IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_______________
m 01-11389
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VERONICA CHAPLIN, THOMAS HALL, FRANK ILLING,
STEPHEN KENDALL, GERHARD LEVERING,
JOHN DAVID THRONEBERRY,
AS AN INDEPENDENT EXECUTOR OF THE ESTATE OF RALPH THRONEBERRY,
SUBSTITUTED IN PLACE AND STEAD OF RALPH THRONEBERRY, DECEASED,
AND
STEPHEN BUCK,
Plaintiffs-Appellants,
VERSUS
NATIONSCREDIT CORPORATION AND BANK OF AMERICA,
Defendants-Appellees.
_________________________
Appeal from the United States District Court
for the Northern District of Texas
_________________________
October 8, 2002
Before SMITH and BENAVIDES, Circuit Plan in early 1998 when they lost their jobs
Judges, and FITZWATER,* District Judge. because of the reorganization.
JERRY E. SMITH, Circuit Judge: Neither side disputes that plaintiffs earned
salaries below Band C and were involuntarily
The plaintiffs appeal a summary judgment terminated. They disagree only whether plain-
adverse to their claim for employee benefits. tiffs were “designated in writing by the
Finding no error, we affirm. Company’s Director of Human Resources as
eligible to part icipate in the Plan.” Plaintiffs
I. contend they were designated as eligible
Plaintiffs Veronica Chaplin, Thomas Hall, employees by a memorandum dated September
Frank Illing, Stephen Kendall, Gerhard Lever- 25, 1995, with an attached copy of the
ing, Ralph Throneberry,1 and Stephen Buck summary plan description, and by a
worked as executives or managers at Nations- memorandum dated February 29, 1996, with
Credit Distribution Finance (“NCDF”) until an attached copy of an amendment to the
early 1998, when they lost their jobs because summary plan description. NationsCredit
of a corporate reorganization. NationsCredit responds that these documents do not
Corporation (“NationsCredit”) and NCDF designate plaintiffs as eligible employees and,
were subsidiaries of NationsBank Corporation; in any event, NationsCredit terminated the
Bank of America is the successor to plan in 1997 before plaintiffs became eligible.
NationsBank Corporation.
Although they claimed eligibility under the
NationsCredit established a severance pay plan, each plaintiff signed a Letter of Agree-
plan in 1995 under the Employee Retirement ment between March 1998 and September
Income Security Act of 1974 (“ERISA”), 11 1998 releasing NationsCredit from all potential
U.S.C. § 1001 et seq. The plan granted claims in exchange for severance benefits
severance benefits to “those full-time salaried under non-ERISA guidelines adopted in Jan-
employees in Salary Grades below Band C uary 1998 during the reorganization. A
who are designated in writing by the section of the Letter of Agreement entitled
Company’s Director of Human Resources as “Release of Claims” included the following
eligible to participate in the Plan due to language:
involuntary termination of his/her employment
as a result of position elimination, position [Y]ou hereby agree to release NCDF
restructuring, lack of work, and/or the like.” from any and all claims, suits, demands,
Plaintiffs and NationsCredit dispute whether or other causes of action of any kind . . .
plaintiffs were eligible employees under the arising at any time in the unlimited past
up to and including the date of your ex-
ecution of this Letter of Agreement.
* This release includes any claims based in
District Judge of the Northern District of
Texas, sitting by designation. tort, contract or alleged violation of any
federal, state or municipal statute, or
1
Ralph Throneberry died after plaintiffs sued. ordinance. It includes, but is not limited
His son, John Throneberry, has been substituted as to, all claims arising by reason of or in
the executor of his estate.
2
any way connected with your a motion to reconsider and a second
employment relationship with NCDF . . memorandum opinion. In the first opinion, the
.. court denied summary judgment on the ERISA
claims and granted summary judgment on the
... state law claims.
. . . You also acknowledge that any First, the court found a genuine issue of
payment(s) made to you under the terms material fact regarding plaintiffs’ eligibility for
of this agreement are in addition to any- the plan when they were terminated. Second,
thing you are already legally entitled to the court held that the releases did not bar suit
receive from NCDF. because the releases were limited to “anything
[plaintiffs] are already legally entitled to re-
The severance benefits plaintiffs received in ceive from NCDF,” which could include sev-
exchange for signing the release were less than erance benefits offered in the plan if plaintiffs
they would have received under the plan if the proved at trial that they were in fact eligible
plan was active in early 1998 and if plaintiffs in employees when they were terminated. Third,
fact were eligible for benefits under the plan. the court found a genuine issue of material fact
as to whether the plan administrator had
II. denied plaintiffs’ appeal for benefits in an
Notwithstanding this release, plaintiffs sub- arbitrary and capricious manner, because the
mitted claims for severance benefits under the court already had concluded that plaintiffs
plan to NationsCredit in January 1999.2 Na- might have been eligible for benefits under the
tionsCredit denied the claims in March 1999, plan and that the releases did not bar the suit.
because plaintiffs had released it from all lia- Finally, the court held that ERISA’s
bility. Plaintiffs then appealed the denial to the preemption clause, 29 U.S.C. § 1144(a),
plan administrator in April 1999. The preempted plaintiffs’ state law claims, and
administrator denied the appeal in September accordingly it granted summary judgment to
1999. Plaintiffs then filed the instant action, NationsCredit on these claims.4
making claims under ERISA and state law for
wrongful denial of severance benefits offered After a motion to reconsider, however, the
in the plan and wrongful denial of their appeal court granted in whole NationsCredit’s motion
to the administrator.3 for summary judgment in a second opinion.
The court did not disturb its earlier finding that
NationsCredit moved for summary plaintiffs “were potentially entitled to receive
judgment on all of plaintiffs’ claims, which the benefits under the 1995 plan.” The court
district court ultimately granted, but only after concluded, however, that it had committed a
2 4
Appellant Buck did not submit a claim for Plaintiffs alleged state common law claims of
benefits. fraudulent inducement, unilateral contract, unjust
enrichment, detrimental reliance, breach of fidu-
3
NationsCredit also filed a counterclaim ciary duty, equitable estoppel, mental anguish, and
against plaintiffs for breach of contract, but the intentional and grossly negligent infliction of
counterclaim is not before us on appeal. emotional distress.
3
clear error of law by holding that the releases Id. at 255. To obtain summary judgment, “if
would not bar plaintiffs’ suit because plaintiffs the movant bears the burden of proof on an
and NationsCredit disputed plaintiffs’ issue . . . because . . . as a defendant he is
eligibility for the plan. Thus, even if plaintiffs asserting an affirmative defense, he must
had sued and ultimately prevailed on their establish beyond peradventure all of the
underlying claim of eligibility for the plan, essential elements of the . . . defense to
plaintiffs were not “already legally entitled to” warrant judgment in his favor.” Fontenot v.
severance benefits under the plan. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir.
1986).
The district court therefore granted
summary judgment to NationsCredit because IV.
the releases barred plaintiffs’ suit. For the NationsCredit bears the burden to prove
same reason, the court also concluded that the that the releases bar plaintiffs’ suit; it must es-
plan administrator could not have acted in an tablish that plaintiffs “signed a release that ad-
arbitrary and capricious manner, and therefore dresses the claims at issue, received adequate
it granted summary judgment to NationsCredit consideration, and breached the release.”
on this claim as well. The court did not Williams v. Phillips Petroleum Co., 23 F.3d
disturb its earlier holding that ERISA 930, 935 (5th Cir. 1994). Neither side
preempted plaintiffs’ state law claims. disputes that plaintiffs signed the releases or
Plaintiffs appeal the summary judgment on that, if the releases cover plaintiffs’ claims for
their claims for wrongful denial of benefits and ERISA benefits and they received adequate
wrongful denial of their appeal by the plan consideration, they breached the release by su-
administrator. ing. The parties disagree on, first, whether the
releases cover plaintiffs’ claims for ERISA
III. benefits and, second, whether plaintiffs
We review a summary judgment de novo received adequate consideration for the
and apply the same standards as did the district releases. We agree with the district court that
court. TIG Ins. Co. v. Sedgwick James, 276 the releases cover plaintiffs’ ERISA claims and
F.3d 754, 759 (5th Cir. 2002). Summary that the plaintiffs received adequate
judgment is appropriate only if “the pleadings, consideration.
depositions, answers to interrogatories, and
admissions on file, together with the affidavits, A.
if any,” when viewed in the light most fa- The parties disagree whether the language
vorable to the non-moving party, “show that of the releases covers a claim for ERISA ben-
there is no genuine issue as to any material efits. Plaintiffs contend that for a release to
fact.” Anderson v. Liberty Lobby, Inc., 477 cover an ERISA claim, it must specifically
U.S. 242, 249-50 (1986). A dispute about a mention ERISA. NationsCredit argues that a
material fact is “genuine” if the evidence release need not specifically mention ERISA
would permit a reasonable jury to return a for its broad language to cover an ERISA
verdict for the non-moving party. Id. at 248. claim.
The court must draw all reasonable We agree with NationsCredit that the lang-
inferences in favor of the non-moving party. uage in the release sweeps widely enough to
4
cover plaintiffs’ ERISA claim. Federal com- Inc., 801 F. Supp. 1537, 1543 (E.D. La.
mon law controls the interpretation of a re- 1992)). Finally, plaintiffs cite no section of
lease of federal claims. Fulgence v. J. Ray ERISA or any caselaw to suggest, much less
McDermott & Co., 662 F.2d 1207, 1209 (5th to require, that, to cover an ERISA claim, a
Cir. 1981). The terms of the releases release must specifically mention ERISA.
unambiguously reveal an intent to cover every
imaginable cause of action: “[Plaintiffs] The policy behind our holding in Williams
hereby agree to release NCDF from any and also suggests that a release with sweeping any-
all claims, suits, demands, or other causes of and-all language should cover an ERISA
action of any kind . . . arising at any time in claim, even if the release does not specifically
the unlimited past . . . [including] all claims mention ERISA. “Public policy favors
arising by reason of or in any way connected voluntary settlement of claims and
with [plaintiffs’] employment relationship enforcement of releases.” Williams, 23 F.3d at
with NCDF. . . .” (Emphasis added.) 935.6 It would be an odd public policy that
favored settlements and releases, but then
Although we have not expressly decided forced employers to scour the United States
whether this kind of any-and-all language cov- Code and the state statutes and reports to
ers a claim for ERISA benefits, the reasoning identify every possible cause of action.
of Williams strongly suggests that it does.5 In
Williams, the plaintiffs signed releases with Such a rule would add needless transaction
similar any-and-all language. We held that the costs to settlements. Higher transaction costs,
releases covered claims under the Worker Ad- in turn, would discourage settlement in close
justment and Retraining Notification Act cases by making settlement comparatively less
(“WARN”), 29 U.S.C. § 2101 et seq., even attractive to the expected value of success on
though the releases did not specifically the merits.
mention WARN. Williams, 23 F.3d at 936.
We explained that “[t]here is no obligation un- These transaction costs could well be se-
der WARN or the common law for the vere and widespread. Granted, frequent
defendants to mention WARN for the releases visitors to our courts might be indifferent to a
to be valid.” Id. rule requiring that releases specifically mention
all possible causes of action. Their able
Moreover, we cited two cases holding that lawyers could draft interminable releases for
this kind of any-and-all language covers a repeated use and thus consolidate and reduce
claim for ERISA benefits. Id. (citing Fair v. the costs across cases. Yet, most litigants are,
Int’l Flavors & Fragrances, Inc., 905 F.2d happily, not frequent visitors to the courts, and
1114, 1117 (7th Cir. 1990); Franz v. Iolab, they lack the resources to obtain, in advance,
5 6
Plaintiffs intimate that Williams is not good A release of an employment or employment
law after Oubre v. Entergy Operations, Inc., 522 discrimination claim is valid only if it is “knowing”
U.S. 422 (1998). As we explain below, see infra and “voluntary.” Alexander v. Gardner-Denver
Part IV.C, the holding in Oubre is extremely lim- Co., 415 U.S. 36, 52 n.15 (1974). Plaintiffs do not
ited and in no way undermines the holding or the argue that they signed the releases under duress or
reasoning in Williams. otherwise without knowledge or involuntarily.
5
punctilious release language for every possible “[Plaintiffs] also acknowledge that any
situationSSeven if they were on notice that payment(s) made to [plaintiffs] under the terms
they might need it. Moreover, even repeat of this agreement are in addition to anything
litigants would place a lower value on you are already legally entitled to receive
settlements in general, because the contin- from NCDF.” If plaintiffs were “already
gencySShowever slightSSwould remain that legally entitled to receive” severance benefits
they would miss a possible cause of action. under the plan, then the smaller severance
package they received in exchange for the
This unknowable contingency will always releases cannot be adequate consideration.
reduce the expected value of settlement and
will further discourage settlement. In contrast, The parties, naturally enough, dispute plain-
a rule allowing litigants to settle all claims with tiffs’ eligibility. The plan covered “those full-
a plain and simple statement that the release time salaried employees in Salary Grades
covers any and all claims reduces transaction below Band C who are designated in writing
costs, puts sophisticated and unsophisticated by the Company’s Director of Human
litigants alike on equal footing, and adds Resources as eligible to participate in the plan
certainty to settlement negotiations and due to involuntary termination of his/her em-
agreements. The kind of sweeping any-and-all ployment as a result of position elimination,
language contained in these releases not only position restructuring, lack of work, and/or the
promotes swift , inexpensive, and like.” The parties do not disagree that
comprehensive settlement of all disputes, but plaintiffs earned salaries below Band C and
also adequately notifies plaintiffs that they are were involuntarily terminated. They contest
releasing all possible claims. only whether plaintiffs were “designated in
writing by the Company’s Director of Human
In short, a general release of “any and all” Resources as eligible to participate in the
claims applies to all possible causes of action, plan.”
unless a statute specifically and expressly re- Plaintiffs contend that the memoranda of
quires a release to mention the statute for the September 25, 1995, and February 29, 1996,
release to bar a cause of action under the stat- designated plaintiffs as eligible employees.
ute. ERISA contains no such requirements. NationsCredit denies this assertion and
The releases therefore cover plaintiffs’ claims contends that plaintiffs could be designated as
for ERISA benefits. eligible employees only when they lost their
jobs, by which time NationsCredit already had
B. terminated the plan. As the district court
The only remaining question under found in its first opinion and did not reconsider
Williams is whether plaintiffs received in its second, these arguments raise a genuine
adequate consideration for the releases. We issue of material fact that cannot be resolved
conclude that they did. on summary judgment.
The adequacy of the consideration depends Perhaps plaintiffs would have proven their
on plaintiffs’ eligibility for the plan. A clause eligibility for the plan if they had not signed the
in the releases appears to limit the scope of the releases and instead had taken their underlying
releases if plaintiffs were eligible for the plan. ERISA claims to trial; but perhaps not. That
6
is a story whose ending we shall never know, cept severance benefits at the time of their ter-
because plaintiffs signed the releases. By mination and sign a Release, or to wait and
doing so, they surrendered their disputed right dispute their eligibility under the 1995 plan.
to a larger payment for a certain right to a Without exception, plaintiffs chose to take the
smaller payment, which is to say, they received severance benefits when offered at the time of
adequate consideration for the releases. their termination.” They cannot complain now
that the severance package they freely ac-
The district court correctly held, on cepted in lieu of protracted litigation over plan
reconsideration, that O’Hare v. Global benefits is inadequate consideration.
Natural Res., Inc., 898 F.2d 1015, 1016 (5th
Cir. 1990), compels this result.7 In O’Hare, C.
the plaintiff’s employment contract entitled Plaintiffs mount one final assault on the re-
him to benefits if fired without cause, but no leases, namely, that the releases do not con-
benefits if fired with cause. Id. at 1016. The form to the Older Workers Benefits Protection
employer fired plaintiff with alleged cause, but Act (“OWBPA”), 29 U.S.C. § 626(f).
plaintiff disputed the alleged cause. Id. The Congress adopted the OWBPA as an
plaintiff, however, signed a release of all amendment to the Age Discrimination in
claims in exchange for some benefits, though Employment Act (“ADEA”), 29 U.S.C. § 621
less than he would have received if he had et seq., to ensure that workers did not
been fired without cause. Id. Plaintiff then carelessly waive a potential ADEA claim.
sued for alleged age discrimination and for the Oubre v. Entergy Operations, Inc., 522 U.S.
benefits he would have received if fired for 422, 426-27 (1998). “The OWBPA
cause. Id. He argued that the release was in- implements Congress’ policy via a strict,
valid for lack of consideration, because he was unqualified statutory stricture on waivers,” id.
already entitled to receive the benefits under at 427, that requires a release to contain
his employment contract. Id. at 1017. certain elements, for example, a specific
mention of the ADEA and encouragement to
We rejected this argument: “O’Hare gave consult a lawyer, for the release to be valid
up a disputed right to the benefits he would against an ADEA claim.
have received had he been discharged without
cause for an undisputed right to a smaller Plaintiffs apparently think the OWBPA
package of benefits.” Id. The facts and the creates a general law of releases for all federal
holding of O’Hare are indistinguishable from claims, but they could not be more plainly
this case. wrong. One need only cursorily examine the
text of the OWBPA to see that it applies only
As the district court explained in its second to ADEA claims. The OWBPA states that
opinion, “plaintiffs were given a choice: to ac- “[a]n individual may not waive any right or
claim under this chapter unless the waiver is
knowing and voluntary.” 29 U.S.C. § 626-
7
The district court granted NationsCredit’s (f)(1) (emphasis added). The phrase “this
motion to reconsider precisely because the court chapter” in the OWBPA refers to chapter 14
had overlooked O’Hare in its first opinion and of title 29 of the United States Code, i.e., the
hence had committed a clear error of law under ADEA.
Fifth Circuit precedent.
7
The Supreme Court recognized this Perhaps even more important than the
obvious point and the very limited scope of the language of Oubre is the reasoning behind its
OWBPA in Oubre. The Court rejected, in holding. The OWBPA does not mention the
Oubre, an employer’s argument that the common law defenses of ratification and ten-
common law defenses of ratification and der back. The Court concluded, however, that
tender back survived the OWBPA. In the the OWBPA displaced the common law of re-
process, the Court repeatedly stated that the leases, including these defenses, as to ADEA
OWBPA applies only to ADEA claims, and no claims. 522 U.S. at 427. The Court anchored
others. this conclusion in the comprehensive nature of
The Court explained, for example, that the OWBPA, which to the Court evinced a
“[t]he text of the OWBPA forecloses the em- congressional intent for the OWBPA to
ployer’s defense, notwithstanding how general displace the common law and to create “its
contract principles would apply to non-ADEA own regime for assessing the effect of ADEA
claims.” 522 U.S. at 427. Likewise, the Court waivers, separate and apart from contract
expressly conceived a case in which a release law.” Id.
might bar all claims but an ADEA claim be-
cause the release did not comply with the This reasoning drastically limits the scope
OWBPA. “[T]hese questions may be complex of Oubre. If Oubre extends beyond OWBPA
where a release is effective as to some claims and ADEA claimsSSand we strongly doubt it
but not as to ADEA claims.” Id. at 428. doesSSit extends only to federal statutes with
an equally comprehensive regulation of releas-
The Court noted the very limited scope of es. As we explained in Williams, in which we
the OWBPA in many other passages, as well.8 held that the OWBPA does not apply to
The language of Oubre precludes plaintiffs’ ar- WARN, the OWBPA “is a change from the
gument that the OWBPA applies to a release common law, and there is no similar obligation
of an ERISA claim. imposed on employers under WARN.” 23
F.3d at 936. Likewise, ERISA does not reg-
ulate releases at all, so neither the OWBPA
8
See Oubre, 522 U.S. at 426-27 (“The stat- nor Oubre applies to the releases of plaintiffs’
utory command is clear: An employee ‘may not ERISA claims.
waive’ an ADEA claim unless the waiver or release
satisfies the OWBPA’s requirements.”); id. at 427 V.
(“An employee ‘may not waive’ an ADEA claim The district court held, in its first opinion,
unless the employer complies with the statute.”); that the ERISA preemption clause, 29 U.S.C.
id. (“The OWBPA sets up its own regime for § 1144(a), preempts plaintiffs’ state law
assessing the effect of ADEA waivers, separate claims. The court did not disturb this holding
and apart from contract law.”); id. (“The OWBPA
in its second opinion. Plaintiffs argue that the
governs the effect under federal law of waivers or
releases on ADEA claims”); id. at 428 (“As a
court erred, because they cannot be both in-
statutory matter, the release cannot bar her ADEA eligible for plan benefits and have their state
suit, irrespective of the validity of the contract as to law claims preempted. According to plaintiffs,
other claims.”); id. (“It suffices to hold that the if they are ineligible for plan benefits because
release cannot bar the ADEA claim”); id. (“The the plan expired or was terminated before they
statute governs the effect of the release on ADEA lost their jobs, then the plan no longer exists to
claims”).
8
preempt their state law claims. NationsCredit,
on the other hand, reasons that even an
expired or terminated ERISA plan retains its
preemptive effect.
We need not reach the question of ERISA
preemption, because we may affirm on much
simpler grounds: The releases bar the state
law claims. The Texas law of releases is sim-
ilar to this court’s standards explained in this
opinion. Under Texas law, “a release must
mention the claim to be effective.” See Keck
v. Nat’l Union Fire Ins. Co., 20 S.W.3d 692,
698 (Tex. 2000). Texas law does not,
however, “require that the parties anticipate
and identify each potential cause of action
relating to the release’s subject matter.” Id.
The releases expressly cover “any claims
based in tort [or] contract . . . [and] includes,
but is not limited to, all claims arising by rea-
son of or in any way connected with your em-
ployment relationship with NCDF.” Plaintiffs’
state law claims sound in tort or contract and
are directly connected to plaintiffs’
employment at NDCF. These claims therefore
fall within the subject matter of the releases,
and thus the releases bar the state law claims
under Texas law.
AFFIRMED.
9