Suits In The WorkPlace

Two recent decisions here are of particular note for employers seeking to prevent age discrimination claims.

A case out of the Northern District of California limits some of the more creative ways that the plaintiff's bar is trying to contort federal employment discrimination law. In Syverson et al. v. IBM Corp., (No. C-03-04529), IBM released several thousand employees pursuant to a four-year ongoing reduction in force. As is normal in these cases, it offered severance packages to employees selected for termination in exchange for signing releases and covenants not to sue.

Unfortunately, the Ninth Circuit ultimately determined that the releases were not compliant with the Older Workers Benefits Protection Act, and invalidated them. The plaintiffs in this case then sued IBM for violation of the OWBPA, seeking injunctive relief to prevent IBM from reinstating the voided releases, an injunction requiring IBM to inform all of the employees terminated as part of the four-year program that the releases were invalid, and an injunction requiring IBM to not engage in further acts of discrimination. For good measure, the plaintiffs also sought an order from the court that stopped the statute of limitations from running for all employees terminated during the same time on federal employment discrimination claims.

Note that the basis for these claims was not a violation of the Age Discrimination in Employment Act, but rather a portion of that statute, the OWBPA, which, on its face, deals only with the subject of valid waivers of age discrimination claims.

After reviewing cases from a variety of jurisdictions, the court ruled that there was no basis for it to enforce anything under the OWBPA because that portion of the age discrimination statute did not contain any rights-creating language. As the Court noted, there was nothing to suggest that the OWBPA gave any rights other than voiding releases that were not in compliance with it. As a result, the court properly dismissed this portion of the lawsuit, no doubt prompting a sigh of relief from IBM's legal team which did not have to confront the reopening of an even larger can of worms that it already faced.

And a decision out of Minnesota, which is almost as good a place to sue as California, again reinforces the need to properly draft the OWBPA waiver and carefully manage the process once you distribute the releases to the workforce.  In Peterson et al. v. Seagate US LLC, (No. 07-2502), the Court invalidated age discrimination releases, allowing an age discrimination class-action to proceed.  The court also allowed all of the potential class members, even those who had not filed charges of discrimination, to "piggyback" on the timely filed charges of only two individuals. 

In assessing the OWBPA compliance of Seagate, Court noted that the OWBPA provisions require strict, unqualified adherence and that substantial compliance with the OWBPA provisions is not sufficient to secure a release of claims.  The court found that the allegations contained in the complaint-that Seagate failed to properly identify all of the employees subject to the reduction in force decision; that Seagate human resources asked the employees to sign the releases immediately without allowing the opportunity to consult with an attorney (and that human resources personnel stood at the doorway of the facility collecting signed releases as the terminated employees were leaving); that Seagate failed to include the selection criteria and eligibility factors used to select individuals chosen for termination; and that Seagate failed to properly identify the decisional unit affected by the reduction in force-were more than adequate to void the releases. 

Just as an aside, if you're going to hand out release documents that tell people they have 45 days to consider their options and that they should consult with an attorney, as required by the OWBPA, it's generally a bad idea to encourage or even suggest that people should immediately sign the waivers.

We are going to see more and more large-scale age discrimination claims in litigation, if for no other reason than the aging workforce will not "go gently into that good night". As a result, you can expect to see more creative interpretations of the ADEA, which simply reinforces the requirement to get these releases correct the first time.

Again, my apologies for the paucity of posts--I've been away at trial for several weeks and cleaning up after that.

The Supreme Court heard oral arguments recently on an ERISA case that has wide-ranging implications. Larue v. DeWolff Boberg & Associates came before the court on November 26. The case involves a claim by an individual 401(k) pension plan holder against the pension plan administrators for a breach of fiduciary duty. This is a potentially landmark case, because it will be the first real test before the Supreme Court on the rights of an individual employee to seek liability against pension plan administrators directly where the individual's 401(k) investment turns out badly.

Most commentators are predicting a win for the employee. From my viewpoint, while such a win might be correct from a purely legal perspective, holding plan administrators individually liable for investment decisions in employer managed pension plans will probably open a flood gate of litigation both at the class-action and individual level. Without some type of statutory fix by Congress, it could mean that employers will simply get out of the pension business, forcing their employees to take the initiative to save on their own.

From a public policy perspective, this could be a disaster. Much like health insurance, most people have virtually no experience setting up a pension fund other than the one offered through their employer. With Social Security slated to go bankrupt within two generations, cutting the available options for private sector saving should be avoided at all costs.