Bormann v. AT & T Communications, Inc., 875 F.

2d 399 (1989)
49 Fair Empl.Prac.Cas. (BNA) 1622, 50 Empl. Prac. Dec. P 39,059, 57 USLW 2713...

Employment Act of 1967, 217, as

amended, 29 U.S.C.A. 621634.
KeyCite Yellow Flag - Negative Treatment
Superseded by Statute as Stated in Neal v. JPMorgan Chase Bank, N.A., 43 Cases that cite this headnote
E.D.N.Y., August 8, 2012
875 F.2d 399
United States Court of Appeals, [2] Release
Second Circuit. Reality of assent in general
In determining whether unsupervised waiver
Robert E. BORMANN, Domenick R. Ferrantino, of rights under Age Discrimination in
Timothy J. Ferriter, Harry M. Gardner, Employment Act is knowing and willful,
Ronald A. Jacobsen, James W. Meyers, totality of the circumstances will be
Helmut Saarts, Cornelius J. Smith, Karl considered, including whether employer
Ortler, Albert J. Taggi, Neville Smith and encourages employee to consult attorney and
Thomas J. McGuire, PlaintiffsAppellants, whether employee had fair opportunity to do
so. Age Discrimination in Employment Act
v.
of 1967, 217, as amended, 29 U.S.C.A.
AT & T COMMUNICATIONS,
621634.
INC., DefendantAppellee.
120 Cases that cite this headnote
No. 1026, Docket 889095.
|
Argued May 1, 1989. [3] Compromise and Settlement
| Employees, actions involving
Decided May 25, 1989. District Court's scrutiny of unsupervised
releases of age discrimination claims was
Age discrimination action was brought. The United States adequate; court found that claimants were
District Court for the Southern District of New York, experienced executives familiar with reading
Charles L. Brieant, Chief Judge, dismissed the claims, and analyzing contracts and that releases were
and plaintiffs appealed. The Court of Appeals, Feinberg, written in clear and unambiguous language
Circuit Judge, held that: (1) unsupervised release of rights and contained reference to right to consult
was permissible; (2) totality of circumstances standard attorney. Age Discrimination in Employment
would be utilized in determining whether releases were Act of 1967, 217, as amended, 29 U.S.C.A.
valid; and (3) district court's scrutiny of circumstances 621634.
surrounding signing of releases was adequate.
75 Cases that cite this headnote
Affirmed.

[4] Release
Mistake, fraud, or duress
West Headnotes (5) District court's finding that unsupervised
releases of age discrimination claims were not
invalid due to employer's misrepresentation
[1] Release
of their effect was not erroneous. Age
Subject-matter
Discrimination in Employment Act of 1967,
Unsupervised release of rights under Age
217, as amended, 29 U.S.C.A. 621634.
Discrimination in Employment Act is
permissible, subject to close evaluation of 3 Cases that cite this headnote
various factors that are indicia of knowing
and willful waiver. Age Discrimination in
[5] Federal Courts
Matters of Substance

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Bormann v. AT & T Communications, Inc., 875 F.2d 399 (1989)
49 Fair Empl.Prac.Cas. (BNA) 1622, 50 Empl. Prac. Dec. P 39,059, 57 USLW 2713...

Failure of age discrimination claimants to termination payment equal to 5% of the manager's base
seek in district court the discovery they said on pay per year multiplied by the number of years of net
appeal was denied them prevented them from credit service up to a maximum of 20 years. Under the
raising that issue for first time on appeal. Age second option, a manager could choose to receive only
Discrimination in Employment Act of 1967, 3%, rather than 5%, of base pay in applying this formula.
217, as amended, 29 U.S.C.A. 621634. Thus, under the first option, an employee with 20 or
more years of service would receive a termination payment
1 Cases that cite this headnote equal to a year's base pay. Under the second option,
such an employee would receive a payment of only 60%
of annual base pay. However, in order to receive the
higher percentage under the first option, AT & T *401
Attorneys and Law Firms required a manager to sign a full Legal release, which
provided that the employee give up all claims ... and
*400 Charles A. Bradley, White Plains, N.Y. (Taylor, causes of action relating to the employee's employment
McCullough, Goldberger & Geoghegan, of counsel), for or termination of employment, including any rights under
plaintiffs-appellants. laws that prohibit discrimination on the basis of age. The
company advised those considering the options that you
Joel L. Finger, New York City (Roberts & Finger, Carter
may wish to consult your attorney. (emphasis in original).
K. Combe, of counsel), for defendant-appellee.
No release was required from those choosing the second,
Before KAUFMAN, FEINBERG and NEWMAN, lower option.
Circuit Judges.
In October 1985, representatives from AT & T's Regional
Opinion Personnel Department in Oakton, Virginia conducted a
series of five meetings in New York City and White
FEINBERG, Circuit Judge:
Plains to discuss the force reduction program and
Plaintiffs, 12 former second-level managers of AT & termination pay options (Oakton meetings). Following
T Communications, Inc. (AT & T), appeal from a these meetings, all appellants chose the first option and
judgment of the United States District Court for the signed the separation agreements and releases in late 1985
Southern District of New York, Charles L. Brieant, Ch. and early 1986. Since each appellant had been at AT &
J., dismissing their claims under the Age Discrimination T for more than 20 years and each received a salary of
in Employment Act, 29 U.S.C. 621634 (ADEA). approximately $50,000, the additional consideration for
The dismissal was based upon appellants' knowing and choosing the first option was approximately $20,000 for
voluntary waiver of their right to sue AT & T for age each appellant. All appellants were discharged in early
discrimination. For reasons given below, we affirm. 1986.

In June 1987, appellants sued AT & T for age

discrimination under the ADEA. In its answer and
Background counterclaim, AT & T pleaded the separation agreements
and releases as an affirmative defense that barred
During a significant reduction in force in 1986, AT & T
appellants' suit.
eliminated appellants' second-level managerial positions
in White Plains and New York City. In preparation
On the basis of this defense, in December 1987, AT &
for the reductions, AT & T developed a Termination
T moved for summary judgment. In an opinion dated
Payment Plan for Surplus Management Employees (The
March 28, 1988, the district court concluded that an
Plan), which provided for separation payments to
unsupervised waiver of rights can be a bar to a private
surplus management employees who were not placed in
action under the ADEA, so long as it is knowingly
other available positions at AT & T by their separation
and voluntarily given. However, the court denied AT
date. The Plan provided departing employees with two
& T summary judgment because there was a dispute
termination payment options. Under the first option, a
over whether responsible AT & T personnel had stated
plan participant could choose to receive a lump sum

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Bormann v. AT & T Communications, Inc., 875 F.2d 399 (1989)
49 Fair Empl.Prac.Cas. (BNA) 1622, 50 Empl. Prac. Dec. P 39,059, 57 USLW 2713...

or implied that the releases were of doubtful legal banc) (same), cert. denied, 479 U.S. 850, 107 S.Ct. 178,
enforceability, thus, in effect, persuading appellants 93 L.Ed.2d 114 (1986). Two district courts from this
to sign the documents on the misrepresentation that circuit have also reached similar conclusions. See EEOC v.
they could not, or would not, be enforced. The district American Express Publishing Corp., 681 F.Supp. 216, 219
court ordered a separate trial on this issue pursuant to (S.D.N.Y.1988) (assuming that unsupervised waivers are
Fed.R.Civ.P. 42(b). permissible); DiMartino v. City of Hartford, 636 F.Supp.
1241, 1248 (D.Conn.1986) (holding that the ADEA does
The trial took place in November 1988, at which time the not bar voluntary and knowing settlement of claims).
court heard 13 witnesses. At the close of the trial, the court The discussion in these cases of the reasons why the FLSA
found that appellants had failed to provide sufficient analogy does not control settlement of ADEA claims, a
evidence of misrepresentations rising to the level which proposition with which we agree, has been ample, and we
would justify reasonable reliance [on the alleged false see no need to add to it.
assurances] in light of the language of the instruments.
Having decided this disputed issue of fact, the district In addition, we find persuasive the Third Circuit's analysis
court concluded that because the releases were signed in Coventry, which focuses on a comparison of the ADEA
knowingly, voluntarily and for valuable consideration, and Title VII, 42 U.S.C. 2000e et seq. 856 F.2d at 522.
appellants had waived their right to sue AT & T for age Under Title VII, an employee may validly waive a claim of
discrimination. This appeal followed. discrimination so long as the waiver is made knowingly
and willfully. Id. (citing Alexander v. GardnerDenver
Co., 415 U.S. 36, 52 & n. 15, 94 S.Ct. 1011, 1021 & n.
15, 39 L.Ed.2d 147 (1974)). Given that Congress intended
Discussion
that claims under both statutes be expeditiously resolved,
Appellants make a number of arguments in this court, but Coventry, 856 F.2d at 522 n. 8, and that Congress gave
the strongest is that the district court erred in concluding the statutes a common scheme for achieving the goal of
that an unsupervised waiver of rights can bar a private voluntary compliance, DiMartino, 636 F.Supp. at 1247,
action under the ADEA, so long as it is knowingly and we find analogizing the ADEA to Title VII appropriate in
voluntarily given. By unsupervised, appellants mean this context.
a release entered into without the prior approval of a
court or the Equal Employment Opportunity Commission Appellants contend that recent actions by Congress
(EEOC), the agency now administering the ADEA. indicate that these courts have misconstrued
congressional intent in holding that an unsupervised
The issue of whether an unsupervised waiver of rights waiver of rights is permissible under the ADEA.
is permissible under the ADEA has been addressed by Appellants refer first to an EEOC final rule that
other courts of appeals. There is a general consensus would have permitted the unsupervised waiver of rights
that the private settlement of claims is not inconsistent under the ADEA and to congressional action cutting
with the ADEA, Coventry v. United States Steel Corp., off appropriations for enforcement of that rule. See
856 F.2d 514, 517 (3rd Cir.1988), even though the ADEA Departments of Commerce, Justice, and State, The
incorporates by reference the enforcement provisions of Judiciary and Related Agencies Appropriation Act,
the Fair Labor Standards Act (FLSA), 29 U.S.C. 216, 1989, Pub.L. No. 100459, 102 Stat. 2186, 2216 (1988);
217, and private waiver of claims under the latter act Continuing Appropriations, Fiscal Year 1988, Pub.L.
has been precluded by such Supreme Court decisions as No. 100202, 101 Stat. 1329, 132931 (1987). Appellants
Brooklyn Sav. Bank v. O'Neil, 324 U.S. 697, 65 S.Ct. 895, also point to two bills recently introduced in the
89 L.Ed. 1296 (1945), and D.A. Shulte, Inc. v. Gangi, House and Senate that would strictly limit the use
328 U.S. 108, 66 S.Ct. 925, 90 L.Ed. 1114 (1946). See of unsupervised waivers. See Age Discrimination in
Lancaster v. Buerkle Buick Honda Co., 809 F.2d 539, 540 Employment Waiver Protection Act, S. 54, 101st Cong.,
(8th Cir.) (no absolute bar to release of claims under 1st Sess., 135 Cong.Rec. S357 (daily ed. January 25,
the ADEA), cert. denied, 482 U.S. 928, 107 S.Ct. 3212, 1989); 135 Cong.Rec. E816 (daily ed. March 15, 1989)
96 L.Ed.2d 699 (1987); Runyan *402 v. National Cash (statement of Rep. Hawkins introducing House version
Register Corp., 787 F.2d 1039, 104143 (6th Cir.) (in of Age Discrimination in Employment Waiver Protection

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Bormann v. AT & T Communications, Inc., 875 F.2d 399 (1989)
49 Fair Empl.Prac.Cas. (BNA) 1622, 50 Empl. Prac. Dec. P 39,059, 57 USLW 2713...

Act). Appellants claim that these appropriations acts and

the introduction of these bills show that the ADEA does 1) the plaintiff's education and
not permit unsupervised waivers except in settlement of a business experience, 2) the amount
previously filed claim or charge. of time the plaintiff had possession
of or access to the agreement
[1] We agree with appellants that this congressional before signing it, 3) the role of
activity indicates that there is now significant support in plaintiff in deciding the terms of
Congress for limiting the use of unsupervised waivers. the agreement, 4) the clarity of the
We sympathize with the dilemma of older workers who, agreement, 5) whether the plaintiff
after many years of employment, are offered enhanced was represented by or consulted
termination benefits for a waiver of legal rights. Yet, with an attorney, and 6) whether
the introduction of these bills and the passage of the consideration given in exchange
recent appropriations legislation are not an authoritative for the waiver exceeds employee
interpretation of what the ADEA meant when the statute benefits to which the employee was
was enacted in 1967. See Pierce v. Underwood, 487 U.S. already entitled by contract or law.
552, 108 S.Ct. 2541, 255051, 101 L.Ed.2d 490 (1988).
The list is obviously not exhaustive, and we would add
If Congress passes the bills that are now before it, the
to it whether an employer encourages or discourages
amendment will, of course, be an authoritative expression
an employee to consult an attorney, see Cirillo v. Arco
of what the 1989 Congress intended, see id., but until
Chem. Co., 862 F.2d 448, 454 (3rd Cir.1988), and whether
it does so, we can find no persuasive reason to disagree
the employee had a fair opportunity to do so. In any
with the statutory interpretation of our sister circuits. See
event, we adopt the Third Circuit's totality of the
Coventry, 856 F.2d at 52122 & n. 8; Runyan, 787 F.2d
circumstances standard, which is consistent with the
at 1043. Therefore, we hold that an unsupervised release
strong congressional purpose underlying the ADEA to
of rights under the ADEA is permissible, subject to a
eradicate discrimination in employment. Coventry, 856
close evaluation of various factors that are indicia of a
F.2d at 52223. In adopting this standard, we stress again
knowing and willful waiver. See Coventry, 856 F.2d
the need to examine carefully any situation in which an
at 518.
older worker bargains away the statutory right to be free
from age discrimination.
[2] Appellants also argue that even if an unsupervised
waiver is permissible under certain circumstances, this
[3] Applying this standard to the case at hand, we find
one should be set aside because disputed issues of
that although the district court did not explicitly use the
fact remain regarding whether appellants were given
totality of the circumstances standard, its scrutiny of
sufficient time to make a considered choice and whether
the circumstances surrounding the signing of the releases
they signed *403 the separation agreements and releases
was adequate. In its March 1988 opinion on AT & T's
knowingly and willfully. In considering this argument,
motion for summary judgment, the district court found
we must first clarify the standard that should be used in
that it was undisputed that appellants were experienced
deciding whether an employee signed a release knowingly,
executives familiar with reading and analyzing contracts;
willfully and free from coercion. The Fifth and Eighth
that the release itself is written in clear and unambiguous
Circuits appear to apply ordinary contract principles in
language, specifically referring to age discrimination
determining whether a waiver has been signed knowingly
claims; and that the release also states above the signature
and willfully. See Lancaster, 809 F.2d at 541; Runyan, 787
line that the signer is aware of the right to consult an
F.2d at 1044 n. 10. The Third Circuit applies a totality
attorney before signing it. The court also held that on
of the circumstances standard, which is apparently more
the undisputed facts before it appellants had sufficient
stringent. Coventry, 856 F.2d at 524. The Third Circuit
time to consider the release; and that there was no
found helpful in determining whether a release is
economic duress, conclusions that we cannot say were
voluntary, id. at 523, the following enumeration of factors
wrong. Accordingly, the district court was prepared to
by Judge Lasker in EEOC v. American Express Publishing
grant AT & T summary judgment on its motion, except
Corp., 681 F.Supp. at 219:
for the factual issue of misrepresentation as to the effect of
the releases. We believe that the district court sufficiently

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Bormann v. AT & T Communications, Inc., 875 F.2d 399 (1989)
49 Fair Empl.Prac.Cas. (BNA) 1622, 50 Empl. Prac. Dec. P 39,059, 57 USLW 2713...

examined the totality of the circumstances surrounding [5] Finally, appellants claim that the district court erred
in granting AT & T summary judgment because the court
the Plan with care and concern for the rights of older
failed to view all disputed issues of fact in the light most
workers. 1 We also agree that the only genuine factual
favorable to appellants and because it failed to afford
issue was whether the company misrepresented the effect
appellants an opportunity for full and complete discovery.
of the releases.
However, the judge applied the appropriate standard on a
motion for summary judgment in deciding whether there
[4] On the trial of this issue, we find no error in the
were disputed issues of material fact, and, indeed, found
district court's credibility determinations, findings of fact
one, as shown above. In addition, the court not only gave
and conclusions of law and in its decision, therefore, to
appellants full discovery on the issue of the enforceability
grant judgment to AT & T and to dismiss *404 the
of the separation agreement and release, which was all that
complaint. In affirming the district court's judgment, we
was required in determining whether appellants' claims
do not suggest that we approve of termination plans like
were barred by appellee's affirmative defense, but also
the one at issue in this case. We agree with the district judge
granted appellants' request in October 1987 to expand the
that this plan was calculated to and did have an impact
scope of that discovery. In any case, appellants' failure
on the rights of some or all of these employees under the
to seek in the trial court the discovery they now say was
ADEA. However, we cannot say that the district judge
denied them prevents them from raising the issue for the
erred in concluding that those rights were bargained away.
first time on appeal.

Appellants also argue that we should invalidate the release

Since the principal issue on this appeal had not been
in this case because it does not involve a bona fide
directly addressed by this circuit previously, appellee's
factual dispute over AT & T's motivation and intent
request for sanctions is denied.
such as existed in Runyan. The argument has no merit.
In their brief, appellants admit that certain employees
The judgment of the district court is affirmed.
were suspicious of AT & T's motives prior to signing the
releases. Appellants' keen interest in the legality of the
releases at the Oakton meetings belies any claim that they All Citations
did not suspect that appellee may have had discriminatory
motives in formulating the Plan. 875 F.2d 399, 49 Fair Empl.Prac.Cas. (BNA) 1622, 50
Empl. Prac. Dec. P 39,059, 57 USLW 2713, 11 Employee
Benefits Cas. 1619

Footnotes
1 Although appellants apparently did not have an opportunity to negotiate the terms of the waiver, which is one of the issues
relevant to whether the release was signed knowingly and willfully, we do not believe that this fact alone requires a trial
on voluntariness. A company's willingness to negotiate the terms of a waiver is, in part, additional evidence for the court
that the employees realized that they were giving up potentially valuable legal rights in exchange for consideration. In
this case, other indicia, like the clarity of the waiver, make unmistakeably clear that appellants were aware that they were
giving up important rights. Our conclusion in this case does not mean that this factor is irrelevant in considering the
voluntariness of a waiver nor that, on other facts, we would not deny a company's motion for summary judgment due to
its alleged unwillingness to negotiate the terms of a waiver.

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