Oubre v. Entergy Operations Inc.

• Citation: 139 L.Ed.2d 849,522 U.S. 422,118 S.Ct. 838
• Decision Date: 26 January 1998
• Docket Number: 961291
• Parties: Dolores M. OUBRE, Petitioner, v. ENTERGY OPERATIONS, INC
• Court: United States Supreme Court

522 U.S. 422

118 S.Ct. 838

139 L.Ed.2d 849

Dolores M. OUBRE, Petitioner,

v ENTERGY OPERATIONS, INC.

No. 96-1291.

Supreme Court of the United States

Argued Nov. 12, 1997.

Decided Jan. 26, 1998.

Syllabus^*

In consideration for receipt of severance pay under an employment termination agreement, petitioner Oubre signed a release of all claims against her employer, respondent Entergy Operations, Inc. In procuring the release, Entergy failed to comply in at least three respects with the requirements for a release under the Age Discrimination in Employment Act (ADEA), as set forth in the Older Workers Benefit Protection Act (OWBPA): It did not (1) give Oubre enough time to consider her options, (2) give her seven days to change her mind, or (3) make specific reference to ADEA claims. After receiving her last severance payment, Oubre sued Entergy, alleging constructive discharge on the basis of her age in violation of the ADEA and state law. Entergy moved for summary judgment, claiming Oubre had ratified the defective release by failing to return or offer to return the monies she had received. The District Court agreed and entered summary judgment for Entergy. The Fifth Circuit affirmed.

Held: As the release did not comply with the OWBPA's requirements, it cannot bar Oubre's ADEA claim. The OWBPA provides: "An individual may not waive any [ADEA] claim . . . unless the waiver is knowing and voluntary . . . . [A] waiver may not be considered knowing and voluntary unless at a minimum'' it satisfies certain enumerated requirements, including the three listed above. 29 U.S.C. §626(f)(1). Thus, the OWBPA implements Congress' policy of protecting older workers' rights and benefits via a strict, unqualified statutory stricture on waivers, and this Court is bound to take Congress at its word. By imposing specific duties on employers seeking releases of ADEA claims and delineating these duties with precision and without exception or qualification, the statute makes its command clear: An employee "may not waive'' an ADEA claim unless the waiver or release satisfies the OWBPA's requirements. Oubre's release does not do so. Nor did her mere retention of monies amount to a ratification equivalent to a valid release of her ADEA claims, since the retention did not comply with the OWBPA any more than the original release did. Accordingly, even if Entergy has correctly stated the contract ratification and equitable estoppel principles on which it relies, its argument is unavailing because the authorities it cites do not consider the OWBPA's commands. Moreover, Entergy's proposed rule would frustrate the statute's practical operation as well as its formal command. A discharged employee often will have spent the monies received and will lack the means to tender their return. These realities might tempt employers to risk noncompliance with the OWBPA's waiver provisions, knowing that it will be difficult to repay the monies and relying on ratification. This Court ought not to open the door to an evasion of the statute by this device. Pp. ___-___.

112 F.3d 787 (C.A.5 1996), reversed and remanded.

KENNEDY, J., delivered the opinion of the Court, in which STEVENS, O'CONNOR, SOUTER, GINSBURG, and BREYER, JJ., joined. BREYER, J., filed a concurring opinion, in which O'CONNOR, J., joined. SCALIA, J., filed a dissenting opinion. THOMAS, J., filed a dissenting opinion, in which REHNQUIST, C.J., joined.

Barbara G. Haynie, Metairie, LA, for Petitioner.

Beth S. Brinkmann, Washington, DC, for United States as amicus curiae.

Carter G. Phillips, Washington, DC, for respondent.

Justice KENNEDY delivered the opinion of the Court.

An employee, as part of a termination agreement, signed a release of all claims against her employer. In consideration, she received severance pay in installments. The release, however, did not comply with specific federal statutory requirements for a release of claims under the Age Discrimination in Employment Act of 1967 (ADEA), 81 Stat. 602, 29 U.S.C. §621 et seq. After receiving the last payment, the employee brought suit under the ADEA. The employer claims the employee ratified and validated the nonconforming release by retaining the monies paid to secure it. The employer also insists the release bars the action unless, as a precondition to filing suit, the employee tenders back the monies received. We disagree and rule that, as the release did not comply with the statute, it cannot bar the ADEA claim.

I

Petitioner Dolores Oubre worked as a scheduler at a power plant in Killona, Louisiana, run by her employer, respondent Entergy Operations, Inc. In 1994, she received a poor performance rating. Oubre's supervisor met with her on January 17, 1995, and gave her the option of either improving her performance during the coming year or accepting a voluntary arrangement for her severance. She received a packet of information about the severance agreement and had 14 days to consider her options, during which she consulted with attorneys. On January 31, Oubre decided to accept. She signed a release, in which she "agree[d] to waive, settle, release, and discharge any and all claims, demands, damages, actions, or causes of action . . . that I may have against Entergy . . . .'' App. 61. In exchange, she received six installment payments over the next four months, totaling $6,258.

The Older Workers Benefit Protection Act (OWBPA) imposes specific requirements for releases covering ADEA claims. OWBPA, §201, 104 Stat. 983, 29 U.S.C. §§626(f)(1)(B), (F), (G). In procuring the release, Entergy did not comply with the OWBPA in at least three respects: (1) Entergy did not give Oubre enough time to consider her options. (2) Entergy did not give Oubre seven days after she signed the release to change her mind. And (3) the release made no specific reference to claims under the ADEA.

Oubre filed a charge of age discrimination with the Equal Employment Opportunity Commission, which dismissed her charge on the merits but issued a right-to-sue letter. She filed this suit against Entergy in the United States District Court for the Eastern District of Louisiana, alleging constructive discharge on the basis of her age in violation of the ADEA and state law. Oubre has not offered or tried to return the $6,258 to Entergy, nor is it clear she has the means to do so. Entergy moved for summary judgment, claiming Oubre had ratified the defective release by failing to return or offer to return the monies she had received. The District Court agreed and entered summary judgment for Entergy. The Court of Appeals affirmed, 112 F.3d 787 (C.A.5 1996) (per curiam), and we granted certiorari, 520 U.S. ----, 117 S.Ct. 1466, 137 L.Ed.2d 680 (1997).

II

The employer rests its case upon general principles of state contract jurisprudence. As the employer recites the rule, contracts tainted by mistake, duress, or even fraud are voidable at the option of the innocent party. See 1 Restatement (Second) of Contracts §7, and Comment b (1979); e.g., Ellerin v. Fairfax Sav. Assn., 78 Md.App. 92, 108-109, 552 A.2d 918, 926-927 (Md.Spec.App.), cert. denied, 316 Md. 210, 557 A.2d 1336 (1989). The employer maintains, however, that before the innocent party can elect avoidance, she must first tender back any benefits received under the contract. See, e.g., Dreiling v. Home State Life Ins. Co., 213 Kan. 137, 147-148, 515 P.2d 757, 766-767 (1973). If she fails to do so within a reasonable time after learning of her rights, the employer contends, she ratifies the contract and so makes it binding. Restatement (Second) of Contracts, supra, §7, Comments d, e; see, e.g., Jobe v. Texas Util. Elec. Co., No. 05-94-01368-CV, 1995 WL 479645, *3 (Tex.App.-Dallas, Aug.14, 1995) (unpublished). The employer also invokes the doctrine of equitable estoppel. As a rule, equitable estoppel bars a party from shirking the burdens of a voidable transaction for as long as she retains the benefits received under it. See, e.g., Buffum v. Peter Barceloux Co., 289 U.S. 227, 234, 53 S.Ct. 539, 542, 77 L.Ed. 1140 (1933) (citing state case law from Indiana and New York). Applying these principles, the employer claims the employee ratified the ineffective release (or faces estoppel) by retaining all the sums paid in consideration of it. The employer, then, relies not upon the execution of the release but upon a later, distinct ratification of its terms.

These general rules may not be as unified as the employer asserts. See generally Annot., 76 A.L.R. 344 (1932) (collecting cases supporting and contradicting these rules); Annot., 134 A.L.R. 6 (1941) (same). And in equity, a person suing to rescind a contract, as a rule, is not required to restore the consideration at the very outset of the litigation. See 3 Restatement (Second) of Contracts, supra, §384, and Comment b; Restatement of Restitution §65, Comment d (1936); D. Dobbs, Law of Remedies §4.8, p. 294 (1973). Even if the employer's statement of the general rule requiring tender back before one files suit were correct, it would be unavailing. The rule cited is based simply on the course of negotiation of the parties and the alleged later ratification. The authorities cited do not consider the question raised by statutory standards for releases and a statutory declaration making non-conforming releases ineffective. It is the latter question we confront here.

In 1990, Congress amended the ADEA by passing the OWBPA. The OWBPA provides: "An 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'' it satisfies certain enumerated requirements, including the three listed above. 29 U.S.C. §626(f)(1).

The statutory command is clear: An employee "may not waive'' an ADEA claim unless the waiver or release satisfies the OWBPA's requirements. The policy of the Older Workers Benefit Protection Act is likewise clear from its title:...