United States Court of Appeals

Fifth Circuit



## FILED

May 27, 2003

Charles R. Fulbruge III

Clerk 

### REVISED JUNE 2, 2003



## In the 

# United States Court of Appeals

for the Fifth Circuit

_______________



### m 02-50446

_______________



### C AROL 

### F ARIS



### ,

Plaintiff-Appellee,

VERSUS



### W ILLIAMS 

### WPC-I, I NC



### ., ET AL



### .,

Defendants,



### N EXTIRA 

### LLC,

A LSO K NOWN AS W ILLIAMS C OMMUNICATIONS S OLUTIONS LLC;



### S USAN 

### B AIRD



### ,

I N H ER I NDIVIDUAL C APACITY

,



### Defendants-Appellants.

_________________________

Appeal from the United States District Court

for the Western District of Texas

_________________________2

Before G ARWOOD

, S MITH , and B ARKSDALE

, Circuit Judges.

J ERRY E. S MITH , Circuit Judge:

Nextir a LLC (“Nextira”) and Susan Baird

appeal a determination that a post-termination

rele ase signed by Carol Faris was unenforceable under 29 C.F.R . § 825.220(d), a regul ation issued pursuant to the Family and Medical

Leave Act of 1993 (“FMLA”). Co ncluding

that enf o rcement of the release is not prohibited by the regulation, and that the release was

ratified by Faris’s failure to ten der back the

consideration paid for the signin g of the release, we rever se and render judgment for

appellants.

I.

Faris worked as an o ccupational health

specialist for Nextira from November 1997 to

June 1999, when Baird, her supervisor, terminated her, citing poor performance. Faris received two weeks’ pay in lieu of notice. On

t he same day, she was offered an additional

$4,063.32, the equivalent of one month’s salary, in exchange for signing a release that purported to waive her rights to, inter alia , “all

othe r claims arising under any other federal,

state or local law or regulation;” it did not

specifically mention the FMLA. She also received a memoran dum advising that she had

45 days to consider the release and seven days

to revoke if she signed, though the parties dispute wh e ther she was so advised verbally. 1

Faris signe d the release and received

$ 4,063.32; she understood that the paymen t was in return for the signing of t he release.

She has not tendered back the payment.

Faris sued Nextira and Baird (collectively,

“Nextira”), asserting she was fired in retaliation for asserting her rights under the FMLA.

Following discovery, defendants moved for

summary judgment as to the enforceability of

the relea se, and Faris moved for partial summary judgment on whether the release was per

se unenforceable under § 825.220 (d) (“the

regulation”).

The cou rt denied defendants’ motion and

granted Faris’s, holding that the plain language

of t he regulation dictated that FMLA claims

are not w a ivable. The district court certified

the questions of law addressed in its summary

judgment ord er under 28 U.S.C. § 1292(b),

and we granted defendants leave to bring this

interlocutory appeal.

II.

Defendants assert th at the di stri ct court

erred in its determination that t he plain language of the regulation renders Faris’s waiver

void, argui ng instead that, under a plain language reading, the regulation does not reach

the waivabilit

y of post-termination FMLA

claims. Defendants contend, in the alternative,

that, if the regulation is ambiguous , the relevant law under similar statutory schemes, and

the common law presumption of and fa vor

toward waivabilit y, also support a limited

reading of th e regulation. 2 We conclude that

1 Faris states that she was pressured into signing

the release

because she was confronted by Baird

and another employee and told, “This is your last

opportunity to sign the release if you expect to get

compensation for it.” 2 Defend ants also argue that, if the regulation

extends to the waiver at issue here, it is invalid

under Chevron U.S.A. Inc. v. N.R.D.C. , 467 U.S.

837 (1984). This argument was not presented to

nor passed on by the district court, and therefore

may not be considered on appeal. S ee Picco v.

(continued...)3

the proper reading of the regulation is that it

does not apply to post-dispute claims for

damages under the FMLA.

We review de novo a grant or denial of

summary judgment, NCNB Tex. Nat’l Bank v.

Johnson

, 11 F.3d 1260, 1264 (5th Cir. 1994),

ap plying the same standard as did the district

court, Deas v. River W., L.P.

, 152 F.3d 471,

47 5 (5th Cir. 1998). “Summary judgment is

prope r when no issue of material fact exists

and the moving party is entitled to judgment as

a matter of law. Questions of fact are viewed

in the light most favorable to the nonmovant

and questio ns o f law are reviewed d e novo .”

Id

.

A.

Defendants argue that the plain language of

the regu lation demonstrates that it does not

reach retaliation cla ims under FMLA by former employees. Defendants focus in part on

the meaning of the term “employee,” reasoning

that the term implicit ly refer s only to c urrent

employees and cannot extend to former employee s. Faris argues that the plain language

does reach former employees, and this was the

district court’s conclusion.

The regulation rea ds, in relevant part:

“Employees cannot waive, nor may employers

induce employees to waive, their rights under

FMLA.” 29 C.F.R. § 825.220(d). FMLA

§ 2611(3) defines “employee” by reference to

the FLSA, 29 U.S.C. § 203(e), which provides

that “the term ‘employee’ means any individual

employed by an employer.” This definition, by itself, is u nhelpful. In

Nationw ide Mut. Ins. Co. v. Darden

, 503 U.S.

318, 323 (1992), the Court stated that thi s

definition, as applied und er ERISA, “is completely circular and explains nothing.” The

term “employee” may have different meanings

in different acts, or even in different provisions

of the same act. S ee Robinson v. Shell Oil

Co.

, 519 U.S. 337, 341-44 (1997) (considering the meaning of employee in the title VII

c ontext). In R obinson

, the Court noted tha t

although some sections of title VII unambiguously refer to only current or past employees,

those examples at most demonstrate that

the term “emplo yees” may have a plain

mea ning in the context of a particular

section 

### SS not that the term has the same

meaning in all othe r sections and in all

other contexts. Once it is established

that the term “employees” includes former employees in some sections, but not

in others, the term s t anding alone is

necessarily ambiguous and each section

must be analyzed to determine whether

the context gives the term a further

meaning that would resolve the issue in

dispute.

Id. at 343-44 (citations omitted). Similarly,

the term “employee” is ambi guous as used in

the FM LA, because in various contexts it refers to only current employees, but in other

situations it refers to former employees. 3 We

2 (...continued)

Global Marine Drilling C o. , 900 F.2d 846, 849

(5th Cir. 1990). 3 Other circuits also have determined that “employee” is ambiguous in the FMLA context. S e e

Smith v. BellSouth Telecomms., Inc.

, 273 F.3d

1303, 1307-13 (11th Cir. 2001) (finding “employee” ambiguous and deferrin g to Department of

Labor’s interpretation that t h e term includes prospective employees for purposes of discrimination

(continued...)4

must look at the co nt ext in which the term is

used to see whether the waiver prohibition applies to retaliation claims.

The term “employee,” throughout § 825.-

220, appears consistently to refer to curr ent

employees. Several uses unambiguously refer

to current employees only. Section 825.220-

(b)(1) prohibits “transferring employees from

one worksite to another for the purpose of reducing worksites, or to keep worksites, below

the 50 -employee threshold for employee eligibilit y under the Act [.]” Because one can

transfer only a cur rent employee, this use is

unambiguous. Similarly, § 825.220(c) prohibits employers “from discriminating against employees or prospective employees who have

used FMLA leave.” By distinguishing between “employees” and “prospective employees,” th e regulation implies that “employee”

describes only those t hat are currently employed.

Looking back to § 825.220(d), we see that

the examples immediately following the statement of nonwaivability both concern current

employees. The examples are as follows:

For example, employees (or their collect ive bargaining representatives) cannot

“trade off” the right to take FMLA leave

against some other benefit offered by the

emplo y er. This does not prevent an

em ployee’s voluntary and uncoerced

acceptance (not as a condition of employment) of a “light duty” assignment

while recovering fr o m a serious health

condition (see § 825.702(d)). In such a

circumstance the employee’s right to restorati on to the same or an equivalent

position is available until 12 weeks have

passe d within the 12-month period,

including all FMLA leave taken and the

period of “light duty.”

In the context of this regulation, there are

strong indications that “employee” refers only

to current employees. It certainly cannot be

said that the usage unambiguously encompasses former employees.

B.

Defendants argue that the regulation extends only to “ subst antive rights” under the

FM LA, rather than to post-dispute causes of

action for retaliation. The proper focus is on

the meani ng o f the phrase “rights under

FLMA,” which in context limit s the regulation

to p r ospective waivers of rights under the

statute.

Several factors support the interpretation

that this regulati o n applies only to waiver of

substant ive rights under the statute, such as

rights to leave, reinstatement, etc., rather than

to a cause of action for retaliation for the exercise of those rights. The statute and regulation consistently use the term “rights under the

law” or “ri ght s under FMLA” to refer to the

statutory rights to leave, certain conditions of

that leave, and restorat ion, as set forth in 29

U.S.C. §§ 2612-14. Conversely, although

§ 825.220 explicates the requirements of 29

U.S.C. § 2615(a), 4 the regulation never refers

3 (...continued)

claims); Duckworth v. Pratt & Whitney, Inc. , 152

F.3d 1, 9-11 (1st Cir. 1998) (same). 4 29 U.S.C. § 2615(a) state s: “It shall be unlawful for any employer to interfere with, restrain,

or deny the exercise of or the attempt to exerci se,

any right provided under this chapter.”5

to the cause of a ct io n for damages as a right

under FMLA. 5

Indeed, the regulation begins with the title

“Ho w are employees protected who request

leave or otherwise assert FMLA rights?” It

then goes on to describe how FMLA rights are

protected, discussing the pro hibition of disc r imination as a method of protecting those

rights. The cause of action for discrimination,

however, is never described as an FMLA right

itself, within the regulation or elsewhere. Subsection (d) must be read in conjunc tion wi th

the heading describing protecti ons for employees who “request leave or otherwise assert

FMLA rights,” because it is responsive to that

heading, limit

ing waiver of rights considered in

the heading.

The examples of nonwaivability, quoted

above, concern prohibitions on the prospective

waiver of rights under FMLA. In the examples, the rights to leave and restorati on are the

“rights under FMLA.” The cause of action for

retaliation is unaddressed by these examples,

but rather is a protection for FMLA rights, the

waiver of which is not prohibited by the regulation. This is consistent with t he rest of the

language of the regulation. A plain reading of

the regulation is that it prohibits prospective

waiver of rights, not the post-dispute settlement of claims.

C.

Our rea ding of the regulation is bolstered

by public policy favoring th e enforcement of waivers and our knowledge that similar waivers are allowed in other regulatory contexts.

Waivers of

t he right to bring suit under the

Age Discrimination in Employment Act

(“ADEA”) are enforced by this court and are

not void as against public policy. “[A]lthough

an employee cannot waive th e right to file a

charge with the [Equal Employment Opportunity Commission (“EEOC”) ]

, the employee

can waive not only t he right to recover in his

o r her own lawsuit but also the right to re

cover in a suit brought by the EEOC on the

employee’s behalf.” E

EOC v. Cosmair, Inc.,

L'Oreal Hair Care Div.

, 821 F.2d 1085, 1091

(5th Cir. 1987). Therefore, although a defendant cannot waive his substantive rights under

t he st atute, he can waive his right to money

damages.

Releases of title VII claims a r e also enforced. In R ogers v. Gen. Elec. Co.

, 781 F.2d

452 (5th Cir. 1986), we noted that

[a] general

release of Title VII claims

does not ordinarily violate public policy.

To the contrary, public policy favors

voluntary settlement of employment

discrimination claims brought under

Title VII. While a release of Title VII

claims will not ordinari l y violate public

policy, an employee may validly release

only those Title VII claims arising from

discriminatory acts or practices wh ich

antedate the execu t io n of the release.

Thus, an otherwise valid r elease that

waives prospective Tit l e VII rights is

invalid as violative of public policy.

Id . at 454 (citations omitted). 6

5 We also have distinguished the cause of action

for r etaliation from the r ights under the FMLA.

See, e.g., Chaffin v. John H. Carter Co.

, 179 F.3d

316, 319 (5th Cir. 1999) (describing “substantive

rights under the FMLA,” as distinguished from the

cause of action for retaliation). 6 The EEOC has released enforcement guidance

discussing the contours of non-waivable employee

(continued...)6

It is not necessarily dispositi v e that postdispute waiver is allowed under the ADEA and

title VII. We must carefully consider whether

ther e are aspects of title VII, ADEA, and

FMLA that might encourage differing protections and interpre tati ons. 7 We know, however, of no good reason 

### S S nor has Faris suggested one 

### SS

why t he government would

proscribe waiver for FMLA retaliation claims

and yet favor wai ver o f claims for age discrimination under ADEA and for ci vil rights

violatio ns under title VII. Had the Secretary

intended such a departure from the policy emp loyed in analogous areas, one would e xpect

the Secretary would h ave manifested this intent forthrightly. Not only does the regulation

not do so, it employs examples that are entirely con sist ent with title VII and ADEA waiver requirements. 8 The policies employed

in the title VII and ADEA contexts are therefore highly persuasive.

We interpret the regulation to apply only to

waivers of substantive rights under the FMLA,

rather than to claims for money damages, consist ent with public policy and the law under

similar regulatory regimes. In practice, this

may render the regulation ap plicable only to

current employees, as defendants suggest, but

we need not resolve that question. We therefore conclude that the regulation did not render Faris’s waiver of her cl a ims under the

FMLA unenforceable.

III.

Defendant s seek review of the denial of

their motion for summary judg ment , arguing

that the release is enforcea b le because Faris

has not tendered back her payment for the release, precluding her from arguing misrepresentation or duress. In Williams v. Phillips

Petroleum Co.

, 23 F. 3d 930, 935 (5th Cir.

1994), we held that “[o]nce a party establishes

that his opponent signed a releas e that addresses the claims at issue, received adequate

consideration, and breached the re l ease, the

opponent has the burden of demonstrating that

the release was invalid because o f fraud, duress, material mistake, or some other defense.”

But,

[e]ven if a release is tainted by misrepresentation or duress, it i s rat ified if the 6 (...continued)

rights under statutes enforced by the Commission,

which include the ADEA, title VII, the Americans

with Disabilities Act, and the Age Discrimination

in Employment Act. S e e EEOC N OTICE N O

. 915.002 § I (Apr. 10, 19 97). Though the

Commission “recognized that individua l s possess

a no n-waivable right to file charges with the

EEOC,” id

. § III(A), it expressed its “support for

post-dispute agree m ents entered into knowingly

and voluntarily to settle claims of discrimination,”

id . § III(C) (emphasis added).

7 See Pettway v. Am. Cast I ron Pipe Co. , 411

F.2d 998, 1005-06 (5th Cir. 1969) (employing the

FLSA and the NLRA in interpreting title VII, but

noting that reliance on other statutes “must necessarily be guarded becaus e the differences between those Acts and title VII may well outnumber

the similarities”); see also Smith

, 273 F.3d at 1310

(“While cases decided under other employment

statutes p r ohibiting discrimination and retaliation

may be instructive, we must be attentive to the way

the statutes differ in their language, their purposes,

and their scope of protection.”) (citing Pettway ). 8 Although no court has explicitly considered

the argument presented by Faris, two circuits have

allowed waiver of F M LA retaliation claims. S ee

Halvorson v. BSA

, 2000 U.S. App. LEXIS 9648,

at *6 (6th Cir. 2000); Schoenwald v. ARCO Alaska, Inc.

, 1999 U.S. App. LEXIS 20955, at *5 (9th

Cir. 1999).7

releasor retains the consid eration after

learning that the release is vo idable. A

person who signs a release, then sues his

or her em

ployer for matters covered

under the release, is obligated to return

the considerat io n. Offering to tender

back the consideration after obtain i ng

relief in the lawsuit would be insufficient

to avoid a finding of ratification.

Id . at 937.

Although Faris does allege duress, it is undisputed that she received $4,063.32 for signing the release and has not tende red back the

consideration. The release is ratified. We

therefore REVERSE and RENDER judgment

for defendants.