Summary
concluding waiver claims under federal laws, such as Title VII, ADA, and FMLA claims must be knowing and voluntary under the Torrez factors
Summary of this case from Miles v. Unified Sch. Dist. No. 500Opinion
Case No. 99-4122-SAC.
October 30, 2001.
MEMORANDUM AND ORDER
This employment discrimination case comes before the court on the defendant's motion for summary judgment based on a waiver and release signed by the plaintiff. (Dk. 12). The magistrate judge stayed all discovery except for that related to the validity and effect of this waiver and release upon the plaintiff's claims here and set a deadline for the filing of any dispositive motion on this issue. The matter has been fully briefed by both sides and is ripe for decision.
Summary judgment is appropriate only if the record demonstrates that no genuine issue of material fact exists and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The court is to determine "whether there is the need for a trial — whether, in other words, there are any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). "Only disputes over facts that might affect the outcome of the suit under the governing law will . . . preclude summary judgment." Id. There are no genuine issues for trial if the record taken as a whole would not persuade a rational trier of fact to find for the nonmoving party. Matsushita Elec. Indust. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). The initial burden is with the movant to "point to those portions of the record that demonstrate an absence of a genuine issue of material fact given the relevant substantive law." Thomas v. Wichita Coca-Cola Bottling Co., 968 F.2d 1022, 1024 (10th Cir.), cert. denied, 506 U.S. 1013 (1992). If this burden is met, the nonmovant must "come forward with specific facts showing that there is a genuine issue for trial as to elements essential to" the nonmovant's claim or position. Martin v. Nannie and Newborns, Inc., 3 F.3d 1410, 1414 (10th Cir. 1993) (citations omitted).
STATEMENT OF FACTS
The plaintiff, Mike Poppelreiter, worked as a regional sales administrator for the defendant, Straub International, Inc., a dealer in agricultural equipment, until he was terminated on May 1, 1998. The plaintiff brings this action alleging violations of the Americans with Disabilities Act ("ADA") and the Family Medical Leave Act ("FMLA") in being denied a leave of absence and reasonable accommodations and in being terminated.
Prior to filing this action, the plaintiff initiated charges with the Equal Employment Opportunity Commission ("EEOC") and the Department of Labor ("DOL") for alleged violations of the ADA and the FMLA. During the investigation into and negotiation over these administrative charges, Larry Straub, the defendant's chief executive officer, told representatives with the EEOC and the DOL that he would expect any settlement to "take care of both of these issues." (Dk. 13, Straub Dep. p. 16). Mr. Straub recalls the DOL representative, Susan Lang, had told him her position that a settlement with her agency would not foreclose Mr. Poppelreiter from suing in district court. Id. at 17.
By letter dated November 2, 1999, from Ms. Lang, the plaintiff learned that the defendant was "willing to make restitution . . . in the amount of $3,646.87" which represented lost wages for one and one-half months, overtime and insurance premiums. Ms. Lang further wrote that she had directed the defendant to make payment to him and that once payment was received then the DOL investigation would be closed. The letter also informed: "Acceptance of this check does not negate your right to private suit under the FMLA; the Wage Hour Division does not encourage nor discourage such suits." (Dk. 16, Ex. 2). The plaintiff inquired and received an explanation from Ms. Lang as to how this amount of lost wages and benefits was calculated. In anticipation of receiving this check, Mr. Poppelreiter obtained on November 9, 1998, a thirty-day note from his bank in the amount of $1,500.00.
The plaintiff received a letter dated November 16, 1998, from the defendant's counsel directing him to visit counsel's office in order to receive this check in the amount of $3,646,87. On or about November 18, 1998, Mr. Poppelreiter visited the office of Joel McMullen, attorney for the defendant. Mr. McMullen told the plaintiff that he must sign a written release before he could receive the check. Fearful that he was being asked to sign away rights to other claims, Mr. Poppelreiter refused to sign the release saying that the DOL had not said anything about such a release. According to the plaintiff, Mr. McMullen refused to give him a copy of the release and angrily escorted him out of the law office.
The plaintiff telephoned Ms. Lang with news of what happened at Mr. McMullen's office. Ms. Lang assured Mr. Poppelreiter that she would speak with Mr. McMullen and then get back to him. In communications with Ms. Lang, Mr. McMullen wrote her the following:
Pursuant to your request, I am enclosing, herewith, a copy of the Waiver and Release of Claims document that I proposed Mr. Poppelreiter sign in the above captioned matter. While speaking with you on the phone concerning this matter, you made it clear to me that any document could not specifically mention his FMLA Claim against Straub International.
As you will see, this proposed waiver and release does not specifically mention his FMLA Claim. This document is something my client adamantly insists on obtaining from Mr. Poppelreiter regardless of the fact that it may or may not be effective to prevent him from filing his own civil lawsuit. Indeed, if it is ineffective, I do not understand why it could not be signed if, under your interpretation of the law, it will not bar his filing his own private lawsuit to seek additional damages under the FMLA.
(Dk. 16, Ex. 14).
The plaintiff received from Ms. Lang a letter dated November 23, 1998, that stated in relevant part:
I received a copy of the release form which you were asked to sign in order to receive his backwage check under the Family and Medical Leave Act. This waiver has no verbiage regading (sic) release from liability under the FMLA; the release form which you provided complies with the request I made of the attorney several weeks ago. As the information in my file is protected under the Freedom of Information Act, I cannot provide you with a copy of the waiver; however, I can state that it does not specifically mention any wage payment act, disability act, or specifically the Family and Medical Leave Act of 1993.
(Dk. 16, Ex. 6). The plaintiff also received correspondence from defendant's counsel, Mr. McMullen, that said he had been in contact with the DOL and that the plaintiff needed to sign the settlement agreement before he could receive the check.
On November 30, 1998, at Mr. McMullen's law office, the plaintiff was handed the written release and he handed Ms. Lang's letter to Mr. McMullen. After they both finished reading the furnished documents, Mr. Poppelreiter recalls saying that in light of Ms. Lang's advice "you understand when I sign this [release], that I am not giving up any of my rights to sue for damages and future loss of wages, including my EEOC claim." (Dk. 16, Ex. 1, ¶ 13). The plaintiff remembers Mr. McMullen replying, "yes, you have the right to sue. You have the right to go to court." Id. Mr. McMullen denies giving the plaintiff any legal advice. The plaintiff signed the release and received the check. In pertinent part, the release provides:
For the sole consideration of Three Thousand Six Hundred Forty Six and 87/100 Dollars ($3,646.87) the receipt and sufficiency whereof is hereby acknowledged, the undersigned hereby releases and forever discharges Straub International, its administrators, assigns, shareholders, employees, officers, trustees and any and all other current or future representatives, liable or who might be claimed to be liable, none of whom have admitted any liability to the undersigned but all expressly deny any liability, from any and all claims, demands, damages, actions, causes of action or suits of any kind or nature whatsoever and particularly on account of all damages, known and unknown, both to person and/or from the undersigned's termination of employment on April 30, 1998, by Straub International.
The undersigned hereby declares that the terms of this settlement have been completely read and are fully understood and voluntarily accepted for the purpose of making a full and final compromise, adjustment and settlement of any and all claims, disputed or otherwise, on account of his termination from employment as above mentioned and for the express purpose of precluding forever any further or additional claims arising out of the aforesaid incident.
(Dk. 16, Ex. 8).
ARGUMENTS
The defendant argues that the plaintiff's signature on the release and his receipt and retention of benefits from it bar him from pursuing his present claims under the ADA and the FMLA. The defendant maintains the plaintiff knowingly and voluntarily waived his claims as evidenced by the plain language of the release, the plaintiff's own education and experience, the time given for him to make this decision, and his opportunities for seeking legal advice or negotiating different terms. The defendant characterizes the DOL's advice to the plaintiff, erroneous or not, to be simply a unilateral mistake of law that does not void the release. As for any alleged advice given by Mr. McMullen, the defendant maintains it is uncontroverted that the plaintiff relied solely on the DOL's advice in signing the release. Finally, the defendant contends that the plaintiff ratified the release by retaining its benefits after learning the defendant believed the release was a bar to all future claims.
The plaintiff argues there are genuine issues of material fact concerning whether he knowingly and voluntarily waived his rights under the ADA and the FMLA when he signed the written release. While the language of the release is broad and general, the plaintiff points to no express mention of any federal discrimination statutes. The plaintiff emphasizes that Ms. Lang advised him that acceptance of this settlement would not negate his rights to a private suit and that Mr. McMullin's comments to him were consistent with that advice. The plaintiff denies that the defendant or the defendant's counsel encouraged him to seek legal counsel before signing the release. According to the plaintiff, Mr. McMullin knew that Ms. Lang and the plaintiff believed the release would only setoff any recovery in a private suit and would not otherwise bar it. As far as any ratification, the plaintiff denies that he ever indicated any belief in the alleged claim preclusive effect of the release and further maintains that he tendered back the settlement payment when he filed this federal lawsuit.
GOVERNING LAW
As a general proposition, there is no dispute that the settlement of an EEOC or other agency discrimination charge "may include a clear and unambiguous waiver that will bar a subsequent Title VII claim based on the same events." Bielicki v. City of Chicago, No. 97-C-1471, 1997 WL 260595, at *3 (N.D. Ill. May 8, 1997) (citing Sherman v. Standard Rate Data Service, Inc., 709 F. Supp. 1433 (N.D. Ill. 1989)). Even if the waiver language is unambiguous, any such settlement is subject to the rule that employment discrimination claims under federal law, like Title VII, ADA or FMLA, "may be waived by agreement, but the waiver of such claims must be knowing and voluntary." See Torrez v. Public Service Co. of New Mexico, Inc., 908 F.2d 687, 689 (10th Cir. 1990) (Title VII and 42 U.S.C. § 1981); Rivera-Flores v. Bristol-Myers Squibb Caribbean, 112 F.3d 9, 12 (1st Cir. 1997) (ADA); Kujawski v. U.S. Filter Wastewater Group, Inc., No. 00-1151, 2001 WL 893918, at *4 (Min. Aug. 7, 2001) (FMLA); Riddell v. Medical Inter-Insurance Exchange, 18 F. Supp.2d 468, 471 (N.J. 1998) (applied to FMLA claims those legal principles governing releases in Title VII actions). Courts will enforce such releases that have been knowingly and voluntarily made "absent typical exceptions for fraud, duress, lack of consideration, or mutual mistake." Torrez, 908 F.2d at 689 (citation omitted); see Bennett v. Coors Brewing Co., 189 F.3d 1221, 1229 (10th Cir. 1999).
"The majority of circuits, however, explicitly look beyond the contract language and consider all relevant factors in assessing a plaintiff's knowledge and the voluntariness of the waiver." Torrez v. Public Service Co. of New Mexico, Inc., 908 F.2d 687, 689 (10th Cir. 1990) (citations omitted). An inquiry into the validity of any waiver of discrimination claims does not end with contract's language. Id. at 690.
Most circuits, including the Tenth Circuit, have adopted "a federal `totality of the circumstances' approach in determining whether a plaintiff knowingly and voluntarily executed a release of claims." Pierce v. Atchison, Topeka and Santa Fe Ry. Co., 65 F.3d 562, 570-571 (7th Cir. 1995) (citing in part Torrez v. Public Service Co. of New Mexico, Inc., 908 F.2d 687 (10th Cir. 1990)). This approach is consistent with the principal that "[w]aivers of federal remedial rights, . . ., are not lightly to be inferred." Torrez, 908 F.2d at 689. The totality of circumstances test requires a court to consider the following circumstances and conditions under which the release was signed:
(1) the clarity and specificity of the release language; (2) the plaintiff's education and business experience; (3) the amount of time plaintiff had for deliberation about the release before signing it; (4) whether plaintiff knew or should have known his rights upon execution of the release; (5) whether plaintiff was encouraged to seek or in fact received the benefit of counsel; (6) whether there was an opportunity for negotiation of the terms of the Agreement; and (7) whether the consideration given in exchange for the waiver and accepted by the employee exceeds the benefits to which the employee was already entitled by contract or law.Torrez, 908 F.2d at 689-90. The court will now address each factor in deciding whether as a matter of law the plaintiff has knowingly and waived his rights to sue under the ADA and the FMLA. In doing so, the court remains mindful that "[w]aiver and release are affirmative defenses on which the employer bears the burden." Rivera-Flores, 112 F.3d at 12; see Pierce v. Atchison Topeka and Santa Fe Ry. Co., 110 F.3d 431, 437-38 (7th Cir. 1997) (burden of proof on the employer but burden of production on employee to "come forward with specific evidence sufficient to raise a question as to the validity of the release under the totality approach.")
The Seventh Circuit in Pierce also observed the following with respect to this burden of production versus burden of proof issue: that "[a] bald assertion of misrepresentation . . . is legally insufficient" and that "the participation of an attorney in negotiating the release, will give rise to a presumption that the waiver was knowing and voluntary." 110 F.3d at 438 (quotation omitted).
Clarity and Specificity of the Release Language
The release is short constituting a single page and entitled "WAIVER AND RELEASE OF CLAIMS." The document does not use simple and plain English but rather is laden with legalese. The language does qualify as broad and general and refers unambiguously to the "settlement of any and all claims." The failure to name or list and/or describe the specific claims and rights being waived, however, "diminishes" the clarity and specificity of the release. See Riddell v. Medical Inter-Insurance Exchange, 18 F. Supp.2d at 472 (citations omitted); see, e.g., Rivera-Flores, 112 F.3d at 13. The release makes no mention of the FMLA or ADA. Though the plaintiff was settling only FMLA claims that had been pursued by the DOL, the plaintiff believed and the defendant's counsel knew the plaintiff believed that the settlement would not preclude his FMLA suit unless it was specifically named in the release. Accordingly, this factor does not weigh significantly in favor of either party, but it may favor slightly the plaintiff.Education and Experience of Plaintiff
The defendant points to the plaintiff's college education and business experience as factors showing he was capable of understanding the release. It seems reasonable to infer that the quality and level of the plaintiff's education and experience would be consistent with the ability to understand the general language used in the release. Even so, the education and experience of the plaintiff is not such that he would be capable of weighing the advice given by the DOL and reaching a different conclusion on the legal effect of the release on his private lawsuit. For that matter, the plaintiff's education and experience is not such that he could reasonably be expected to understand the alleged statement of the defendant's attorney, Mr. McMullen, to mean that the plaintiff's release would not prevent him from physically filing a lawsuit but that it could be a complete legal defense. Consequently, this factor does not greatly favor either side.
Amount of Time to Examine and Deliberate the Release
The plaintiff avers that despite his request the defendant's counsel on November 18, 1998, refused to provide him with a copy of the release. The defendant's counsel apparently provided Ms. Lang, the DOL representative, with a copy of the release who, in turn, told the plaintiff that the waiver lacked "verbiage regarding release from liability under the FMLA" and that the waiver form complied with her request to the defendant's attorney. On November 30, 1998, the defendant's counsel permitted the plaintiff to study the release in his office prior to signing it. The court believes this factor favors the defendant only slightly.
Plaintiff's Knowledge of His Rights
"A release is more likely to be knowing and voluntary if the employee understood the rights being waived." Riddell, 18 F. Supp.2d at 473. The plaintiff avers:
Had I believed that I was waiving anything other than the loss of the 1 1/2 months wages, I would not have signed the Waiver. I would not have signed the same but for the assurance by Straub's lawyer that this did not keep me from having the right to sue for other damages under the FMLA and on my EEOC ADA claim.
(Dk. 16, Ex. 1, ¶ 24). Other than arguing that the plaintiff testified first in his deposition that he relied on Ms. Lang and testified only later that he also relied on Mr. McMullen, the defendant does not controvert this statement from the plaintiff's affidavit. The written release did not identify what rights the plaintiff had under those federal statutes, nor did it explain which rights were being waived. The plaintiff's knowledge of his rights and the effect of the waiver is likewise a function of the advice he received from the DOL and the alleged assurance from the defendant's counsel. The court believes this factor weighs in favor of the plaintiff.
Plaintiff's Opportunity to Seek Counsel
The defendant argues in its memorandum that "[t]he plaintiff was encouraged to seek advice." The defendant does not offer any citation of record in support of that argument. Even if the defendant had cited the record, the plaintiff denies that he was encouraged to seek legal counsel. (Dk. 16, Ex. 15, pp. 61-62). The written release does not reflect that the plaintiff was informed to consult an attorney before signing the release. The defendant points to the facts that the plaintiff had retained legal counsel in another matter and that he had copied the same counsel with the initial demand letter sent to the defendant. Neither fact shows the defendant encouraged the plaintiff to seek counsel. Nor do these facts convincingly controvert the plaintiff's testimony that he did not consult with an attorney about this release and was not represented by an attorney in the negotiations resulting in this release. The plaintiff did receive and apparently rely on the advice received from the DOL representative, Ms. Lang. Because it is controverted whether the defendant encouraged the plaintiff to seek legal advice and whether the defendant's attorney assured the plaintiff about the limited effect of the release, the court finds the weight of the factor to be a genuine issue of material fact.
Plaintiff's Opportunity to Negotiate
After the plaintiff initially refused to sign the release, Ms. Lang told him that she would check out this release that the defendant's attorney had drafted. The record shows Ms. Lang communicated to the defendant's attorney her insistence that the release not refer specifically to the plaintiff's rights under the FMLA and ADA. The following letter from the defendant's attorney shows that the parties disagreed over the legal effect of the release and that the defendant's attorney encouraged the plaintiff's representative to have the release executed in order to satisfy his client:
As you will see, this proposed waiver and release does not specifically mention his FMLA Claim. This document is something my client adamantly insists on obtaining from Mr. Poppelreiter regardless of the fact that it may or may not be effective to prevent him from filing his own civil lawsuit. Indeed, if it is ineffective, I do not understand why it could not be signed if, under your interpretation of the law, it will not bar his filing his own private lawsuit to seek additional damages under the FMLA.
(Dk. 16, Ex. 14). In effect, the plaintiff did have the opportunity to negotiate the release, as Ms. Lang conducted the negotiations on his behalf. The defendant, however, "adamantly insist[ed]" on the release but agreed not to mention specifically the FMLA in order that the plaintiff would believe he had not waived his right to a private lawsuit but had only agreed to a setoff from a future recovery. Finally, when the plaintiff directly negotiated with the defendant's attorney on November 30th, the plaintiff recalls the defendant's attorney saying that the release would not foreclose him from filing a private suit. Considering the nature and substance of the negotiations that took place, the court does not believe this factor favors the defendant.
Consideration for Signing Release
The defendant maintains the consideration paid the plaintiff exceeds what he was already entitled by contract or law at the time he signed the release. Because the defendant was disputing liability, the plaintiff necessarily received consideration when he signed the release. This factor favors the defendant.
Totality of the Circumstances
Under the totality of the circumstances, the evidence before the court presents a material question of fact as to whether the plaintiff knowingly and voluntarily waived his right to bring a private lawsuit under the FMLA and the ADA. The plaintiff refused to sign the release when he initially believed the release could preclude him from suing the defendant. After receiving advice from Ms. Lang and assurance from the defendant's attorney, the plaintiff then executed the release apparently believing it would not foreclose his right to sue privately under the ADA and the FMLA. The plaintiff's words and actions simply do not demonstrate that he unequivocally understood the effect of signing the release. The court believes it is for the jury to decide whether the plaintiff knowingly and voluntarily waived his rights.
Unilateral Mistake
The defendant summarily argues the plaintiff cannot rely on the bad advice he received to deny that his waiver was knowing and voluntary. Citing Kansas law, the defendant insists this is nothing more than a unilateral mistake insufficient to void the release. The plaintiff points out that the defendant has not provided any case law applying the unilateral mistake doctrine in the context of a federal employment discrimination suit. More importantly, the plaintiff notes the assurances made by the defendant's attorney that induced him to execute the release.
Without deciding if Kansas law or federal common law should govern this issue, the court finds that genuine issues of material fact exist as to whether the plaintiff made a mistake of fact in understanding the release and whether the defendant knew the plaintiff had made this mistake. See Corcoran v. Supertel Hospitality Management, Inc., 159 F. Supp.2d 1321, 1328-30 (Kan. 2001) ( citing in part Andres v. Claassen, 238 Kan. 732, 740, 714 P.2d 963 (1986) ("It has long been the law that a written instrument may be reformed where there is ignorance or mistake on one side and fraud or inequitable conduct on the other, as where one party to an instrument has made a mistake and the other knows it and fails to inform of the mistake or conceals the truth from him.")). "Thus, unilateral mistake may be the basis for relief when it is accompanied by the fraud of, or is known to, the other party." Andres, 238 Kan. at 740. The letter written by the defendant's attorney evidences his knowledge about the plaintiff's understanding about the limited effect of the release. The plaintiff's testimony about the conversation with defendant's attorney on November 30th is evidence that the defendant's agent not only knew of the alleged mistake but concealed it. The court cannot decide this issue as a matter of law on the record before it.
As the parties have briefed this issue, the choice of law issue does not appear to make a practical difference. See Christianson v. Henderson, No. 97-20826, 2000 WL 33364122 (S.D. Iowa Mar. 10, 2000).
Ratification
Even if the release is voidable, the defendant argues the plaintiff ratified it in keeping the benefits of the agreement. The defendant's brief fails to address several critical issues: (1) that the plaintiff represents he has satisfied the common-law tender back requirement by tendering the return of the consideration in his pleadings; (2) that the plaintiff's conduct in promptly retaining counsel and filing suit shows that he did not ratify the release of his private right to sue on his ADA and FMLA claims; and (3) that these state common-law doctrines of ratification and tender back apply to actions enforcing these federal remedial statutory schemes, see Aikins v. Tosco Refining Co. Inc., No. 98-00755, 1999 WL 179686 (N.D. Cal. Mar. 26, 1999); Riddell v. Medical Inter-Insurance Exchange, 18 F. Supp.2d 468, 475-476 (N.J. 1998); Rangel v. El Paso Natural Gas Co., 996 F. Supp. 1093, 1096-99 (N.M. 1998); but see Fleming v. U.S. Postal Service AMF O'Hare, 27 F.3d 259 (7th Cir. 1994), cert. denied, 513 U.S. 1085 (1995). At this juncture, the court finds the plaintiff to have presented a genuine issue of material fact with respect to the first two issues. Because neither party has discussed the third issue, the court will not decide it at this time.
IT IS THEREFORE ORDERED that the defendant's motion for summary judgment (Dk. 12) is denied.