the ratification doctrine in the

ADEA context has implications for whether, as the district

court s judgment declares, the release bars non-ADEA claims.

Though cursory mention of state law was made in the summary

judgment motions, both parties centered their arguments on

the question of whether the release, as a whole, was subject

to the ratification doctrine under federal and Puerto Rico

law. The district court opinion is unclear as to whether the

release, despite the employees' invalid waiver of ADEA

claims, nonetheless would bar their Puerto Rico Law 100

claims, as well as any other claims relating to their

employment. In reaching a conclusion that it does, the court

merely stated: "The result is the same under Puerto Rico

law."

In Long, the Third Circuit, facing the same

problem, explained:

[T]he district court rested its grant of
summary judgment as to all claims on its
finding that the release as a whole was
voidable and had been ratified . . . .
Our holding, confined as it is to ADEA
releases invalid under OWBPA, does not
automatically dispose of the remainder of
[the employee's] claims as might be the
case if we had rested our decision on the
void/voidable distinction.

105 F.3d at 1544-45. To ensure that the parties had an

adequate opportunity to litigate this issue, the Long court

vacated the district court's entry of summary judgment on the

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non-ADEA claims and remanded for further consideration. Id.

at 1545. We think the same prudent approach is warranted

here. While we express no opinion on the issue, we vacate

the district court's declaration that the release bars non-

ADEA claims and remand that issue for further consideration

consistent with our opinion.11 Cf. Eagle-Picher Industries,

Inc. v. Liberty Mut. Ins. Co., 829 F.2d 227, 246 (1st Cir.

1987) (vacating language in final judgment and remanding for

further consideration).

V.
V.

Monetary Benefits Deposited in the Court Registry
Monetary Benefits Deposited in the Court Registry

In May 1996, the district court ordered the deposit

of the employees' retirement benefits into an interest-

bearing account pursuant to Fed. R. Civ. P. 67. During the

11. As already noted, we affirm the court's dismissal of
ADEA and Law 100 claims because they are barred by the
statute of limitations. See infra. The statute of

limitations does not, however, provide an independent basis
for affirming the district court's declaratory judgment. The
district court s declaratory judgment had three parts: (1)
that the release was ratified, (2) that the release precludes
all employment related claims (including ADEA claims), and

(3) that the employees age discrimination claims are time-
barred. On appeal, we must determine if the trial court's
declaratory judgment, a final ruling that is res judicata in
any future litigation concerning this release, is correct in
all respects. See 10A Charles A. Wright, et al., Federal

Practice and Procedure, 2771 (1983)("A declaratory

judgment is binding on the parties before the court and is
res judicata in subsequent proceedings as to the matters
declared. . . ."). The statute of limitations is relevant
only to the third part of the district court s declaratory
judgment. Therefore, we must reach the ratification issue
despite the fact that the employees counterclaim is barred
by the limitations period.

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29

pendency of this action, these funds have been accumulating.

The question remains as to their proper disposition. The

record reflects that American choose not to address this

issue on summary judgment and neither party raises it on

appeal. Therefore, we do not reach this issue. We note,

however, that these funds are due to the employees unless

there exists a basis for their retention. We leave this for

the district court to determine on remand in a manner

consistent with this opinion.

VI.
VI.

Statutes of Limitations
Statutes of Limitations

The district court granted American summary

judgment on the ground that the applicable limitations

periods barred all of the employees' counterclaims. We

affirm as to the federal claims, although we clarify that

four of the employees' Law 100 claims were not barred by the

statute of limitations.

1. The ADEA Claims

In "deferral states" (states which have enacted

employment discrimination laws) such as Puerto Rico,

employees must file charges of unlawful age discrimination in

employment with the EEOC within 300 days "after the alleged

unlawful practice occurred." 29 U.S.C. 626(d). American

contends that the employees filed their claims with the ADU

and the EEOC outside the 300-day time limit imposed by the

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30

ADEA. We agree. To determine the timeliness of the

employee's complaint, we must specifically identify when the

unlawful practice that the employees claim violated the ADEA

occurred. See Lorance v. A.T. & T. Techs., 490 U.S. 900, 904

(1989). The gravamen of the employees' complaint is that

American misled them into believing that they were faced with

an impossible choice: retire with enhanced benefits or face

termination when American eliminated the cargo and

reservations operations in San Juan. In Vega v. Kodak

Caribbean Ltd., 3 F.3d 476 (1st Cir. 1993), we explained that

such a "take it or leave it" choice that discriminates on the

basis of age is unlawful.

To transform an offer of early retirement
into a constructive discharge, a
plaintiff must show that the offer was
nothing more than a charade, that is, a
subterfuge disguising the employer's
desire to purge the plaintiff from the
ranks because of his age. . . . [A]
plaintiff who has accepted an employer's
offer to retire can be said to have been
constructively discharged when the offer
presented was, at rock bottom, a choice
between early retirement with benefits or
discharge without benefits . . . .

Id. at 480 (citations and internal quotations omitted). If

the VERP was a charade, then American discriminated against

the employees by providing them no choice but to participate

in an early retirement program offered only to older

employees. As the alleged discriminatory act, this

constructive discharge triggered the limitations period. See

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31

Young v. Nat'l Ctr. for Health Servs. Research, 828 F.2d 235,

238 (4th Cir. 1987); cf. Kimzey v. Wal-Mart Stores, Inc., 107

F.3d 568, 573 (8th Cir. 1997) (applying rule in Title VII

case). It follows that, at the latest, the applicable

statutes began to run when each employee accepted the VERP.

All the employees accepted the VERP more than 300 days prior

to filing their administrative claims.12 Therefore, the

employees claims are time-barred.

The employees' arguments to the contrary are

flawed. The employees first argue that the statute did not

12. The defendants/employees have provided a table titled
"Summary of Relevant Dates" that set forth the applicable
election and filing dates for calculating the limitations
periods. American has not disputed the accuracy of these
dates.

VERP ADU Days
VERP ADU Days
Employee Accepted Filing Post VERP
Employee Accepted Filing Post VERP

Cardoza-Rodriguez 10/18/94 10/29/95 376
Coll-Figueroa 10/28/94 10/27/95 364

De La Paz 10/11/94 10/27/95 381

Garcia-Caceres 10/12/94 11/15/95 399
De Rivero 10/14/94 10/27/95 378

Martinez-Rivera 12/12/94 10/27/95 318

Mattos 11/3/94 10/27/95 356
Ortiz-Rosa 10/18/94 11/15/95 393

Santiago-Negron 10/21/94 10/30/95 374

Zequiera-Julia 12/13/94 10/27/95 317

Lopez-Garcia 11/10/94 11/15/95 370

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32

start to run until they actually left American's employ after

electing to retire early. This argument is meritless. In

Delaware State College v. Ricks, 449 U.S. 250, 257 (1980) the

Supreme Court held that a plaintiff's Title VII claim accrued

when the employee was denied tenure due to alleged race

discrimination, not when his actual employment contract

expired one year later. Because the allegedly unlawful act

was the denial of tenure, the termination date itself was

merely the "inevitable consequence" of prior discrimination

and thus did not trigger the statute of limitations. Id. at

257-58. Here, the employees' job termination was similarly

the inevitable result of their decision to participate in the

VERP.

The employees' contend that their discrimination

claims did not accrue until younger workers actually replaced

them. This argument fails because a prima facie age

discrimination claim does not necessarily require replacement

by a younger worker. See Sanchez v. Puerto Rico Oil Co., 37

F.3d 712, 719 n.7 (1st Cir. 1994) (citing cases). Instead,

when an employer implements a reduction-in-force, "the

[employee] may demonstrate either that the employer did not

treat age neutrally or that younger persons were retained in

the same position." Hildalgo v. Overseas Condado Ins.

Agencies, Inc., 120 F.3d 328, 333 (1st Cir. 1997)(internal

quotations omitted). We have stated categorically:

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33

"[W]hen an employee knows that he has
been hurt and also knows that his
employer has inflicted the injury, it is
fair to begin the countdown toward
repose. And the plaintiff need not know
all the facts that support his claim in
order for countdown to commence."

Morris, 27 F.3d at 750. When the employees signed the VERP,

they knew that the program was offered only to employees over

forty-five years of age. And it was then, the employees

allege, that American presented them with a "take it or leave

it" choice between early retirement and losing their jobs.

As a result, by the time the employees were allegedly

pressured into accepting early retirement, they had

sufficient information to bring their discrimination claim.

See id.

In this case, the limitations period commenced when

the employees elected to participate in the VERP. Thus,

unless there exists a basis for equitable modification of the

limitations period, all the employees' ADEA claims are barred

as a matter of law.

2. Equitable Estoppel and Tolling

The employees contend that the doctrines of

equitable estoppel and equitable tolling should save their

claims.13 We reject the application of these doctrines here.

13. The ADEA filing period is akin to a statute of
limitations and thus, subject to equitable modification. See

Mercado-Garcia v. Ponce Federal Bank, 979 F.2d 890, 895 (1st

Cir. 1992).

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34

Equitable estoppel is invoked when an employee is

aware of his ADEA rights, but does not make a timely filing

due to his reasonable reliance on his employer's deceptive

conduct. Kale v. Combined Ins. Co. of America, 861 F.2d 746,

752 (1st Cir. 1988). The employees have failed to allege

such conduct here. Rather, they have simply parroted the

same events that gave rise to their underlying claim: that

American misled them as to the reason for the VERP. There is

no evidence that American caused the employees to delay

bringing their lawsuit, or otherwise "lulled the plaintiff[s]

into believing that it was not necessary for [them] to

commence litigation." Dillman v. Combustion Eng., Inc., 784

F.2d 57, 60 (2d Cir. 1986). Thus, equitable estoppel is not

warranted.

Equitable tolling is appropriate when the plaintiff

demonstrates "excusable ignorance" of his statutory rights.

Kale, 861 F.2d at 752. Equitable tolling does not apply,

however, if an employee is actually or constructively aware

of his or her ADEA rights. Id. at 753. An employee has

actual knowledge of his rights if he "learns or is told of

his ADEA rights, even if he becomes only generally aware of

the fact there is a statute outlawing age discrimination."

Id.

In this case, each employee signed the VERP

election form, which contained a paragraph attesting that he

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35

or she had read the release. The release stated that the

employees were releasing American from any age discrimination

claims he or she may have had. Therefore, the employees had

actual knowledge of their ADEA rights. In addition, the

employees have alleged here that, shortly after inducing them

to sign the VERP, American went on a "recruitment frenzy of

new reservation agents" and announced that the cargo

department would remain in Puerto Rico despite American's

earlier claims. In light of these facts, the employees'

claim that their "excusable" ignorance caused them to wait

far longer than 300 days to pursue their claims is

untenable.14 See Cada v. Baxter Healthcare Corp., 920 F.2d

446, 452 (7th Cir. 1990) (holding that equitable tolling was

not warranted when the employee discovered, three weeks after

receiving notice of his termination, that a younger employee

would replace him).

3. The Puerto Rico Law 100 Claims

The employees contend that their Law 100 claims are

not barred by the statute of limitations. In pertinent part,

14. The employees allude to the theory of continuing
violations, which applies when a plaintiff alleges repetitive
instances of discrimination perpetuated over time. See Havens

Realty Corp. v. Coleman, 455 U.S. 363, 380 (1982); United Air

Lines, Inc. v. Evans, 431 U.S. 553, 558 (1977). The

employees have, however, failed properly to allege any
factual basis for finding an act of discrimination within the
limitations period. This claim therefore fails as a matter
of law.

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36

Law 100 forbids adverse employment actions based on any one

of several protected characteristics, including age. See

P.R. Laws Ann. tit. 29, 146 (1985); Sanchez, 37 F.2d at

723. Under substantive Puerto Rico law generally, actions

for civil liability based on fault commence "from the time

the aggrieved person had knowledge thereof." P.R. Laws Ann.

tit. 31, 5298 (1991); Rodriguez v. Nazario De Ferrer et

al., 121 P.R. Dec. 347, P.R. Offic. Trans. No. CE-86-417, at

9 (P.R. 1988).

In Olmo v. Young & Rubicam of P.R., Inc., 110 P.R.

Dec. 740 (P.R. 1981), the Supreme Court of Puerto Rico held

that the one year statute of limitations in Article 1868 of

the Puerto Rico Civil Code applied to Law 100 claims. Like

ADEA claims, a cause of action under Law 100 accrues when an

employee becomes aware of his injury through receipt of a

termination notice.15 See Rodriguez, P.R. Offic. Trans. No.

15. The employees cite Sanchez v. A.E.E., 97 J.T.S. 45

(1997) for the proposition that the statute of limitations
under Law 100 begins to run from the last day that an
employee was employed. American contests this reading,
asserting that the case dealt with a hostile and persistent
sexual harassment work atmosphere, was issued without a
formal opinion, and thus, has no precedential value. We
direct the employees' attention to U.S. Ct. of App. 1st Cir.
Rule 30.7, 28 U.S.C.A. (West 1997):

Whenever an opinion of the Supreme Court of Puerto
Rico is cited in a brief and oral argument which
does not appear in the bound volumes in English, an
official, certified or stipulated translation
thereof with three conformed copies shall be filed.

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37

CE-86-417, at 9; see also Montalban v. Puerto Rico Marine

Management, Inc., 774 F. Supp. 76, 77 (D.P.R. 1991)(applying

Puerto Rico law). Therefore, in the context of a

constructive discharge, the date the employee elects to

retire triggers the Law 100 limitation period. All of the

employees' claims, with the exception of four discussed below

(Coll-Figuera, Martinez-Rivera, Mattos, and Zequiera-Julia),

are thus barred by statute of limitations as a matter of law.

The remaining four employees' Law 100 claims are

not time-barred; they fail on the merits as a matter of law.

To survive summary judgment, an employee must submit at least

some evidence upon which a jury could properly proceed to

find an employer guilty of age discrimination. See De

Arteaga v. Pall Ultrafine Filtration Corp., 862 F.2d 940, 941

(1st Cir. 1988) (affirming summary judgment on Law 100

complaint for lack of evidence). With respect to the

remaining four employees, the record is devoid of any

competent evidence demonstrating that they were victims of

age discrimination. These four employees have failed

individually to submit even sworn affidavits attesting that

they suffered age discrimination. Rather, they appear to

rely wholly on the general allegations contained in their

The employees have not complied with this rule. Thus, we
decline their invitation to find that the Supreme Court of
Puerto Rico has overruled Rodriguez.

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38

complaint and the affidavits of their fellow employees. Such

evidence cannot withstand a motion for summary judgment. See

Fed. R. Civ. P. 56(c); see also Mesnick, 950 F.2d at 822 (an
,

appellate panel can affirm on any independently sufficient

ground).

VIII.
VIII.

In conclusion, we hold that the release violated

the OWBPA and that the employees' retention of benefits does

not act to ratify a waiver that failed to comply with the

OWBPA. We therefore reverse that portion of the district

court's judgment declaring that the employees' retention of

benefits ratified the release of their ADEA claims. We

vacate and remand to the district court to further consider

the issue of whether the release bars non-ADEA claims. We

affirm the district court's entry of summary judgment on the

employees' counterclaims.

Affirmed in part; reversed in part; vacated and

remanded in part. No costs.

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39