Krane v. Capital One Services, Inc., CIV.A. 3:03cv675.

CourtUnited States District Courts. 4th Circuit. United States District Court (Eastern District of Virginia)
Citation314 F.Supp.2d 589
Docket NumberNo. CIV.A. 3:03cv675.,CIV.A. 3:03cv675.
PartiesDonald F. KRANE, Cynthia Gay, Michael H. Jones, Bruce M. Wilson and Eric B. Winfrey, Plaintiffs, v. CAPITAL ONE SERVICES, INC., Defendant.
Decision Date20 April 2004

John B. Donohue, Craig J. Curwood, Thosen & Scher LLP, Richmond, VA, for Plaintiffs.

W. Carter Younger, Carl E. Omohundro, Jr., McGuire Woods LLP, Richmond, VA, for Defendant.


PAYNE, District Judge.

On November 21, 2004, the Plaintiffs, Donald F. Krane, Cynthia Gay, Michael H Jones, Bruce M. Wilson, and Eric B. Winfrey, filed the First Amended Complaint ("FAC"), alleging five counts against the Defendant, Capital One Services, Inc. ("Capital One"). Counts One and Two allege that Capital One's termination of the Plaintiffs' employment constituted disparate treatment and disparate impact discrimination, respectively, under the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. § 621, et seq. Count Three alleges violations of the Older Workers Benefit Protection Act ("OWBPA") amendments to the ADEA, 29 U.S.C. § 626(f), and of the ADEA itself, arising out of Capital One's attempts to obtain waivers of ADEA claims from the Plaintiffs. Count Four asserts that Capital One violated the OWBPA by failing to provide in its waiver forms certain information that was required by law. Finally, Count Five alleges unlawful retaliation, in violation of the ADEA. The Plaintiffs seek a declaration that the Defendant's conduct violated the ADEA and OWBPA, injunctive relief against further similar conduct, restoration of class members to their previous positions or front pay, back pay up to the date of their reinstatement, compensatory damages, and costs. The FAC purports to present a representative, or class, action under 29 U.S.C. § 216(b).

Pursuant to Fed.R.Civ.P. 12(b)(6), Capital One has moved: (1) for dismissal of Counts One, Three, Four, and Five, in their entirety; (2) for dismissal of all claims by Plaintiffs Gay, Jones, and Wilson as barred by the statute of limitations; (3) for dismissal of the claims of Plaintiff Krane because he has not timely opted into this action; and (4) for dismissal, as untimely, of any class claims arising from events that occurred before October 11, 2002. For the reasons set forth below, the motion is granted in part and denied in part.


As is necessary, the facts are stated as asserted in the FAC, affording the Plaintiffs all reasonable inferences.

Capital One is a Delaware corporation, doing business in Virginia. The Plaintiffs are former employees of the Richmond, Virginia office of Capital One who are all over the age of forty now and were forty years old or older at the time their employment with Capital One was terminated. Krane was hired by Capital One around May 1998 to serve as a Tier 8 employee,1 and he was terminated in December 2001, at the age of sixty-two. FAC ¶¶ 8, 32. Gay was employed by Capital One as a Tier 7 employee from about June 1999 until November 26, 2001, when she was forty-seven. Id. ¶ 9. Jones was hired as a Tier 5 employee around August 2000, and he was terminated on December 14, 2001, at the age of forty-one. Id. ¶ 10. Wilson was employed as a Tier 5 employee from July 19, 2000 until his termination on March 29, 2002, when he was forty-three. Id. ¶ 11. Winfrey, a Tier 6 employee, was hired in February 1999 and was terminated on October, 25, 2002, at the age of forty. Id. ¶ 12.

Pursuant to 29 U.S.C. § 626(b), the Plaintiffs purport to represent a class of similarly situated former employees who were terminated from employment by Capital One between October 2001 and the present pursuant to a common policy of age discrimination. The FAC defines the class to include:

all persons age 40 or older who were employed by Capital One and whose demotion, discharge or other forced separation from Capital One during the period from about October 1, 2001 through the present, and continuing, resulted from Capital One's policy requiring that 6% to 10% of Capital One's workforce be "managed out" by categorizing or characterizing their performance as unacceptable.

Id. ¶ 14. In addition, Plaintiffs Gay, Jones, Wilson, and Winfrey purport to bring claims on behalf of a subclass composed of those former Capital One employees who executed waivers of ADEA claims at the time of their terminations. The subclass is defined to include:

all persons age 40 or older who were employed by Capital One, were discharged during the period from about October 1, 2001 through the present and continuing, and were offered "Separation Pay" conditioned upon signing a Letter of Agreement including a release and waiver of age discrimination claims that (1) did not include 45 days to consider the release and waiver; (2) did not include the ages and job titles of all persons terminated by Capital One and retained by Capital One as part of the termination program; and (3) included provisions requiring the return of any separation pay provided and threatened actions for attorney fees if the person filed an action for age discrimination.

Id. ¶ 15.

According to the Plaintiffs, Capital One engaged in a policy of aggressive growth from 1995 through 2001, during which time it hired employees who would be "the best industry candidates for employment." Id. ¶¶ 27-28. In this campaign, Capital One touted its youthful culture2 and its high number of young employees, in an attempt to recruit even more young employees. Id. ¶¶ 36-38. The average age of Capital One employees at the time was twenty-six to twenty-nine years old. Id. ¶¶ 36, 38. The Plaintiffs also state that younger employees were more often selected for advancement within the company than older employees. Id. ¶¶ 48-56 ("On information and belief, Plaintiffs allege that, in the `Talent Forecasting' and other processes used to identify `high potential' employees, age was either considered a negative factor and that these procedures relied on such subjective factors that older employees were negatively and adversely impacted by the selection process and were not generally included on the `high potential' lists."). The evaluation and promotion policies of Capital One were developed by the Benefits Committee, which is composed of "the highest tier employees of the company." Id. ¶¶ 59-62.

Beginning in the middle of 2001, Capital One embarked on a new endeavor to cut costs and increase profits.3 Id. ¶ 65. To those ends, Capital One adopted the so-called "Capital One Workout," or, as it was later called, "Worksmart."4 Id. ¶ 76. According to the Plaintiffs, underlying the streamlining and reorganization process was the idea that "savings to the company resulting from the mass terminations of employees would increase with the percentage of older employees among the terminated." Id. ¶ 81. The Plaintiffs claim that senior management at Capital One set a goal of eliminating six to ten percent of Tier 5-7 employees between the summer of 2001 and the first quarter of 2002. Id. ¶¶ 86, 93. The reorganization mechanism that senior management imposed is explained in the FAC as follows: "[t]he company set out to label 10-12% of the tier 5-7 workforce as `Below' or `Approaching' performance expectations, from which no less than the mandated 6% would be `managed out' and their employment terminated." Id. ¶ 87. Middle managers (most of them under forty years of age) were in charge of evaluating employees under management's policy, but the Plaintiffs claim that Capital One had already developed a list of employees (including a disproportionately high number of older employees) scheduled for termination before evaluations had even begun. Id. ¶ 89. The Plaintiffs also state that senior management expected that six to ten percent of the Tier 4 and 8 employees would be terminated, although specific goals or policies were not established as to them. Id. ¶ 88. New hires and those newly promoted were exempted from the reorganization program. Id. ¶¶ 114-15.

Because employees were to be terminated ostensibly on the basis of performance, Capital One middle managers had to begin evaluating as substandard employees, like the Plaintiffs, who had previously received satisfactory reviews. Id. ¶¶ 91-92. The newly imposed evaluation policy was a very subjective one — unlike the previously objective review strategy that had been used before the reorganization. Id. ¶¶ 97-100. Senior management allegedly told middle managers that age should be a negative factor in evaluating employees. Id. ¶ 103. In addition, the Plaintiffs state that the generally young middle managers injected their own age biases into the already-subjective evaluations process. Id. ¶ 124. While middle managers reviewed employees, the Plaintiffs state that senior managers kept records of and somehow generally approved the evaluations made at lower management levels. Id. ¶¶ 117-18.

The abbreviated time table of the reorganization meant that many employees were terminated before they were given an effective chance to improve shortcomings identified during their performance evaluations. Id. ¶¶ 94-112. Consequently, "termination was inevitable" when an employee was initially evaluated as substandard. Id. ¶ 117. The Plaintiffs' purported class also includes former Capital One employees aged forty or older who resigned in the face of allegations of poor performance and of inevitable termination; the Plaintiffs claim these class members were constructively terminated. Id. ¶ 130. The Plaintiffs allege that their positions at Capital One were assumed by younger employees after their termination. Id. ¶¶ 138-39.

Although Capital One's basic reorganization policy is claimed to have been implemented in the middle of 2001 and continued until the beginning of 2002, the Plaintiffs also aver that "terminations of varying percentages have continued every quarter up to the present, and are continuing forward." Id. ¶ 135. The...

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