Raczak v. Ameritech Corp.

Decision Date21 March 1997
Docket NumberNo. 95-1082,95-1082
Citation103 F.3d 1257
Parties72 Fair Empl.Prac.Cas. (BNA) 1357, 70 Empl. Prac. Dec. P 44,580, 65 USLW 2465, 20 Employee Benefits Cas. 2774 Gary RACZAK, Bernard Surma, Loraine Holmes, Gladys Moore, Carole Chandler, Lou Ann Fox, M. Jean Kruse, Phyllis Tarpley, and Thomas Satkiewicz, Plaintiffs-Appellees, v. AMERITECH CORPORATION, Ameritech Services, Inc., and Michigan Bell Telephone Company, Defendants-Appellants.
CourtU.S. Court of Appeals — Sixth Circuit

Beth M. Rivers, argued and briefed, Rudy J. Huizenga, argued, Huizenga, Hagan, Hergt & Rivers, Detroit, MI, for Carole Chandler, Bernard Surma, Thomas Satkiewicz, Loraine Holmes, Gladys Moore, Jean Kruse, Phyllis Tarpley, Lou Ann Fox, Dorothy Payne and Gary Raczak.

Beth M. Rivers, argued and briefed, Huizenga, Hagan, Hergt & Rivers, Detroit, MI, for George Kinsella, Louise Ward Neal, Rex Steyskal and Cathleen Longan.

Donald A. Van Suilichem, argued and briefed, Valerie L. MacFarlane, Van, Suilichem & Brown, Troy, MI, for Ameritech Corporation, Ameritech Services, Inc.

Albert Calille, briefed, Michigan Bell Telephone Company, Detroit, MI, for Michigan Bell Telephone Company.

Ann E. Reesman, briefed, Douglas S. McDowell, McGuiness & Williams, Washington, DC, for Amicus Curiae Equal Employment Advisory Council.

Peter Van Schaick, briefed, Peter Van Schaick, P.C., Glen Ridge, NJ, for Amicus Curiae National Employees Lawyers Association.

Thomas W. Osborne, briefed, American Association of Retired Persons, Washington, DC, for Amicus Curiae American Association of Retired Persons.

Before: JONES, GUY, and BOGGS, Circuit Judges.

BOGGS, J., delivered the opinion of the court in Parts I and II, in which JONES and GUY, JJ., concurred. JONES, J. (pp. 1268-71), delivered a separate opinion with respect to the issue addressed in Part III, in which GUY, J. (p. 1271), concurred in a separate opinion, making Judge JONES's opinion the opinion of the court on the Part III issue.

BOGGS, Circuit Judge.

Plaintiffs Gary Raczak, Bernard Surma, Loraine Holmes, and Gladys Moore worked for defendant Michigan Bell Telephone Co. Plaintiffs Carole Chandler, Lou Ann Fox, M. Jean Kruse, Phyllis Tarpley, and Thomas Satkiewicz worked for defendant Ameritech Services Inc., a subsidiary of Ameritech Corp. They sued their employers under the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. § 621 et seq., as amended by the Older Workers Benefit Protection Act ("OWBPA"), 29 U.S.C. § 626 et seq., alleging that they were selected to be fired under defendants' workforce reduction programs solely on the basis of their age. 1

Defendants countersued for breach of contract, claiming that plaintiffs received enhanced severance packages in return for waiving such claims, and that plaintiffs' continued refusal to disgorge the benefits bars them from contesting the agreements' validity.

Both sides moved for summary judgment. In an order dated August 1, 1994, the district court denied defendants' motions and granted plaintiffs' motion. The court held that the defendants had not furnished the terminated employees with "the job titles and ages of all individuals eligible or selected for the [downsizing] program, and the ages of all individuals in the same job classification or organizational unit who are not eligible or selected for the program," as required by 29 U.S.C. § 626(f)(1)(H)(ii). Instead, defendants had categorized the information on the employees selected and not selected by age and salary grade. Although plaintiffs and the court conceded that this was the only provision of the OWBPA that was alleged to have been breached, the court held that this flaw rendered the waivers unenforceable.

The district court also held that plaintiffs' acceptance and continued retention of the enhanced compensation benefits did not "ratify" the defective waivers, and therefore did not preclude plaintiffs from bringing suit. The court reasoned that such a "tender-back" requirement would be inconsistent with the remedial purposes of the OWBPA and would "deter meritorious challenges to releases." Memorandum and Order of Aug. 1, 1994 ("Memorandum and Order ") at 20-21, 1994 WL 780899. If plaintiffs were to prevail in their suit, the court noted that "any such recovery would be offset against the benefits they've already received from [defendants]." Id. at 21. It is not clear if plaintiffs agree with this statement by the court.

Defendants then asked the court to certify its order for interlocutory appeal because the order "involves a controlling issue of law as to which there is a substantial ground for difference," and that an immediate appeal could "materially advance the ultimate termination of the litigation." 28 U.S.C. § 1292(b). The district court agreed, and we granted the petition to appeal.

Although an interlocutory appeal allows this court to review the district court's order in its entirety, and thus any issue pertinent to the disposition of this case, we will review only the two issues addressed by the district court in its grant of summary judgment: 2 (1) whether defendants violated the OWBPA by providing plaintiffs with data organized by and relating to salary grade, in lieu of what plaintiffs characterize as "job title"; and (2) whether plaintiffs are precluded from suing by their refusal to refund the additional compensation that they received as an inducement for executing a waiver of liability.

Upon review and analysis, we reverse and remand the case to the district court. We unanimously conclude that because the nomenclature of § 626(f)(1)(H) of Title 29 is ambiguous, a rigid and mechanical interpretation of that provision is inappropriate. Congress's intent in enacting § 626 was to compel employers to provide data so that an employee considering waiving ADEA rights could assess, with the assistance of counsel, the viability of a potential ADEA claim. Although the OWBPA is lengthy and detailed, clause (H)(ii) of § 626(f)(1) is not as precise, referring to concepts of "job title," "job classification," and "organizational unit"--terms not defined within the OWBPA. Holding an employer strictly accountable for what might be a technical violation of these imprecise terms, with no indication that this would facilitate the provision's purpose and might even hamper it, is untenable and would elevate form over substance. Accordingly, we remand to the district court with instructions to determine whether the data that defendants supplied to plaintiffs fulfilled the requirements of the OWBPA by providing information, "in a manner calculated to be understood by the individual" participant, that would allow that individual to understand and gauge the prospects of an ADEA claim.

The panel is split with respect to the question of ratification and the proper procedure upon remand. I would reverse on the issue of ratification as well, and in so doing, distinguish between the doctrine of ratification and the "tender-back" doctrine and adopt the latter. However, the remaining two members of the panel, for the varying reasons set forth in their separate opinions, agree that plaintiffs in this case may continue their suit upon remand without tendering back their waiver payments, and that view is thus the opinion of the court.

I

In September 1992, Ameritech announced that it would be reducing the number of managers through voluntary and involuntary terminations through its Workforce Resizing Program. Under the voluntary retirement program, any management employee could retire early and receive two additional years of service credit, a supplemental payment, and a favorable interest rate in calculating lump sum pension distributions. These employees were required to select this option before November 2, 1992.

The remainder of the downsizing was to be accomplished through the involuntary termination component of the plan. In the first phase, Ameritech designated an "at-risk pool" consisting of the lowest-performing 30% of managers, based on 1990 and 1991 incentive payments and bonuses. Workers in these at-risk pools were grouped according to their salary grade (of which there were about twelve), and those in each salary grade were subdivided into smaller groups to create more manageable comparison groups (those in subgroups of less than ten were compared on a company-wide basis).

The second phase of the involuntary component involved classifying the at-risk employees based on assessments of their job performance, specific job skills or expertise, leadership ability, and potential for growth. Each employee was rated by the appropriate supervisor on each of the four factors, and the employees were ranked based on their average rating. After Ameritech vice-presidents determined how many employees needed to be trimmed to achieve the downsizing goals, the individuals to be terminated were selected anonymously, based on the lowest average performance ratings. Michigan Bell's Workforce Resizing Program was almost identical in its methodology and system of classification.

All of the Ameritech and Michigan Bell plaintiffs were involuntarily terminated, except for Raczak, 3 who took early retirement. Each employee received a packet describing the supplemental severance benefits available if the Michigan Bell plaintiffs would sign a "Termination Agreement, Waiver, and Release"; the Ameritech plaintiffs were offered a similar "Waiver and Release." All pages of both waiver forms were clearly labelled at the top with "PLEASE CONSULT WITH AN ATTORNEY BEFORE EXECUTING THIS DOCUMENT," as required by 29 U.S.C. § 626(f)(1)(E) 4.

The waivers also satisfied the other conditions of 29 U.S.C. § 626(f)(1) because they were "written in a manner calculated to be understood ... by the average individual"; the waivers referred specifically to ADEA claims; they did not...

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