F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
AUG 27 1999
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT
WARDER W. BENNETT, CHARLES
BLALOCK, LEONARD L.
GARRETT, ROBERT HANNAH,
ERNEST HOWARD, JOHN
MCMINIMEE, and JULIA A.
SIMPSON, Nos. 97-1195 and 97-1221
Plaintiffs-Appellants-Cross-
Appellees,
v.
COORS BREWING COMPANY, a
Colorado corporation,
Defendant-Appellee-Cross-
Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
(D.C. No. CIV-95-Z-2574)
K. Preston Oade, Jr.(Richard G. Wilkins and Kelly M. Condon with him on the
briefs), of Holme, Roberts & Owen, LLP, Denver, Colorado for Defendant-
Appellee-Cross-Appellant.
Charles Welton (Alan E. Richman, Stephen J. Hensen, C. Todd Drake, of
Richman & Henderson, P.C., Denver, Colorado, with him of the briefs), of
Denver, Colorado, for Plaintiff-Appellants-Cross-Appellees.
Before PORFILIO , HOLLOWAY , and HENRY , Circuit Judges.
HENRY , Circuit Judge.
This case involves identical early retirement and voluntary separation
releases signed by the plaintiffs-appellants, Warder W. Bennett, Charles Blalock,
Leonard L. Garrett, Robert Hannah, Ernest Howard, John McMinimee, and Julia
A. Simpson. The appellants appeal the district court’s grant of summary
judgment in favor of the defendant-appellee, Coors Brewing Company (“Coors”),
on their claims for age discrimination under 29 U.S.C. §621-634, the Age
Discrimination in Employment Act (“ADEA”), and their pendent state law claims
for wrongful discharge, outrageous conduct, negligent misrepresentation, and
fraud. The district court rejected all of the appellants’ claims, holding that the
appellants had knowingly and voluntarily executed a release of all claims against
Coors. In the alternative, the district court held that, even if the releases were
invalid due to fraud, appellants ratified the releases because they did not “tender
back” their separation benefits before filing suit against Coors. As an ancillary
matter, Coors cross-appeals the district court’s denial of its contractual claim for
attorneys’ fees. We exercise jurisdiction under 28 U.S.C. § 1291 and affirm in
part and reverse in part.
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I. BACKGROUND
A. Facts
In reciting the facts, we review the record and the inferences therefrom in
the light most favorable to the non-moving party. See Sanchez v. Denver Pub.
Sch. , 164 F.3d 527, 531 (10th Cir. 1998). Appellants were among twenty-eight
employees in the security department at Coors. In the summer of 1993, Coors
announced that, as part of a work place redesign, Coors would reduce its
workforce by 500 employees. To avoid involuntary layoffs, Coors planned to
achieve this reduction through voluntary severance and attrition. Coors created
two voluntary separation plans: the Enhanced Voluntary Severance Program
(“EVSP”) and the Enhanced Early Retirement Window (“EERW”). Both the
EVSP and EERW were one-time benefits packages offered to qualified
employees who volunteered to terminate employment or retire during the election
period.
Between August and October of 1993, Coors supplied all eligible
employees, including the appellants, with detailed and complete explanations of
the EVSP and EERW. Specifically, Coors attempted to inform eligible
employees about the plans by providing personalized employee information
packets, company-sponsored meetings regarding the plans, a telephone “hotline”
for employee questions, and a videotape featuring company executives discussing
3
the voluntary severance and early retirement programs.
As part of the downsizing, eligible employees in the security department
were given the option of participating in the EVSP or the EERW. In addition to
downsizing, Coors evaluated the possibility of completely outsourcing the
security department, a decision that if approved would have eliminated all
twenty-eight positions in the department. Appellants were aware of rumors of
potential outsourcing in the late summer of 1993, when they were considering
whether to accept one of the benefit packages.
On September 20, 1993, in an attempt to control rumors about the
outsourcing of the security department, Coors informed employees through its
company newsletter that there had been no decision on whether to outsource
security. The newsletter stated:
RUMOR: Security has been outsourced.
FACT: Security has not been outsourced. Security, like other areas
involved in the General and Administrative Workplace Redesign, is
brainstorming and evaluating all kinds of ideas.
Aplts’ App., vol. II, at 491. Subsequently, according to the affidavits of the
appellants, Coors made two statements regarding the downsizing and potential
outsourcing of the security department. See Aplts’ App., vol. II, at 684-87. On
October 11, 1993, at a meeting attended by the appellants, Coors announced that
it intended to eliminate 9.36 full-time employees from the security department.
4
Id. Further, at the same meeting, Coors announced that security was not going to
be outsourced at the present time, but that outsourcing would be examined again
in six months. Id.
Between September 1 and October 28, 1993, all seven of the appellants
accepted either the early retirement or the enhanced severance package. Charles
Blalock received a $51,563 lump-sum cash payment in return for his voluntary
severance, and Leonard Garrett, John McMinimee and Ernest Howard
respectively received $38,640, $33,088 and $24,563 in cash for their voluntary
severance. Warder Bennett was paid a $9,944 lump sum for his early retirement,
with an additional enhanced payment of $453 per month to him and his spouse
for the rest of their lives. Robert Hannah and Julie Simpson respectively
received $7,426 and $5,460 in cash at the time of their early retirements, with
additional monthly payments of $383 and $501 respectively, continuing for life.
As part of the packages, appellants each signed a “Legal Release and
Agreement Not to Sue,” which provided, among other things:
You agree fully and forever to release all of your legal rights and
claims against Coors, whether or not presently known to you,
including future legal rights and claims, if based on acts or
omissions occurring before you deliver this signed Agreement to the
Benefits Department, in any way relating to your employment with
Coors, including your separation from employment . . . .
You agree that the legal rights and claims that you are giving up
include, but are not limited to, all state and federal statutes which
protect you from discrimination in employment on the basis of sex,
5
race, national origin, religion, disability and age, such as the Age
Discrimination in Employment Act of 1987, . . . as well as all
common law rights and claims, such as breach of contract, express or
implied, tort, whether negligent or intentional, wrongful discharge
and any claim for fraud, omission or misrepresentation concerning
the [Early Retirement Window or Enhanced Severance Program].
***
You agree that, if you bring any kind of legal claim against Coors
that you have given up by signing this Agreement, then you will be
violating this Agreement and you must pay all legal fees, other costs
and expenses incurred by Coors in defending against your claim.
Aplts’ App., vol. I, at 85-98. The releases further advised employees to consult a
lawyer before signing the release, afforded a forty-five day period in which to
consider signing the release, and established a seven-day revocation period in
which employees could revoke their acceptances. See id. By November 5, 1993,
the official employment of each of the appellants had terminated as a result of
their participation in the programs.
Only days later, on November 10, 1993, Coors posted a “Job
Opportunities” bulletin in its in-house news letter, advertising seven openings in
the security department. On January 2, 1994, Coors ran an advertisement in the
Denver Post seeking full-time employees for its security department. As a result
of these ads, Coors hired new personnel for the security department. However,
the record is not clear on the number of new employees hired or their ages.
Appellants claim that, as a result of the advertisements, Coors hired a total
6
of twelve new security personnel by the end of February, 1994, eleven of whom
were under the age of forty and one who was forty-one. See Aplts’ Reply Br. at
2. Appellants further argue that Coors continued to hire new employees so that
by the end of 1994, Coors had re-hired the security department to approximately
the same number of personnel as before the downsizing. See id. at 3 (“Despite
Coors’ incorrect statement that the Security Department was reduced from 28
employees to 19 employees, the evidence shows that the level of staffing in
Security did not materially change.”). However, appellants have not presented,
and we are unable to find in the record, any “evidence” that shows the level did
or did not materially change.
Coors disputes these assertions and explains that any new hiring done in the
security department was the result of more employees taking the benefit packages
than anticipated or due to the restructuring of the security department. See Aple’s
Br. at 14. Coors maintains that, as a result of the restructuring, it reduced the
number of management positions and increased the number of entry-level
positions in the security department. Further, Coors affirmatively states that
“employees over the age of 40 were hired by or transferred into the Coors Security
Department.” Aplts’ App., vol. I, at 53. Moreover, Coors claims that it only
hired eight new employees so that, by February of 1994, the security department
had nineteen employees, “a decrease of nine employees as compared to July 1993
7
-- exactly the reduction that Coors announced in fall 1993.” Id. at 66. Coors does
not address whether more employees were hired in the Security Department after
February 1994. The record does not resolve this factual dispute.
B. Procedural History
Based on their allegations that new, younger employees were hired to
replace them, six of the seven appellants filed charges of age discrimination with
the Equal Employment Opportunity Commission (the “EEOC”) between
September 7 and 16, 1994. Appellant Julie Simpson, however, never filed a
charge of discrimination with the EEOC.
On October 18, 1995, the appellants filed the current suit against Coors in
Colorado federal district court, alleging that Coors: (1) constructively discharged
them in violation of the ADEA; (2) fraudulently and/or negligently induced them
to resign from their jobs and sign the releases; (3) wrongfully discharged them;
and (4) engaged in outrageous conduct. After considerable discovery, Coors
moved for summary judgment on all of the appellants’ claims and, citing the
releases’ provisions regarding the payment of attorneys’ fees, also sought to
collect all fees it had incurred defending the suit. The appellants also moved for
partial summary judgment, requesting that the court hold that their claims arose
after they signed the releases. The district court granted Coors’ motion for
8
summary judgment, accepting Coors’ argument that all claims were barred under
the plain language of the releases. In the alternative, the district court held that
the plaintiffs’ claims were barred because they did not “tender back” their
severance packages before bringing suit. Additionally, the court denied the
plaintiffs’ motion for partial summary judgment, and denied Coors’ motion for
attorneys’ fees.
C. Standard of Review
We review the grant or denial of summary judgment de novo, applying the
same legal standard used by the district court. See McKnight v. Kimberly Clark
Corp. , 149 F.3d 1125, 1128 (10th Cir. 1998). Summary judgment is appropriate
“if the pleadings, depositions, answers to interrogatories, and admissions on file,
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). When applying this standard, “we examine the factual
record and reasonable inferences therefrom in the light most favorable to the party
opposing summary judgment.” See McKnight , 149 F.3d at 1128. If there is no
genuine issue of material fact in dispute, we then must determine if the
substantive law was correctly applied by the district court. See id.
9
II. DISCUSSION
In this appeal, we must resolve whether appellants’ claims are barred by the
terms of the releases they executed upon their separation from Coors. We begin
by addressing appellants’ claims under the ADEA.
A. APPELLANTS’ ADEA CLAIMS
1. Knowing and Voluntary Release Execution
Appellants argue first that the district court erred in holding that the
releases, signed by the appellants when they accepted either the EVSP or EERW,
were knowing and voluntary under 29 U.S.C. §626, the Older Workers Benefit
Protection Act (“OWBPA”). Specifically, appellants argue that the waivers were
not knowing and voluntary because of fraud, duress, and mutual mistake. Coors,
however, argues that the releases are valid because they comply with the express
requirements of the OWBPA.
Section 201 of the OWBPA prohibits the waiver of ADEA claims if the
waiver is not “knowing and voluntary.” 29 U.S.C. § 626(f)(1). The statute
provides that an ADEA waiver is not knowing and voluntary unless, “at a
minimum,” it complies with the requirements set out in the statute. Id. The
statutory requirements are summarized as follows:
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(1) the release must be written in a manner calculated to be
understood by the employee signing the release, or by 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 execution;
(4) the employer must provide consideration for the waiver or release
of ADEA claims 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 revoke 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 or not selected for the program.
See 29 U.S.C. § 626(f)(1)(A)-(H).
In the present case, the district court correctly found that the releases
complied with these express statutory requirements. However, the statutory
factors are not exclusive and other circumstances, outside the express statutory
requirements, may impact whether a waiver under the OWBPA is knowing and
voluntary.
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In Torrez v. Public Serv. Co. of N.M., Inc ., 908 F.2d 687, 690 (10th Cir.
1990) (per curiam), we held that a court must look to the “totality of the
circumstances” to determine if the release of an employment discrimination claim
is knowing and voluntary. This approach, adopted by “a majority of circuits,”
requires that a court “explicitly look beyond the contract language and consider
all relevant factors in assessing a plaintiff’s knowledge and the voluntariness of
the waiver.” Id. at 689 (emphasis added).
In our view, the totality of the circumstances approach is the better
one. While evaluation of the language of the contract is necessary to
determine the validity of the waiver of discrimination claims, our
inquiry cannot end there. Especially "[i]n light of the strong policy
concerns to eradicate discrimination in employment, a review of the
totality of the circumstances, considerate of the particular individual
who has executed the release, is also necessary ."
Id. at 690 (emphasis added) (quoting Coventry v. United States Steel Corp. , 856
F.2d 514, 522-23 (3d Cir. 1988)). Although Torrez was decided before the 1990
amendments to the ADEA, which includes § 626(f), its requirement that a court
look beyond the minimum statutory requirements to the “totality of the
circumstances” is consistent with the plain language and the legislative history of
the OWBPA.
The OWBPA plainly states that the listed statutory requirements are a
minimum for determining whether a waiver is knowing and voluntary. 29 U.S.C.
§ 626(f)(1) (“a waiver may not be considered knowing and voluntary unless at a
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minimum . . . ” it complies with the listed statutory requirements.). In addition,
the legislative history explicitly approves of the logical and plain meaning
interpretation that the statutory requirements are not exclusive.
Title II of the [OWBPA] provides . . . that waivers not supervised
by the EEOC may be valid and enforceable if they meet certain
threshold requirements and are otherwise shown to be knowing and
voluntary . . . .
. . . The individual [waiving his rights] . . . must have acted in the
absence of fraud, duress, coercion, or mistake of material fact. The
Committee expects that courts reviewing the "knowing and
voluntary" issue will scrutinize carefully the complete circumstances
in which the waiver was executed . . . .
The bill 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.”
S. Rep. No. 263, at 31-32 (1990), reprinted in 1990 U.S.C.C.A.N. 1509, 1537
(emphasis added). Accordingly, we must look beyond the specified statutory
minimum requirements.
Under general contract principles, it is well established that a contract is
void and unenforceable if procured through fraud. See, e.g. , Restatement
(Second) Contracts §164(1) (1981) (“If a party’s manifestation of assent is
induced by a fraudulent or a material misrepresentation by the other party upon
which the recipient is justified in relying, the contract is voidable by the
recipient”); Shaheen v. B.F. Goodrich Co. , 873 F.2d 105, 107 (6th Cir. 1989)
(“Properly executed waivers of possible employment-related discrimination claims
knowingly and voluntarily made between an employee and his employer will be
13
enforced absent the typical exceptions for fraud, duress, lack of consideration or
mutual mistake.”). Applying these principles, we hold that non-statutory
circumstances such as fraud, duress, or mutual mistake may render an ADEA
waiver not “knowing and voluntary” under the OWBPA.
The Eleventh Circuit reached this same conclusion in Griffin v. Kraft Gen.
Foods, Inc. , 62 F.3d 368, 373-74 (11th Cir. 1995). In Griffin , terminated
employees sued their former employer under the OWBPA, seeking to invalidate
releases of ADEA rights that they were required to sign as a condition of
receiving severance benefits. The terminated employees argued that the district
court erred when it failed to consider non-statutory factors showing the waiver
was not “knowing and voluntary.” The Eleventh Circuit agreed, holding that
“nonstatutory circumstances, such as fraud, duress, or coercion in connection with
the execution of the waiver, may render an ADEA waiver not ‘knowing and
voluntary.’” Id.
In the present case, as in Griffin , the district court erred by not addressing
the totality of the circumstances surrounding the releases. While appellants’
claims of fraud, duress and mutual mistake are separate state law claims, they are
also inquiries relevant to the issue of whether the waivers were knowing and
voluntary under the OWBPA.
After reviewing the record and taking the facts in the light most favorable
14
to appellants, for the reasons discussed below, we conclude that the appellants
established a prima facie claim of fraud, indicating that the waivers may not have
been knowing and voluntary. However, appellants failed to establish a prima
facie claim of duress or mutual mistake.
a. Fraud
To establish a prima facie case of fraud under Colorado law, a plaintiff
must present evidence of the following:
(1) “the defendant made a false representation of a material fact;”
(2) “the party making the representation knew it was false;”
(3) “the party to whom the representation was made did not know of the
falsity;”
(4) “the representation was made with the intent that it be acted upon;” and,
(5) “the representation resulted in damages.”
Brody v. Bock , 897 P.2d 769, 775-76 (Colo. 1995). As a general rule, actionable
fraud cannot consist of unfulfilled predictions or erroneous conjectures as to
future events. However, exceptions exist:
Merely expressing an opinion in the nature of a prophecy as to the
happening of a future event is not actionable. However, a promise
concerning a future act, when coupled with a present intention not to
fulfill the promise, can be a misrepresentation which is actionable as
fraud .
15
Ballow v. Phico Ins. Co. , 875 P.2d 1354, 1362 (Colo. 1993) (quotations and
citations omitted) (emphasis added) .
Appellants claim that when Coors stated that it intended to downsize the
security department by 9.36 personnel, the statement was false and Coors’ true
intention was to keep the same number of employees. Appellants also argue that
when Coors made the statement that outsourcing would be re-evaluated in six
months, Coors had no intention of outsourcing or re-evaluating in six months and
the decision had already been made not to outsource the security department.
Thus, appellants argue, these allegedly fraudulent statements were made either to
induce them to take the severance packages or, for those employees who had
already signed a release, to insure that those appellants would not revoke their
acceptance during the seven-day revocation period required by the OWBPA.
When taken in the light most favorable to the non-moving party, the fact
that Coors began to advertise for new employees five days after appellants’
official termination date and the allegation that Coors re-hired the security
department to approximately the same number as before the downsizing is
sufficient on this record to support appellants’ allegations and establish a prima
facie claim of fraud. While appellants’ allegations concern future events,
appellants argue that, at the time Coors made these statements, Coors knew they
were false and had no intention of downsizing or re-evaluating outsourcing. In
16
addition, the actual number of employees re-hired by Coors is in dispute.
Contrary to appellants’ assertions, Coors claims that it only hired eight new
employees, in the end reducing the department by nearly the exact number as it
had stated in October of 1993. The issue of fraud as it relates to the knowing and
voluntary nature of the waiver (including the disputed number of employees
terminated and re-hired by Coors) was not developed in this summary judgment
record and, on the factual record to this point, we cannot decide the issue of fraud
as a matter of law. We therefore leave it for the district court to consider on
remand whether, under the totality of the circumstances, the waiver was valid in
light of appellants’ allegations of fraud.
b. Duress
In addition to fraud, appellants claim that the releases were not knowing
and voluntary because they were under duress at the time they executed the
releases. Specifically, appellants argue that Coors made “threats” of outsourcing
the security department that left appellants with no choice but to accept the
severance packages. In support of their claims, appellants have submitted
personal affidavits and the opinions of two expert witnesses, Dr. Bebensee and
Dr. Pesci. Dr. Bebensee is a senior human resource executive and Dr. Pesci is a
licensed counselor who worked with the appellants while they worked in the
17
security department. Dr. Bebensee and Dr. Pesci stated that appellants were under
“duress” because of the changes and uncertainty surrounding the security
department. These assertions, however, do not establish a prima facie case of
duress.
In order to establish duress under Colorado law, a party must show an
unlawful threat or other improper means, so that the other party’s will “was so
taken away that he could not properly enter into [the] contract.” Wiesen v. Short ,
604 P.2d 1191, 1192 (Colo. Ct. App. 1979).
To establish duress as ground for the avoidance of a contract,
conveyance, or other act, it is not alone sufficient to show the
exertion of pressure by threats or even by physical compulsion, but it
must also clearly appear that the force or threats employed actually
subjugated the mind and will of the person against whom they were
directed, and were thus the sole and efficient cause of the action
which he took . . . . And it is a general rule that a transaction cannot
be held to have been induced by duress, notwithstanding any threats
which may have been made, where the party had and took an
opportunity for reflection and for making up his mind, and where he
consulted with others and had the benefit of their advice, especially
where he was advised by his counsel .
Wiesen , 604 P.2d at 1192 (emphasis added) (quotations omitted). See also
Anselmo v. Manufacturers Life Ins. Co. , 771 F.2d 417, 420 (8th Cir. 1985)
(holding that the fact that an employee faces a tough decision of either “accepting
. . . termination perks or pursuing his legal rights under [an] employment
agreement . . . does not mean that [the employee] lacked the requisite free will to
make the decision.”); Vail/Arrowhead, Inc. v. District Court for the Fifth Judicial
18
Dist., Eagle County , 954 P.2d 608, 612 (Colo. 1998) (“A contract is voidable on
the grounds of duress if a party's manifestation of assent is induced by an
improper threat that leaves no reasonable alternative.”) (emphasis added) (citing
Restatement (Second) of Contracts § 175 (1981)). However, “[t]hreats to do what
one may lawfully do [are] not duress.” Heald v. Crump , 215 P. 140, 141 (Colo.
1923).
In the present case, there is no evidence to indicate Coors “threatened”
employees with downsizing or outsourcing in the manner Colorado law requires
for duress. Moreover, Coors was completely within its legal rights to downsize or
outsource the security department; appellants’ affidavits, claiming general
uncertainty and unsettled circumstances in the security department, simply do not
establish a legal claim of duress. The “pressures” that appellants and their experts
allege are present any time an employee faces the difficult choice between
accepting additional benefits or pursuing his legal rights. This alone does not
indicate lack of free will. Finally, appellants were given the opportunity for
reflection on their decisions for forty-five days, were given a seven-day period to
revoke their acceptance, and were encouraged by Coors to consult legal counsel
before signing the releases. There is simply no evidence from which a reasonable
jury could conclude that the down-sizing, potential outsourcing, or general
pressures in the security department subjugated the mind and will of the
19
appellants so that they could not properly execute the releases.
c. Mutual Mistake
Finally, appellants argue that the releases were not knowing and voluntary
because of a mutual mistake. Appellants contend that if, as Coors argues, the
releases cover all of the claims raised by appellants in this lawsuit, then there was
a “mutual mistake” and the releases were therefore not knowing and voluntary.
Appellants argue that the mistake was that they believed they were only giving up
claims that had already accrued. However, Coors agrees with the appellants that
the releases only apply to claims that had already accrued. Therefore, there is no
mutual mistake on this point. Rather, appellants’ true dispute is over the scope of
the releases which, as discussed below, cover appellants’ ADEA claims.
2. Scope of the Releases
Appellants argue that, even if the releases are valid, their ADEA claims do
not fall within the scope of the releases. We disagree. The relevant part of the
releases states:
You agree fully and forever to release all of your legal rights and
claims against Coors, whether or not presently known to you,
including future legal rights and claims, if based on acts or omissions
occurring before you deliver this signed Agreement to the Benefits
Department , in any way relating to your employment with Coors,
including your separation from employment . . . .
20
Aplts’ App., vol. I, at 89 (emphasis added).
Appellants argue that the releases do not bar their ADEA claims because
the claims arose after they signed the releases. After appellants signed and
delivered the releases to the benefits department, there was a seven-day revocation
period before the releases became effective during which time appellants
continued to work for Coors. Appellants argue that their ADEA claims accrued
after they signed the releases, at the end of the seven-day revocation period when
the releases became effective and appellants were “discharged” from Coors.
Thus, they argue that their claims are not covered by the releases, because they
were “discharged” seven days after they signed and delivered the releases.
Coors argues that the releases, by their clear terms, reach all claims relating
to appellants’ employment and separation from Coors. They argue that the
releases, under their express terms, clearly apply to all claims “in any way relating
to [appellants’] employment with Coors, including [appellants’] separation from
employment.” Aplts’ App., vol. I, at 89. Further, the releases specifically include
any claim for discrimination on the basis of age under the ADEA. See id.
Under Colorado law, “interpretation of the language of a contract is a
question of law to be resolved by the court.” Denver Ctr. for the Performing Arts
v. Briggs , 696 P.2d 299, 306 (Colo. 1985). “[W]hether . . . a contract is
ambiguous is also a question of law for the court.” Id. However, “[t]he fact that
21
the parties disagree as to the meaning of the terms of the contract does not lead
necessarily to the conclusion that the contract is ambiguous.” Id. “In ascertaining
whether certain provisions of a document are ambiguous, the instrument’s
language must be examined and construed in harmony with the plain and generally
accepted meaning of the words employed, and reference must be made to all the
provisions of the agreement.” Radiology Prof’l Corp. v. Trinidad Area Health
Assoc. , 577 P.2d 748, 750 (Colo. 1978). “The plain effect of a contract should
not be destroyed by strained construction.” Briggs , 696 P.2d at 306.
We agree with the district court that the plain meaning of the releases is to
release any claims in any way relating to appellants’ employment with Coors,
which includes appellants’ ADEA claims. “[I]t is a cardinal rule that an
agreement . . . must be construed as a whole and effect given, if possible, to its
every provision.” Brown v. Brown , 419 P.2d 444, 445 (Colo. 1966). “[S]pecific
terms and exact terms [in this case, the specifically listed ADEA claims] are given
greater weight than general language.” Restatement (Second) Contracts § 203(c)
(1981). The releases specifically address any claims for discrimination based on
age under the ADEA. Appellants’ literal, out-of-context interpretation of a single,
general sentence would destroy the plain meaning of the agreements and would, in
effect, remove the specifically listed ADEA claims from the releases. The
releases, when interpreted as a whole, have only one reasonable meaning – to bar
22
all claims in any way relating to appellants’ employment and discharge from
Coors, specifically including appellants’ ADEA claims. Therefore, we affirm the
conclusion of the district court and hold that appellants’ ADEA claims are barred
by the unambiguous terms of the releases.
3. Tender Back
The district court held in the alternative that, even if the releases were not
knowing and voluntary, appellants ratified the releases and could not challenge
their validity because they did not “tender back” or return the severance benefits
they received from Coors before bringing suit. Colorado law provides that “[o]ne
seeking to remedy fraudulent inducement of a contract must elect either to rescind
the entire contract to restore the conditions existing before the agreement was
made, or to affirm the entire contract and recover the difference between the
actual value of the benefits received and the value of those benefits if they had
been as represented.” Trimble v. City & County of Denver , 697 P.2d 716, 723
(Colo. 1985).
If one elects to affirm the agreement, after full knowledge of the truth
respecting the false and fraudulent representations, and thereafter
continues to carry it out and receive its benefits, he may not thereafter
maintain an action in damages for deceit, because this would
constitute ratification of the agreement and a condonation of the
fraud ; otherwise one might, with knowledge of fraud, speculate upon
the advantages or disadvantages of an agreement, receive its benefits,
and thereafter repudiate all its obligations.
23
Tisdel v. Central Sav. Bank & Trust Co. , 6 P.2d 912, 918 (Colo. 1931) (emphasis
added). Thus, under Colorado law, Coors argues that appellants are precluded
from raising the issue of whether the releases were knowing and voluntary and
would have had to return their severance benefits before they could challenge the
validity of the releases.
In the context of ADEA claims, however, federal law has abrogated this
common law doctrine through Congress’ policy decision requiring heightened
protection for older workers, implemented in the OWBPA. See Oubre v. Entergy
Operations, Inc. , 118 S. Ct. 838, 841-42 (1998). In Oubre , an opinion decided
during the pendency of this appeal, an employee who, as part of a termination
agreement, signed a release of all claims against the employer in exchange for
severance pay, subsequently sued the employer for age discrimination in violation
of the ADEA. The employer argued that the employee had ratified the release by
failing to return the monies she had received. The Supreme Court specifically
rejected this argument, holding that an employee’s failure to tender back benefits
could not act as a ratification for a release of an ADEA claim that is void under
the OWBPA. The Court stated that “[t]he statutory command is clear: An
employee ‘may not waive’ an ADEA claim unless the waiver or release satisfies
the OWBPA’s requirements.” Id. at 841. The Court went on to say:
The OWBPA governs the effect under federal law of waivers or
releases on ADEA claims and incorporates no exceptions or
24
qualifications. The text of the OWBPA forecloses the employer’s
defense [requiring tender back] notwithstanding how general contract
principles would apply to non-ADEA claims . The rule proposed by
the employer would frustrate the statute's practical operation as well
as its formal command. In many instances a discharged employee
likely will have spent the monies received and will lack the means to
tender their return. These realities might tempt employers to risk
noncompliance with the OWBPA's waiver provisions, knowing it will
be difficult to repay the monies and relying on ratification. We ought
not to open the door to an evasion of the statute by this device.
Id. at 842 (emphasis added).
Oubre is dispositive in the present case. Coors cannot assert that the
appellants’ failure to tender back their separation benefits acted as ratification for
releases that are allegedly void under the OWBPA. The Supreme Court
acknowledged that, as a result of its decision, a release may be effective as to
some claims (in this case appellants’ state law claims), while ineffective as to the
ADEA claims. See id. (noting that the restitution, tender back, and ratification
issues “become complex where a release is effective as to some claims but not as
to ADEA claims”). Thus, in the present case, while the appellants’ failure to
tender back their severance benefits can act as a ratification of the waiver as to
their state law claims, see discussion of state law claims, infra , it has no effect on
their ability to challenge the waivers of their ADEA claims under the OWBPA.
4. Untimeliness
In addition to the reasons articulated by the district court, Coors argues that
25
appellants’ ADEA claims are barred by 29 U.S.C. 626(d)(2). Section 626(d)
provides, in pertinent part, that:
No civil action may be commenced by an individual under this
section until 60 days after a charge alleging unlawful discrimination
has been filed with the Equal Employment Opportunity Commission.
Such a charge shall be filed--
(1) within 180 days after the alleged unlawful practice occurred; or
(2) in a case to which section 633(b) of this title applies, within 300
days after the alleged unlawful practice occurred, or within 30 days
after receipt by the individual of notice of termination of proceedings
under State law, whichever is earlier.
Subsection (b)(2) extends the time period to 300 days if section 633(b) applies.
Section 633(b) applies to states that have statutorily prohibited age discrimination.
Here, 633(b) applies because the State of Colorado has statutorily prohibited
employment discrimination on the basis of age, see Colo. Rev. Stat. § 24-34-402,
and, therefore, the 300-day limitation period of subsection (d)(2) applies in this
case. See 29 U.S.C. § 633(b).
The appellants accepted their benefit packages and resigned from Coors
between September 8 and October 28, 1993. Coors argues that the latest date that
any of the appellants could have been “constructively discharged” was November
5, 1993 – the last date the seven-day revocation period ended for any of the
appellants. Using November 5, 1993, as the latest possible date for the alleged
unlawful practice by Coors, the 300-day filing period mandated by 29 U.S.C.
626(d)(2) would have expired on September 1, 1994. Appellants (except Ms.
26
Simpson) filed their claims with the EEOC between September 7 and 16, 1994.
Coors argues, therefore, that appellants’ claims are untimely and barred by the
statute because none of appellants filed charges with the EEOC before September
1, 1994.
In response, appellants first argue that their claims did not arise until
January 31, 1994, the date that Coors allegedly hired its first replacement
employee. Therefore, appellants had until November 27, 1994 (300 days from
January 31, 1994) to file their claims with the EEOC. In the alternative,
appellants argue that even if November 5, 1993 is the date on which their causes
of action accrued, the 300-day filing period should be equitably tolled because
Coors fraudulently concealed their ADEA claims.
Addressing appellants’ first argument, we find that November 5, 1993 was
the latest date on which their constructive discharge claims could have arisen. In
Hulsey v. KMart, Inc ., 43 F.3d 555, 557 (10th Cir. 1994), we held that a cause of
action accrues under the ADEA on “the date the employee is notified of an
adverse employment decision” by the employer. In Hulsey , the plaintiffs, two
KMart employees, were demoted from their positions as store managers and
transferred to different stores. Two years later, the plaintiffs viewed a television
program, “A Current Affair,” which purportedly revealed that their demotions
were motivated by age discrimination. The plaintiffs thereafter filed suit and
27
argued that their cause of action did not accrue until the time that they watched
the television program. The court rejected this argument:
A cause of action accrues under the Age Discrimination in
Employment Act ("ADEA") on the date the employee is notified of an
adverse employment decision. Generally, an employee is notified of
an adverse employment decision when a particular event or decision
is announced by the employer .
It is undisputed that the allegedly discriminatory actions by
Kmart against Employees were the demotions and transfers. As such,
Employees' cause of action accrued on the dates Kmart notified them
of their new assignments.
Hulsey , 43 F.3d at 557 (emphasis added) (quotations omitted) (further holding
that the plaintiffs’ allegation of constructive discharge was not “sufficient to
invoke the doctrine of equitable tolling”).
Applying Hulsey , we agree with Coors that the very latest date any of the
appellants’ claims could be considered to have arisen was on November 5, 1993.
As stated by appellants, “[t]his is an employment discrimination case in which
[appellants] . . . allege that [Coors] violated the [ADEA] by constructively
discharging them because of their age.” Aplts’ Br. at 1. The allegedly
discriminatory action by Coors was the constructive discharge of appellants
because of their age. At the latest, this discharge occurred on November 5, 1993,
the last day the seven-day revocation period ended for any of the appellants.
While the hiring of new, younger employees might be evidence of Coors’ alleged
28
discriminatory intent at the time appellants left Coors, it is the alleged
discriminatory “discharge” that appellants seek to redress. Appellants admit as
much when they state that their “claims are primarily based on misrepresentations
made by Coors which occurred on October 12, 1993 (elimination of 9.36 FTEs),
October 14, 1993 (outsourcing still being considered), and November 5, 1993
(concealment of discriminatory intent at time of termination).” Aplts’ Reply Br.
at 6-7. Thus, November 5, 1993 is the very latest date any of the appellants’
constructive discharge claims could be considered to have arisen and none of the
appellants filed an administrative claim within 300 days of this date.
Alternatively, appellants argue that even if their ADEA claims arose on
November 5, 1993, the 300-day filing period should be equitably tolled because of
Coors’ fraudulent concealment of their claims. Equitable tolling, like equitable
estoppel, “provide[s] for tolling of the statute of limitations when a plaintiff’s
unawareness of his ability to bring a claim -- either unawareness of the facts
necessary to support a discrimination charge or unawareness of his legal rights --
is due to defendant’s misconduct.” Christopher v. Mobil Oil Corp. , 950 F.2d
1209, 1215 (5th Cir. 1992). “It is well settled that equitable tolling of the ADEA
. . . is appropriate only where the circumstances of the case rise to the level of
active deception . . . where a plaintiff has been lulled into inaction by her past
employer.” Hulsey v. KMart, Inc ., 43 F.3d at 557 (quotations omitted). “When
29
such deception is alleged on the part of an employer, the limitations period will
not be tolled unless an employee’s failure to timely file results from either a
deliberate design by the employer or actions that the employer should
unmistakably have understood would cause the employee to delay filing his
charge.” Id. (quotations omitted). Equitable tolling “is not warranted where an
employee is aware of all of the facts constituting discriminatory treatment but
lacks direct knowledge of the employer’s subjective discriminatory purpose.”
Christopher , 950 F.2d at 1216.
For example, in Meyer v. Riegel Prods. Corp. , 720 F.2d 303, 307 (3d Cir.
1983), a case very similar to the present action, the court held that the 300 day
limitation period could be equitably tolled. In Meyer , Mr. Joseph W. Meyer
brought suit against Riegel Products Corporation, Inc., claiming age
discrimination under the ADEA. Mr. Meyer had been dismissed from Riegel four
years before he would be entitled to full pension benefits, when the company was
purchased and reorganized by the James River Corporation. The Third Circuit
held that Riegel’s alleged misrepresentation, that Mr. Meyer had been dismissed
as part of a reorganization, furnished grounds for equitable tolling. After stating
the rules regarding equitable tolling discussed above, the court reasoned that
“[g]iven plaintiff’s allegations, either of these phenomena – [the alleged
pretextual reorganization and the alleged surreptitious plan to replace plaintiff
30
with a younger worker] viewed in a light most favorable to plaintiff – could have
caused him to temporarily defer filing with the Department of Labor.” Id. at 307.
Thus, the court concluded, Mr. Meyer “has surmounted his initial hurdle: alleging
acts that, taken as alleged, could persuade a court to activate the doctrine of
equitable tolling.” Id. at 308.
Appellants’ claims closely resemble the claims of Mr. Meyer. They claim
that Coors’ “reorganization” of the security department was a pretext to replace
older workers with younger workers. Moreover, appellants claim that Coors
actively deceived them by making fraudulent representations concerning the
proposed downsizing and potential outsourcing. Thus, we conclude, as did the
court in Meyer , that appellants have alleged acts that, taken as alleged, could
persuade a court to activate the doctrine of equitable tolling. However, as with
appellants’ fraud claims, the record is not sufficiently developed to determine, as
a matter of law, whether appellants were actively deceived. We therefore leave it
to the district court to determine on remand whether “the circumstances of the
case rise to the level of active deception,” sufficient to invoke the doctrine of
equitable tolling. Hulsey , 43 F.3d at 557.
5. Conclusion
Appellants’ ADEA claims are remanded to the district court to consider
31
whether under the totality of the circumstances the waivers were valid in light of
appellants’ allegations of fraud. If the district court finds that the waivers were
not knowing and voluntary (i.e., that there was fraud), then the waivers do not bar
appellants’ ADEA claims. The court must then determine whether equitable
tolling under 29 U.S.C. § 626(d)(2) applies and, if so, whether appellants’ filed
their claims with in the required period. However, if the district court determines
that the waivers were knowing and voluntary and that there was no fraud, then
appellants’ ADEA claims are barred by the unambiguous terms of the releases.
B. APPELLANTS’ STATE LAW CLAIMS
In addition to their claims under the ADEA, appellants have asserted state
law claims for wrongful discharge, outrageous conduct, negligent
misrepresentation, and fraud. The district court held that appellants’ state law
claims were barred under the terms of the releases. In addition, the district court
held that if the releases are invalid, appellants ratified the releases by failing to
“tender back” their separation benefits and therefore could not challenge the
validity of the releases. We agree that appellants are precluded from challenging
the validity of the releases, as to the state law claims, because they failed to tender
back their severance benefits. Further, we agree that appellants’ state law claims
are barred under the terms of the releases. Therefore, we affirm the holding of the
32
district court.
1. Ratification
As with their ADEA claims, appellants argue that the releases are invalid
due to fraud. However, appellants did not return their separation benefits before
bringing suit against Coors. As previously discussed, Colorado law provides that,
in order to challenge the validity of a contract for fraud, a party “must elect either
to rescind the entire contract to restore the conditions existing before the
agreement was made, or to affirm the entire contract and recover the difference
between the actual value of the benefits received and the value of those benefits if
they had been as represented.” Trimble v. City & County of Denver , 697 P.2d
716, 723 (Colo. 1985).
In the present case, appellants have affirmed the releases, after full
knowledge of the “truth” respecting their allegation of fraudulent representations,
by retaining their separation benefits. Appellants may not, under Colorado law,
claim that they were fraudulently induced into signing the releases. To do so
would allow appellants, “with knowledge of fraud, [to] speculate upon the
advantages or disadvantages of [the releases], receive [the] benefits, and
thereafter repudiate all its obligations.” Tisdel v. Central Sav. Bank & Trust ,6
P.2d 912, 917-18 (Colo. 1931). Unlike appellants’ ADEA claims, the OWBPA
33
does not prevent appellants from ratifying the releases as to their state law claims.
The Supreme Court specifically noted in Oubre that a release may be effective as
to some claims but not as to the ADEA claims. Oubre , 118 S.Ct. at 842. That is
the precise situation in this case.
By retaining their separation benefits, appellants have ratified the releases
as to their state law clams. Consequently, the releases are effective as to
appellants’ state law claims, even if the releases were induced by fraud or other
improper means. Accordingly, appellants are precluded from challenging the
validity of the releases as to their state law claims.
2. Scope of the Releases
Similar to their ADEA claims, appellants argue that the releases do not bar
their state law claims because their state law claims accrued after they signed the
releases, at the end of the seven-day revocation period when the releases became
effective and appellants were “discharged” from Coors. However, like their
ADEA claims, the releases specifically list the state law claims asserted by the
appellants: “all common law rights and claims, such as breach of contract,
express or implied, tort, whether negligent or intentional, wrongful discharge and
any claim for fraud, omission or misrepresentation.” Aplts’ App., vol I, at 89.
Again, appellants’ strained construction of a single, general sentence would have
34
the effect of removing these specifically listed claims from the releases,
destroying their plain meaning when interpreted as a whole. The releases have
but one reasonable meaning – to bar all of appellants’ state law claims.
Therefore, we affirm the conclusion of the district court and hold that appellants’
state law claims are barred by the unambiguous terms of the releases.
3. Conclusion
Appellants are precluded from challenging the validity of the releases
because, under Colorado law, appellants failed to return their separation benefits
before bringing suit against Coors. Further, appellants are contractually precluded
from asserting their state law claims against Coors, under the clear, unambiguous
terms of the releases. Therefore, we affirm the district court’s grant of summary
judgment in favor of Coors on appellants’ state law claims.
C. ATTORNEYS’ FEES
Coors cross-appeals the trial court’s ruling that they were not entitled to
recover attorneys’ fees under the terms of the releases. Specifically, the district
court held that, while the releases provided that appellants would pay attorneys’
fees if they brought a claim barred by the releases, those provisions contradict
35
Congress’s policy of not providing attorneys’ fees and costs to a defendant in an
ADEA case. The court did not draw a distinction between appellants’ ADEA
claims and their state law claims. However, it appears from the record that the
court believed that Coors could not recover attorneys’ fees for the state law claims
because of the same “federal policy.” See Aplts’ App., vol. IV, at 1544-47.
“In the United States, the prevailing litigant is ordinarily not entitled to
collect a reasonable attorneys’ fee from the loser.” Alyeska Pipeline Serv. Co. v.
Wilderness Soc’y , 421 U.S. 240, 247 (1975). This American rule, however, has
several well-established exceptions, also set out in Alyeska . See id. at 257-59.
Two of these exceptions are implicated in this case: (1) where the parties have
entered a contract that shifts attorneys’ fees and (2) where a statute provides for
fee shifting. See id.
Coors argues that it is entitled to its attorneys’ fees because the releases are
enforceable contracts shifting attorneys’ fees. The releases state: “[y]ou agree
that, if you bring any kind of legal claim against Coors that you have given up by
signing this Agreement, then you will be violating this Agreement and you must
pay all legal fees, other costs and expenses incurred by Coors in defending against
your claim.” Aplts’ App., vol. I, at 89.
In response, appellants argue that a defendant/employer may not recover
attorneys’ fees under section 626(b) of the ADEA. Section 626(b) incorporates
36
the remedial provision of the Fair Labor Standards Act, 29 U.S.C. § 216(b) (the
“FLSA”), which provides that “[t]he court . . . shall, in addition to any judgment
awarded to the plaintiff or plaintiffs, allow a reasonable attorney’s fee to be paid
by the defendant, and costs of the action.” 29 U.S.C. § 216(b). The appellants
argue that under this language, which expressly provides for a plaintiff to recover
attorneys’ fees, it is implicit that a defendant/employer may not recover attorneys’
fees for claims under the ADEA. They further argue that this “federal policy”
reaches to appellants’ pendent state law claims and preempts any state law
contractual right to recover attorneys’ fees.
First, it is unclear that appellants’ initial premise – that a
defendant/employer prevailing on a “released” ADEA claim may not receive
attorneys’ fees – is a correct statement of the law. While we have found no
decision nor have the parties provided a decision that has specifically addressed
contractual fee shifting under the ADEA, courts have generally held that the
common law exceptions to the American rule apply to a defendant under the
ADEA. For example, courts have specifically allowed defendants to recover
attorneys’ fees under Alyeska ’s “bad faith” exception. See, e.g. , EEOC v. O & G
Spring & Wire Forms Specialty Co. , 38 F.3d 872, 883 (7th Cir. 1994) (“By
explicitly changing [the American rule] with respect to plaintiffs but remaining
silent with respect to defendants, the most sensible reading is that the FLSA and
37
the ADEA adopt the common law rule with respect to prevailing defendants.”);
Gray v. New England Tel. & Tel. Co. , 792 F.2d 251, 260 n.1 (1st Cir. 1986)
(“Under ADEA, an award of attorney’s fees is only authorized for plaintiffs.
However, defendants may obtain fees under Alyeska .” (citation omitted)).
However, we need not reach this issue. The district court must first
determine on remand whether the releases are valid as to appellants’ ADEA
claims. As it is yet undetermined whether the releases are valid, and there is no
prevailing party on appellants’ ADEA claims, the issue of attorneys’ fees for the
ADEA claims is not ripe. We therefore decline to reach the issue.
However, assuming arguendo that appellants’ initial premise is correct and
there is some federal policy prohibiting defendants from recovering fees under the
ADEA, there is nothing to indicate that federal policy should alter the common
law rule regarding attorneys’ fees for pendent state law claims. Contrary to
appellants’ argument, for which they present no authority, pendent jurisdiction
over state law claims in a federal ADEA action does not generally preempt state
law remedies. See, e.g. , Cancellier v. Federated Dep’t Stores , 672 F.2d 1312,
1318 (9th Cir. 1982) (“The ADEA does not preempt the award of tort damages on
pendent state claims.”); Moody v. Pepsi-Cola Metro. Bottling Co., Inc. , 915 F.2d
201, 210 (6th Cir. 1990) (“[I]t is our best judgment that because there is no clear
statement of Congressional intent to preempt, no requirement on any party to act
38
in accordance with state law at the risk of violating federal law, and nothing
inherent in the nature of age discrimination which requires federal preeminence,
this [emotional damages pendent state law claim] is not an appropriate case for
preemption.”).
In addition, the requirements for releases under the OWBPA do not restrict
an employer’s right to contract regarding attorneys’ fees. Rather, the
requirements are extensive and give employees every opportunity to understand
the terms of the releases (like the specific fee shifting provision at issue here),
including encouraging employees to consider the terms of the releases with the
advice of counsel. See 29 U.S.C. § 626(f)(1)(A)-(H).
Finally, the conclusion that any federal policy concerning fee shifting does
not extend to pendent state law claims is consistent with the Supreme Court’s
holding in Oubre . In Oubre , the Court declined to extend the “federal policy” of
the OWBPA – extirpating the common law doctrine of “tender back” for ADEA
claims – to pendent state law claims. Oubre , 118 S.Ct. at 842. Similarly, we
decline to extend any federal policy regarding fees embodied in the ADEA to
pendent state law claims.
Accordingly, we hold that, even if there is a federal policy preventing
contractual fee shifting under the ADEA, the policy does not apply to pendent
state law claims. In a suit containing a claim under the ADEA, an employer may
39
recover attorneys’ fees pursuant to an “enforceable release” for any pendent state
law claims.
On remand, the district court may, of course, still review Coors’ claim for
attorneys’ fees as to pendent state law claims to determine if it is “inequitable and
unreasonable.” United States v. Western States Mech. Contractors, Inc. , 834 F.2d
1533, 1548 (10th Cir. 1987). If the district court determines that Coors’ fees are
inequitable or unreasonable, “the trial court has discretion to deny or reduce the
fee award.” Id. at 1549.
III. CONCLUSION
The district court’s grant of summary judgment on appellants’ ADEA
claims is REVERSED and REMANDED to the district court to consider whether,
under the totality of the circumstances, the releases are valid in light of
appellants’ allegations of fraud. Further, the district court’s grant of summary
judgment on appellants’ state law claims is AFFIRMED. Finally, the district
court’s denial of Coors’ motion for summary judgment on its cross-appeal for
attorneys’ fees is VACATED and REMANDED to the district court for further
proceedings in accordance with this opinion.
40