Pierce v. Atchison Topeka and Santa Fe Ry. Co.

• Decision Date: 27 March 1997
• Docket Number: No. 96-2403,96-2403
• Citation: 110 F.3d 431
• Parties: 73 Fair Empl.Prac.Cas. (BNA) 1062, 70 Empl. Prac. Dec. P 44,578, 65 USLW 2727, 46 Fed. R. Evid. Serv. 1012 Eugene PIERCE, Plaintiff-Appellee, v. The ATCHISON TOPEKA AND SANTA FE RAILWAY CO., d/b/a Santa Fe Railroad Co., Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 431

110 F.3d 431

73 Fair Empl.Prac.Cas. (BNA) 1062,

70 Empl. Prac. Dec. P 44,578, 65 USLW 2727,

46 Fed. R. Evid. Serv. 1012

Eugene PIERCE, Plaintiff-Appellee, v. The ATCHISON TOPEKA AND SANTA FE RAILWAY CO., d/b/a Santa Fe Railroad Co., Defendant-Appellant.

No. 96-2403.

United States Court of Appeals,Seventh Circuit.

Argued Jan. 23, 1997.

Decided March 27, 1997.

H. Nicholas Berberian (argued), Robert J. Kuker, Neal, Gerber & Eisenberg, Chicago, IL, for Plaintiff-Appellee.

J. Stephen Poor (argued) and Alicia Wiltz, Seyfarth, Shaw, Fairweather & Geraldson, Chicago, IL, for Defendant-Appellant.

Before BAUER, FLAUM, and KANNE, Circuit Judges.

FLAUM, Circuit Judge.

Twice a jury has concluded that a release signed by Eugene Pierce in favor of his former employer, Santa Fe Railroad Co. ("Santa Fe"), did not constitute a knowing and voluntary waiver of his rights under the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. §§ 621-634. On review of the first such conclusion, this court acknowledged that ADEA rights could be relinquished through a knowing and voluntary waiver and held that whether a waiver was knowing and voluntary should be determined by looking to the totality of the circumstances surrounding the waiver. 65 F.3d 562, 571 (7th Cir.1995). In addition, we held that "after the employer raises the existence of a release as a defense to a discrimination suit, the burden rests on the plaintiff to challenge specifically his voluntary and knowing consent to the release." Id. at 572. We noted that, although "the court instructed the jury that Santa Fe had to prove that Pierce's execution of the release was knowing and voluntary, ... it is clear that neither the parties nor the court reflected upon whether that requirement encompasses the totality-of-the-circumstances inquiry." Id. Moreover, it was not "apparent whether Pierce ever asserted that his consent to the release was not knowing and voluntary." Id. We therefore remanded with instructions to determine whether Pierce's consent was knowing and voluntary under the totality of the circumstances. On remand, the jury once again found that Pierce's waiver was not knowing and voluntary. We now affirm.

I.

The underlying facts are presented at length in our first opinion, but we will briefly recount them here. In July 1989, Santa Fe fired Pierce from his job as a Senior Analyst, a nonunion position to which Pierce had climbed the previous year after working for more than a decade in various union posts. At the time, the railroad offered Pierce a $19,000 severance package, conditioned on his signing a general release of all claims against Santa Fe. Pierce rejected the offer and chose instead to exercise his union seniority rights, which enabled him to secure a position as a file room clerk. His woes continued, however, for after only two days, a more senior employee took Pierce's job and relegated him to the role of assistant file room clerk. Unwilling to accept Santa Fe's explanation that a reduction in force had necessitated the elimination of his Senior Analyst position, Pierce filed claims of age and race discrimination with the EEOC in October 1989.

In November, hearing rumors that his department was to relocate from Illinois, Pierce approached George Pacocha, a Santa Fe official, about receiving a severance package. Pierce had learned from his fellow workers that Santa Fe had offered other union employees a "360" package and he was curious to know whether he was eligible. ¹ Pacocha initially responded that he would have to check with his superiors; when the two men subsequently met on either the Tuesday or the Wednesday before Thanksgiving, Pacocha told Pierce that he could receive the severance package provided that he signed by day's end a general release of all claims against Santa Fe. At this point, Pierce informed Pacocha of the EEOC complaint and asked whether the release would preclude the discrimination claims. Pacocha responded that he did not believe the release would bar Pierce's claims, and gave Pierce until the following business day (either Wednesday or Monday) to decide whether to sign it and accept the severance package.

When the two men next met, Pacocha again advised Pierce of the legal consequences of his signing the release. Exactly what Pacocha told Pierce at this second meeting is a matter of considerable dispute, but the result of the meeting was that Pierce accepted the severance package and signed the release, which included the following terms:

For and in consideration of the sum of $36,871.20, subject to the usual deductions, the receipt of which is hereby acknowledged, I hereby knowingly and voluntarily resign from the service of The Atchison, Topeka and Santa Fe Railway Company.

I understand and agree, in consideration of the above specified amount, that this voluntary resignation constitutes a complete relinquishment and surrender unto said Railway Company, of any and all my rights including seniority, Health and Welfare, and other rights and benefits which may heretofore have accrued to me as an employe[e] of said Railway Company.

I further understand that this voluntary resignation constitutes full settlement and release of any and all claims of any nature, known or unknown, which I have or might have against said Railway Company, including, but not limited to, claims which derive from or are based on any aspect of my preceding employment relationship with said Railway Company or my resignation of such employment. ²

Despite having signed this release, Pierce filed suit against Santa Fe in June 1991 upon receiving notice from the EEOC of his right to sue.

At the first trial, the jury found that the release did not bar Pierce's claims, found that Santa Fe had discriminated against Pierce on the basis of age, awarded him back pay, and doubled this award based upon a finding of willful discrimination. See 65 F.3d at 567. Acting in its advisory capacity, the jury rejected Pierce's claim of racial discrimination, and the court accepted this conclusion. See id.

On appeal, we held that the evidence was sufficient to support the jury's finding of age discrimination, although we reversed the finding of willfulness. Id. at 572-74. We also held, however, that, as a matter of contract law, the release unambiguously covered Pierce's claims. Id. at 568. Rejecting Pierce's state-law defenses to the release, we concluded that the release was not the product of duress and that Santa Fe should not be estopped from asserting its validity. Id. at 568-70. We nevertheless decided to remand the case for a determination of whether Pierce's consent to the release was knowing and voluntary and thus sufficient to waive his federal statutory rights. As noted above, we held that the question whether a waiver of ADEA rights was knowing and voluntary should be answered by looking to the totality of the circumstances. Because we were "explicitly adopting this approach for the first time," we believed that "the trial judge, and possibly a new jury," should have an opportunity to apply the totality-of-the-circumstances test we had just adopted. Id. at 572. A second jury has now done so, and Santa Fe appeals the result.

On this second appeal, the railroad takes issue with the district court's entire approach to the proceedings below. More specifically, Santa Fe argues, first, that the district court erred by placing upon the company the burden of proving that Pierce's consent to the release was knowing and voluntary. Santa Fe also objects to several of the court's evidentiary rulings, many of which, in the company's view, improperly permitted Pierce to relitigate his discrimination claims and to argue, in disregard of our holding that the release was clear and unambiguous, that he did not understand the terms of the release. Finally, Santa Fe contends that, under the totality-of-the-circumstances test we adopted in our first opinion, the company was entitled to judgment as a matter of law.

II.

We first address Santa Fe's contention that the district court erred in placing upon the railroad the ultimate burden of proving that Pierce's waiver was knowing and voluntary. The debate centers around one sentence in our first opinion--our direction to the district court that "after the employer raises the existence of a release as a defense to a discrimination suit, the burden rests on the plaintiff to challenge specifically his voluntary and knowing consent to the release," 65 F.3d at 572. Santa Fe argues that nothing could be clearer: Pierce bore the burden of proof as to whether he executed the release knowingly and voluntarily. Not so, responds Pierce: our instruction is better understood as addressing the burden of production. ³

The parties can find little support for their respective positions in the opinions of our fellow courts of appeals. Although several courts have explored the factors to be considered in determining whether a waiver of an ADEA claim was knowing and voluntary, few have explicitly discussed the proper allocation of the burden of persuasion. ⁴ This silence may be attributable to the fact that few courts, if any, have had to confront the unusual posture in which Pierce's claim stood on remand. Pierce already had proved his discrimination claim; the sole issue in the second trial was whether his release was knowing and voluntary under the totality-of-the-circumstances test set forth in our first opinion.

Consequently, the answer to the question posed by Santa Fe's second appeal is not immediately obvious. Our resolution of the matter, however, will not have long-ranging consequences, for Congress has provided its own answer. Under the 1990 amendments to the ADEA enacted in the Older Workers Benefit Protection Act ("OWBPA"), Pub.L. No. 101-433, § 201, "the party asserting the validity of a waiver shall have the burden of proving in a court of competent jurisdiction that a waiver was knowing and voluntary"...