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