Opinion ID: 2601
Heading Depth: 2
Heading Rank: 2

Heading: Releases of Certain Plaintiffs' ERISA Claims

Text: The final issue raised in this appeal is Defendants-Appellants' argument that the District Court erred in ruling that the release forms signed by several Plaintiffs-Appellees did not apply to the ERISA claims asserted in this litigation. [3] The releases at issue provided that the signing employee release[s] Xerox from any and all claims ... based on anything that has occurred prior to the date [he or she] sign[s] this Release in exchange for up to fifty-two weeks of salary continuance. In addition, the form specifies several potential federal claims, including those based in ERISA, that the release covers. As a threshold matter, Plaintiffs-Appellees argue, for the first time in this appeal, that Defendants-Appellants may not rely upon the release forms signed by several Plaintiffs-Appellees because Federal Rule of Civil Procedure 17(a) requires that an action in federal court be prosecuted in the name of the real party in interest. Although Defendants-Appellants are the pension plan at issue in this litigation and its administrators, Plaintiffs-Appellees argue that only Xerox Corporation has a sufficient stake in reversing the trial court's ruling that the Xerox general release form constitutes a waiver of ERISA claims by the releasee. Appellees' Br. at 39. As noted above, the District Court dismissed Xerox early in this litigation, and Plaintiffs-Appellees did not appeal this ruling. See Frommert, 433 F.3d at 256 n. 2. Moreover, Plaintiffs-Appellees did not challenge the authority of Defendants-Appellants to rely upon the releases below and thus have waived this argument for purposes of this appeal. See Rogers v. Samedan Oil Corp., 308 F.3d 477, 482-84 (5th Cir.2002) (affirming district court's ruling that third-party defendant had waived real-party-in-interest defense by failing to assert it until the day before trial); Richardson v. Edwards, 127 F.3d 97, 99 (D.C.Cir.1997) (deeming real-party-in-interest defense waived when not raised until appellate proceedings). Even if Plaintiffs-Appellees had not waived this argument, their real-party-in-interest argument is meritless because the release form itself defines its reference to Xerox to include `the Xerox employee benefit plans' in which the employee had participated or was then participating. See Frommert, 472 F.Supp.2d at 460 n. 2 (quoting release forms). Moreover, Defendants-Appellants are not the parties prosecuting this action; that role belongs to Plaintiffs-Appellees. See 6A Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice & Procedure § 1542 (2d ed. 1990) ([T]he real party in interest principle ... directs attention to whether [the] plaintiff has a significant interest in the particular action he has instituted, and Rule 17(a) is limited to plaintiffs.). Cf. Stichting Ter Behartiging Van de Belangen Van Oudaandeelhouders In Het Kapitaal Van Saybolt Int'l B.V. v. Schreiber, 407 F.3d 34, 49 (2d Cir.2005) (holding that a Rule 17(a) defect may not be cured by the joinder, as nominal defendants, of the real parties in interest to the action where those parties have evinced no intention of prosecuting the action). Thus, Plaintiffs-Appellees' real-party-in-interest argument fails. As to the merits of Defendants-Appellants' arguments regarding the releases, an individual can waive his or her right to participate in a pension plan governed by ERISA only if his or her waiver `is made knowingly and voluntarily.' Finz v. Schlesinger, 957 F.2d 78, 82 (2d Cir.1992) (quoting Laniok v. Advisory Comm. of Brainerd Mfg. Co. Pension Plan, 935 F.2d 1360, 1365 (2d Cir.1991)). We have articulated several factors as relevant to the determination of whether such a waiver is knowing and voluntary: 1) the plaintiff's education and business experience, 2) the amount of time the plaintiff had possession of or access to the agreement before signing it, 3) the role of plaintiff in deciding the terms of the agreement, 4) the clarity of the agreement, 5) whether the plaintiff was represented by or consulted with an attorney, [as well as whether an employer encouraged the employee to consult an attorney and whether the employee had a fair opportunity to do so] and 6) whether the consideration given in exchange for the waiver exceeds employee benefits to which the employee was already entitled by contract or law. ... [T]his list of factors [is] not exhaustive.... Id. (internal citation omitted). A court should consider the totality of the circumstances in determining whether a waiver of ERISA rights is knowing and voluntary. Id. Despite acknowledging the explicit and broad language in the release form, the District Court concluded that the instant ERISA claims were not covered due to perceived deficiencies related to the clarity of the release and the consideration given by Xerox in exchange for the releases. Frommert, 472 F.Supp.2d at 461-62. Specifically, the District Court focused on one paragraph in which the signing employee agrees that the consideration set forth in this Release is in addition to anything of value to which I am entitled by law or Xerox policy. The District Court concluded that this language meant that the employee was not waiving his or her ERISA claim: The import of paragraph 5 is that the salary continuance given to the employee did not take the place of, but was in addition to, any benefits to which the employee was already entitled by law or Xerox policy. This suggests that the employee was not waiving his right to such benefits. If he were, it would make little sense to describe his salary continuance as being in addition to such benefits. ... Furthermore, while it might be argued that there is a distinction between a right to pension benefits in general and a claim seeking to have those benefits calculated according to a particular formula, that is a distinction without a difference here, because the Second Circuit has now held that, at least with respect to employees rehired before 1998, Xerox's reduction of justified expectations of benefits [by using the phantom account] took the form of a retroactive cut-back in violation of ERISA. In other words, those employees were entitled by law not simply to receive some pension benefits, but to have their benefits calculated without any reduction attributable to a phantom account. Id. at 462 (footnote omitted; emphasis in original). In reaching this conclusion, the District Court appears to have conflated the existence of consideration adequate to render a release enforceable with the scope of claims thereby released. [4] The paragraph on which the District Court focused provided only that the consideration for the release, i.e., the salary continuance, did not replace any benefits, including pension benefits, to which the employee was already entitled. However, there is no allegation that Defendants-Appellants violated this term of the contract by denying these Plaintiffs-Appellees any and all pension benefits to which they would have been entitled. To the contrary, counsel for Defendants-Appellants represented to this Court at oral argument that several of these Plaintiffs-Appellees had already received pension benefits, albeit calculated under the phantom account offset method. At bottom, neither the uncertainty of such benefits at the time of release nor the fact that hindsight has revealed that such benefits are now worth more than the signing Plaintiffs-Appellees likely expected at that time can render these releases unenforceable. As the method used to calculate pension benefits for rehired employees was, and has continued to be, disputed throughout this litigation, the precise amount of benefits that an employee signing a release would have received in the absence of such a release was always indeterminate. Plaintiffs-Appellees who signed these releases did so before the District Court crafted its remedy for the ERISA violations we identified. The mere fact that the anticipated recovery associated with ongoing litigation is uncertain does not render an employee's release of claims asserted in that litigation unenforceable. Cf. Anita Founds., Inc. v. ILGWU Nat'l Ret. Fund, 902 F.2d 185, 189 (2d Cir.1990) ([A] settlement payment, made when the law was uncertain, cannot be successfully attacked on the basis of any subsequent resolution of the uncertainty.). Applying the factors we have articulated as relevant to the issue of whether a waiver of ERISA rights was knowing and voluntary and reviewing the undisputed facts pertaining to these releases under the totality of the circumstances, see Finz, 957 F.2d at 82, we conclude that the District Court erred in holding that the releases at issue were unenforceable. There appears to be no dispute that those Plaintiffs-Appellees who signed these releases had ample time (45 days) to decide whether to sign the release, that Xerox encouraged such individuals to consult an attorney, and that the signatories received salary continuances in consideration of their releasing claims. Some Plaintiffs-Appellees even modified the terms of the release forms with which they had been presented before signing them. As to the language of the releases themselves, we cannot conclude, as the District Court did, that the express terms of these releases were at the very least ambiguous as to what the employee was giving up in exchange for salary continuance. Frommert, 472 F.Supp.2d at 462. As the District Court's interpretation of the release forms is incorrect, it cannot stand. Unless the release form at issue specifically exempted this litigation as noted above, the releases signed by certain Plaintiffs-Appellees are enforceable.