LEGAL DECISION OPENS THE DOORS FOR AGE DISCRIMINATION CLAIMS AGAINST IBM

PRESS RELEASE

May 4, 2005

FOR IMMEDIATE RELEASE

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Jeff Young 207-725-5581 (work)
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LEGAL DECISION OPENS THE DOORS FOR AGE DISCRIMINATION CLAIMS AGAINST IBM

A decision issued by the Eighth Circuit Court of Appeals on Tuesday may have opened the doors for thousands of former IBM employees to sue the company for age discrimination under the federal Age Discrimination in Employment Act (?ADEA?). In Thomforde v. IBM, No. 04-1538, a unanimous 3-judge panel of the federal Court of Appeals ruled that IBM?s standard form waiver of employment claims signed by Dale Thomforde, a former engineer for IBM, was invalid. The Court held that because the waiver language was unclear, it did not comply with the requirements of the Older Workers Benefits Protection Act (OWBPA). Accordingly, the Appeals Court returned the case to a Minnesota federal district court, which had dismissed Thomforde?s suit, to determine the facts regarding his claim of age discrimination.
Although Tuesday?s decision applies only immediately to Thomforde, whom IBM fired in 2001 as part of a reduction in force, the decision may have ramifications for a collective action currently pending against IBM in California. Jeffrey Neil Young, an attorney with the Topsham, Maine law firm of McTeague, Higbee & Case, represents several hundred former IBM employees in a pending class action against the company. According to Young, ?The Eighth Circuit decision ultimately could permit as many as 20,000 former IBM employees let go since 2001 to sue the computer giant for age discrimination.?
Young explained that a federal district court in San Jose, California last May had dismissed a class action for age discrimination on behalf of employees terminated by IBM after Thomforde. That dismissal is currently on appeal to the Ninth Circuit Court of Appeals in San Francisco. However, because the releases which the plaintiffs signed in the California case are virtually identical to the illegal release signed by Thomford, the Ninth Circuit may be required to follow the lead of the Eighth Circuit and reinstate the class action. If so, then thousands of former IBM employees potentially would be eligible to participate in the California-based collective age discrimination action even though they signed the waiver and received up to 26 weeks of severance pay when IBM fired them. The Supreme Court ruled in 1998 that it is not necessary to return severance payments in order to bring an action for age discrimination.
?Today?s decision is particularly important to ex-IBM employees who believe they were discriminated against on the basis of their age when combined with the Supreme Court?s recent decision in Smith v. City of Jackson, and another age discrimination case already decided against IBM.? Young stated that in the Smith case, the Supreme Court ruled that employees could sue their employers for age discrimination under what is known as the ?disparate impact? theory of discrimination. Under the disparate impact theory of discrimination, where older workers are terminated in numbers which are statistically significant and unexpected compared to their percentage in the workforce, employers can be held liable for age discrimination without other evidence of discrimination. Young explained that the collective action in California, unlike the Thomforde suit, is based, in part, upon a disparate impact theory of age discrimination.
Young also mentioned that a decision in 2004 in Cooper v. IBM, a pension case in Illinois, supports his clients? claims of age discrimination. In Cooper, an Illinios federal district court ruled that IBM had violated ERISA, the federal pension law, restructuring its pension plan so as to treat older workers less favorably than younger IBM employees. Although IBM has appealed the decision, according to a report in the Wall Street Journal on September 30, 2004 it already has partially settled the suit for $300 million, and has also agreed to cap further damages to an additional $1.4 billion, depending on the outcome of the appeal.
Congress passed the OWBPA effective on October 16, 1990 to insure that older workers were fully aware of their rights when signing waivers of employment claims in return for limited severance pay. The OWBPA spells out a series of requirements which companies must meet to effectuate a valid waiver of claims. The primary requirement of the OWBPA is that the language of the waiver be ?calculated to be understood by the average individual.?
The Thomforde court found that IBM?s standard form release was too confusing to comply with the OWBPA. In one part of the document, the employee releases all claims related to his or her employment with IBM, including claims for age discrimination. However the document later declares ?this covenant not to sue does not apply to actions based solely under the [ADEA],? the federal age law. The Eighth Circuit concluded it ?can easily see how a participant under the Agreement could construe? the subsequent language ?as an exception to the general release.? Consequently, the Court ruled ?as such, the Agreement is ineffective as a matter of law to waive Thomforde?s rights under the ADEA.?