Court Opinion

ID: 196203
Source: CourtListenerOpinion
Date Created: 2011-02-07 03:00:29+00
Date Added: 2024-06-11T10:07:16.242522
License: Public Domain

United States Court of Appeals
                      For the First Circuit
                                           

No. 95-1086

                       MARY DEREN, ET AL.,

                     Plaintiffs, Appellants,

                                v.

                     DIGITAL EQUIPMENT CORP.,

                       Defendant, Appellee.

                                           

           APPEAL FROM THE UNITED STATES DISTRICT COURT

                FOR THE DISTRICT OF MASSACHUSETTS

       [Hon. Frank H. Freedman, Senior U.S. District Judge]
                                                                    

                                           

                              Before

                        Cyr, Circuit Judge,
                                                    
            Coffin and Bownes, Senior Circuit Judges.
                                                              

                                           

  Mark L. Hare for appellants.
                        
  Jay  M. Presser  with  whom  Jeffrey C.  Hummel was  on  brief for
                                                           
appellee.

                                           

                          July 25, 1995
                                           

     COFFIN,  Senior Circuit  Judge.    As  part of  a  severance
                                             

agreement, plaintiffs signed releases  waiving all claims against

their  former  employer.    Three  and  one  half   years  later,

contending that the  releases had been coerced, they brought this

ERISA  suit.  The  district court dismissed,  applying the common

law rule  that a party may  not avoid a contract  based on duress

without first  returning the consideration received.   We express

no view  on whether  ERISA plaintiffs must  satisfy this  "tender

back" requirement.   Instead, we affirm the  court's dismissal on

the  ground that, by waiting  so long before  attempting to avoid

the releases,  plaintiffs have ratified them,  thus waiving their

claims.

                          I.  Background
                                                  

     We  take the  facts  as alleged  in  the complaint.    E.g.,
                                                                          

Waterson v. Page, 987 F.2d 1, 3 (1st Cir. 1993).  Plaintiffs were
                          

employees   of  a   Digital   Equipment   facility  in   Enfield,

Connecticut.   In May or June 1990, Digital offered all employees

at the Enfield  plant a severance package,  called a Transitional

Financial Support Option  (TFSO), which consisted  of a lump  sum

cash payment of  at least 40  weeks' pay.   Plaintiffs agreed  to

accept the TFSO in a timely manner.  Digital, however, apparently

underestimating  the number  of  employees who  would accept  its

offer, refused to give plaintiffs the TFSO benefits.  Instead, it

gave  the TFSO package to  ten other employees.   Plaintiffs then

requested information  from  Digital concerning  the criteria  by

which the  ten employees  were selected.   Digital, in  response,

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offered  plaintiffs an  alternate  severance  package, with  less

generous benefits than  the TFSO.   In November  and December  of

1990, plaintiffs  accepted the alternate severance  plan, and, in

exchange, signed  releases  waiving all  claims against  Digital,

including claims arising out of its refusal to give them the TFSO

benefits.

     Plaintiffs filed this suit on June 17, 1994, more than three

and one half  years later,  claiming that they  had been  coerced

into accepting the lesser  package and signing the releases.   In

particular, they  alleged that  Digital had isolated  them, given

them only four days  to accept or reject the alternate  plan, and

told  them that they  would likely suffer  a pay reduction  or be

transferred  or laid  off without  any benefits  if they  did not

accept.   Digital  moved to  dismiss  the  suit on  a  number  of

grounds.  The district court held that ERISA left undisturbed the

common law rule that, as a  precondition to attempting to avoid a

contract or release, the consideration supporting the contract or

release  must  be tendered  back to  the  released party.   Since

plaintiffs concededly have retained the benefits of the alternate

severance package, the district  court concluded that their suits

were not viable.

                          II.  Analysis
                                                 

     The parties have extensively briefed whether ERISA displaces

the common  law tender back requirement, a question apparently of

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first  impression in  any federal  court of  appeals.1   We leave

this interesting question for another day.

     In  In  re Boston  Shipyard Corp.,  886  F.2d 451  (1st Cir.
                                                

1989), we said:

     It  is  well  settled  that "[a]  contract  or  release, the
     execution of which  is induced by  duress, is voidable,  not
     void, and  the person claiming  duress must act  promptly to
     repudiate  the contract or release  or he will  be deemed to
     have waived his right to do so." 

Id. at  455 (quoting Di Rose v. PK Management Corp. 691 F.2d 628,
                                                             

633-34 (2d Cir. 1982)).  Applying this principle, we found that a

party had  ratified a release agreement by  accepting payment and

waiting for  over a year and one half before claiming that it was

duress-induced.    Id.   We recently  reiterated  the rule.   See
                                                                           

Vasapolli v.  Rostoff, 39  F.3d 27,  35 n.5  (1st Cir. 1994)  ("A
                               

contract signed  under duress is voidable,  but not automatically

void.  By accepting the funds  and failing to seek a remedy based

                    
                              

     1 In  Hogue v. Southern  Ry. Co., 390  U.S. 516  (1968), the
                                               
Supreme Court held that the Federal Employer Liability Act (FELA)
had  displaced   the   tender  back   requirement,  and   allowed
             
plaintiff's suit  to  go forward  despite his  failure to  return
consideration received  for a release of claims.   Several courts
of appeals have addressed the applicability of the Hogue decision
                                                                  
to a  variety of remedial statutes, such as 42 U.S.C.   1983, the
ADEA,  Title VII, and the Jones Act, with mixed results.  Compare
                                                                           
Forbus v.  Sears Roebuck  & Co., 958  F.2d 1036, 1041  (11th Cir.
                                         
1992) (no tender  back requirement for ADEA plaintiff)  and Oberg
                                                                           
v. Allied Van Lines, 11 F.3d 679, 684 (7th Cir. 1993) (same) with
                                                                           
Wamsley v.  Champlin Refining and  Chemicals, Inc., 11  F.3d 534,
                                                            
539-40  (5th Cir. 1993)  (contra).  See  also Botefur v.  City of
                                                                           
Eagle Point,  7 F.3d  152, 156  (9th Cir. 1993)  (no tender  back
                     
requirement for   1983 plaintiff); Smith v. Pinell, 597 F.2d 994,
                                                            
996 (5th Cir.  1979) (no  tender back requirement  for Jones  Act
plaintiff); Flemming v. U.S.  Postal Service AMF O'Hare,  27 F.3d
                                                                 
259, 260-62  (7th Cir.  1994) (enforcing tender  back requirement
for  Title VII plaintiff).   None, apparently, has  been asked to
determine whether Hogue applies to ERISA.
                                 

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on  duress  within a  reasonable  period  of time  .  .  . ,  the

plaintiffs forfeited  any entitlement to relief  on this basis.")

(citations omitted).  See also Abbadessa v. Moore Business Forms,
                                                                           

Inc., 987 F.2d 18, 22-24 (1st Cir. 1993) (finding ratification of
              

an allegedly avoidable release under  New Hampshire law).   Other

courts  agree.    E.g.,  Sutter  Home  Winery,  Inc.  v.  Vintage
                                                                           

Selections,  Ltd.,  971  F.2d 401,  409  (9th  Cir. 1992)  (after
                           

accepting  the benefits of an agreement for four years, party may

no longer avoid  the agreement based on  claimed duress); Grillet
                                                                           

v.  Sears, Roebuck  & Co.,  927  F.2d 217,  220  (5th Cir.  1991)
                                   

(retaining   benefits  of  release   for  two  years  constitutes

ratification).

     We  think the instant case  falls squarely within this rule.

The  undisputed facts  show that,  for three  and one  half years

after any claimed duress  had passed, the plaintiffs enjoyed  the

benefits of  the bargain  they now  wish to  avoid.   During this

time,  they never sought  to repudiate their  agreements based on

duress.2    Thus, whether  or  not  the releases  initially  were
                    
                              

     2 We think the district court was overly generous in stating
that plaintiffs claimed they  orally had repudiated the releases.
The  court  cited only  to a  footnote in  plaintiffs' memorandum
opposing  the  motion  to   dismiss,  which  asserted  that  they
"notified  Digital of  their claims  promptly."   To  repudiate a
contract, however, "a party must unequivocally declare his intent
not to perform  his obligation."   Taylor v.  Gordon Flesch  Co.,
                                                                           
Inc., 793  F.2d 858, 864 (7th Cir. 1986).  Plaintiffs point to no
              
such unambiguous  statement of intent to  disavow their agreement
to  forego legal  claims against  Digital before they  filed this
lawsuit.  The language relied on by the district court is far too
vague  to be  read  as a  claimed  repudiation of  the  releases.
Indeed, we  suspect it might  refer to  what plaintiffs'  counsel
described   at  oral  argument   as  plaintiffs'  post-settlement
requests  for  information concerning  the  TFSO.   Perhaps  more

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secured  through  duress,  plaintiffs   ratified  them  by  their

subsequent  conduct.  See Boston Shipyard, 886 F.2d at 455 (party
                                                   

may ratify an agreement entered into under duress by, inter alia,
                                                                          

"`remaining silent or acquiescing in the contract for a period of

time  after he has the opportunity to avoid it'") (quoting United
                                                                           

States v.  McBride, 571 F.  Supp. 596, 613 (S.D.Tex.  1988)).  By
                            

ratifying  the releases,  plaintiffs waived  the claims  they now

attempt to assert.  Their complaint was properly dismissed.

     Affirmed.
                       

                    
                              

importantly, the  essential document  for evaluating a  motion to
dismiss,  the  amended  complaint,  contains  no  allegation that
plaintiffs repudiated the releases  before bringing suit.

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