IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MINNESOTA
Elizabeth McLeod, Heidi O’Sullivan, Sherri )
Slocum, Ivette Harper, Robert West, Kevin )
Stemwell, Stephen Miller, Peggy Maxe, ) Case No. 15-cv-00494-JRT-HB
Littlefield, Colleen Friedrichs, Arlene Hornilla, )
Marilyn Epps., Dwight Sevaldson, Ann Carlson,)
Michael Baehr, Gabriele Bauer, Mark Davis, )
Susanne Dehnke, Frank Delaney, Paula )
Freeman-Brown, Barbara Fuglie, Richard )
Fuglie, Christopher Gunn, Michelle Laurence )
Robert Morris, Vicki Nellen-Jungers, Heidi )
Neumann, Greg Norman, Michelle Race, )
Susan Ryan, Timothy Schroeder, Diane )
Sundquist, and Greg Zimprich, for and )
on behalf of themselves and )
other persons similarly situated )
)
Plaintiffs, )
)
v. )
)
General Mills, Inc., )
)
Defendant. )
____________________________________ )
MEMORANDUM OF LAW OF THE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION AS AMICUS CURIAE
IN SUPPORT OF PLAINTIFFS AND IN OPPOSITION TO DEFENDANT’S MOTION TO DISMISS AND TO COMPEL ARBITRATION
________________________________________________________________
STATEMENT OF INTEREST
The Equal Employment Opportunity Commission is the agency charged by Congress with interpreting, administering, and enforcing the Age Discrimination in Employment Act, 29 U.S.C. §§621 et seq. (“ADEA”), as amended by the Older Workers Benefit Protection Act, 29 U.S.C. §626(f) (“OWBPA”), and other federal employment discrimination statutes. In OWBPA, Congress imposed specific duties on employers who seek waiver or release of claims created by the ADEA. Oubre v. Entergy Ops., 522 U.S. 422, 427 (1998). Unless a release complies with these “stringent safeguards,” it is “unenforceable” insofar as it purports to release claims under the ADEA. Id. at 427-28.
Pursuant to its authority to “issue such rules and regulations” as it considers “necessary or appropriate” in enforcing the ADEA (29 U.S.C. §628), the Commission has promulgated regulations, with accompanying explanatory information, interpreting the OWBPA. One such regulation specifies that once the validity of a release has been challenged, the employer must prove “in a court of competent jurisdiction” that the release complies with OWBPA’s stringent requirements. See 29 C.F.R. §625.22(h). This regulation accords with the plain language of the statute (29 U.S.C. §626(f)(3)), and, so, is entitled to great deference. See, e g., Auer v. Robbins, 519 U.S. 452, 460-62 (1997) (agency’s regulations and its interpretation of them are entitled to great deference).
In this case, Defendant is arguing that, because the company added an arbitration provision to Release Agreements in which former employees purported to release substantive claims under the ADEA and other laws, this Court should compel those persons to arbitrate, on an individual basis, both the validity of the releases and their claims that they were terminated because of age. This argument cannot be reconciled with the Commission’s regulations or the plain language of the OWBPA. Moreover, if the Court were to accept Defendant’s argument, the result could seriously undermine the protections that Congress built into OWBPA. The Commission therefore offers its views to this Court.
STATEMENT OF THE ISSUE
The Older Workers Benefit Protection Act specifies that, to be enforceable, agreements purporting to waive or release claims under the ADEA must comply with certain stringent conditions. It further specifies that, when challenged, the employer must prove “in a court of competent jurisdiction” that it satisfied those conditions. Can an employer circumvent the requirements of OWBPA and avoid proving “in a court of competent jurisdiction” that a “Release Agreement” purporting to release ADEA claims is enforceable under OWBPA merely by including an arbitration provision in the same document?
STATEMENT OF THE CASE
1. Nature of the Case and Course of Proceedings
On February 11, 2015, a number of Defendant’s former employees brought this suit alleging that they were terminated because of their age. District court docket number (“R”) 1. On March 5, Defendant moved to dismiss or stay the suit and to compel Plaintiffs, as individuals, to arbitrate not only their claims but also the validity of the Release Agreements they had signed releasing their ADEA claims. R.5, 7-8. On March 26, Plaintiffs filed an amended complaint, adding additional claimants; they now total thirty-three. R.15. Plaintiffs also filed an opposition to Defendant’s motion to dismiss. R.16. On the same day, AARP submitted an amicus brief in support of Plaintiffs (R.17, 18), which Defendant has opposed (R.20). On April 9, 2015, Defendant filed a reply to Plaintiffs’ opposition (R.24) and an amended motion to dismiss and compel (R.20).
2. Statement of Facts
In 2012, General Mills conducted a mass layoff of over 800 employees, many of whom were based in the Twin Cities. R.15 (Complaint ¶¶2-3). According to the Complaint, the layoffs disproportionately adversely affected employees age 40 and over, including the Plaintiffs, all of whom had been performing satisfactorily. Many of these individuals were replaced by younger employees and/or new hires. Id. ¶4.
Employees terminated in the lay-off were not automatically entitled to severance benefits regardless of how long they had worked for the company. Id. ¶79. To obtain severance benefits, employees had to sign a “Release Agreement” (id.), examples of which are found at R.8-1 (DEx.1 through DEx.14).
The Release Agreements specify that the individual agrees to release the company and related entities “from all causes of action [and] claims . . . including but not limited to any and all claims directly or indirectly relating to [the individual’s] employment, or [] separation from employment. Th[e] release includes any and all claims under federal, state, and local laws prohibiting employment discrimination,... and specifically includes, without limitation, claims arising under” a list of statutes including the Age Discrimination in Employment Act and the Older Workers Benefit Protection Act. See, e.g., DEx.1 ¶2.
The Agreement then states that the individual agrees “that, in the event there is any dispute or claim arising out of or relating to the above release of claims including without limitation any dispute about the validity or enforceability of the release or the assertion of any claim covered by the release, all such disputes or claims will be resolved exclusively through a final and binding arbitration on an individual basis and not in any form of class, collective, or representative proceeding.” Id. ¶4.
Believing that they were slated for termination because of their age, Plaintiffs brought this suit. The Complaint challenges the terminations under disparate impact and disparate treatment theories. Complaint, counts 2 through 5. The Complaint also contends that the Release Agreements do not comply with OWBPA because they are written in a confusing or misleading way and employees were not given the information required by the statute and regulations. See, e.g., Complaint ¶249.
General Mills promptly moved to dismiss the suit and to compel Plaintiffs to arbitrate on an individual basis. Notwithstanding the explicit requirement in OWBPA that the party asserting the validity of a waiver or release of claims under the ADEA must prove that fact “in a court of competent jurisdiction” (29 U.S.C. §626(f)(3)), the company takes the position that Plaintiffs must individually arbitrate even the threshold question of whether the releases comply with the requirements of OWBPA.
ARGUMENT
DISMISSAL WOULD BE IMPROPER BECAUSE GENERAL MILLS MUST FIRST CONVINCE THIS COURT THAT THE RELEASE AGREEMENTS COMPLY WITH OWBPA’S STRINGENT REQUIREMENTS
General Mills has asked this Court to dismiss this suit and to compel each Plaintiff to arbitrate his or her individual claims under the ADEA. At best, this motion is premature. In addition to their terminations, Plaintiffs are challenging the enforceability of the Release Agreements they signed after being terminated in the 2012 mass layoff. The plain terms of OWBPA as well as EEOC’s implementing regulations specify that the employer “shall” prove in “a court of competent jurisdiction” that the releases comply with OWBPA’s stringent requirements. Until and unless the company carries that burden — persuading this Court that the Releases are enforceable — its motion should be denied.
In 1990, Congress amended the ADEA by passing the Older Workers Benefit Protection Act, or “OWBPA.” 29 U.S.C. §626(f). The purpose of the statute is “clear from its title.” Oubre v. Entergy Ops., 522 U.S. 422, 427 (1998). It was “designed to protect the rights and benefits of older workers . . . via a strict, unqualified statutory stricture on waivers.” Id.
In keeping with this purpose, the statute provides that an individual “may not waive” an ADEA claim “unless the waiver is knowing and voluntary.” 29 U.S.C. §626(f)(1). It then explains that waivers “may not be considered knowing and voluntary” unless, “at a minimum,” they satisfy certain enumerated requirements, including a requirement that they be written in a manner calculated to be understood by the employee and an “average individual eligible to participate.” Id. §626(f)(1)(A)-(G). Moreover, employers requesting waivers in connection with an “employment termination program” affecting a group or class of employees — like the layoffs at General Mills — must provide specific additional information about other individuals selected and not selected for termination. Id. §626(f)(1)(H).
Finally — of particular relevance to this case — the statute provides that in any dispute over whether the terms of the waiver comply with the statutory requirements, “the party asserting the validity of [the] waiver” — here, General Mills — “shall have the burden of proving in a court of competent jurisdiction that the waiver was knowing and voluntary pursuant to paragraph (1).” Id. §626(f)(3).
Notably, although OWBPA speaks in terms of “waivers,” its provisions apply equally to releases. See Oubre, 522 U.S. at 426-27 (“An employee ‘may not waive’ an ADEA claim unless the waiver or release satisfies the OWBPA’s requirements.”) (emphasis added). Thus, under the plain terms of the statute, General Mills must prove to this Court’s satisfaction that the Release Agreements signed by the Plaintiffs comply with the informational and other requirements of OWBPA.
Pursuant to its rule-making authority under the ADEA (29 U.S.C. §628), in 1998 and 2000, the Commission published regulations, along with supporting information, reinforcing and clarifying key provisions of OWBPA. See 29 C.F.R. §§1625.22-23. These regulations and the Commission’s interpretation of them are entitled to great deference. See, e.g., Auer, 519 U.S. at 460-62.
Three of these regulations and related interpretations are especially helpful in understanding the issues presented in this case. First, §1625.22(f) spells out information that an employer must provide employees in a mass layoff such as this one.
Second, §1625.22(b) specifies that a waiver or release agreement must be drafted in plain language geared to the level of understanding of the individual parties to the agreement. This means, among other things, that the agreement may not “have the effect of misleading, misinforming, or failing to inform participants.” §1625.22(b)(4). Furthermore, any provision that would cause an employee to believe that he or she could not seek a “judicial determination” of the “validity” of the release “misrepresents the rights and obligations of the parties to the agreement” and, so, “conflicts” with the underlying OWBPA requirement that valid agreements “must be ‘written in a manner calculated to be understood’ by the employee ‘or by the average individual eligible to participate.’” 65 Fed. Reg.77438, 77444 (Dec. 11, 2000) (citing 29 U.S.C. §626(f)(1(A)).
Third, §1625.22(h) reaffirms that in any dispute over whether any of the statutory or regulatory requirements, conditions, and circumstances have been satisfied, the employer bears the burden of proving the validity of the waiver or release, and this showing must be made in a court of competent jurisdiction. As the Commission explained, by “investing ‘court[s] of competent jurisdiction’ with the authority to resolve ‘any dispute that may arise over ... the validity of a waiver,” Congress “manifested” its “intention to permit an employee who signed an ADEA waiver to sue his or her employer upon the belief that the waiver did not comply with the OWBPA.” 65 Fed. Reg. at 77443-44.[1]
Applying these statutory and regulatory provisions to the present dispute, it is clear that Defendant’s motion should be denied. Because the documents at issue are, by their express terms, “Release Agreements,” they are governed by and must comply with the OWBPA’s “stringent safeguards.” Unless they do, they are unenforceable insofar as they purport to release claims under the ADEA. Oubre, 522 U.S. at 427-28. Furthermore, because Plaintiffs have challenged the validity of the releases, the burden falls on General Mills to prove in this forum — “a court of competent jurisdiction” — that they are in fact valid.
Plaintiffs argue that the information they were given does not satisfy the requirements of 29 U.S.C. §626(f)(H) and the releases are misleading, rather than written in a way that is understandable by Plaintiffs and average persons, as required by §626(f)(1). While the Commission takes no position on the first argument, Plaintiffs do have a viable argument that the releases do not comply with 29 U.S.C. §626(f)(1)(A) and 29 C.F.R. §1625.22(b)(4).
As noted above, the agreements contain arbitration provisions that explicitly inform employees that “in the event there is any dispute or claim arising out of or relating to the above release of claims” including “any dispute about the validity or enforceability of the release or the assertion of any claim covered by the release, all such disputes or claims will be resolved exclusively through a final and binding arbitration on an individual basis and not in any form of [collective] proceeding.” See, e.g., DEx.1 (emphasis added). On its face, that statement “misrepresents the rights and obligations of the parties” since OWBPA requires that General Mills prove the enforceability of the releases in a “court of competent jurisdiction.” See 65 Fed. Reg. at 77444 (“any provision ... that would cause an employee to believe that he or she could not seek a judicial determination of the validity of the waiver agreement” conflicts with §626(f)(1)(A)); see also 29 C.F.R. §1625.22(b)(4). Accordingly, until Defendant convinces this Court that the Release Agreements nevertheless comply with OWBPA, Plaintiffs should be free to proceed with their collective action in this judicial forum.
To support its motion, General Mills cites a string of cases holding that where an individual has signed an arbitration agreement, he or she may be compelled to arbitrate even claims under the ADEA. See, e.g., R.8 (Defendant’s Memorandum at passim) (citing, e.g., Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991); 14 Penn Plaza v. Pyett, 556 U.S. 247 (2009)). Those cases are inapposite. The agreements here are not arbitration agreements; they are “Release Agreements.” As such, they must comply with OWBPA, and it is the employer’s burden to prove compliance in a judicial, not an arbitral, forum. An employer cannot circumvent the protections Congress included in OWBPA by simply adding an arbitration provision to a document that by its plain terms waives and/or releases claims under the ADEA.
General Mills argues that the Federal Arbitration Act (“FAA”) trumps the ADEA and OWBPA, so Plaintiffs must be compelled to arbitrate all of their claims on an individual basis. See, e.g. id. at 11-12. At least with respect to OWBPA, however, the company is mistaken. Congress clearly has the power to write a statutory provision that precludes the waiver of a judicial forum. See Gilmer, 500 U.S. at 26 (Congress’s intent to preclude a waiver of a judicial forum should be discoverable from, among other things, the statutory text). That is the case with §626(f)(3). Congress explicitly provided that the employer “shall” prove the enforceability of a waiver or release “in a court of competent jurisdiction.” Had it simply wanted to allocate the burden of proof, Congress could have omitted the phrase “in a court of competent jurisdiction.” Since the phrase is included, this Court should give effect to the phrase. See, e.g., Landgraf v. USI Film Prods., 511 U.S. 244, 295 (1994) (where possible, statutes should be construed so as to give effect to every word and avoid treating terms as mere surplusage).
General Mills further argues that the phrase “a court of competent jurisdiction” in §626(f)(3) is “identical” to the phrase in §626(c)(1), which permits a plaintiff to “bring a civil action” in “any court of competent jurisdiction.” The company notes that the Supreme Court in Gilmer determined that §626(c)(1) “falls short of the clear Congressional command required to override the FAA.” Reply at 10-11 & n.6. This misreads the statutory language.
While both provisions contain the phrase “court of competent jurisdiction,” they differ in at least one critical way. Section 626(c)(1) — the provision addressed in Gilmer — is permissive. A plaintiff “may” bring suit in “any court of competent jurisdiction.” Section 626(f)(3) — the provision in OWBPA — is mandatory. The employer “shall” have “the burden of proving in a court of competent jurisdiction” that the waiver or release is valid. By using the word “shall,” Congress made it crystal clear that General Mills must prove the validity of the releases in court, not in arbitration.[2]
In short, §626(f)(3) expressly overrides any presumption in favor of arbitration. Consistent with the purpose of protecting older workers’ benefits, Congress directed that the validity of a waiver or release of ADEA claims must be proved in a court of competent jurisdiction. Defendant’s attempt to move that determination to an arbitral forum cannot be reconciled with the express terms of the statute. The company’s motion should therefore be denied.
Respectfully submitted,
U.S. EQUAL EMPLOYMENT OPPORTUNITY
COMMISSION
P. DAVID LOPEZ
General Counsel /s/ Laurie A. Vasichek
LAURIE A. VASICHEK (No. 171438)
CAROLYN L. WHEELER Senior Trial Attorney
Acting Associate General Counsel
Minneapolis Area Office
BARBARA L. SLOAN 30 South Second Avenue
Attorney Suite 720
Minneapolis, MN 55401
Office of General Counsel (612) 335-4061
131 M Street N.E., 5th Floor FAX: (612) 335-4044
Washington, D.C. 20507 laurie.vasichek@eeoc.gov
(202) 663-4721
FAX: (202) 663-7090