E.E.O.C. v. Sundance Rehabilitation Corp.

• Decision Date: 24 October 2006
• Docket Number: No. 04-4178.,04-4178.
• Citation: 466 F.3d 490
• Parties: EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellee, v. SUNDANCE REHABILITATION CORPORATION, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

466 F.3d 490

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellee, v. SUNDANCE REHABILITATION CORPORATION, Defendant-Appellant.

No. 04-4178.

United States Court of Appeals, Sixth Circuit.

Argued: December 1, 2005.

Decided and Filed: October 24, 2006.

ARGUED:

Dean E. Westman, Kastner, Westman & Wilkins, Akron, Ohio, for Appellant. Daniel Travis Vail, Equal Employment Opportunity Commission, Washington, D.C., for Appellee.

ON BRIEF:

Dean E. Westman, Thomas Evan Green, Kastner, Westman & Wilkins, Akron, Ohio, for Appellant. Daniel Travis Vail, Equal Employment Opportunity Commission, Washington, D.C., for Appellee. Ann E. Reesman, McGuiness, Norris & Williams, Washington, D.C., for Amici Curiae.

Before: BOGGS, Chief Judge; BATCHELDER, Circuit Judge; COHN, District Judge.^*

BOGGS, C. J., delivered the opinion of the court in which, BATCHELDER, J., joined. COHN, D.J. (p. 503), delivered a separate dissenting opinion.

OPINION

BOGGS, Chief Judge.

Defendant SunDance Rehabilitation Corporation ("SunDance") appeals the district court's grant of summary judgment in favor of the Equal Employment Opportunity Commission ("EEOC") on cross-motions for summary judgment. The EEOC sued SunDance under the antiretaliation provisions of the Americans with Disabilities Act ("ADA"), 42 U.S.C. §§ 12117(a) and 12203; Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. § 623(d); Equal Pay Act ("EPA"), 29 U.S.C. § 215(a)(3); and Title VII of the Civil Rights Act of 1964 ("Title VII"), 42 U.S.C. § 2000e-3(a), alleging that the separation agreement that SunDance offered to discharged employees in exchange for severance pay not otherwise owed to the employees violates those statutory antiretaliation provisions. The "Separation Agreement, General Release, and Covenant Not to Sue" ("Separation Agreement") offers severance pay in exchange for, among other things, promises not to sue or file an administrative charge and not to make any statement or take any action that would reflect negatively on SunDance. The Separation Agreement contains a provision whereby SunDance has the right to return of the severance pay, any other damages, and attorneys' fees and costs, in the event of a violation of the agreement's terms by a releasor.

The district court held that the separation agreement constitutes facial retaliation under the antiretaliation statutory provisions to the extent that it conditions severance pay on a promise not to file a charge with the EEOC. We reverse.

I

Elizabeth Salsbury, a speech language pathologist employed by SunDance, was notified by letter from SunDance dated February 26, 1999 that the company was compelled to reduce its workforce and that Salsbury's job would be terminated effective March 1, 1999. The letter informed Salsbury that she would receive 80 hours' worth of severance pay after signing a separation agreement and general release. Neither Salsbury nor any other similarly situated employee was otherwise entitled to any amount of severance pay.

On March 5, 1999, SunDance mailed Salsbury a "Separation Agreement, General Release, and Covenant Not to Sue" ("Separation Agreement"). That Separation Agreement, which lies at the heart of this case, states in relevant part:

1. Severance Pay: Upon the execution of this Release by Elizabeth Salsbury and its delivery to Company, Company will, as full and complete consideration and severance: pay in one lump sum an amount equal to 80 hours of pay at the base rate.... Releasor promises and agrees not to make any statements or take any actions that would reflect negatively upon the Company or its representatives. Failure of the Releasor to comply with this agreement will result in the immediate repayment by Releasor of the total severance amount to Company as outlined in this paragraph. The parties acknowledge and agree that this severance pay exceeds any and all pay to which Releasor may have been entitled from the Company pursuant to law....

3. General Release: In consideration of the payment made to Releasor by Company, Releasor ... does hereby voluntarily and knowingly release and discharge Company ... from any and all claims, actions, causes of actions, liabilities, demands, rights, damages, costs, attorney fees, expenses and controversies of any kind and description whether known or unknown, fixed or contingent, arising before the execution of this Release through the date of this Release. This Release and covenant not to sue also expressly, and without any limitation of the foregoing General Release, includes but is not limited to any claims which Releasor may have or may assert under federal or state law prohibiting employment discrimination and claims growing out of any legal restrictions on the rights of Company to terminate its employees, whether statutory or arising under common law, including without limitation: Title VII of the Civil Rights Act of 1964 ... [and] the Americans with Disabilities Act.... Releasor on behalf of herself and other releasors expressly agrees that she will not institute, commence, prosecute or otherwise pursue any proceeding, action, complaint, claim, charge, or grievance against Company or any other released parties in any administrative, judicial or other forum whatsoever with respect to any acts or events occurring prior to the date hereof in the course of Releasor's dealings with Releasee.

6. Miscellaneous: The terms of this General Release are contractual and not mere recitals. Releasor acknowledges that before deciding to sign this Release, Releasor had time to review and consider whether to enter into this Release and Releasor had full opportunity to consult with an attorney....

7. Return of Severance Pay: Releasor understands and agrees that any violation of the terms of this Agreement may cause irreparable harm and damage to the Company and will seriously interfere with the purpose of this Agreement, which is to accomplish a private, unpublished severance agreement and general release of any and all claims Releasor has or may have against the Company. In the event that the provisions of this Agreement are violated, Releasor agrees that the Company shall have the right to seek and obtain injunctive relief and damages in any court of competent jurisdiction from said violation, including the right to return of the entire amount of the consideration paid by the Company under this Agreement, plus any damages proven, including reasonable attorneys' fees and costs. Releasor further expressly agrees that if any portion of this Agreement and the release incorporated herein is ruled to be unenforceable as the result of a challenge brought by the Releasor to the Agreement's or release's validity, then Releasor shall return to the Company the entire amount of consideration paid hereunder.

8. Confidentiality: Releasor agrees to hold strictly in confidence the terms, amount, and fact of this Release. Releasor will not disclose any such information, orally or in writing, to anyone else, including without limitation, any past, present or future employee of Company.

(Emphasis added.) The Separation Agreement also contains, inter alia, a statement that if any provision is deemed void or unenforceable, the remaining provisions shall be valid and enforceable, and a declaration that the Separation Agreement is governed by the laws of Ohio.

In an affidavit, Salsbury said that she thought she had been denied a promotion and was laid off by SunDance due to her sex, and wanted to file a charge of sex discrimination with the EEOC. Yet she believed she could not sign the Separation Agreement because it purported to prohibit the filing of a charge with an agency and would have allowed SunDance to sue her for return of the severance payment and for attorneys' fees and costs if she signed the Agreement and subsequently filed a charge with the EEOC. Salsbury called SunDance's Human Resources department at its toll-free number and asked the representative if she could strike the provision that prohibited her from filing a charge with the EEOC and from suing SunDance, and then sign the Separation Agreement. The representative told her that she could not and that any alterations would be null and void. Salsbury replied that "it seemed like the Agreement required me to give up all my civil rights"; the representative told her that "most terminated employees simply signed the form Separation Agreement to get their severance payment." Salsbury decided not to sign the Separation Agreement.

On April 20, 1999, Salsbury filed a charge with the EEOC. In that charge she alleged that she had been denied promotion and was laid off on the basis of her sex in violation of Title VII. She also stated that she had been "asked to sign a separation agreement, general release and covenant not to sue agreement in order to get a lump sum payment of 80 hours. I did not sign this release because I believe it violates the Laws administered by the EEOC."

The EEOC issued a determination dated September 30, 1999, finding no reasonable cause to believe that Salsbury was discriminated against on the basis of sex with respect to the failure to promote or lay-off issues, and informing Salsbury of her right to sue on the sex discrimination allegations. The determination added, however, that the Separation Agreement failed to meet the criteria "as set forth ... in 29 U.S.C. § 626(f)(1)(A)-(G)" of the ADEA, as amended by the Older Workers' Benefit Protection Act ("OWBPA"), for a knowing and voluntary waiver of a right or claim under the ADEA; it stated that the Separation Agreement violated 29 U.S.C. § 626(f)(1)(C), which requires that an individual "not waive rights or claims that may arise after the date the waiver is executed." "Moreover," the determination continued, the waiver provision in the Separation Agreement "may produce a chilling effect, thereby undermining the Commission's ability to enforce the ADEA, Title VII, the EPA and the ADA." The Separation...