No. 04-3039 _________________________________________ IN THE UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT _________________________________________ JOHN R. WASTAK, Plaintiff-Appellant, v. LEHIGH VALLEY HEALTH NETWORK, INC., Defendant-Appellee. ______________________________________________ On Appeal from the United States District Court for the Eastern District of Pennsylvania ______________________________________________ Brief of the U.S. Equal Employment Opportunity Commission as Amicus Curiae Supporting Plaintiff-Appellant ______________________________________________ ERIC S. DREIBAND General Counsel LORRAINE C. DAVIS Acting Associate General Counsel U.S. EQUAL EMPLOYMENT CAROLYN L. WHEELER OPPORTUNITY COMMISSION Assistant General Counsel Office of General Counsel 1801 L Street, NW, Room 7030 ANNE NOEL OCCHIALINO Washington, DC 20507 Attorney (202) 663-4724 TABLE OF CONTENTS Table of Authorities . . . . . . . . . . . . . . . . . . . . .iii Statement of Interest. . . . . . . . . . . . . . . . . . . . . .1 Statement of the Issue . . . . . . . . . . . . . . . . . . . . .1 Statement of the Case. . . . . . . . . . . . . . . . . . . . . .2 A. Facts and Procedural Background . . . . . . . . . . .2 B. District Court Decision . . . . . . . . . . . . . . .4 Argument . . . . . . . . . . . . . . . . . . . . . . . . . . . . THE DISTRICT COURT ERRED IN FINDING THAT WASTAK'S INITIATION OF HIS ADEA LAWSUIT WAS IN BAD FAITH BECAUSE THIS COURT REJECTED HIS ARGUMENT THAT THE WAIVER HE SIGNED WAS UNENFORCEABLE. . . . . . . . . . . . . . . . . 6 A. The ADEA's bad-faith standard for awarding fees to a prevailing defendant militates against a finding that the the initiation of an age discrimination lawsuit is in bad faith when a court finds that the plaintiff signed a valid waiver. . . . . . . . . . . . . . . . . . . . . .7 B. The district court's finding contravenes the ADEA, public policy, and the Commission's regulations. .10 1. The court's holding contravenes both the language of the ADEA and Congress's intent in enacting it. . . . . . . . . . . . . . 11 2. The court's ruling will have a chilling effect on victims of age discrimination. . . . . 13 3. The district court's ruling contravenes the Commission's regulation at 29 C.F.R. 1625.23 .. . . . . . . . . . . 17 4. The district court cited no relevant authority to support its finding. . . . . . . . . . 19 C. Even if a plaintiff's initiation of an ADEA lawsuit could constitute bad faith when a court finds a waiver enforceable, the record does not support the district court's bad-faith finding in this case. . . . . . . . . . . . . . . . 20 Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Certificate of Compliance. . . . . . . . . . . . . . . . . . . . Certificate of Service . . . . . . . . . . . . . . . . . . . . . TABLE OF AUTHORITIES CASES Carroll v. Primerica Fin. Servs. Ins. Mktg., 811 F. Supp. 1558 21 Cesaro v. Thompson Publ'g Group, 20 F. Supp. 2d 725 (D.N.J. 1998)7, 8 Christiansburg Garment Co. v. EEOC, 434 U.S. 412 (1978)8, 9, 14, 15 Clay v. Johnson, 264 F.3d 744 (7th Cir. 2001). . . . . . . . . 18 Colbert v. Yadkin Valley Tel. Memership Corp., 960 F. Supp. 84 (M.D.N.C. 1997). . . . . . . . . . . . . . .5, 20 EEOC v. Clay Printing Co., 13 F.3d 813 (4th Cir. 1994) . . . . 21 EEOC v. Hendrix Coll., 53 F.3d 209 (8th Cir. 1995) . . . 5, 8, 20 Ford v. Temple Hosp., 790 F.2d 342 (3d Cir. 1986). . . . . 16, 20 Freeman v. Package Mach. Co., 865 F.2d 1331 (1st Cir. 1988). . .9 Hoover v. Armco, Inc., 915 F.2d 355 (8th Cir. 1990). . . 5, 9, 19 Hughes v. Rowe, 449 U.S. 5 (1980) . . . . . . . . . . . . . . 22 Isaacs v. Caterpillar, 765 F. Supp. 1359 (C.D. Ill. 1991). . . 13 Long v. Sears Roebuck & Co., 105 F.3d 1529 (3d Cir. 1997). 11, 16 Lorillard v. Pons, 434 U.S. 575 (1978) . . . . . . . . . . 11, 16 Monroe v. Children's Home Ass'n of Illinois, 128 F.3d 591 (7th Cir. 1997)9 Oubre v. Entergy Operations, Inc., 522 U.S. 422 (1998) . . 11, 15 Raczak v. Ameritech Corp., 103 F.3d 1257 (6th Cir. 1997) . . . 12 Richardson v. Alaska Airlines Inc., 750 F.2d 763 (9th Cir. 1984)10 Spinetti v. Serv. Corp. Int'l, 324 F.3d 212 (3d Cir. 2003) . . 22 Turlington v. Atlanta Gas Light Co., 135 F.3d 1428 (11th Cir. 1998)8 Wastak v. Lehigh Valley Health Network, 333 F.3d 120 (3d Cir. 2003)7 Wastak v. Lehigh Valley Health Network, 342 F.3d 281 (3d Cir. 2003) . . . .passim FEDERAL STATUTES Age Discrimination in Employment Act of 1967, U.S.C. 621-634.1 Fair Labor Standards Act, 29 U.S.C. 201. . . . . . . . . . . .7 Title VII of the Civil Rights Act of 1964, 42 U.S.C. 2000e . .7 29 U.S.C. 216(b) . . . . . . . . . . . . . . . . . . . . .7, 13 29 U.S.C. 626(f). . . . . . . . . . . . . . . . . . . . . . . 11 29 U.S.C. 626(f)(1). . . . . . . . . . . . . . . . . . . passim 29 U.S.C. 626(f)(3). . . . . . . . . . . . . . . . . . . 12, 14 29 U.S.C 626(f)(4) . . . . . . . . . . . . . . . . . .3, 11, 22 42 U.S.C. 2000e-5(k) . . . . . . . . . . . . . . . . . . .7, 13 TABLE OF AUTHORITIES (con't) FEDERAL REGULATIONS 29 C.F.R. 1625.22(a)(3). . . . . . . . . . . . . . . . . . . 15 29 C.F.R. 1625.22(b)(4). . . . . . . . . . . . . . . . . . . .4 29 C.F.R. 1625.22(i)(2). . . . . . . . . . . . . . . . . . . .3 29 C.F.R. 1625.22(i)(2)(i) . . . . . . . . . . . . . . . . . 23 29 C.F.R. 1625.23(b) . . . . . . . . . . . . . 4, 6, 17, 18, 19 MISCELLANEOUS Fed. R. Civ. P. 54(d)(1) . . . . . . . . . . . . . . . . . . . 15 Waivers of Rights and Claims: Tender Back of Consideration, 65 Fed. Reg. 77438 (Dec. 11, 2000) . . . . . . . . . . passim Waivers of Rights and Claims: Tender Back of Consideration, 64 Fed. Reg. 19952 (April 23, 1999) . . . . . . . . . 12, 18 STATEMENT OF INTEREST The Equal Employment Opportunity Commission enforces the Age Discrimination in Employment Act, 29 U.S.C. 621-634, and other federal employment-discrimination statutes. The Commission also has substantive rule- making authority under the ADEA. This is the second appeal in this case. In the first appeal, this Court decided that the waiver the plaintiff signed upon his termination was enforceable. The district court subsequently found that the plaintiff had litigated in bad faith and awarded attorneys' fees to the defendant. The court based its bad-faith finding in part on the fact that the plaintiff understood that the waiver he signed prohibited him from filing an ADEA lawsuit. This finding conflicts with the ADEA, the public policy underlying the ADEA, and the Commission's current regulations. Because the court's ruling impacts the Commission's enforcement efforts and is contrary to the Commission's regulations, we offer our views to the Court under Fed. R. App. P. 29(a). STATEMENT OF THE ISSUE Whether the district court erred in concluding that a plaintiff who filed an age discrimination lawsuit after signing a waiver agreement that he understood to prohibit him from filing suit litigated in bad faith when this Court subsequently held that the waiver was valid. The EEOC takes no position on any other issue raised in this appeal. STATEMENT OF THE CASE A. Facts and Procedural Background When John Wastak was fifty-seven years old, Lehigh Valley Health Network fired him. See Wastak v. Lehigh Valley Health Network, 342 F.3d 281, 284 (3d Cir. 2003). Wastak signed a separation agreement in which he waived all employment-related claims. See id. Among other things, the waiver prohibited Wastak from filing an age-discrimination charge relating to his termination. See id. at 289. The waiver also stated that the prevailing party would be entitled to recover reasonable costs and attorneys' fees in any litigation brought to enforce the agreement. See id. at 284. More than a year after Lehigh Valley fired him, Wastak filed a charge of age discrimination with the EEOC. (JA2, 1/7/04 Order at 2, n.2) The EEOC dismissed this charge as untimely. (Id.) On August 21, 2000, Wastak filed this lawsuit in state court, and on September 21, 2000, Lehigh Valley removed the case to federal court. See Wastak, 342 F.3d at 285, JA10. On Lehigh Valley's motion for summary judgment, the district court ruled that Wastak had waived his ADEA and parallel state-law claims. See Wastak, 342 F.3d at 285. Specifically, the court concluded that the waiver Wastak signed was knowing and voluntary as required under 29 U.S.C. 626(f)(1) and therefore complied with the ADEA. See id. Wastak appealed to this Court, arguing that the waiver was unenforceable because it was not knowing and voluntary and because it contained a charge-filing ban that violated 29 U.S.C 626(f)(4). See Wastak, 342 F.3d 281. The Commission filed an amicus brief joining Wastak in arguing that the waiver's ban on charge-filing conflicted with section 626(f)(4) and therefore invalidated the waiver. See id. at 288-93. In a published opinion, this Court rejected the arguments of both Wastak and the Commission and concluded that the waiver was enforceable. See id. This Court agreed that section 626(f)(4) "essentially states that, whatever its provisions, a privately executed waiver agreement cannot alter or obstruct the EEOC's ability to exercise its rights and responsibilities, and that an employer may not invoke a waiver in an attempt to impede an employee's participation in EEOC procedures." Id. at 289. According to this Court, however, "there was no apparent violation of the clear terms of section 626(f)(4)" because Lehigh Valley did not interfere with Wastak's filing of his charge and because Wastak did not allege that the release affected the Commission's rights and responsibilities. See id. at 290. This Court also concluded that the waiver's charge-filing ban did not operate to invalidate the waiver under section 626(f)(4) or under section 626(f)(1). See id. at 290-93. In a footnote, however, this Court observed that the Commission's regulation at 29 C.F.R. 1625.22(i)(2) which was not in effect when Wastak signed his agreement "clearly precludes the inclusion of provisions that prohibit resort to [the] administrative process." See id. at 293, n.6. This Court said that "under proper circumstances" a court could find that a charge-filing ban in a waiver subject to the Commission's current regulations had "'the effect of misleading, misinforming, or failing to inform'" an individual, therefore rendering the waiver invalid. Id. (quoting 29 C.F.R. 1625.22(b)(4)). In another footnote, this Court addressed Wastak's argument that the waiver contained provisions that violated 29 C.F.R. 1625.23(b), which prohibits waivers from imposing penalties or other limitations (including attorneys' fees) "'adversely affecting any individual's right to challenge the agreement.'" Id. at 293, n.7 (quoting 29 C.F.R. 1625.23(b)). This Court noted, however, that section 1625.23(b) became effective after Wastak signed his waiver and filed his lawsuit. See id. Finding no basis for concluding that the regulation applied retroactively, this Court concluded that it did not operate to invalidate the waiver. See id. B. District Court Decision Following the Third Circuit's decision, the district court reconsidered Lehigh Valley's petition for costs and attorneys' fees, which the court had stayed pending the appeal. (JA1, 1/7/04 order at 1, n.1) In a January 7, 2004, order the court concluded that Lehigh Valley was entitled to its attorneys' fees. (JA2, 1/7/04 order at 2, n.2) The court began its analysis by noting that the Third Circuit has not yet determined the standard for assessing fees under the ADEA. (JA1, 1/7/04 order at 1, n.1) Next, the court observed that every circuit court to consider the issue has concluded that the standard is "bad faith." (Id.) The court consequently adopted the bad-faith standard. (JA2, Order at 2, n.2) The court then concluded that Lehigh Valley was the prevailing party and that Wastak had brought his lawsuit in bad faith by making knowing misrepresentations to the court. (Id.) The court gave three reasons for its finding: 1) Wastak admitted in his deposition that he included false statements in his affidavit concerning his mental state at the time of his termination; 2) Wastak testified that he understood that under the waiver he was agreeing not to sue Lehigh Valley in exchange for thirty-six weeks of severance pay and outplacement service; and 3) the EEOC had dismissed Wastak's charge for untimeliness because Wastak had filed it 495 days after his termination. (Id.) Citing Hoover v. Armco, Inc., 915 F.2d 355, 357 (8th Cir. 1990), Colbert v. Yadkin Valley Tel. Memership Corp., 960 F. Supp. 84, 87 (M.D.N.C. 1997), and EEOC v. Hendrix College, 53 F.3d 209, 211 (8th Cir. 1995), the court concluded that these circumstances demonstrated Wastak's bad faith. (Id.) In a June 21, 2004, order, the court addressed the reasonableness of the costs and attorneys' fees. (JA4-6, 6/21/04 order at 1-3) The court first noted, however, that Wastak had filed what the court considered to be a tardy motion to reconsider its January 7, 2004, order. (JA4, 6/21/04 order at 1, n.1) The court dismissed Wastak's argument by stating that the Third Circuit itself had noted that the Commission's regulation at section 1625.23(b) "did not apply retroactively to this case." (Id.) The court then went on to consider Wastak's arguments concerning the reasonableness of the fee and costs award. (JA4-5, Order at 1-2, n.1) The court agreed with some of Wastak's objections and eventually awarded to Lehigh Valley $38,695.50 in fees and $2,440.95 in costs. (JA4-6, Order at 1-3, n.1) ARGUMENT THE DISTRICT COURT ERRED IN FINDING THAT WASTAK'S INITIATION OF HIS ADEA LAWSUIT WAS IN BAD FAITH BECAUSE THIS COURT REJECTED HIS ARGUMENT THAT THE WAIVER HE SIGNED WAS UNENFORCEABLE. The district court erred in finding that Wastak's initiation of his lawsuit was in bad faith because he understood that his waiver prohibited him from filing suit and because this Court subsequently concluded that the waiver was valid. The district court's ruling would effectively make a finding of bad faith and a fee award automatic whenever a court rejects an employee's challenge to the validity of a waiver. This result contravenes both the language and the purpose underlying the ADEA and the Commission's current regulations. Even if the mere filing of a lawsuit could support a bad-faith finding when a court concludes that a plaintiff signed an enforceable waiver, the record does not support the district court's finding of bad faith in this case. Therefore, this Court should find that the district court erred in resting its bad-faith finding on Wastak's initiation of his lawsuit. A. The ADEA's bad-faith standard for awarding fees to a prevailing defendant militates against a finding that the initiation of an age discrimination lawsuit is in bad faith when a court finds that the plaintiff signed a valid waiver. This Court has not expressly ruled on the ADEA standard for awarding fees to prevailing defendants. See, e.g., Cesaro v. Thompson Publ'g Group, 20 F. Supp. 2d 725, 726 (D.N.J. 1998). When Congress enacted the ADEA, it took some provisions from Title VII, 42 U.S.C. 2000e et seq., and others from the Fair Labor Standards Act, 29 U.S.C. 201 et seq. See Lorillard v. Pons, 434 U.S. 575, 578 (1978). Both Title VII and the FLSA contain fee-shifting provisions. Title VII authorizes an award of attorneys' fees to any "prevailing party." 42 U.S.C. 2000e-5(k). The FLSA, in contrast, expressly authorizes an award of attorneys' fees only to "the plaintiff or plaintiffs." 29 U.S.C. 216(b). In enacting the ADEA, Congress chose to follow the FLSA, authorizing an award of attorneys' fees only to "the plaintiff or plaintiffs." 29 U.S.C. 216(b) (incorporated into the ADEA by 29 U.S.C. 626(b)). Accordingly, the ADEA differs from Title VII in that it does not expressly provide for fee awards to prevailing defendants. Numerous courts have held, however, that as in FLSA cases prevailing employers in ADEA cases may recover fees under the "bad faith" exception to the "American Rule" on fees. See, e.g., Turlington v. Atlanta Gas Light Co., 135 F.3d 1428, 1437 (11th Cir. 1998); EEOC v. Hendrix Coll., 53 F.3d 209, 211 (8th Cir. 1995); Cesaro, 20 F. Supp. 2d at 726. The ADEA's "bad faith" standard is more stringent than Title VII's standard, which requires only a showing that "the plaintiff's action was frivolous, unreasonable, or without foundation, even though not brought in subjective bad faith." Christiansburg Garment Co. v. EEOC, 434 U.S. 412, 421 & 422 (1978) (recognizing that it is easier to show that an action was frivolous, unreasonable, or without foundation than to show bad faith). Consequently, as a result of Congress's decision to incorporate the FLSA's fee-shifting provision rather than Title VII's, it is more difficult for a prevailing defendant to obtain an award of attorneys' fees in an ADEA action than in a Title VII action. See, e.g., Turlington, 135 F.3d at 1437 n.19 (11th Cir. 1998) (stressing that the "bad faith" standard applicable to ADEA defendants "differs significantly from" the Christiansburg standard). Notwithstanding the ADEA's and Title VII's different standards for awarding fees to prevailing defendants, the fee-shifting provisions of both statutes reflect the same enforcement objectives. In Christiansburg, the Supreme Court held that Title VII provides a dual standard for the award of attorneys' fees to prevailing parties. A prevailing Title VII plaintiff "ordinarily is to be awarded attorney's fees in all but special circumstances." 434 U.S. at 417. In contrast, a prevailing Title VII defendant is to be awarded attorneys' fees only "upon a finding that the plaintiff's action was frivolous, unreasonable, or without foundation." Id. at 421. According to the Court, this dual standard is necessary "to promote the vigorous enforcement of the provisions of Title VII." Id. at 422. Like Title VII, the ADEA codifies a dual standard for awarding attorneys' fees. See Monroe v. Children's Home Ass'n of Illinois, 128 F.3d 591, 594 (7th Cir. 1997) (ADEA adopts the same "asymmetric" approach to fee shifting as other civil rights laws); Freeman v. Package Mach. Co., 865 F.2d 1331, 1347 (1st Cir. 1988) ("[i]nsofar as cost-shifting is concerned," the ADEA is a "sister[] under the skin" with other civil rights statutes; Congress viewed the ADEA as a "'civil rights' type" of statute "similar to earlier, more traditional [civil rights] enactments"); see also Hoover, 915 F.2d at 358 (McMillan, J., concurring in part, dissenting in part) (ADEA's "bad faith" standard serves the same purpose as the Christiansburg standard; it ensures that fee awards against plaintiffs do not have a chilling effect). The only difference between the statutes is that the ADEA goes further than Title VII, relegating prevailing defendants to the highly restrictive "bad faith" standard. As one court explained, Congress "chose its words carefully" in the ADEA, authorizing the award of attorneys' fees to prevailing plaintiffs while curtailing substantially "the recovery of attorney's fees by an employer who has successfully defended himself against an accusation of age discrimination." Richardson v. Alaska Airlines Inc., 750 F.2d 763, 767 (9th Cir. 1984). Accordingly, the history and the language of the ADEA especially when viewed in contrast to Title VII demonstrates that courts should award attorneys' fees to prevailing ADEA defendants only in those rare cases in which a plaintiff has litigated in bad faith. Wastak's initiation of his lawsuit does not make this case one of them. B. The district court's finding contravenes the ADEA, public policy, and the Commission's regulations. The district court erred in holding that Wastak initiated his lawsuit in bad faith in part because this Court subsequently held that he had signed an enforceable waiver. The district court's holding effectively makes a finding of bad faith automatic whenever a court rejects an ADEA plaintiff's argument that his or her waiver is unenforceable. This result conflicts with the ADEA's language and legislative purpose, public policy, and the Commission's regulations. 1. The court's holding contravenes both the language of the ADEA and Congress's intent in enacting it. In 1990, Congress amended the ADEA by enacting the Older Workers Benefit Protection Act ("OWBPA"). As the Supreme Court has said, "[t]he policy of the OWBPA is . . . clear from its title: It is designed to protect the rights and benefits of older workers." Oubre v. Entergy Operations, Inc., 522 U.S. 422, 427 (1998). Although OWBPA permitted employees to waive their right to sue for age discrimination, 29 U.S.C. 626(f), Congress protected the rights of older workers by requiring that a waiver be "knowing and voluntary." See 29 U.S.C. 626(f)(1); see also Long v. Sears Roebuck & Co., 105 F.3d 1529, 1534 (3d Cir. 1997) (stating that OWBPA was intended to "'ensure[] that older workers are not coerced or manipulated into waiving their rights to seek legal relief under the ADEA'") (quoting S. Rep. No. 263, 101st Cong., 2d Sess. (1990)). A waiver is "knowing and voluntary" only if it meets an enumerated list of minimum requirements. 29 U.S.C. 626(f)(1)(A)-(H). Congress also stated that waivers cannot interfere with the Commission's duties or with the right of an individual to file a charge or participate in an investigation. See 29 U.S.C. 626(f)(4). In enacting OWBPA's stringent waiver requirements, Congress clearly contemplated that employees would be able to challenge their waivers in court. See Raczak v. Ameritech Corp., 103 F.3d 1257, 1271 (6th Cir. 1997) (Jones, J., concurring in part) ("It was the intent of Congress that waivers would not preclude parties from bringing suit under the OWBPA."). In addition to the fact that section 626(f)(1) sets out minimum requirements a court should consider when determining the validity of a waiver, section 626(f)(3) explicitly states that "[i]n any dispute that may arise over whether" any of the OWBPA requirements "have been met, the party asserting the validity of a waiver shall have the burden of proving in a court . . . that a waiver was knowing and voluntary . . . ." 29 U.S.C. 626(f)(3) (emphasis added). As the Commission has recognized, "the plain language" of section 626(f)(3) manifested Congress's "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." Waivers of Rights and Claims: Tender Back of Consideration, 65 Fed. Reg. 77438, 77443-44 (Dec. 11, 2000); see also Waivers of Rights and Claims: Tender Back of Consideration, 64 Fed. Reg. 19952, 19954 (April 23, 1999) (notice of proposed rulemaking) ("The ADEA clearly envisions that courts would have authority to determine the validity of the waiver, and therefore, necessarily contemplates that individuals would have the opportunity to bring such a challenge."). Because Congress intended that individuals would be able to test the validity of their waivers in court, an individual who does so cannnot automatically be deemed to have acted in bad faith even if a court ultimately determines that a waiver was valid. Had Congress intended otherwise, it could have stated in the statute that an employer is entitled to an award of attorneys' fees whenever a plaintiff sues and a court concludes that the plaintiff had signed a valid waiver. As discussed above, however, not only did Congress not include such a provision, but Congress incorporated the restrictive FLSA fee standard and authorized fees only to "the plaintiff or plaintiffs" rather than adopting Title VII's standard, which allows fees to any "prevailing party." Compare 29 U.S.C. 216(b) (incorporated by reference in 29 U.S.C. 626(b)) with 42 U.S.C. 2000e-5(k). Accordingly, the district court's ruling undermines Congress's intention that workers be able to challenge the validity of their waivers in court. 2. The court's ruling will have a chilling effect on victims of age discrimination. The district court's finding that fees should be awarded against age discrimination plaintiffs who sign waivers that are found to be enforceable will have a chilling effect on victims of age discrimination. See 65 Fed. Reg. at 77442 ("The Commission remains concerned about the chilling effect that the potential for attorneys' fees (other than those currently available) and damages would have" on challenges to the enforceability of waivers). The Supreme Court recognized as much in Christiansburg, 434 U.S. 412, which involved an award of fees under the less-stringent Title VII standard. There, the Court warned about the chilling effect of fee awards against civil rights plaintiffs and emphasized that losing a lawsuit does not itself mean that a plaintiff's action was unfounded: [I]t is important that a district court resist the understandable temptation to engage in post hoc reasoning by concluding that, because a plaintiff did not ultimately prevail, his action must have been unreasonable or without foundation. This kind of hindsight logic could discourage all but the most airtight claims, for seldom can a prospective plaintiff be sure of ultimate success. Id. at 421-22. Here, the district court's holding contravenes Christiansburg's admonition that litigation is always uncertain and that defeat does not necessarily signal that an action was unfounded, much less brought in bad faith. It is especially inappropriate to make fee awards hinge on the validity of waiver agreements because "the validity of a waiver is not always apparent from its face, even with regard to the enumerated OWBPA requirements." 65 Fed. Reg. at 77440; see also 29 C.F.R. 1625.22(a)(3) ("[o]ther facts and circumstances may bear on the question of whether the waiver is knowing and voluntary, as, for example, if there is a material mistake, omission, or misstatement in the information furnished by the employer to an employee in connection with the waiver"). The Supreme Court has also recognized that financial pressures have a chilling effect on age discrimination victims. See Oubre, 522 U.S. 422. In Oubre, which involved tender-back requirements in waivers of age discrimination claims, the Court reasoned that many discharged individuals will "lack the means to tender [the] return" of funds received in exchange for the waiver and, therefore, will refrain from bringing cases they otherwise might pursue. Id. at 427. According to the Court, employers' perceptions that individuals will be deterred from seeking judicial assessment of ADEA waivers may, in turn, "open the door to an evasion of the statute." Id. The Supreme Court's reasoning in Oubre is equally applicable here. If the bad-faith standard is satisfied merely by filing an age discrimination lawsuit and having a court conclude a waiver was enforceable, employees will undoubtedly be deterred from bringing lawsuits out of fear of having to pay attorneys' fees. This is especially true because individuals who sue for age discrimination are often unemployed with little chance of finding a new job, thus effectively forcing their premature retirement. Indeed, this Court has recognized that "'older Americans have less than a 50/50 chance of ever finding new employment. The[y] often have little or no savings, and may not yet be eligible for Social Security.'" Long v. Sears Roebuck, 105 F.3d at 1534 (quoting S. Rep. No. 79, 101st Cong., 1st Sess. 9 (1989)). Here, Wastak is just such an individual. After losing his job at the age of fifty-seven, the district court imposed a $38,695.50 fee award against him at the age of sixty-four. The possibility of incurring such a significant fee award is enough to make any older worker think twice before filing an age discrimination lawsuit even when it appears fairly clear that a waiver fails to comply with OWBPA. See 65 Fed. Reg. at 77443 ("even individuals who are fairly certain that an ADEA waiver is unenforceable may choose not to bring suit simply because they are unwilling to risk liability for damages or the employer's attorneys' fees"); see also Ford v. Temple Hosp., 790 F.2d 342, 349 (3d Cir. 1986) (partially reversing fee award against attorney and stating that the "uncritical imposition of attorneys' fees can have an undesirable chilling effect on an attorney's legitimate ethical obligation to represent his client zealously"). Because of the chilling effect that the district court's ruling in this case will have, this Court should hold that Wastak's filing of his lawsuit after signing an enforceable waiver does not meet the stringent bad-faith standard. 3. The district court's ruling contravenes the Commission's regulation at 29 C.F.R. 1625.23(b). The district court's bad-faith finding also conflicts with the Commission's current regulation at 29 C.F.R. 1625.23(b), which prohibits waivers from including provisions "allowing employers to recover attorneys' fees and/or damages because of the filing of an ADEA suit," except to the extent such fees are "specifically authorized under federal law." Although the district court acknowledged the Commission's regulation, (JA4, 6/21/04 order at 1, n.1), the court concluded that it could not rely on it because this Court already held that the Commission adopted section 1625.23(b) after Wastak signed his waiver and that the regulation did not apply retroactively. (Id., citing Wastak, 342 F.3d at 294, n.7) The district court erred, however, in holding that this Court's ruling precluded it from considering the regulation in determining whether Wastak acted in bad faith. There are three reasons why the district court's refusal to consider the Commission's regulation was in error. First, Wastak was not seeking to apply section 1625.23(b) retroactively to invalidate his waiver, as he was doing in his first appeal to this Court. Instead, Wastak sought to have the district court consider the regulation to determine contemporaneously whether Wastak's August 21, 2000, filing of his lawsuit which occurred after the Commission published its April 23, 1999, notice of proposed rulemaking for section 1625.23(b) but before the final rule became effective on January 10, 2001 was in bad faith. See 65 Fed. Reg. 77438 (final rule); 64 Fed. Reg. 19952 (notice of proposed rulemaking). Second, section 1625.23(b) clarified rather than changed the law concerning the availability of fees to a prevailing employer. See Clay v. Johnson, 264 F.3d 744, 749 (7th Cir. 2001) (rule clarifying unsettled areas of law may apply retroactively). Section 1625.23(b) merely states what the courts had already concluded that attorneys' fees are available only if "specifically authorized under federal law," which means, under the ADEA, if a plaintiff litigated in bad faith. See 65 Fed. Reg. at 77442 (stating that courts have held that prevailing employers may be awarded fees if a plaintiff litigated in bad faith; also stating that the Commission does not intend to disturb existing law concerning fees). The Commission's January 10, 2001, regulation also clarified the law in the sense that it adopted the proposed rule that the Commission published on April 23, 1999 before Wastak filed his lawsuit. Third, even if the regulation itself cannot be considered, the logic and reasoning behind it compel the conclusion that the filing of a lawsuit after the signing of a valid waiver does not constitute bad faith. Therefore, the district court should have considered the Commission's regulation. Under section 1625.23(b), waivers are precluded from imposing fees upon employees who file ADEA actions, except if a plaintiff litigated in bad faith so that fees would be "specifically authorized under federal law" (in other words, in "bad faith"). The court's holding in this case, however, would render the Commission's regulation nugatory. In the district court's view, the filing of a lawsuit after having signed a waiver is always in bad faith if a court rejects a plaintiff's arguments that a waiver is unenforceable. That is clearly contrary to the Commission's regulation, which assumes that something more than the mere filing of a lawsuit after having signed a waiver (even if valid) must be shown to establish bad faith. 4. The district court cited no relevant authority to support its finding. Finally, the district court cited no cases to support its conclusion that the mere filing of a lawsuit after having signed a waiver that a court finds to be valid constitutes bad faith. The only three cases the court cited concerned a plaintiff's litigation conduct as to the merits of the underlying age claim. (JA2, 1/7/04 order at 2, n.1 (citing Hoover v. Armco, Inc., 915 F.2d 355, 357 (8th Cir. 1990) (holding that plaintiff acted in bad faith when he "brought and doggedly pursued a baseless retaliatory discharge claim" and included time-barred demotion claim in four amended complaints, even after the defendant raised an undisputed statute of limitations defense), Colbert v. Yadkin Valley Tel. Membership Corp., 960 F. Supp. 84, 87 (M.D.N.C. 1997) (holding that pursuit of claim after court pointed out its deficiencies and dismissed it for untimeliness was vexatious and harassing, warranting fee award), and EEOC v. Hendrix Coll., 53 F.3d 209, 211 (8th Cir. 1995) (holding that EEOC initiated suit in bad faith when it knew employer had voluntarily changed its recordkeeping policies)). The absence of any authority to support the court's ruling also militates in favor of this Court finding that the court erred in finding that Wastak acted in bad faith by filing his lawsuit. C. Even if a plaintiff's initiation of an ADEA lawsuit could constitute bad faith when a court finds a waiver enforceable, the record does not support the district court's bad-faith finding in this case. Assuming, arguendo, that a bad-faith finding could be supported by an ADEA plaintiff's initiation of a lawsuit following the signing of a valid waiver, the court's finding that Wastak initiated his suit in bad faith is clearly erroneous. See Ford, 790 F.2d at 347 (stating that district court's finding of bad faith "is a factual determination and may be reversed only if its clearly erroneous"; also stating that decision to award fees upon bad-faith finding is reviewed for abuse of discretion). According to this Court, bad faith is shown by the "intentional advancement of a baseless contention that is made for an ulterior purpose, e.g., harassment or delay." Id. Here, the record does not support the conclusion that Wastak initiated his lawsuit for any ulterior purpose other than to assert his rights or that he made baseless contentions. Four facts demonstrate that Wastak initiated his lawsuit in good faith, even if he was ultimately unsuccessful in arguing that the waiver failed to comply with OWBPA. See Carroll v. Primerica Fin. Servs. Ins. Mktg., 811 F. Supp. 1558, 1567 (N.D. Ga. 1992) (in pre-OWBPA case, holding that employer could not sue employees for damages based on breach of waiver agreement because plaintiffs had good-faith belief that they signed waivers unknowingly and involuntarily). First, this Court issued a lengthy published opinion addressing Wastak's arguments that his signing of the waiver was not knowing and voluntary. Although these arguments were ultimately unsuccessful, this is not a case in which the plaintiff made unfounded arguments that were summarily dispensed with in a short unpublished opinion. Cf. EEOC v. Clay Printing Co., 13 F.3d 813 (4th Cir. 1994) (finding that EEOC's position was not "substantially justified" under Equal Access to Justice Act and therefore warranted fee award where tenor of district court's opinion was "that EEOC wasted everybody's time and was grasping at evidentiary straws" and case did not improve on appeal). Instead, Wastak put forth non- frivolous arguments supported by legal authority that warranted serious consideration by this Court. Therefore, his initiation of his lawsuit cannot be characterized as having been brought in bad faith. See Hughes v. Rowe, 449 U.S. 5, 15-16 (1980) (in Title VII case with less-stringent fee standard, holding that "[a]llegations that, upon careful examination, prove legally insufficient to require a trial are not, for that reason alone, 'groundless' or 'without foundation' as required by Christiansburg"). Second, this Court agreed that section 626(f)(4) "essentially states that" a waiver cannot interfere with the Commission's enforcement duties and "that an employer may not invoke a waiver in an attempt to impede an employee's participation in EEOC procedures." Wastak, 342 F.3d at 289. Thus, although this Court did not think that the charge-filing ban in Wastak's waiver operated to invalidate the waiver, the Court did agree that under section 626(f)(4) the ban could not be enforced. Third, this Court's opinion relies in part on an arbitration case the Court decided well after Wastak initiated his lawsuit, and even after the parties filed their appellate briefs. See Wastak, 342 F.3d at 292 (relying on Spinetti v. Serv. Corp. Int'l, 324 F.3d 212 (3d Cir. 2003)). Fourth, the Commission, which is the agency with substantive rulemaking and enforcement authority under the ADEA, joined Wastak in arguing on appeal that his waiver was unenforceable because it failed to comply with OWBPA's requirements. Moreover, as discussed above, under the Commission's current regulations, waiver agreements such as Wastak's are unenforceable if they contain provisions prohibiting employees from filing a charge. See 29 C.F.R. 1625.22(i)(2)(i). In short, Wastak had a good-faith belief that his waiver did not comply with OWBPA and that he therefore was not breaching it by filing suit. CONCLUSION Because the district court's ruling contravenes the language and policy underlying the ADEA and conflicts with the Commission's regulations, this Court should find that the district court erred in concluding that Wastak's initiation of his lawsuit was in bad faith because this Court rejected his arguments that the waiver failed to satisfy OWBPA's requirements. To hold otherwise would have a chilling effect on age discrimination victims. Even those workers whose waivers reasonably appear to be invalid and who appear to have strong cases of age discrimination will hesitate to file suit if they know that doing so can expose them to a fee award. Therefore, this Court should find that the district court's bad-faith finding cannot rest on Wastak's filing of his lawsuit after he signed a waiver that this Court found to be enforceable. Respectfully submitted, ERIC S. DREIBAND General Counsel LORRAINE C. DAVIS Acting Associate General Counsel CAROLYN L. WHEELER Assistant General Counsel __________________________ ANNE NOEL OCCHIALINO Attorney U.S. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION 1801 L Street, NW, Room 7030 Washington, DC 20507 (202) 663-4724 CERTIFICATE OF COMPLIANCE I certify that this brief complies with the type-volume limitation set forth in Fed. R. App. P. 32(a)(7)(B). This brief contains _________ words. ____________________________ ANNE NOEL OCCHIALINO Attorney U.S. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION Office of General Counsel 1801 L Street, NW, Room 7030 Washington, DC 20507 (P) (202) 663-4724 (F) (202) 663-7090 CERTIFICATE OF SERVICE I certify that on October ___, 2004 I served copies of this brief by mailing them overnight mail to the following: Office of the Clerk United States Court of Appeals for the Third Circuit 21400 U.S. Courthouse 601 Market Street Philadelphia, PA 19106-1790 Attorney for Plaintiff-Appellant Donald P. Russo 117 East Broad Street P.O. Box 1890 Bethlehem, PA 18016 Attorney for Defendant-Appellee Jonathan B. Sprague Post & Schell 1800 John F. Kennedy Boulevard 19th Floor Philadelphia, PA 19103 ____________________________ ANNE NOEL OCCHIALINO Attorney U.S. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION Office of General Counsel 1801 L Street, NW, Room 7030 Washington, DC 20507 (P) (202) 663-4724 (F) (202) 663-7090 _______________________________________________ 1 This Court signaled in its original opinion in this case, which was subsequently vacated, that it agreed that fees should be awarded to prevailing defendants in age discrimination cases upon a showing of bad faith. See Wastak v. Lehigh Valley Health Network, 333 F.3d 120, 133 n.7 (3d Cir. 2003). 2 This language is found in Judge Jones’s concurring opinion that expressed the holding of the court on the tender-back doctrine, which the majority held is “an effective bar to suit and as such, it is incongruous with the intent of the OWBPA.” Raczak, 103 F.3d at 1271, 1258; id. at 1258 (Guy, J.) (concurring in result reached by Judge Jones). 3 Losing plaintiffs are already subject to awards of costs, which, as in this case, can run into the thousands of dollars. See Fed. R. Civ. P. 54(d)(1) (“costs other than attorneys’ fees shall be allowed as of course to the prevailing party unless the court otherwise directs”). Accordingly, cost awards themselves serve as a deterrent to the filing of baseless claims. 4 For the same reason, it is appropriate for the Court to look at the Commission’s December 11, 2000, commentary that accompanied the adoption of section 1625.23(b). See 65 Fed. Reg. 77438.