Source: http://ca10.washburnlaw.edu/cases/2006/05/04-7118.htm
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04-7118 -- Kruchowski v. Weyerhaeuser Co. -- 05/02/2006
| Keyword | Case | Docket | Date: Filed / Added | (40077 bytes) (36530 bytes)
EQUAL EMPLOYMENT ADVISORY COUNCIL; THE CHAMBER OF COMMERCE OF THE UNITED STATES OF AMERICA; THE WILLIAMS COMPANIES, INC.,
This matter is before the court on appellee's petition for panel rehearing with suggestion for rehearing en banc. At our request, appellants have responded. Also, we have for consideration motions to file amici curiae briefs supporting appellee's petition, which we grant. Upon consideration of the petition, response, and amici briefs, the panel grants rehearing in part, withdraws the prior panel opinion, and issues the attached revised opinion in its place. The revised opinion omits any discussion of the eligibility factors issue. The panel denies the petition for rehearing in all other respects.
The suggestion for rehearing en banc was circulated to all active judges of the court. Because no active judge called for a poll, the suggestion for rehearing en banc is denied.
Plaintiffs filed an action under the Age Discrimination in Employment Act (ADEA), 29 U.S.C. §§ 621-634, against defendant, their former employer. Defendant terminated plaintiffs' employment as part of a reduction in force (RIF). Each plaintiff signed an identical Release of Claims in order to obtain a severance package in exchange for his or her waiver of the right to assert an ADEA claim against defendant. The initial issue before the district court, and now on appeal, is whether the Release can be enforced. Plaintiffs contend that the Release is void as a matter of law because it failed to conform to the statutory requirements for a Release under the ADEA as amended by the Older Workers Benefit Protection Act (OWBPA), 29 U.S.C. § 626(f)(1), (4). The district court granted defendant's motion for summary judgment, finding that the Release of Claims complied with the statutory requirements. Because we conclude that the Release did not comply with a certain requirement of § 626(f)(1)(H), we reverse and remand for further proceedings.(1)
Plaintiffs argue that the Release fails as a matter of law because it did not contain the required group informational disclosures for the "decisional unit" as is required by § 626(f)(1)(H)(i). Section 626(f)(1)(H)(i) provides in part:
The class, unit, or group of individuals considered for termination is determined by examining the "decisional unit." 29 C.F.R. § 1625.22(f)(1)(iii)(C). "A 'decisional unit' is that portion of the employer's organizational structure from which the employer chose the persons who would be offered consideration for the signing of a waiver and those who would not be offered consideration for the signing of a waiver." Id. § 1625.22(f)(3)(i)(B).
Defendant's Group Termination Notice notified plaintiffs that the "decisional unit" was all salaried employees of defendant employed at the Valliant Containerboard Mill. Aplt. App. at 58. Defendant later, in responding to interrogatories, indicated the "decisional unit" actually consisted of those salaried employees reporting to the Mill manager. Id. at 26-27. Fifteen employees at the Mill, who worked in human resources, information technology, and accounting/purchasing, did not report to the Mill manager. Thus, those fifteen employees, over ten percent of the employees at the Mill, were not part of the actual "decisional unit," although the Group Termination Notice indicated that they were included.
Plaintiffs correctly argue that the "decisional unit" of which they were notified and the actual "decisional unit" are two separate groups. Compare 29 C.F.R. § 1625.22(f)(3)(iii)(A), (iv)(A) (example of "decisional unit" being entire facility), with id. § 1625.22(f)(3)(iii)(D), (iv)(D) (example of "decisional unit" being employees reporting to one person). Thus, the information defendant gave to plaintiff was inaccurate. See id. § 1625.22(b)(4) ("The waiver agreement must not have the effect of misleading, misinforming, or failing to inform participants and affected individuals."); id. at § 1625.22(b)(5) (applying § 1625.22(b)(4) to § 626(f)(1)(H)).
In addition, the information defendant gave to plaintiffs emphasized its financial challenges and the fact that the Mill would continue to restructure and combine jobs. Aplee. Supp. App. at 378. According to the regulations, when an employer intends to eliminate excessive overhead, expenses or costs, the facility will be the "decisional unit." See 29 C.F.R. § 1625.22(f)(3)(ii)(C). Under this regulation, the fifteen employees would be included in the "decisional unit," unless defendant had indicated otherwise, which it did not.
Even defendant recognizes that there is a difference between the "decisional unit" it identified to plaintiffs and the intended "decisional unit." See Aplee. Supp. App. at 265 (stating that its interrogatory response was "only a slight clarification or slightly more detailed response" to what it characterized as clear information). Defendant, however, presented no evidence that plaintiffs either knew or should have known that the "decisional unit" was other than that specified in the information provided. The fact that the RIF notice came from the Mill manager is insufficient to prove plaintiffs knew that fifteen employees were not part of the "decisional unit."
Nonetheless, defendant argues that it made proper informational disclosures, because the OWBPA does not define "decisional unit," the regulations require the employer's organizational structure to be considered in formulating and evaluating the organizational unit, and those persons not included in the "decisional unit" were not part of its organizational reporting hierarchy. See 29 C.F.R. § 1625.22(f)(3)(i)(A)-(B). Although we recognize that an employer's organizational structure is important, defendant expressly notified plaintiffs of a "decisional unit" that was not the actual "decisional unit." Defendant had the burden to prove a valid waiver. See 29 U.S.C. § 626(f)(3). By its own admission, it failed to provide clear information to plaintiffs about the "decisional unit." See id. § 626(f)(1)(H) (requiring waiver information to "inform[] the individual in writing in a manner calculated to be understood by the average individual eligible to participate"). Furthermore, defendant had the responsibility to consider its own organizational structure and decision-making process at the time it identified its "decisional unit." See 29 C.F.R. § 1625.22(f)(3)(i)(B). Defendant itself ignored its structure and decision-making hierarchy when it notified plaintiffs of the "decisional unit."
Two of the amici curiae characterize defendant's error in identifying the "decisional unit" as de minimis, because the list of job titles and ages defendant appended to the Group Termination Notice actually represented the "decisional unit." An employer's responsibility to provide information regarding the "decisional unit" and job titles and ages are two separate requirements. See 29 U.S.C. § 626(f)(1)(H)(i) & (ii). Defendant, a large company that should have been familiar with the OWBPA requirements, simply gave plaintiffs the wrong "decisional unit" information. Under the circumstances, we cannot say that that error was de minimis.
The statute requires that terminated employees be informed of the "decisional unit" at the time they consider whether to waive any ADEA claims. "The purpose of th[is] informational requirement[] is to provide an employee with enough information regarding the program to allow the employee to make an informed choice whether or not to sign a waiver agreement." 29 C.F.R. § 1625.22(f)(1)(iv); see Adams v. Moore Bus. Forms, Inc., 224 F.3d 324, 328 (4th Cir. 2000). Defendant failed to provide the correct, mandated information when it informed plaintiffs that the "decisional unit" included all salaried employees of the Mill. Because the information defendant provided did not meet the strict and unqualified requirement of the OWBPA, the Release is ineffective as a matter of law. See Oubre, 522 U.S. at 427-28. Plaintiffs therefore did not waive their right to pursue claims under the ADEA.(2)
URL: http://ca10.washburnlaw.edu/cases/2006/05/04-7118.htm.