IBM Claim Release Is 'Not Written in Manner
Calculated to Be Understood,' Court Says

An IBM release of claims was not "written in a manner calculated to be understood" and failed to meet another requirement of the Older Workers Benefits Protection Act, a federal district court in Texas has ruled, declining to dismiss an age discrimination claim (Hartger v. Int'l Bus. Machs. Corp., N.D. Tex., No. 3:04-CV-2124-L, 8/31/05).
After 24 years with International Business Machines Corp., Barbara Hartger was terminated in 2003 in a reduction-in-force. Although she signed a "General Release and Covenant Not to Sue" in exchange for six months' severance pay and benefits, she sued under the Age Discrimination in Employment Act. She claimed that the waiver was not knowing and voluntary because the agreement was "not written in a manner calculated to be understood."
OWBPA "imposes strict, unqualified statutory requirements upon employers who wish to enforce an employee's waiver of ADEA claims obtained by a release," said Judge Sam A. Lindsay of the U.S. District Court for the Northern District of Texas. "An employer must comply with all of the OWBPA requirements in order for an employee to effectively waive any ADEA claim."

Must Meet All Requirements

"Substantial compliance is not adequate," the court said, citing Blakenay v. Lomas Info. Sys. Inc., 65 F.3d 482. 68 FEP Cases 1729 (5th Cir. 1995). "A release either satisfies all OWBPA requirements, meaning a waiver made pursuant thereto may be considered 'knowing and voluntary,' or a release fails to meet the requirements and is voidable."
Under the OWBPA, the court noted, for a release to secure an enforceable ADEA waiver, the release must, at a minimum,
be written in a manner calculated to be understood;
specifically refer to rights or claims arising under the ADEA;
not waive rights or claims arising after the date the waiver is executed;
be supported by consideration;
advise the employee to consult an attorney before signing; and,
give the employee at least 21 days to consider the agreement, or 45 days if the severance package offered in exchange for the waiver is being offered to a group or class of employees, and allow the employee to revoke the agreement for at least seven days after signing it.
In addition, the court noted, if the employee's waiver is made in connection with an exit incentive or other employment termination program, the employer must provide written information on the group of individuals covered by the program, any eligibility factors, and applicable program time limits, and the job titles and ages of employees who were and were not selected for termination. The court cited 29 U.S.C. Sec. 626(f)(1)(A)-(H) (2004).
The last requirement--providing written information on those involved in an exit incentive or employment termination program--was one reason the court found that IBM did not comply and rejected the release. Hartger was released as part of a RIF, but IBM did not show that she received the required information.
As its other reason for rejection, the court agreed with Hartger that IBM had not shown that the agreement was "written in a manner calculated to be understood by Hartger or by the average person eligible to execute the Agreement." She claimed that the release was limited and did not include her ADEA rights.
"This language alone, if proved to be true, shows that Hartger had a different understanding than IBM had regarding the scope of the Agreement," the court found. "Such difference in understanding could establish that the terms of the Agreement were not written in a manner calculated to be understood." Whether Hartger really believed her assertion was "not for the court to decide in determining the present motion," it said.

Employer Must Prove Validity

"The party asserting the validity of an ADEA waiver has the burden of proving the waiver was knowing and voluntary," the court stated.
IBM's motion to dismiss "misapplies the OWBPA burden scheme," the court found, citing Oubre v. Entergy Operations Inc., 522 U.S. 422, 75 FEP Cases 1255 (1998). "Since IBM seeks to enforce the waiver, IBM carries the burden of demonstrating strict compliance."
The court denied IBM's motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, finding that the company could not show that Hartger could "prove no set of facts in support of [her] claim which would entitle [her] to relief." The court noted that the company could still bring a summary judgment motion; "however, the court refuses to perform particularized inquiries into complex facts when deciding a motion to dismiss."
Hal K. Gillespie of Gillespie Rozen Watsky Motley and Jones and Robert F. Falk of Falk and Fish, all in Dallas, represented Hartger.
Brian M. Jorgensen and Stanley Weiner of Jones Day in Dallas represented IBM.