Thomforde v. International Bus. Machines Corp., 04-1538.

• Decision Date: 16 June 2005
• Docket Number: No. 04-1538.,04-1538.
• Parties: Dale J. THOMFORDE, Appellant, v. INTERNATIONAL BUSINESS MACHINES CORPORATION, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

406 F.3d 500

Dale J. THOMFORDE, Appellant, v. INTERNATIONAL BUSINESS MACHINES CORPORATION, Appellee.

No. 04-1538.

United States Court of Appeals, Eighth Circuit.

Submitted: January 11, 2005.

Filed: May 3, 2005.

Rehearing and Rehearing En Banc Denied June 16, 2005.^*

William J. Egan, argued, Edina, MN, for appellant.

Jerry W. Snider, argued, Minneapolis, MN, for appellee.

Before SMITH, FAGG, and HANSEN, Circuit Judges.

HANSEN, Circuit Judge.

Dale Thomforde appeals the district court's grant of summary judgment to International Business Machines Corporation (IBM) on Thomforde's discrimination claim under the Age Discrimination in Employment Act (ADEA), 29 U.S.C. §§ 621-634 (2000). Because the release of claims signed by Thomforde as part of IBM's involuntary termination program did not satisfy the statutory waiver requirements of the Older Workers Benefits Protection Act (OWBPA), 29 U.S.C. § 626(f) (2000), we reverse.

I.

Thomforde worked for IBM as an engineer from 1973 to 2001. In 2001, as part of a reduction in force, IBM implemented the Server Group Resource Action (SGRA), an involuntary termination program. In July 2001, Thomforde was notified that he had been selected for termination, and IBM provided him with a document titled General Release and Covenant Not to Sue (Agreement). The document began by referring to "this General Release and Covenant Not to Sue (hereinafter `Release')" and contained the following relevant language:

In exchange for the sums and benefits received pursuant to the terms of the [SGRA], DALE J. THOMFORDE (hereinafter "you") agrees to release and hereby does release [IBM] ... from all claims, demands, actions or liabilities you may have against IBM of whatever kind including, but not limited to, those that are related to your employment with IBM, the termination of that employment, or other severance payments or your eligibility for participation in the Retirement Bridge Leave of Absence, or claims for attorneys' fees.

....

... You also agree that this Release covers, but is not limited to, claims arising from the [ADEA], as amended, ... and any other federal, state or local law dealing with discrimination in employment including, but not limited to, discrimination based on sex, sexual orientation, race, national origin, religion, disability, veteran status, or age.

....

You agree that you will never institute a claim of any kind against IBM ... including, but not limited to, claims related to your employment with IBM or the termination of that employment or other severance payments or your eligibility for participation in the Retirement Bridge Leave of Absence. If you violate this covenant not to sue by suing IBM..., you agree that you will pay all costs and expenses of defending against the suit incurred by IBM ..., including reasonable attorneys' fees, and all further costs and fees, including attorneys' fees, incurred in connection with collection. This covenant not to sue does not apply to actions based solely under the [ADEA], as amended. That means that if you were to sue IBM ... only under the [ADEA], as amended, you would not be liable under the terms of this Release for their attorneys' fees and other costs and expenses of defending against the suit. This Release does not preclude filing a charge with the U.S. Equal Employment Opportunity Commission.

(Appellant's Add. at 4-5.)

Prior to signing the Agreement, Thomforde asked his supervisor, Andrew Schram, if the exception for ADEA claims contained in the covenant not to sue meant that he could sue IBM if the case was limited to claims under the ADEA. Schram told Thomforde that he would contact IBM's legal department. Schram later sent Thomforde an e-mail stating "Regarding your question on the General Release and Covenant Not to Sue, the wording is as intended by IBM. The site attorney was not comfortable providing an interpretation for you and suggested you consult with your own attorney." (Appellant's App. at 100.) After meeting with his attorney to review the Agreement, Thomforde concluded that he could sign the Agreement and still pursue his claims of age discrimination as long as they were limited to ADEA claims.

IBM terminated Thomforde on August 24, 2001, and Thomforde signed the Agreement on September 6, 2001. He simultaneously gave Schram a letter addressed to IBM's counsel complaining about his reduced retirement benefits and making a second request for a one-year Retirement Bridge Leave of Absence, which had previously been denied. In the letter, Thomforde stated that he found "no other alternative but to pursue various legal channels under the anti-age discrimination statutes." (Id. at 7.) He also stated that he would "be filing a complaint with the EEOC, following up with other possible legal action, as allowed under the General Release and Covenant Agreement." Id.

In November, Thomforde filed charges with the EEOC, which IBM sought to have dismissed based on the waiver in the Agreement. The EEOC issued a Notice of Right to Sue in October 2002, and Thomforde filed the instant suit. IBM moved for summary judgment, arguing that Thomforde, by signing the Agreement and accepting benefits, had released all of his claims against IBM; that Thomforde knowingly and voluntarily signed the Agreement; that the waiver conformed to the specifications of the OWBPA; and that the Agreement was not ambiguous. IBM claimed that the covenant not to sue was an entirely different provision from the release provisions, and each provision performed different functions. According to IBM, the covenant not to sue did not "undo" his release of the ADEA claims, but merely exempted Thomforde from liability for attorneys' fees associated with defending a suit.

In response, Thomforde argued that he did not knowingly and voluntarily waive his ADEA rights because (1) the Agreement expressly preserved Thomforde's right to file an action solely under the ADEA; (2) the waiver did not conform to the OWBPA requirement that it be written in a manner calculated to be understood by an individual signing the agreement; (3) under a "totality of the circumstances" approach determining whether the waiver was knowing and voluntary, the evidence showed that Thomforde did not understand that he was surrendering his rights under the ADEA by signing the agreement; and (4) even under state contract principles, the agreement was ambiguous on its face. The district court granted IBM's motion for summary judgment. It found that Thomforde clearly waived any potential claims against IBM by signing the Agreement. The court also found that the waiver signed by Thomforde fully conformed with the OWBPA requirements, and, rejecting a "totality of the circumstances" approach, determined that the waiver was unambiguous, and therefore enforceable. Thomforde appeals.

II.

We review de novo the district court's grant of summary judgment. Evers v. Alliant Techsys., Inc., 241 F.3d 948, 953 (8th Cir.2001). Summary judgment is appropriate where the evidence, viewed in the light most favorable to Thomforde as the non-moving party, shows no genuine issue of material fact and that IBM is entitled to judgment as a matter of law. Id. We review the district court's statutory interpretation of the OWBPA de novo. Ellison v. Premier Salons Int'l, Inc., 164 F.3d 1111, 1113 (8th Cir.1999).

Enacted in 1990, the OWBPA amended the ADEA by providing that "[a]n individual may not waive any right or claim under [the ADEA] unless the waiver is knowing and voluntary.... [A] waiver may not be considered knowing and voluntary unless at a minimum" the waiver satisfies a number of requirements, one of which is that "the waiver is part of an agreement between an individual and the employer that is written in a manner calculated to be understood by such individual, or by the average individual eligible to participate." 29 U.S.C. § 626(f)(1)(A) (emphasis added). The statutory requirements for waiver of ADEA claims are strict and unqualified; if an employer fails to meet any of the statutory requirements, the waiver is ineffective as a matter of law. See Qubre v. Entergy Operations, Inc., 522 U.S. 422, 427, 118 S.Ct. 838, 139 L.Ed.2d 849 (1998). Thus, if the Agreement at issue here was not "written in a manner calculated to be understood by such individual, or by the average individual eligible to participate," then Thomforde did not release his rights under the ADEA.

The waiver language in the Agreement clearly states that Thomforde, in exchange for the amount determined under the SGRA, released IBM from all claims of any kind, including claims under the ADEA. Three paragraphs later, the Agreement then states that "[y]ou agree that you will never institute a claim of any kind against IBM ... including, but not limited to, claims related to your employment with IBM." (Appellant's Add. at 5.) The paragraph continues by stating that "[t]his covenant not to sue does not apply to actions based solely under the [ADEA]." (Id.) Thus, one plausible reading of the document reveals that the employee releases IBM from all ADEA claims and agrees not to institute a claim of any kind against IBM, except the employee may bring an action based solely under the ADEA. Without a clear understanding of the legal differences between a release and a covenant not to sue, these provisions would seem to be contradictory; how can an employee bring a suit solely under the ADEA if the employee has waived all...