Wamsley v. Champlin Refining and Chemicals, Inc.

UNITED STATES COURT OF APPEALS

For the Fifth Circuit

No. 92-1743

ALLEN M. WAMSLEY, DONALD J. WHITTENBERG,
ANTHONY J. NAGY, BETTY R. SANDERSON and GLENDA
K. BENNETT,

Plaintiffs-Appellants,

VS.

CHAMPLIN REFINING AND CHEMICALS, INC., ET AL.,
Defendants,

CHAMPLIN REFINING AND CHEMICALS, INC., ET AL.,
Defendants-Appellees.

Appeal from the United States District Court
for the Northern District of Texas
(December 30, 1993)

Before JONES and DeMOSS, Circuit Judges, and BARBOUR, District
Judge1.

DeMOSS, Circuit Judge:

We are called upon in this case to determine whether the

waiver requirements of the Older Workers Benefit Protection Act2

(the "OWBPA"), make our holding in Grillet v. Sears Roebuck & Co.,

1
Chief Judge of the Southern District of Mississippi,
sitting by designation.
2
Pub. L. No. 101-433, § 201, 104 Stat. 983 (1990) (amending
the Age Discrimination in Employment Act at 29 U.S.C.A. § 626(f)
(West Supp. 1993)).
927 F.2d 217 (5th Cir. 1991), unsound. Because we conclude that

nothing in the text or the legislative history of the OWBPA

evidences a congressional intent to disturb the common law

principles to which our holding in Grillet is anchored, the

district court's judgment is affirmed.

BACKGROUND

Appellants are former employees of Champlin Refining &

Chemicals, Incorporated ("Champlin") or one of its predecessors-in-

interest. In September of 1990, Champlin informed its Irving,

Texas office employees that at the end of the year Champlin would

become a wholly owned subsidiary of Citgo Petroleum Corporation.

Champlin explained that as a result, the Irving office was to be

closed and several of its employees were going to lose their jobs.

Champlin also explained that it was initiating a "Termination Pay

Plan" (the "Plan") for the benefit of those employees whose

employment would be terminated. In October, Champlin circulated a

copy of the Plan to all of its employees, including Appellants.

In November and December, Champlin informed Appellants that

they were among the employees who were going to be "let go."

Champlin provided them with a "Notice Pertaining to Release of

Claims" document and a "Release of Claims" agreement.3 The notice

included the following provision:

3
On November 7, Wamsley received the notice and release and
was informed that he would be terminated on November 30; on
November 15, Nagy received the notice and release and was told
that his termination date was also on the 30th; on November 20,
Whittenberg, Bennett, and Sanderson received the notice and
release and were informed that their employment would be
terminated on December 31.

2
 Although you may execute the Release of Claims as soon as
you wish, you also may take up to 45 days from your
receipt of the Release of Claims to consider it. Your
decision to execute the Release of Claims and accept
benefits under the Termination Pay Plan will be revocable
for seven days after execution, and no payment of
termination pay will be made until that period has
expired. Therefore, to be able to provide your
termination pay to you not later than five business days
after the termination of your employment, the Company
must receive your executed Release of Claims at least
seven days before that payment date.

The release provided for Appellants' waiver of any action or

claim against Champlin and "its successors, assigns, [and]

affiliates," "relating to or arising out of [their] employment

with [Champlin] . . . or the termination of such employment,

including but not limited to, claims for . . . age discrimination

under . . . the Age Discrimination in Employment Act of 1967." The

release made clear that the benefits to be paid under the Plan

constituted the consideration for the release.

Each of the appellants executed a release, and in return,

Champlin paid Appellants severance benefits.4 It is undisputed

that Appellants would not have otherwise been entitled to receive

these benefits; such benefits were paid strictly as consideration

for their release of Champlin.

4
Wamsley executed on November 20 and received $84,369.13;
Nagy executed on November 21 and received $90,763.01; Sanderson
executed on November 27 and received $25,634.99; Bennett executed
on December 19 and received $28,442.80; and Whittenberg executed
on December 21 and received $54,000.00. In addition to cash,
appellants received other benefits including outplacement
services through 1991 and medical, dental and life insurance
benefits for a period of six months.

3
 In April of 1991, Wamsley, Whittenberg, Nagy, and Sanderson

sent Champlin a letter threatening suit under the ADEA.5 Later

that year, in May, each of the aforementioned appellants filed

charges against Champlin for age discrimination with the Equal

Employment Opportunity Commission.6 In January of 1992, their

releases notwithstanding, Appellants filed suit against Champlin,

Citgo and the Plan (collectively referred to as "Champlin")

alleging that it had unlawfully discriminated against them on the

basis of age when it terminated their employment and denied them

certain benefits under the Plan.

They also alleged that their releases were "void or voidable"

due to duress and Champlin's failure to comply with one of the

conditions of the OWBPA. Appellants contended that Champlin had

failed to provide them 45 days to consider the release as required

under the OWBPA, and thus, the releases were not "knowing and

voluntary" within the meaning of the section 626(f)(1) of the ADEA.

Champlin answered the suit with a motion to dismiss. It

argued that the releases were valid under the OWBPA and relied on

the above-quoted portion of the notice document as proof that

Champlin had provided its employees the 45-day consideration

period. It also tendered affidavits specifically denying that

Appellants were told to execute and return the release prior to the

expiration of the 45-day period. Champlin explained that it had

5
Apparently Bennett had not thrown in with the other would-
be-litigants at this time.
6
Bennett filed her claim with the EEOC on December 30, 1991.

4
simply told its employees that they could avoid an interruption in

payroll if they returned the executed releases before their

termination date.

Champlin also averred that Appellants had not returned or

offered to return the severance benefits they received as

consideration for the releases. Thus, Champlin argued that even if

the court was unable to determine as a matter of law that Champlin

had provided the 45-day consideration period, the court should hold

that Appellants had ratified the releases and dismiss their claims.

Appellants responded to Champlin's motion and proof by

tendering affidavits in which each swore to facts surrounding their

termination and execution of the release. Appellants claimed to

have been told by certain individuals in the Champlin organization

that they had to sign and return the release by their termination

date, less than 45 days after receiving the notice, in order to

receive benefits under the Plan.

On August 14, 1992, the district court granted Champlin

judgment and dismissed Appellants' suit. The court held that the

releases were knowing and voluntary within the meaning of the ADEA

and, thus, barred Appellants' suit. The court alternatively held

that even if the releases were not valid when executed, Appellants

had ratified the agreements by failing to return to Champlin the

benefits they had received as consideration after learning of the

releases' alleged invalidity.

Appellants appeal, raising two general contentions. They

argue first, that fact issues exist regarding the knowing and

5
voluntary nature of their releases. They also contend that the

doctrine of ratification has no application in this suit. Although

we agree with Appellants' first contention, we reject their second.

The district court's judgment is, therefore, affirmed.

DISCUSSION

Knowing and Voluntary Waiver

Congress, through enactment of the OWBPA, has determined that

employers must afford their employees the right to consider for 45

days whether they should waive any rights or claims vis á vis the

ADEA in exchange for benefits under a group termination program. 29

U.S.C. § 626(f)(1)(F)(ii). Appellants contend, inter alia, that

Champlin denied them this right. Champlin responds by arguing that

it complied with the 45-day requirement and pointing to the "Notice

Pertaining to Release of Claims" document as proof. Appellants

counter by swearing that the information contained therein was

orally countermanded by certain persons at Champlin. Champlin, of

course, denies that Appellants were told anything of the sort.

Which version accurately describes Champlin's dealings with

Appellants is an issue that cannot be resolved by the court through

summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242,

249-55 (1986). We are unable to conclude, therefore, that

Appellants' releases were "knowing and voluntary" under the ADEA

OWBPA. Although we recognize that Appellants have managed to

create a fact issue on this point, we consider the issue to be

immaterial in light of our conclusion that Appellants have ratified

their releases as a matter of law.

6
Ratification of the Releases

Appellants do not dispute that they have neither returned nor

offered to return the benefits they received as consideration for

the releases. Rather, Appellants argue that the law does not

require them to make such a tender in order to pursue claims under

the ADEA. In taking this position, Appellants press two arguments.

They first contend that the OWBPA has effectively overruled our

decision in Grillet v. Sears, Roebuck & Company. In Grillet, the

court held that when an employee agrees to release her employer

from liability under the ADEA and receives benefits as

consideration for the agreement, the employee ratifies the

agreement if she retains the consideration after learning that the

release is voidable. 927 F.2d at 220. Appellants alternatively

argue that Grillet was erroneously decided and should be overruled.

We treat each argument in turn.

The OWBPA and Ratification

Appellants contend that "[t]he language and purpose of the

OWBPA preclude ratification of a release otherwise in violation of

the OWBPA." The language upon which Appellants rely states that an

individual "may not" waive any ADEA claim unless the waiver is

knowing and voluntary within the meaning of section 626(f)(1) of

title 29. (emphasis Appellants') Appellants read this language to

mean that any waiver failing to meet one of the requirements under

section 626(f)(1) is not simply voidable, but void and, therefore,

unable to be ratified.

7
 The doctrine of contractual ratification is the enforcement of

a promise to perform all or part of an antecedent contract of the

promisor, previously voidable by him, but not avoided prior to the

making of the promise. RESTATEMENT (SECOND) OF CONTRACTS § 85 (1981).

To have ratification, there must be an antecedent contract that was

previously voidable, but not avoided. A contract is voidable if

there exist grounds upon which a party can avoid, or disaffirm, his

duty of performance. Id. § 7. Such grounds have traditionally

included fraud, duress, mistake and infancy. Id. § 7 cmt. b.

Ratification operates to allow a party having the power to

avoid his contractual duty to make, or be deemed to have made, a

new promise to perform his previously voidable duty and thus,

extinguish his power of avoidance. Id. § 85 cmt. a. To say that a

contract is voidable, therefore, is to say that an antecedent

promise created a legal duty on the promisor's part and that the

promisor has the power either to avoid performance, based on any

one of the several grounds of avoidance, or to ratify the promise

by making a new one.7

Promises that are void cannot be ratified. The reason for

this is simple: Void promises are not legally binding and thus, are

not contracts. Id. § 7 cmt. a. Without an antecedent contract to

ratify, there can be no ratification. To say that a promise is

void is to say that it created no legal obligation and that the

7
Note that if the same grounds for avoidance exist when the
new promise is made, the party again enjoys the power to avoid
performance under the new promise. REST. CONT., § 85 cmt. b.
Where, however, such grounds no longer exist, ratification
mandates performance of the new promise.

8
promisor is without the power to bind himself under a new promise

to perform the antecedent promise. Id. §§ 8 and 85 cmt. a.

We do not interpret the language of section 626(f)(1) to mean

that a waiver which fails to meet the requirements of subsections

(A) through (H) is void of legal effect. Rather, we interpret it

to mean that such waivers are not knowing and voluntary and thus

are subject to being avoided at the election of the employee. This

interpretation comports with the language of section 626(f)(1) and

is supported by the legislative history of the OWBPA.8

We also find that the provisions of section 626(f)(1) support

our conclusion that defective waiver agreements are voidable and

not void. Section 626(f)(1)(G) expressly provides that for seven

days after execution of a waiver agreement an employee may revoke

the agreement and that the agreement does not become enforceable

until the expiration of the seven day revocation period. If non-

compliance with the other subparts of section 626(f)(1) rendered

the agreement void, there would be no need for subpart (G).

8
The legislative history indicates that the fundamental
purpose of the OWBPA waiver provisions is to ensure that an older
worker who is asked to sign an ADEA waiver does so in the absence
of fraud, duress, coercion, or mistake of material facts. S. REP.
NO. 101-263, 101st Cong., 2nd Sess. (1990), reprinted in 1990
U.S.C.C.A.N. 1509, 1537. The circumstances against which these
provisions were designed to protect are the same circumstances
that have traditionally given rise to grounds upon which a party
can avoid contractual obligations. That the Committee enumerated
several of the traditional grounds of avoidance is significant.
Also significant is the absence of any language in the statute
and any statement in the legislative history indicating that a
waiver executed in contravention of the OWBPA requirements is
void of legal effect and cannot be ratified by an employee.

9
 Finally, an interpretation of section 626(f)(1) that renders

defective waiver agreements void would be inconsistent with one of

the expressed purposes of the ADEA: "to help employers and workers

find ways of meeting problems arising from the impact of age on

employment." 29 U.S.C. § 621(b). The simplest and easiest way to

further this purpose is to give effect to private agreements which

resolve age related employment problems without the inevitable

delays and costs associated with litigation. Were employers forced

to assume the risk that non-compliance with all of statutory

requirements of section 626(f)(1) renders a waiver agreement for

which they have paid valuable consideration void and thus, not

capable of being ratified, clearly they would be disinclined to

propose such solutions.9

Therefore, we hold that neither the language nor the purpose

of the OWBPA indicates a congressional desire to deprive an

9
The facts before us testify to this truth. The Plan which
Champlin circulated to Appellants in early October 1990 contained
a provision materially identical to the waiver agreement that
each of the appellants executed. Thus, two of the appellants had
almost two months and the others had almost three months to
consider the Plan and their waiver of rights under the ADEA.
Nevertheless, after executing the agreements and accepting the
termination benefits as the consideration for their promises not
to sue, each of the appellants filed suit, claiming that the
waiver agreements were not "knowing and voluntary." Although,
Champlin's documentary evidence shows it to have been in letter
perfect compliance with section 626(f)(1) and to have lived up to
its end of the waiver bargain, the nature of Appellants' attack
on the agreements assured Appellants of a fact issue with which
to avoid summary judgment on this issue. Thus, were we to
conclude that Appellants' waiver agreements were void from their
execution, Champlin would be facing continued litigation with
opponents who could use, and possibly already have used, to
finance their suit, the very funds Champlin paid as consideration
to avoid litigation.

10
employee of the ability to ratify a waiver that fails to meet the

requirements of the OWBPA. When Appellants chose to retain and not

tender back to Champlin the benefits paid them in consideration for

their promise not to sue Champlin, they manifested their intention

to be bound by the waivers and thus, made a new promise to abide by

their terms.10 Grillet, 927 F.2d at 220; O'Shea v. Commercial

Credit Corp., 930 F.2d 358, 362 (4th Cir. 1991); In Re Boston

Shipyard Corp., 886 F.2d 451, 455 (1st Cir. 1989); Anselmo v.

Manufacturers Life Ins. Co., 771 F.2d 417, 420 (8th Cir. 1985).

The court will enforce their new conduct based promises as it

legally and equitably should.11

10
A promise is a manifestation of intention to act or
refrain from acting in a specified way, so made as to justify a
promisee in understanding that a commitment has been made. REST.
CONT. § 2. That a promise has been made can be determined from
conduct as well as words. REST. CONT. § 19. Here the conduct
giving rise to Appellants' promise to perform under their waivers
was their retention of the consideration for their waivers. That
Appellants may have subjectively intended something different is
of no moment.

In the final analysis, the objective theory of
contracts, as distinguished from the subjective theory,
is based on analogy to estoppel. This is apparent
whenever a person is held bound by a contract because
of his manifestations when his manifestations are
contrary to his actual state of mind.

1 SAMUEL WILLISTON, WILLISTON ON CONTRACTS § 98, p. 362 (1957) (footnote
omitted).
11
Note that the court is not enforcing the promises
contained in any of the allegedly voidable waiver agreements as
such. What the court is enforcing is a new promise, evidenced by
subsequent conduct, to be bound by the terms of the original
waiver agreements. Therefore, that the original waiver
agreements may not have been in compliance with § 626 is of no
consequence. The court is now concerned with the enforcement of
a new promise which gives rise to a new legal obligation. As a
new promise that creates a new obligation, it is not subject to

11
 Grillet and Hogue

Appellants alternatively argue that our decision in Grillet is

contrary to the Supreme Court's decision in Hogue v. Southern R.

Co., 88 S.Ct 1150 (1968). We disagree.

In Hogue, the Court held that a "tender back" of consideration

paid by a rail carrier to one of its injured employees in exchange

for the employee's release was not a prerequisite to the employee

bringing suit on the injury. Id. at 1151-5. The Court reasoned as

follows:

[A] rule which required a refund as a
prerequisite to institution of suit would be
wholly incongruous with the general policy of
the [Federal Employers Liability Act] to give
railroad employees a right to recover just
compensation for injuries negligently
inflicted by their employers. Rather it is
more consistent with the objectives of the Act
to hold, as we do, that it suffices that,
except as the release may otherwise bar
recovery, the sum paid shall be deducted from
any award determined to be due to the injured
employee.

Id. at 1152 (citations omitted). The Court's holding is founded on

the recognition that a "tender back" requirement would be "wholly

the waiver requirements of § 626, and thus, such requirements
pose no bar to its enforcement. Consequently, we find ourselves
in respectful disagreement with the Seventh Circuit's recent
decision in Oberg v. Allied Van Lines, Inc., 1993 WL 483614 (7th
Cir. Nov. 23 1993), in which the court concludes, without any
analysis of the doctrine of ratification, that "[n]o matter how
many times parties may try to ratify [a waiver] contract, the
language of the OWBPA, '[a]n individual may not waive', [sic]
forbids any waiver." Id. * 3. We believe that the court's
conclusion in Oberg is at odds with the legislative history and
congressional intent behind the OWBPA, See Note 8, supra, and
overlooks the legal theories that define the doctrine of
ratification of voidable contracts.

12
incongruous" with the right of recovery provided under the FELA and

inconsistent with the objectives of that Act. The right of

recovery under the FELA, however, is unique in that it advances a

congressional intention of facilitating recovery by injured

railroad workers against their employers.

The FELA was designed not simply to discourage negligent

conduct, for indeed, the common law at the FELA's passage provided

rail workers an action for negligence. Rather, the Act was

designed with a broader purpose in mind: "to provide liberal

recovery for injured workers," Kernan v. American Dredging Co., 355

U.S. 426, 432 (1957), and thus, "to put on the railroad industry

some of the cost for the legs, eyes, arms, and lives which it

consumed in its operations."12 Wilkerson v. McCarthy, 336 U.S. 53,

12
The FELA's legislative history testifies to this truth:

[T]he employers' liability law . . . places such
stringent liability upon the railroads for injuries to
their employees as to compel the highest safeguarding
of the lives and limbs of the men in this dangerous
employment. The tremendous loss of life and limb on
the railroads of this country is appalling. The total
casualties to trainmen on the interstate railroads of
the United States for the year 1908 was 281,645.

It was the intention of Congress in the enactment of
this law . . . to shift the burden of the loss
resulting from these casualties from "those least able
to bear it" and place it upon those who can, as the
Supreme Court said in the Taylor case (210 U.S. 281),
"measurably control their causes."

The passage of the original act and the perfection
thereof by the amendments herein proposed stand forth
as a declaration of public policy to radically change,
as far as congressional power can extend, those rules
of the common law which the President, in a recent
speech at Chicago, September 16, 1909, characterized as
"unjust." President Taft in his address . . . referred

13
68 (1949) (concurring opinion of Justice Douglas). It accomplished

these purposes by creating a statutory scheme that "stripped [an

employer] of his common law defenses," and granted recovery if the

"employer['s] negligence played any part, even the slightest, in

producing the injury or death for which damages are sought." Rogers

v. Missouri Pacific R. Co., 352 U.S. 500, 506-7 (1956). These

dramatic changes evinced a clear congressional intent "favoring

unburdened and expeditious recoveries" by rail workers. Smith v.

Pinell, 597 F.2d 994, 996 (5th Cir. 1979).

The FELA's statutory scheme removed several of the common-law

obstacles hindering the injured rail worker's "unburdened and

expeditious recovery." The Supreme Court in Hogue removed yet

another common-law obstacle to the rail worker's congressionally

encouraged recovery. By so acting, the Court advanced the FELA's

purposes of providing liberal recovery to injured rail workers and

thus, of shifting from them to their employers the heavy loss

associated with their severe injuries.

No such purposes underlie the ADEA. Congress expressly

declared that the purposes of the ADEA were "to promote employment

"to the continuance of unjust rules of law exempting
employers from liability for accidents to laborers."

This public policy which we now declare is based upon
the failure of the common-law rules as to liability for
accident, to meet the modern industrial conditions and
is based not alone upon the failure of those rules in
the United States, but their failure in other countries
as well.

GRIFFITH, THE VINDICATION OF A NATIONAL POLICY UNDER THE FEDERAL EMPLOYERS'
LIABILITY ACT, 18 LAW & CONTEMP. PROB. 160 (1953)(quoting from 45
Cong. Rec. 4041 (1910)).

14
of older persons based on their ability rather than age; to

prohibit arbitrary age discrimination in employment; [and] to help

employers and workers find ways of meeting problems arising from

the impact of age on employment." 29 U.S.C. § 621(b). Unjustified

discrimination on the basis of age was the problem targeted by the

ADEA. To redress this problem, Congress provided employees a

wholly new right of action for age discrimination. Nowhere in

section 621(b) did Congress express, however, its desire to

actively facilitate an ADEA claimant's recovery.13

What Congress did under the FELA was something it has not yet

done under the ADEA, that is, to legislatively facilitate an

employee/claimant's recovery. Until Congress demonstrates its

desire to promote "liberal," "unburdened and expeditious

recoveries" to claimants under the ADEA, Grillet will remain sound

authority and unaffected by Hogue.

We also note that there are fundamental differences between

settling a claim for personal injury or death under the FELA and

settling a potential claim for a possible ADEA violation in

connection with an employer's pre-announced program for reduction

in force. In the FELA situation the injury has in fact already

13
We believe that the Seventh Circuit in Oberg, by adopting
the reasoning of Forbus v. Sears, Roebuck & Co., 958 F.2d 1036
(11 Cir. 1992), and Isaacs v. Caterpillar, Inc., 765 F.Supp. 1359
(C.D.Ill. 1991), has improperly analogized the FELA to the ADEA
and, thus, arrived at the erroneous conclusion that Hogue
precludes a "tender back" requirement in suits brought under the
ADEA. For the reasons set forth in this opinion, we consider
these two "remedial" statutes to be fundamentally different in
congressional purpose and intent. Consequently, we consider such
an analogy inaccurate.

15
occurred; otherwise there is no FELA claim to settle. However, in

an ADEA situation dealing with a prospective reduction in force,

such as involved here, the purpose of the settlement agreement is

to compromise in advance a potential age discrimination event and

to offset in advance any loss and injury which an employee might

experience if such an event were to occur.

Moreover, the FELA has effectively rendered liability of the

employer a given in the great majority of cases, leaving

quantification of damages as the principal focus of settlement

negotiations. No such inference of liability exists as to ADEA

claims; mere termination of employment is not sufficient to

establish liability. An ADEA claimant faces the burdensome task of

proving that the termination of his employment was the result of

unlawful age discrimination. Therefore, the elements to be

considered in the settlement of an ADEA claim involve not only

damages, but also the more critical issue of threshold liability.

Therefore, when (1) an employer presents his employee with a

settlement agreement, the purpose of which is to resolve the issues

of potential liability and damages under the ADEA, (2) the employee

is given the opportunity to consider the agreement for a period of

almost two months, and (3) the employer funds the agreed settlement

consideration, thus performing its side of the bargain - all of

which has occurred in this case, we believe justice and equity

require the employee who seeks to avoid the obligations to which he

agreed under the settlement agreement to return the consideration

which he received for his promise not to sue.

16
 CONCLUSION

In light of the foregoing, we AFFIRM the district court's

judgment.

wjl:\opin\92-01743.opn
CWF
17