Opinion
No. 1:99-CV-296.
November 16, 1999.
OPINION AND ORDER ON MOTION FOR SUMMARY JUDGMENT
On April 21, 1999, plaintiff Patrick J. Fortuna filed an eight-count complaint in this action against his former employer, United Parcel Service ("UPS"). Fortuna, who alleges that he is a male of Hispanic-American descent, has asserted claims against UPS which include gender, race, and/or national origin discrimination in violation of Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq.
Although the complaint also named as a defendant Brenda Bizzell, plaintiff's former supervisor, the parties have since stipulated that the court lacks personal jurisdiction over Ms. Bizzell. Pursuant to this stipulation, the court dismissed Bizzell from this action on June 16, 1999.
The matter is currently before the court on a motion by UPS for summary judgment. Fortuna has opposed the motion. For the reasons to follow, the court grants the motion.
FACTS
On September 10, 1987, Fortuna was hired by UPS as a delivery driver.
Approximately three years later, in June, 1990, Fortuna was promoted to a position as supervisor in UPS's loss prevention department. Fortuna alleges that in this position he was given the opportunity to work in all departments. He also alleges that he was being groomed for a promotion to a Manager position.
In 1994, Fortuna was offered another supervisor position at UPS's customer service center located in San Antonio, Texas. In early November that year, Fortuna flew to San Antonio and was interviewed for the position by Brenda Bizzell, the operational division manager for the customer service center site. Fortuna alleges that during the interview, Bizzell made derogatory comments about Hispanic-Americans.
Notwithstanding Bizzell's alleged comments, Fortuna accepted the position and re-located to San Antonio in November, 1994. Fortuna alleges that throughout the course of his employment at UPS's San Antonio facility, he was subjected to discrimination by Bizzell and others, not only because he is Hispanic-American, but also because he is male. Fortuna contends that as a result of this treatment, he came to believe that Bizzell wanted to fire him. Rather than be fired, Fortuna alleges, he attempted to arrange a transfer to another district within the company. Fortuna also alleges that he complained to UPS management about his disparate treatment.
Fortuna's alleged voicing of concerns about disparate treatment, as well as his efforts to arrange a transfer, apparently met with Bizzell's disfavor. According to Fortuna, Bizzell accused him of being insubordinate, and in September, 1997 informed him that he would not be receiving his annual raise or stock benefits. Fortuna alleges that Bizzell gave no reason for denying him these benefits, instead directing him to speak to Dennette Jerrell, UPS's human resources manager.
During a meeting with Fortuna, Jerrell presented him with a separation agreement and an option to resign in lieu of termination. When Fortuna asked why he was being "forced" to resign, Jerrell allegedly told him that he was guilty of "misrepresentation of falsified information," but failed to elaborate further. Fortuna refused to sign the separation agreement. On September 19, 1997, Jerrell telephoned Fortuna and "directed" him to fly to Atlanta, Georgia to meet with her on September 22, 1997. Fortuna did so, and on September 22, 1997, after arriving in Atlanta, Fortuna attended a meeting with UPS representatives in the "Crown Room" at Atlanta's International Airport. During the meeting, which Fortuna alleges lasted several hours, the company's representatives again accused him of misconduct and indicated that if he did not voluntarily resign and execute a separation agreement, he would be fired from his employment. Fortuna alleges that he left the meeting several times in tears, but ultimately signed the agreement "under tremendous emotional duress." The agreement, provides, among other things, that Fortuna hereby unconditionally releases and forever discharges UPS . . . from any and all known, unknown, pending, or suspected claims, demands, liabilities, or causes of action of any kind that [he] may have against [UPS], as of the date of this Agreement. This release includes, but is not limited to:
a. any and all claims of wrongful discharge, breach of contract . . . breach of public policy, negligent or intentional tort, or any other theory of recovery;
b. any and all claims of discrimination under any federal, state or local law prohibiting discrimination on the basis of age, race, color, religion, gender, national origin, handicap or disability, or any other protected characteristic. The laws to which this release applies include but are not limited to the Age Discrimination in Employment Act of 1967 (as amended by the Older Workers Benefit Protection Act of 1990 [OWBPA]), Title VII of the Civil Rights Act of 1964, the Equal Pay Act of 1963, the Americans with Disabilities Act and any state or local human rights law, fair employment practices law, or similar law or regulations; and
c. any and all other rights, actions, causes of action, charges, suits, demands and claims in law or equity, enforceable constitutionally, statutorily, or under the common law of the United States or of any state or territory of the United States or any subdivision thereof.
Motion for Summary Judgment, Exhibit B. The separation agreement further provides, in pertinent part, that if [Fortuna] violates this release by suing UPS, [he] agrees to return to UPS the consideration set forth in paragraph 1, to which [he] was not otherwise entitled. Also, if [Fortuna] sues UPS, [he] agrees to pay all costs and expenses of defending against the suit incurred by UPS, or those associated with UPS, including but not limited to reasonable attorney's fees.
A separate page of the agreement, initialed by Fortuna, also provides as follows:
Information Regarding Your Rights
You have been given the opportunity to accept a package of money in return for signing the Separation Agreement. This Agreement releases UPS from a variety of claims, including claims under the Age Discrimination in Employment Act of 1967 (the "ADEA").
Before you consider signing the Separation Agreement, you should be aware of the following:
1. You should consult with an attorney regarding the contents of the Separation Agreement.
2. You have seven (7) days after signing the Separation Agreement to change your decision. The Separation Agreement will not become effective until the end of this seven (7) day period. If you choose to revoke your acceptance of the Separation Agreement, you must do so in writing.
Fortuna alleges that on September 23, 1997, the day after the meeting, he telephoned Jim Daniels, UPS's human resources division manager, who had attended the September 22 meeting.
According to Fortuna, he asked Daniels "the consequences of retracting the severance agreement[.]" Complaint, ¶ 44.
Daniels informed Fortuna that the consequence would be "that his employment would definitely be terminated outright, with no severance package whatsoever." Id.
Fortuna has not alleged that he revoked his acceptance of the separation agreement. However, at some point he apparently regretted his decision to sign the agreement, for he alleges that he thereafter filed a timely charge of race and/or national origin discrimination, sex discrimination, and retaliation against UPS with the Equal Employment Opportunity Commission. After he received a notice of right to sue, he filed this action against UPS, asserting claims of race/national origin discrimination ("Count I"); sex discrimination ("Count II"); retaliation ("Count III"); defamation ("Count IV"); self-defamation ("Count V"); intentional infliction of emotional distress ("Count VI"); and promissory estoppel ("Count VIII").
Fortuna also asserted a claim, against Bizzell only, for tortious interference with an advantageous business relationship ("Count VII").
UPS contends, and Fortuna has not disputed, that he received a gross payment from UPS of $25,800 in consideration for his execution of the separation agreement.
Notwithstanding his receipt of this sum, he now challenges the validity of the release contained within the agreement. Fortuna has not disputed that he has not tendered the severance payment back to UPS.
ANALYSIS
In its motion, UPS argues that it is entitled to summary judgment in its favor because Fortuna's failure to "tender back" the severance payment constitutes enforceable ratification of the allegedly voidable release. UPS contends that a "tender back" of the payment is a prerequisite to filing any action challenging the validity of the release.
Summary judgment is appropriate where "there is no genuine issue as to any material fact and . . . the moving party is entitled to a judgment as a matter of law."
Fed.R.Civ.P. 56(c). In evaluating a motion for summary judgment, the court must determine "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson v. Liberty Lobby. Inc., 477 U.S. 242, 251-52 (1986). The party moving for summary judgment bears the burden of establishing the non-existence of any genuine issue of material fact and may satisfy this burden by "'showing' — that is, pointing out to the district court — that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Carett, 477 U.S. 317, 325 (1986). While inferences drawn from the underlying facts must be viewed in the light most favorable to the party opposing the motion, "[w]hen the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Only factual disputes which may have an effect on the outcome of a lawsuit under the applicable substantive law are "material." Anderson, 477 U.S. at 248.
The separation agreement specifies that its terms "shall be governed by, and interpreted in accordance with, the laws of the state of Texas." UPS argues that as a matter of Texas common law, and in accordance with the clear terms of the agreement, Fortuna was required as a prerequisite to this suit to tender back the consideration he received for the agreement, and that the failure to tender back constitutes ratification of the agreement and an absolute bar to this litigation. E.g., Blakeney v. Lomas Information Systems, Inc., 65 F.3d 482, 485 (5th Cir. 1995). UPS also argues that even if Michigan law is applied, the common law tender-back doctrine bars all of Fortuna's non-Title VII claims. Stefanac v. Cranbrook Education Committee, 435 Mich. 155, 458 N.W.2d 56, 58 (1990).
In his response to UPS's motion, Fortuna concedes that the applicable common law required him to tender back the consideration he received before filing any state law claims against UPS arising out of his employment with the company. Thus, these state law claims are subject to dismissal. However, Fortuna argues that as a matter of federal law, he was not required to tender back the severance payment before filing suit for alleged violations of Title VII.
In his brief, Fortuna stipulates under Stefanac, he was required to tender back the severance payment before filing any claims based on Michigan law. This statement suggests that Fortuna believes that Michigan rather than Texas law applies to his common law claims. However, because Fortuna has stated that he will "voluntarily dismiss" his non-Federal claims, choice of law concerns do not prevent granting UPS's motion insofar as it seeks a dismissal of Fortuna's state law claims.
Sixth Circuit authority recognizes that "under particular circumstances employers and employees may negotiate a valid release of ADEA and Title VII claims." Adams v. Philip Morris. Inc., 67 F.3d 580, 583 (6th Cir. 1995) (citing Runyan v. National Cash Register Corp., 787 F.2d 1039 (6th Cir.), cert. denied, 479 U.S. 850 (1986)). In determining whether such waivers are valid, the court has applied "ordinary contract principles," while at the same time "remaining alert to ensure that employers to not defeat the policies of the ADEA and Title VII by taking advantage of their superior bargaining position or by overreaching." Adams, 67 F.3d at 583 (citation omitted). In evaluating whether a release has been "knowingly and voluntarily executed," the court examines the following factors:
(1) plaintiff's experience, background, and education; (2) the amount of time the plaintiff had to consider whether to sign the waiver, including whether the employee had an opportunity to consult with a lawyer; (3) the clarity of the waiver; (4) consideration for the waiver; as well as (5) the totality of the circumstances.
Id. (citations omitted).
Fortuna does not contend that the release contained within the separation agreement was unclear, nor does he contend that the release was not supported by consideration. Moreover, in his response Fortuna had indicated that he "generally stipulates to [UPS's] recitation of the facts." Notwithstanding his adoption of the version of the facts provided by UPS in its motion, Fortuna nonetheless argues that his execution of the separation agreement was not knowing and voluntary. He also argues that his failure to tender back the consideration which he received under the agreement does not prevent him from challenging its validity contemporaneous with the filing of this lawsuit asserting violation of Title VII.
In support of his position, Fortuna relies on Oubre v. Entergy Operations, Inc., 522 U.S. 422, 118 S.Ct. 838 (1998). In that case, the plaintiff, like Fortuna, had signed a release of all claims against her employer as part of a termination agreement, in exchange for which she received severance pay in installments. The release, however, did not comply with specific statutory requirements for a release of claims under the ADEA, and after receiving her last installment of severance pay, the plaintiff filed suit against her former employer under the ADEA. The employer argued that the plaintiff had ratified and validated the nonconforming release by keeping the severance pay, and the employer also insisted that the release barred plaintiff's action unless, as a precondition to filing suit, plaintiff tendered back the monies she received. The Supreme Court disagreed, holding that because the release did not comply with the relevant provisions of the statute, it could not bar her ADEA claim. 118 S.Ct. at 840.
OWBPA imposes specific requirements for releases covering ADEA claims. Oubre, 118 S.Ct. at 840 (citing 29 U.S.C. § 626(f)(1)(B), (F), and (G)).
The Court concluding paragraph in Oubre reads as follows:
In further proceedings in this or other cases, courts may need to inquire whether the employer has claims for restitution, recoupment, or setoff against the employee, and these questions may be complex where a release is effective as to some claims but not as to ADEA claims. We need not decide those issues here, however. It suffices to hold that the release cannot bar the ADEA claim because it does not conform to the statute. Nor did the employee's mere retention of monies amount to a ratification equivalent to a valid release of her ADEA claims, since the retention did not comply with the OWBPA any more than the original release did. The statute governs the effect of the release on ADEA claims, and the employer cannot invoke the employee's failure to tender back as a way of excusing its own failure to comply.
Id. at 842.
Fortuna also relies on language contained in Judge Jones' partial concurrence in Raczak v. Ameritech Corp., 103 F.3d 1257 (6th Cir. 1997). In Raczak, another ADEA case, Judge Jones concluded that the plaintiffs were not required to tender back the consideration they received as a precondition to bringing suit against their former employers under the ADEA. 103 F.3d at 1268-69. Because another member of the panel, Judge Guy, concurred in the result reached by Judge Jones on the tender-back issue, Judge Jones' opinion became the opinion of the court on that issue. 103 F.3d at 1258, 1271. The result of the decision was that the plaintiffs in the case were allowed to continue their suit upon remand without tendering back their waiver payments. Id. at 1260. However, writing separately, Judge Guy clarified his views on the issue as follows:
On the tender-back issue, I would only add that there was not a total failure of consideration when the ADEA claim was instituted without plaintiffs tendering back benefits received. The release signed was a general one, releasing the employer from any and all claims, not just ADEA claims. The general release is still valid, and it is only that portion of the release involving ADEA claims that is called into question by this lawsuit. I reserve judgment as to whether a release limited to ADEA claims would require a different result.
Id. at 1271.
UPS argues that Fortuna's reliance on the Court's opinion in Oubre and on the concurrence in Raczak is misplaced because those decisions pertain only to alleged violations of the OWBPA, 29 U.S.C. § 627, and alleged waiver of claims for age discrimination in violation of the ADEA. UPS contends that Fortuna has not and cannot plead violations of the OWBPA or ADEA because he was admittedly under age 40 as of September, 1997, when he executed the separation agreement which terminated his employment. UPS also argues that because the Sixth Circuit "has endorsed the application of common law doctrines to waivers and releases[,]" 103 F.3d at 1268, and the common law doctrine pertaining to waivers and releases holds that failure to tender-back constitutes ratification of an allegedly invalid release, Raczak actually confirms that UPS is entitled to summary judgment based on Fortuna's failure to tender-back.
As the court observed in Oubre, "[t]he OWBPA sets up its own regime for assessing the effect of ADEA waivers, separate and apart from contract law." 118 S.Ct. at 841. Specifically, the OWBPA creates a series of prerequisites for knowing and voluntary waivers and imposes affirmative duties of disclosure and waiting periods. The OWBPA governs the effect under federal law of waivers or releases on ADEA claims and incorporates no exceptions or qualifications. The text of the OWBPA forecloses the employer's defense, notwithstanding how general contract principles would apply to non-ADEA claims.
* * *
Oubre's cause of action arises under the ADEA, and the release can have no effect on her ADEA claim unless it complies with the OWBPA. In this case, both sides concede the release the employee signed did not comply with the requirements of the OWBPA., Since Oubre's release did not comply with the OWBPA's stringent safeguards, it is unenforceable against her insofar as it purports to waive or release her ADEA claim. As a statutory matter, the release cannot bar her ADEA suit, irrespective of the validity of the contract as to other claims.
Id. at 841-42. Thus, while Oubre is not on point, it contains language suggesting that UPS is correct insofar as it argues that this court must apply general contract principles in assessing, under federal law, the effect of waivers or releases on non-ADEA claims, including claims under Title VII. See also Street v. J.C.Bradford Co., 886 F.2d 1472, 1481 (6th Cir. 1989) ("Federal law controls the validity of a release of a federal cause of action"); Shaheen v. B.F. Goodrich Co., 873 F.2d 105, 107 (6th Cir. 1989) ("Properly executed waivers of possible employment-related discrimination claims knowingly and voluntarily made between an employee and his employer will be enforced absent the typical exceptions for fraud, duress, lack of consideration or mutual mistake").
In this case, applying general principles of federal law, the propriety of summary judgment turns on the validity of the release contained within the separation agreement, in which Fortuna waived his right to file a Title VII action against UPS. Thus, UPS, which is asserting the separation agreement as a defense to Fortuna's Title VII claims, must establish the enforceability of the release contained therein. See Hill v. City of Cleveland, 12 F.3d 575, 577-78 (6th Cir. 1993) (defendants required to establish enforceability of release-dismissal agreement asserted as a defense to plaintiff's civil rights claim under 42 U.S.C. § 1983).
Here, Fortuna's only reply to UPS's defense of release is that his signature on the release was "the product of duress." Plaintiff's Response, at 1, ¶ 3. However, even if duress were proved to exist, the release would merely be voidable, and not void. See Street, 886 F.2d at 1482 (release induced by duress is voidable as to federal causes of action).
Moreover, it is well-settled that under such circumstances, "'the person claiming duress must act promptly to repudiate tile contract or release or he will be deemed to have waived his right to do so.'" In re Boston Shipyard Corp., 886 F.2d 451, 455 (11th Cir. 1989) (quoting Di Rose v. PK Management Corp., 691 F.2d 628, 633-34 (2d Cir. 1982), cert. denied, 461 U.S. 915 (1983)). In addition, If the coerced party does not contest within a reasonable time the document allegedly executed under duress, the contract or release may be ratified or affirmed. . . . A party may ratify an agreement entered into under duress in a number of different ways: 'first, by intentionally accepting benefits under the contract; second, by remaining silent or acquiescing in the contract for a period of time after he has the opportunity to avoid it; and third, by recognizing its validity . . . by acting upon it, performing under it, or affirmatively acknowledging it.'"
In re Boston Shipyard, 886 F.2d at 455 (citations omitted). Thus, regardless of any tender-back requirement, a party may ratify a release by accepting payment and failing to seek a remedy or otherwise repudiate the release within a reasonable period of time. See id; see also Deren v. Digital Equipment Corp., 61 F.3d 1, 2-3 (1st Cir. 1995) (holding that plaintiffs' ERISA action was properly dismissed where undisputed facts showed that plaintiffs failed to repudiate releases for three and one-half years); Cumberland Ohio Co. of Texas. Inc. v. First American Nat'l Bank, 936 F.2d 846, 850 (6th Cir. 1991) ("In general, a party seeking to avoid a contract induced by economic duress must act promptly upon removal of the duress to avoid the contract"), cert. denied, 502 U.S. 1034 (1992); Harless v. Research Institute of America, 1 F. Supp.2d 235, 242-43 (S.D.N.Y. 1998) (granting motion to dismiss and/or for summary judgment on plaintiff's ERISA claim, where plaintiff failed to allege that signing release was the product of a threat, and in any event evidence was lacking that plaintiff promptly repudiated release).
In this case, Fortuna alleges, in the complaint, that he telephoned UPS on the day after he signed the release.
Complaint, at p. 7, ¶ 44. However, Fortuna does not allege that he repudiated the release at that time; instead, he merely alleges that he inquired as to "the consequences of retracting [it]." Id. Merely asking the consequences of repudiation, however, is not sufficient to indicate an intent to repudiate. In re Boston Shipyard, 886 F.2d at 455 (contractor could not challenge modification of contract based on duress; contractor's disagreement with modification and inquiry regarding cancellation, with no allegation of duress, was insufficient to avoid ratification). Although Fortuna clearly at some point filed a charge of discrimination with the EEOC, thus committing an act which could evidence an intent to repudiate the release, lie has not presented facts indicating when he filed the charge, nor has he presented any other evidence supporting an inference that he sought to repudiate the release in a timely manner. Under the circumstances, even assuming that Fortuna signed the release under duress, the court concludes that given the absence of facts indicating that Fortuna timely sought to avoid or repudiate the release, UPS is entitled to summary judgment as a matter of law.
CONCLUSION
For the foregoing reasons, the court grants defendant UPS's motion, and enters summary judgment in favor of UPS.