E.E.O.C. v. Cosmair, Inc., L'Oreal Hair Care Div.

• Decision Date: 16 July 1987
• Docket Number: No. 86-1806,86-1806
• Citation: 821 F.2d 1085
• Parties: 44 Fair Empl.Prac.Cas. 569, 43 Empl. Prac. Dec. P 37,261, 56 USLW 2059, 8 Employee Benefits Ca 2185 EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellee, v. COSMAIR, INC., L'OREAL HAIR CARE DIVISION, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1085

821 F.2d 1085

44 Fair Empl.Prac.Cas. 569,

43 Empl. Prac. Dec. P 37,261, 56 USLW 2059,

8 Employee Benefits Ca 2185

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellee, v. COSMAIR, INC., L'OREAL HAIR CARE DIVISION, Defendant-Appellant.

No. 86-1806.

United States Court of Appeals Fifth Circuit.

July 16, 1987.

Thomas W. Budd, Clifton, Budd, Burke & DeMaria, Michele C. Horan, New York City, Jonathan C. Wilson, Haynes & Boone, Dallas, Tex., for defendant-appellant.

John F. Suhre, Washington, D.C., for plaintiff-appellee.

Appeals from the United States District Court for the Northern District of Texas.

Before CLARK, Chief Judge, POLITZ, and HIGGINBOTHAM, Circuit Judges.

CLARK, Chief Judge:

Cosmair, Inc. appeals the issuance of a preliminary injunction requiring it to continue severance pay and medical insurance coverage promised to an employee in exchange for a release of Age Discrimination in Employment Act (ADEA), 29 U.S.C. Secs. 621-634, and other claims. Cosmair stopped performing its part of the bargain when the employee filed a charge of age discrimination with the Equal Employment Opportunity Commission (EEOC). We modify the injunction in part, and, as modified, affirm.

I. Factual Background

Robert Lee Terry was Central Texas Sales Representative for the L'Oreal Hair Care Division of Cosmair. Kevin Bergin, Director of Human Resources for Cosmair, fired Terry on March 18, 1986. When terminated, Terry was 53 years old and had worked for Cosmair 18 years. Bergin offered to continue Terry's salary and medical benefits for 37 weeks following discharge in exchange for Terry's releasing Cosmair

from all actions, causes of action, claims and demands whatsoever including, but not limited to, any claims, such as those under any federal, state or local law dealing with discrimination in employment on the basis of sex, race, national origin, religion, or age, arising from or in connection with his employment with COSMAIR, INC. which he ever had, now has or may have from the day of his commencement of employment with COSMAIR, INC. to the date of this release.

Terry signed the release on March 21, 1986, without consulting his attorney, after Bergin increased the pay and medical benefits offered to 39 weeks. If Terry had not signed the release Cosmair would not have offered him any severance benefits.

On April 7, 1986, Terry filed a charge with the EEOC alleging that Cosmair had discriminated against him on the basis of age in terminating his employment. In addition to allegations that he personally had been harassed and wrongfully terminated, Terry asserted that Cosmair had a policy of discharging older employees or forcing them into early retirement so that it could replace them with younger employees. On its face the charge sought no relief. When Bergin received notice of the charge, he discontinued Terry's severance benefits. Terry then filed a second charge with the EEOC contending that Cosmair had unlawfully retaliated against him for filing a charge by discontinuing his benefits.

After investigating the retaliation charge and unsuccessfully attempting conciliation, the EEOC determined reasonable cause existed to believe that Cosmair had unlawfully retaliated against Terry for filing an age discrimination charge. The Commission then moved for a preliminary injunction barring Cosmair from refusing to pay severance benefits to Terry, from seeking releases from other employees, and from retaliating against other employees who file age discrimination charges or participate in EEOC investigations. The magistrate recommended denying the EEOC's motion. He concluded that in the absence of case authority establishing the illegality of Cosmair's conduct the EEOC had not proven a substantial likelihood of success on the merits. The district court, not accepting the magistrate's recommendation, granted the motion for preliminary injunction. The court held that Cosmair's conduct was retaliation arising out of the employment relationship and thus was unlawful. Cosmair appeals.

II. Requirements for a Preliminary Injunction

To obtain a preliminary injunction, the moving party bears the burden of proving the following:

(1) a substantial likelihood of success on the merits; (2) a substantial threat that the movant will suffer irreparable injury if the injunction is not issued; (3) that threatened injury to the movant outweighs any damage the injunction might cause to the opponent; and (4) that the injunction will not disserve the public interest.

Gearhart Indus., Inc. v. Smith Int'l, Inc., 741 F.2d 707, 710 (5th Cir.1984). Each of these elements is a mixed question of fact and law. Apple Barrel Prod., Inc. v. Beard, 730 F.2d 384, 386 (5th Cir.1984). We review the district court's findings of fact under a clearly erroneous standard and its conclusions of law de novo. Enterprise Int'l, Inc. v. Corporacion Estatal Petrolera Ecuatoriana, 762 F.2d 464, 472 (5th Cir.1985). The ultimate issue, however, is whether the district court abused its discretion in granting the preliminary injunction. Plains Cotton Coop. Ass'n v. Goodpasture Computer Serv., Inc., 807 F.2d 1256, 1259 (5th Cir.1987).

On appeal, Cosmair challenges two of the requirements for a preliminary injunction as not being met. It contends that the EEOC did not demonstrate a substantial likelihood of success on the merits and did not prove irreparable injury. In addition, Cosmair contests the scope of the injunction. The company maintains that the district court erred in issuing a company-wide injunction and in enjoining Cosmair from requiring employees to sign releases to receive severance benefits. We will address these contentions in turn.

III. Likelihood of Success on the Merits

The district court found the EEOC likely to succeed on the merits because Cosmair violated the prohibition on retaliation contained in section 4(d) of the ADEA when it halted severance payments in response to Terry's filing a charge. Section 4(d) makes it "unlawful for an employer to discriminate against any of his employees ... because such individual ... has made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or litigation under this [Act]." 29 U.S.C. Sec. 623(d). This provision is derived from a similar one in title VII of the Civil Rights Act of 1964, 42 U.S.C. Sec. 2000e-3(a); see Oscar Mayer & Co. v. Evans, 441 U.S. 750, 755-56, 99 S.Ct. 2066, 2071, 60 L.Ed.2d 609 (1979), and its purpose is to protect persons who "resort[ ] to the legal procedures that Congress has established in order to right congressionally recognized wrongs," East v. Romine, Inc., 518 F.2d 332, 340 (5th Cir.1975). Cosmair argues that Terry is not entitled to claim the protection of section 4(d) because Terry was no longer an employee and because Cosmair's actions did not constitute retaliation.

A. Employee Status

The ADEA protects from retaliation "employees or applicants for employment." 29 U.S.C. Sec. 623(d). Employee means "an individual employed by any employer." Id. Sec. 630(f). Cosmair contends that because Terry had already been terminated when he signed the release, and so was no longer employed, he was not protected from retaliation. The term "employee," however, is interpreted broadly: it includes a former employee as long as the alleged discrimination is related to or arises out of the employment relationship. Pantchenko v. C.B. Dolge Co., 581 F.2d 1052, 1055 (2d Cir.1978) (per curiam); Rutherford v. American Bank of Commerce, 565 F.2d 1162, 1165-66 (10th Cir.1977); Dunlop v. Carriage Carpet Co., 548 F.2d 139, 147 (6th Cir.1977); Hodgson v. Charles Martin Inspectors of Petroleum, Inc., 459 F.2d 303, 306 (5th Cir.1972). Certainly the discontinuance of severance pay arose out of Terry's employment relationship with Cosmair. Terry's first charge with the EEOC alleged that Cosmair had discriminated against him while he was an employee. The release waived all claims "arising from or in connection with" Terry's employment with Cosmair. The company agreed to continue to pay Terry's salary and medical insurance premiums, and calculated the length of time payments would continue based on the length of Terry's tenure with the company. The district court properly concluded that Terry was a protected employee under the ADEA.

B. Retaliation

Cosmair also argues that it did not violate section 4(d) when it stopped Terry's severance pay because it was merely suspending performance of its duties under the release after Terry breached. The EEOC argues that whether Terry breached the release is irrelevant. According to the Commission, Cosmair could not suspend payments in response to Terry's filing a charge; doing so was retaliation. Cosmair can only rely on the release as a defense to Terry's ADEA cause of action. The district court agreed with the EEOC, holding that a release is at most a defense to an ADEA claim and cannot be used to impede EEOC enforcement of the civil rights laws.

We agree with the district court that Cosmair's suspension of payments was unlawful retaliation, but we do not fully adopt the district court's rationale for reaching that result. Clearly if Cosmair stopped providing Terry benefits to which he was otherwise entitled simply because he filed a charge, the company would be guilty of retaliation. See McDaniel v. Temple Indep. School Dist., 770 F.2d 1340, 1346 (5th Cir.1985) (retaliation requires some "adverse employment action"); cf. Wolf v. J.I. Case Co., 617 F.Supp. 858, 867-68 (E.D.Wisc.1985) (denial of necessary employment information); Grove v. Frostburg Nat'l Bank, 549 F.Supp. 922, 944-45 (D.Md.1982) (change in company vacation policy). Cosmair maintains that the present case is distinguishable because Terry's breach relieved the company of its obligation to perform. We need not decide whether Cosmair could suspend payments if Terry breached the release, because Terry did not breach the release. The release...