McClellan v. Midwest Machining, Inc., 17-1992

Citation900 F.3d 297
Decision Date16 August 2018
Docket NumberNo. 17-1992,17-1992
Parties Jena MCCLELLAN, Plaintiff-Appellant, v. MIDWEST MACHINING, INC., Defendant-Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (6th Circuit)

900 F.3d 297

Jena MCCLELLAN, Plaintiff-Appellant,
v.
MIDWEST MACHINING, INC., Defendant-Appellee.

No. 17-1992

United States Court of Appeals, Sixth Circuit.

Argued: June 13, 2018
Decided and Filed: August 16, 2018
Rehearing En Banc Denied October 12, 2018


ARGUED: William F. Piper, WILLIAM F. PIPER, PLC, Portage, Michigan, for Appellant. Gregory N. Longworth, CLARK HILL PLC, Grand Rapids, Michigan, for Appellee. Philip M. Kovnat, EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Washington, D.C., for Amicus Curiae. ON BRIEF: William F. Piper, WILLIAM F. PIPER, PLC, Portage, Michigan, for Appellant. Gregory N. Longworth, CLARK HILL PLC, Grand Rapids, Michigan, for Appellee. Philip M. Kovnat, EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Washington, D.C., for Amicus Curiae.

Before: COLE, Chief Judge; CLAY and THAPAR, Circuit Judges.

CLAY, J., delivered the opinion of the court in which COLE, C.J., joined, and THAPAR, J., joined in part. THAPAR, J. (pp. 311–15), delivered a separate opinion concurring in part and dissenting in part.

CLAY, Circuit Judge.

Plaintiff Jena McClellan brought suit against her former employer to enforce her rights under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. , as amended by the Pregnancy Discrimination Act, 42 U.S.C. § 2000e(k), and the Equal Pay Act, 29 U.S.C. § 206(d). The district court granted summary judgment for Defendant on the grounds that Plaintiff’s federal claims were barred by

900 F.3d 300

the common law tender-back doctrine. Because we conclude that the tender-back doctrine does not apply to claims brought under Title VII and the Equal Pay Act, we REVERSE the district court’s judgment and REMAND for further proceedings.

BACKGROUND

Factual Background

In 2008, Defendant Midwest Machining, Inc., a maker of component parts for complex tools and machines, hired Plaintiff Jena McClellan as a telemarketer and quickly promoted her to work in their "inside sales" department. In late August of 2015, Plaintiff announced to her employer that she was pregnant. According to Plaintiff, her supervisor made negative comments for weeks in response to the announcement, including "commenting sardonically and jealously about her perfect life," (R. 1, Compl., PageID # 3), and was annoyed by Plaintiff’s absences for pre-natal appointments. About three months later, Plaintiff was terminated "[d]espite [her] many years of service for the company in its inside sales department and no record of discipline in over six years." (R. 33, Second S. J. Order PageID # 230.)

Plaintiff testified that on the day of termination, Philip Allor, Midwest’s president, called her into his office. There, he presented Plaintiff with an agreement and said that she "needed to sign then if [she] wanted any severance." (R. 17-3, McClellan Aff., PageID # 90.) As the district court explained, although the two reviewed the agreement together, "Allor did not ensure McClellan’s understanding as they went along at a rapid pace." (R. 33, Second S. J. Order, PageID # 231 (citing R. 31-4, McClellan Dep., PageID # 202).) Plaintiff testified that she felt bullied throughout the meeting, that she felt she could not ask any further questions, and that Allor’s tone was "raised" during the entire conversation. (R. 31-4, McClellan Dep., PageID # 203–04.) "[W]hen McClellan challenged a paragraph early on, and stated, ‘I still should have had one week [of vacation] left,’ Allor forcefully replied, ‘[you] do not,’ and moved on." (R. 33, Second S. J. Order, PageID # 231 (citing R. 31-4, McClellan Dep., PageID # 202).) Plaintiff also testified that Allor shut the door and she did not feel free to leave.

"Feeling pressured," Plaintiff signed the agreement, without the benefit of a lawyer. (R. 17-3, McClellan Aff., PageID # 90.) The agreement provided that Plaintiff would waive "any and all past, current and future claims" she had against Midwest. (R. 16-1, Severance Agreement, PageID # 62.) Plaintiff would later affirm that she "did not understand that the ‘claims’ referred to in ... the severance agreement meant discrimination complaints." (R. 17-3, McClellan Aff., PageID # 90.) Instead, she "assumed it referred to any unpaid wages or benefits." (Id. )

Under the terms of the Severance Agreement, Defendant Midwest agreed to pay Plaintiff $4,000, payable in eight weekly installments beginning November 27, 2015. Defendant made each payment and Plaintiff accepted them.

Procedural History

Plaintiff filed a charge of discrimination with the Equal Employment Opportunity Commission, which issued her a right-to-sue letter on August 11, 2016. On November 6, 2016, Plaintiff met with an attorney and explained what had transpired during her employment with Midwest. Given that any Title VII claim was about to expire, Plaintiff’s attorney "immediately drafted a lawsuit." (R. 17-2, Piper Aff., PageID # 83.)

On November 9, 2016, Plaintiff filed a complaint, naming Midwest Machining,

900 F.3d 301

Inc. and Self Lube, Inc. as defendants. The complaint alleges that Midwest "terminated Ms. McClellan because of her pregnancy." (R. 1, Compl., PageID # 4.) It also accuses Midwest of maintaining a sex-segregated workforce insofar as "all 20 or so people who worked in inside sales ... were women," and "all three people who worked in outside sales were men." (Id. at PageID # 2.) The complaint further avers that Midwest "paid male outside sales persons substantially higher commissions and paid them substantially more overall than female inside sales persons, even though the positions required substantially similar duties, requirements, equal skill, effort and responsibility, under the same or similar working conditions." (Id. at PageID # 3.) The suit brought claims for "pregnancy discrimination" under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. , as amended by the Pregnancy Discrimination Act, 42 U.S.C. § 2000e(k), under 42 U.S.C. § 1981a, and under the Michigan Elliot-Larsen Civil Rights Act, MCL 37.2101 et seq. (Count I); and for equal pay violations under the Equal Pay Act ("EPA"), 29 U.S.C. § 206(d)et seq. , under the Michigan Minimum Wage Law of 1964, MCL 408.381 et seq. (repealed 2014), and under the Elliot-Larsen Act (Count II).

After receiving Plaintiff’s complaint, Midwest’s counsel informed Plaintiff’s counsel of the severance agreement. On or around December 1, 2016, about three weeks after Plaintiff filed suit and before any responsive pleading was due, Plaintiff sent a letter to Midwest, at the direction of her attorney, saying that she was "rescinding the severance agreement ... because [she] want[ed] to litigate matters relating to [her] former employment and termination." (R. 17-2, McClellan Letter, PageID # 85; R. 17-2, Piper Aff., PageID # 83.) Enclosed with the letter was a check for $4,000. Midwest responded by returning the check to Plaintiff a week later, asserting that "[t]here is no legal basis for rescinding the severance agreement." (R. 17-2, Midwest Resp., PageID # 87.)

On February 24, 2016, Defendants filed a motion for summary judgment, arguing that the severance agreement barred Plaintiff’s claims. They further argued that Plaintiff’s claims were also barred because she did not "tender back" the monetary consideration she received under the severance agreement before commencing her lawsuit. On April 18, 2017, the district court granted in part and denied in part Defendants’ motion for summary judgment. The court dismissed Defendant Self Lube, Inc., holding that there was no such legal entity known as Self Lube, which instead is a valid assumed name for Midwest Machining, Inc. The court then denied summary judgment for Defendant Midwest without prejudice and held that "at this stage and on this factual record, the Court cannot conclude the release was valid under federal law." (R. 19, First S. J. Order, PageID # 101.) The court permitted the parties to conduct discovery limited to the issue of whether Plaintiff "knowingly and voluntarily executed the agreement." (Id. at PageID # 102–04.) The court also ordered further briefing as to whether federal law required a plaintiff to tender back any consideration received under a severance agreement before commencing suit under Title VII and the EPA.

On May 30, 2017, Defendant Midwest Machining, Inc. filed a renewed motion for summary judgment. And on August 3, 2017, the court granted it. The court held that genuine disputes of material fact precluded summary judgment on the issue of whether Plaintiff "knowingly" and "voluntarily" executed the severance agreement. Indeed, the court found that on the morning

900 F.3d 302

Plaintiff signed the agreement, "she was ‘blindsided’ by an unexpected meeting" to terminate her employment; "she felt ‘bullied,’ did not feel free to leave the room, and did not feel like she could ask any questions." (R. 33, Second S. J. Order, PageID # 232.) Further, Philip Allor had "insisted [Plaintiff] sign the agreement and forcefully said if she wanted any money after her abrupt termination, she would need to sign the agreement; she had no time to consider whether to sign the release, and certainly no time to consult with a lawyer." (Id. ) The court added...

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