OCTOBER TERM, 1997
Syllabus
OUBRE
v. ENTERGY OPERATIONS, INC.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH
CIRCUIT
No.96-1291. Argued November 12, 1997-Decided January 26,
1998
In consideration for receipt of severance pay under an
employment termination agreement, petitioner Oubre signed a release
of all claims against her employer, respondent Entergy Operations,
Inc. In procuring the release, Entergy failed to comply in at least
three respects with the requirements for a release under the Age
Discrimination in Employment Act (ADEA), as set forth in the Older
Workers Benefit Protection Act (OWBPA): It did not (1) give Oubre
enough time to consider her options, (2) give her seven days to
change her mind, or (3) make specific reference to ADEA claims.
After receiving her last severance payment, Oubre sued Entergy,
alleging constructive discharge on the basis of her age in
violation of the ADEA and state law. Entergy moved for summary
judgment, claiming Oubre had ratified the defective release by
failing to return or offer to return the moneys she had received.
The District Court agreed and entered summary judgment for Entergy.
The Fifth Circuit affirmed.
Held: As the release did not comply with the OWBPA's
requirements, it cannot bar Oubre's ADEA claim. The OWBPA provides:
"An individual may not waive any [ADEA] claim ... unless the waiver
is knowing and voluntary .... [A] waiver may not be considered
knowing and voluntary unless at a minimum" it satisfies certain
enumerated requirements, including the three listed above. 29 U. S.
C. § 626(f)(1). Thus, the OWBPA implements Congress' policy of
protecting older workers' rights and benefits via a strict,
unqualified statutory stricture on waivers, and this Court is bound
to take Congress at its word. By imposing specific duties on
employers seeking releases of ADEA claims and delineating these
duties with precision and without exception or qualification, the
statute makes its command clear: An employee "may not waive" an
ADEA claim unless the waiver or release satisfies the OWBPA's
requirements. Oubre's release does not do so. Nor did her mere
retention of moneys amount to a ratification equivalent to a valid
release of her ADEA claims, since the retention did not comply with
the OWBPA any more than the original release did. Accordingly, even
if Entergy has correctly stated the contract ratification and
equitable estoppel principles on which it relies, its argument is
unavailing because the authorities it cites do not consider the
OWBPA's commands. Moreover, Enter-
423
gy's proposed rule would frustrate the statute's practical
operation as well as its formal command. A discharged employee
often will have spent the moneys received and will lack the means
to tender their return. These realities might tempt employers to
risk noncompliance with the OWBPA's waiver provisions, knowing that
it will be difficult to repay the moneys and relying on
ratification. This Court ought not to open the door to an evasion
of the statute by this device. Pp. 425-428.
112 F.3d
787, reversed and remanded.
KENNEDY, J., delivered the opinion of the Court, in which
STEVENS, O'CONNOR, SOUTER, GINSBURG, and BREYER, JJ., joined.
BREYER, J., filed a concurring opinion, in which O'CONNOR, J.,
joined,
post, p. 430. SCALIA, J., filed a dissenting
opinion,
post, p. 434. THOMAS, J., filed a dissenting
opinion, in which REHNQUIST, C. J., joined,
post, p.
434.
Barbara G.
Haynie argued the cause for petitioner.
With her on the briefs were
W Richard House, Jr., and
John S.
Lawrence, Jr.
Beth S. Brinkmann argued the cause for the United States et al.
urging reversal. With her on the brief were Acting Solicitor
General Dellinger, Deputy Solicitor General Waxman,
J. Ray
Terry, Jr., Gwendolyn Young Reams, and Carolyn L. Wheeler.
Carter G. Phillips argued the cause for respondent. With him on
the brief were Michael G. Thompson, O. H. Storey
III, Renee
W Masinter, and Rosemarie Falcone.*
JUSTICE KENNEDY delivered the opinion of the Court. An employee,
as part of a termination agreement, signed a release of all claims
against her employer. In consider-
*Briefs of
amici curiae urging reversal were filed for
the American Association of Retired Persons by
Cathy
Ventrell-Monsees and
Thomas Osborne; and for the
National Employment Lawyers Association by
Thomas R.
Meites.
Briefs of
amici curiae urging affirmance were filed for
the Equal Employment Advisory Council et al. by
Ann Elizabeth
Reesman, Stephen A. Bokat, Robin S.
Conrad, Edward H.
Comer, J. Bruce Brown, and
Edward N
Bomsey; and for the Illinois State Chamber of Commerce by
Brian W Bulger.
424
ation, she received severance pay in installments. The release,
however, did not comply with specific federal statutory
requirements for a release of claims under the Age Discrimination
in Employment Act of 1967 (ADEA), 81 Stat. 602, 29 U. S. C. § 621
et seq. After receiving the last payment, the employee
brought suit under the ADEA. The employer claims the employee
ratified and validated the nonconforming release by retaining the
moneys paid to secure it. The employer also insists the release
bars the action unless, as a precondition to filing suit, the
employee tenders back the moneys received. We disagree and rule
that, as the release did not comply with the statute, it cannot bar
the ADEA claim.
I
Petitioner Dolores Oubre worked as a scheduler at a power plant
in Killona, Louisiana, run by her employer, respondent Entergy
Operations, Inc. In 1994, she received a poor performance rating.
Oubre's supervisor met with her on J anuary 17, 1995, and gave her
the option of either improving her performance during the coming
year or accepting a voluntary arrangement for her severance. She
received a packet of information about the severance agreement and
had 14 days to consider her options, during which she consulted
with attorneys. On January 31, Oubre decided to accept. She signed
a release, in which she "agree[d] to waive, settle, release, and
discharge any and all claims, demands, damages, actions, or causes
of action ... that I may have against Entergy .... " App.61. In
exchange, she received six installment payments over the next four
months, totaling $6,258.
The Older Workers Benefit Protection Act (OWBPA) imposes
specific requirements for releases covering ADEA claims. OWBP A, §
201, 104 Stat. 983, 29 U. S. C. §§ 626(f)(1) (B), (F), (G). In
procuring the release, Entergy did not comply with the OWBPA in at
least three respects: (1) Entergy did not give Oubre enough time to
consider her options. (2) Entergy did not give Oubre seven days
after she signed
425
the release to change her mind. And (3) the release made no
specific reference to claims under the ADEA.
Oubre filed a charge of age discrimination with the Equal
Employment Opportunity Commission, which dismissed her charge on
the merits but issued a right-to-sue letter. She filed this suit
against Entergy in the United States District Court for the Eastern
District of Louisiana, alleging constructive discharge on the basis
of her age in violation of the ADEA and state law. Oubre has not
offered or tried to return the $6,258 to Entergy, nor is it clear
she has the means to do so. Entergy moved for summary judgment,
claiming Oubre had ratified the defective release by failing to
return or offer to return the moneys she had received. The District
Court agreed and entered summary judgment for Entergy. The Court of
Appeals affirmed,
112 F.3d
787 (CA5
1996) (per curiam), and we granted certiorari,
520 U. S. 1185 (1997).
II
The employer rests its case upon general principles of state
contract jurisprudence. As the employer recites the rule, contracts
tainted by mistake, duress, or even fraud are voidable at the
option of the innocent party. See 1 Restatement (Second) of
Contracts § 7, and Comment
b (1979);
e. g.,
Ellerin v.
Fairfax Sav. Assn., 78 Md. App. 92,
108-109, 552 A. 2d 918, 926-927 (Md. Spec. App.), cert. denied, 316
Md. 210, 557 A. 2d 1336 (1989). The employer maintains, however,
that before the innocent party can elect avoidance, she must first
tender back any benefits received under the contract. See,
e.
g., Dreiling v.
Home State Life Ins. Co., 213 Kan. 137,
147-148,515 P. 2d 757, 766-767 (1973). If she fails to do so within
a reasonable time after learning of her rights, the employer
contends, she ratifies the contract and so makes it binding. 1
Restatement (Second) of Contracts,
supra, § 7, Comments
d, e; see,
e. g., Jobe v.
Texas Util. Elec.
Co., No. 05-94-01368-CV, 1995 WL 479645, *3 (Tex. App.-Dallas,
Aug. 14, 1995) (unpublished). The employer also invokes the
426
doctrine of equitable estoppel. As a rule, equitable estoppel
bars a party from shirking the burdens of a voidable transaction
for as long as she retains the benefits received under it. See,
e. g., Buffum v.
Peter Barceloux Co., 289 U. S. 227, 234 (1933)
(citing state case law from Indiana and New York). Applying these
principles, the employer claims the employee ratified the
ineffective release (or faces estoppel) by retaining all the sums
paid in consideration of it. The employer, then, relies not upon
the execution of the release but upon a later, distinct
ratification of its terms.
These general rules may not be as unified as the employer
asserts. See generally Annot., 76 A. L. R. 344 (1932) (collecting
cases supporting and contradicting these rules); Annot., 134 A. L.
R. 6 (1941) (same). And in equity, a person suing to rescind a
contract, as a rule, is not required to restore the consideration
at the very outset of the litigation. See 3 Restatement (Second) of
Contracts,
supra, § 384, and Comment
b; Restatement
of Restitution § 65, Comment
d (1936); D. Dobbs, Law of
Remedies § 4.8, p. 294 (1973). Even if the employer's statement of
the general rule requiring tender back before one files suit were
correct, it would be unavailing. The rule cited is based simply on
the course of negotiation of the parties and the alleged later
ratification. The authorities cited do not consider the question
raised by statutory standards for releases and a statutory
declaration making nonconforming releases ineffective. It is the
latter question we confront here.
In 1990, Congress amended the ADEA by passing the OWBPA. The
OWBPA provides: "An individual may not waive any right or claim
under [the ADEA] unless the waiver is knowing and voluntary ....
[A] waiver may not be considered knowing and voluntary unless at a
minimum" it satisfies certain enumerated requirements, including
the three listed above. 29 U. S. C. § 626(f)(1).
The statutory command is clear: An employee "may not waive" an
ADEA claim unless the waiver or release satisfies
427
the OWBP A's requirements. The policy of the OWBP A is likewise
clear from its title: It is designed to protect the rights and
benefits of older workers. The OWBP A implements Congress' policy
via a strict, unqualified statutory stricture on waivers, and we
are bound to take Congress at its word. Congress imposed specific
duties on employers who seek releases of certain claims created by
statute. Congress delineated these duties with precision and
without qualification: An employee "may not waive" an ADEA claim
unless the employer complies with the statute. Courts cannot with
ease presume ratification of that which Congress forbids.
The OWBP A sets up its own regime for assessing the effect of
ADEA waivers, separate and apart from contract law. The statute
creates a series of prerequisites for knowing and voluntary waivers
and imposes affirmative duties of disclosure and waiting periods.
The OWBP A governs the effect under federal law of waivers or
releases on ADEA claims and incorporates no exceptions or
qualifications. The text of the OWBP A forecloses the employer's
defense, notwithstanding how general contract principles would
apply to non-ADEA claims.
The rule proposed by the employer would frustrate the statute's
practical operation as well as its formal command. In many
instances a discharged employee likely will have spent the moneys
received and will lack the means to tender their return. These
realities might tempt employers to risk noncompliance with the
OWBPA's waiver provisions, knowing it will be difficult to repay
the moneys and relying on ratification. We ought not to open the
door to an evasion of the statute by this device.
Oubre's cause of action arises under the ADEA, and the release
can have no effect on her ADEA claim unless it complies with the
OWBP A. In this case, both sides concede the release the employee
signed did not comply with the requirements of the OWBP A. Since
Oubre's release did not comply
428
with the OWBP A's stringent safeguards, it is unenforceable
against her insofar as it purports to waive or release her ADEA
claim. As a statutory matter, the release cannot bar her ADEA suit,
irrespective of the validity of the contract as to other
claims.
In further proceedings in this or other cases, courts may need
to inquire whether the employer has claims for restitution,
recoupment, or setoff against the employee, and these questions may
be complex where a release is effective as to some claims but not
as to ADEA claims. We need not decide those issues here, however.
It suffices to hold that the release cannot bar the ADEA claim
because it does not conform to the statute. Nor did the employee's
mere retention of moneys amount to a ratification equivalent to a
valid release of her ADEA claims, since the retention did not
comply with the OWBP A any more than the original release did. The
statute governs the effect of the release on ADEA claims, and the
employer cannot invoke the employee's failure to tender back as a
way of excusing its own failure to comply.
We reverse the judgment of the Court of Appeals and remand the
case for further proceedings consistent with this opinion.
It is so ordered.
APPENDIX TO OPINION OF THE COURT
Older Workers Benefit Protection Act, § 201, 104 Stat. 983, 29
U. S. C. § 626(f):
(f) Waiver
(1) An individual may not waive any right or claim under this
Act unless the waiver is knowing and voluntary. Except as provided
in paragraph (2), a waiver may not be considered knowing and
voluntary unless at a minimum-
(A) the waiver is part of an agreement between the individual
and the employer that is written in a manner calcu-
429
lated to be understood by such individual, or by the average
individual eligible to participate;
(B) the waiver specifically refers to rights or claims arising
under this Act;
(C) the individual does not waive rights or claims that may
arise after the date the waiver is executed;
(D) the individual waives rights or claims only in exchange for
consideration in addition to anything of value to which the
individual already is entitled;
(E) the individual is advised in writing to consult with an
attorney prior to executing the agreement;
(F)(i) the individual is given a period of at least 21 days
within which to consider the agreement; or
(ii) if a waiver is requested in connection with an exit
incentive or other employment termination program offered to a
group or class of employees, the individual is given a period of at
least 45 days within which to consider the agreement;
(G) the agreement provides that for a period of at least 7 days
following the execution of such agreement, the individual may
revoke the agreement, and the agreement shall not become effective
or enforceable until the revocation period has expired;
(H) if a waiver is requested in connection with an exit
incentive or other employment termination program offered to a
group or class of employees, the employer (at the commencement of
the period specified in subparagraph (F)) informs the individual in
writing in a manner calculated to be understood by the average
individual eligible to participate, as to-
(i) any class, unit, or group of individuals covered by such
program, any eligibility factors for such program, and any time
limits applicable to such program; and
(ii) the job titles and ages of all individuals eligible or
selected for the program, and the ages of all individuals in the
same job classification or organizational unit who are not eligible
or selected for the program.
430
(2) A waiver in settlement of a charge filed with the Equal
Employment Opportunity Commission, or an action filed in court by
the individual or the individual's representative, alleging age
discrimination of a kind prohibited under section 4 or 15 may not
be considered knowing and voluntary unless at a minimum-
(A) subparagraphs (A) through (E) of paragraph (1) have been
met; and
(B) the individual is given a reasonable period of time within
which to consider the settlement agreement.
(3) In any dispute that may arise over whether any of the
requirements, conditions, and circumstances set forth in
subparagraph (A), (B), (C), (D), (E), (F), (G), or (H) of paragraph
(1), or subparagraph (A) or (B) of paragraph (2), have been met,
the party asserting the validity of a waiver shall have the burden
of proving in a court of competent jurisdiction that a waiver was
knowing and voluntary pursuant to paragraph (1) or (2).
(4) No waiver agreement may affect the Commission's rights and
responsibilities to enforce this Act. No waiver may be used to
justify interfering with the protected right of an employee to file
a charge or participate in an investigation or proceeding conducted
by the Commission.
JUSTICE BREYER, with whom JUSTICE O'CONNOR joins,
concurring.
This case focuses upon a worker who received a payment from her
employer and in return promised not to bring an age-discrimination
suit. Her promise failed the procedural tests of validity set forth
in the Older Workers Benefit Protection Act (OWBPA), 29 U. S. C.
§626(f)(1). I agree with the majority that, because of this
procedural failing, the worker is free to bring her
age-discrimination suit without "tendering back" her employer's
payment as a precondition. As a conceptual matter, a "tender back"
requirement would imply that the worker had ratified her promise by
keeping
431
her employer's payment. For that reason, it would bar suit,
including suit by a worker (without other assets) who had already
spent the money he received for the promise. Yet such an act of
ratification could embody some of the same procedural failings that
led Congress to find the promise not to sue itself invalid. For
these reasons, as the majority points out, a tender back
precondition requirement would run contrary to Congress' statutory
command. See
ante, at 426-427. Cf. 1 Restatement (Second) of
Contracts § 85, Comment
b (1979) (a promise ratifying a
voidable contract "may itself be voidable for the same reason as
the original promise, or it may be voidable or unenforceable for
some other reason"); D. Dobbs, Law of Remedies 982 (1973)
("[C]ourts must avoid allowing a recovery that has the effect of
substantially enforcing the contract that has been declared
unenforceable, since to do so would defeat the policy that led to
the ... rule in the first place").
I write these additional words because I believe it important to
specify that the statute need not, and does not, thereby make the
worker's procedurally invalid promise totally void, i.
e.,
without any legal effect, say, like a contract the terms of which
themselves are contrary to public policy. See 1 Restatement
(Second) of Contracts § 7, Comment
a (1979); 2
id., §
178. Rather, the statute makes the contract that the employer and
worker tried to create voidable, like a contract made with an
infant, or a contract created through fraud, mistake, or duress,
which contract the worker may elect either to avoid or to ratify.
See 1
id., § 7, and Comment
b.
To determine whether a contract is voidable or void, courts
typically ask whether the contract has been made under conditions
that would justify giving one of the parties a choice as to
validity, making it voidable,
e. g., a contract with
an infant; or whether enforcement of the contract would violate the
law or public policy irrespective of the conditions in which the
contract was formed, making it void,
e. g., a
con-
432
tract to commit murder. Compare 1
id., § 7, Comment
b (voidable), with 2
id., § 178, and Comment
d
(void). The statute before us reflects concern about the conditions
(of knowledge and free choice) surrounding the making of a contract
to waive an age-discrimination claim. It does not reflect any
relevant concern about enforcing the contract's substantive terms.
Nor does this statute, unlike the Federal Employers' Liability Act,
35 Stat. 65, as amended, 45 U. S. C. § 51
et seq., say that
a contract waiving suit and thereby avoiding liability is void. §
55. Rather, as the majority's opinion makes clear, see
ante,
at 426-427, the OWBPA prohibits courts from finding ratification in
certain circumstances, such as those presented here, namely, a
worker's retention of an employer's payment for an invalid release.
That fact may affect ratification, but it need not make the
contract void, rather than voidable.
That the contract is voidable rather than void may prove
important. For example, an absolutely void contract, it is said,
"is void as to everybody whose rights would be affected by it if
valid." 17 A Am. Jur. 2d, Contracts § 7, p. 31 (1991). Were a
former worker's procedurally invalid promise not to sue absolutely
void, might it not become legally possible for an employer to
decide to cancel its own reciprocal obligation, say, to pay the
worker, or to provide ongoing health benefits-whether or not the
worker in question ever intended to bring a lawsuit? It seems most
unlikely that Congress, enacting a statute meant to protect
workers, would have wanted to create-as a result of an employer's
failure to follow the law-any such legal threat to all workers,
whether or not they intend to bring suit. To find the contract
voidable, rather than void, would offer legal protection against
such threats.
At the same time, treating the contract as voidable could permit
an employer to recover his own reciprocal payment (or to avoid his
reciprocal promise) where doing so seems
433
most fair, namely, where that recovery would
not bar the
worker from bringing suit. Once the worker (who has made the
procedurally invalid promise not to sue) brings an
agediscrimination suit, he has clearly rejected (avoided) his
promise not to sue. As long as there is no "tender back"
precondition, his (invalid) promise will not have barred his suit
in conflict with the statute. Once he has sued, however, nothing in
the statute prevents his employer from asking for restitution of
his reciprocal payment or relief from any ongoing reciprocal
obligation. See Restatement of Restitution § 47, Comment
b
(1936) ("A person who transfers something to another believing that
the other thereby comes under a duty to perform the terms of a
contract ... is ordinarily entitled to restitution for what he has
given if the obligation intended does not arise and if the other
does not perform"); Dobbs,
supra, at 994 (restitution is
often allowed where benefits are conferred under voidable
contract). A number of older state cases indicate, for example,
that the amount of consideration paid for an invalid release can be
deducted from a successful plaintiff's damages award. See,
e. g., St. Louis-San Francisco R. Co. v.
Cox, 171 Ark. 103, 113-115, 283 S. W. 31, 35 (1926) (amount
paid for invalid release may be taken into consideration in setting
remedy);
Koshka v.
Missouri Pac. R. Co., 114 Kan.
126, 129-130, 217 P. 293, 295 (1923) (the sum paid for an invalid
release may be treated as an item of credit against damages);
Miller v.
Spokane Int'l R. Co., 82 Wash. 170,
177-178, 143 P. 981, 984 (1914) (same);
Gilmore v.
Western Elec. Co., 42 N. D. 206, 211-212, 172 N. W. 111, 113
(1919).
My point is that the statute's provisions are consistent with
viewing an invalid release as voidable, rather than void.
Apparently, five or more Justices take this view of the matter. See
post, at 436, n. 1 (THOMAS, J., dissenting). As I understand
the majority's opinion, it is also consistent with this view, and I
consequently concur in its opinion.
434
JUSTICE SCALIA, dissenting.
I agree with JUSTICE THOMAS that the Older Workers Benefit
Protection Act (OWBP A), 29 U. S. C. § 626(f), does not abrogate
the common-law doctrines of "tender back" and ratification. Because
no "tender back" was made here, I would affirm the judgment.
I do not consider ratification a second basis for affirmance,
since ratification cannot occur until the impediment to the
conclusion of the agreement is eliminated. Thus, an infant cannot
ratify his voidable contracts until he reaches majority, and a
party who has contracted under duress cannot ratify until the
duress is removed. See 1 E. Farnsworth, Contracts § 4.4, p. 381, §
4.19, p. 443 (1990). Of course for some contractual impediments,
discovery itself is the cure. See 12 W. Jaeger, Williston on
Contracts § 1527, p. 626 (3d ed. 1970) (ratification by a defrauded
party may occur "after discovery of the fraud"); 2 Farnsworth,
supra, § 9.3, at 520 (ratification by party entitled to
avoid for mistake may occur after "that party is or ought to be
aware of the facts"). The impediment here is not of that sort. OWBP
A provides that "[a]n individual may not waive any right or claim
under thee] [Age Discrimination in Employment Act of 1967] unless
the waiver is knowing and voluntary," 29 U. S. C. § 626(f)(1), and
says that a waiver "may not be considered knowing and voluntary"
unless it satisfies the requirements not complied with here,
ibid. That a party later learns that those requirements were
not complied with no more enables ratification of the waiver than
does such knowledge at the time of contracting render the waiver
effective
ab initio.
JUSTICE THOMAS, with whom THE CHIEF JUSTICE joins,
dissenting.
The Older Workers Benefit Protection Act (OWBPA), 29 U. S. C. §
626(f), imposes certain minimum requirements that waivers of claims
under the Age Discrimination in Employment Act of 1967 (ADEA), 29
U. S. C. § 621
et seq., must meet
435
in order to be considered "knowing and voluntary." The Court of
Appeals held that petitioner had ratified a release of ADEA claims
that did not comply with the OWBPA by retaining the benefits she
had received in exchange for the release, even after she had become
aware of the defect and had decided to sue respondent. The majority
does not suggest that the Court of Appeals was incorrect in
concluding that petitioner's conduct was sufficient to constitute
ratification of the release. Instead, without so much as
acknowledging the long-established principle that a statute "must
'speak directly' to the question addressed by the common law" in
order to abrogate it,
United States v.
Texas,
507 U. S. 529,
534 (1993) (quoting
Mobil Oil Corp. v.
Higginbotham,
436 U. S. 618,
625 (1978)), the Court holds that the OWBPA abrogates both the
common-law doctrine of ratification and the doctrine that a party
must "tender back" consideration received under a release of legal
claims before bringing suit. Because the OWBP A does not address
either of these common-law doctrines at all, much less with the
clarity necessary to abrogate them, I respectfully dissent.
It has long been established that" '[s]tatutes which invade the
common law ... are to be read with a presumption favoring the
retention of long-established and familiar principles, except when
a statutory purpose to the contrary is evident.'"
United
States v.
Texas, supra, at 534 (quoting
Isbrandtsen
Co. v.
Johnson, 343 U. S. 779, 783
(1952)). Congress is understood to legislate against a background
of common-law principles,
Astoria Fed. Sav. &
Loan
Assn. v.
Solimino, 501 U. S. 104, 108 (1991), and thus
"does not write upon a clean slate,"
United States v.
Texas, supra, at 534. As a result, common-law doctrines
"'ought not to be deemed to be repealed, unless the language of a
statute be clear and explicit for this purpose.'"
Norfolk
Redevelopment and Housing Authority v.
Chesapeake &
Potomac Telephone Co. of Va., 464 U. S. 30, 35-36 (1983)
(quoting
Fairfax's Devisee v.
Hunter's Lessee, 7
Cranch 603, 623 (1813)).
436
The only clear and explicit purpose of the OWBP A is to define
"knowing and voluntary" in the context of ADEA waivers. Prior to
the statute's enactment, the Courts of Appeals had disagreed about
the proper standard for determining whether such waivers were
knowing and voluntary. Several courts had adopted a "totality of
the circumstances" test as a matter of federal waiver law, see,
e. g., Cirillo v.
Arco Chemical Co., 862 F.2d
448, 451 (CA3 1988);
Bormann v.
AT&T
Communications, Inc., 875 F.2d
399, 403 (CA2), cert. denied,
493 U. S. 924 (1989);
O'Hare v.
Global Natural Resources, Inc., 898 F.2d
1015, 1017 (CA5 1990), while others had relied solely on
common-law contract principles, see
Runyan v.
National
Cash Register Corp., 787 F.2d
1039, 1044, n. 10, 1045 (CA6) (en bane), cert. denied, 479 U.
S. 850
(1986); Lancaster v.
Buerkle Buick Honda Co.,
809 F.2d
539, 541 (CA8), cert. denied, 482 U. S. 928 (1987). In enacting
the OWBP A, Congress adopted neither approach, instead setting
certain minimum requirements that every release of ADEA rights and
claims must meet in order to be deemed knowing and voluntary. I
therefore agree with the Court that the OWBPA abrogates the
common-law definition of a "knowing and voluntary" waiver where
ADEA claims are involved.
From this rather unremarkable proposition, however, the Court
leaps to the conclusion that the OWBP A supplants the common-law
doctrines of ratification and tender back. The doctrine of
ratification (also known in contract law as affirmation) provides
that a party, after discovering a defect in the original release,
can make binding that otherwise voidable release either explicitly
or by failing timely to return the consideration received. See 1
Restatement (Second) of Contracts § 7, Comments
d, e
(1979); 1 E. Farnsworth, Contracts §§ 4.15, 4.19 (1990).1 The
tender back doctrine re-
1 For the reasons noted by JUSTICE BREYER, see
ante, at
431-432, I think it cannot be doubted that releases that fail to
meet the OWBPA's requirements are merely voidable, rather than
void.
437
quires, as a condition precedent to suit, that a plaintiff
return the consideration received in exchange for a release, on the
theory that it is inconsistent to bring suit against the defendant
while at the same time retaining the consideration received in
exchange for a promise
not to bring such a suit. See
Buffum v.
Peter Barceloux Co., 289 U. S. 227, 234 (1933)
(citing state cases).
The OWBP A simply does not speak to ratification. It is
certainly not the case-notwithstanding the Court's statement that
the OWBP A "governs the effect under federal law of waivers or
releases on ADEA claims,"
ante, at 427-that ratification can
never apply in the context of ADEA releases. There is no
reason to think that releases voidable on nonstatutory grounds such
as fraud, duress, or mistake cannot be ratified: The OWBP A merely
imposes requirements for knowing and voluntary waivers and is
silent regarding fraud, duress, and mistake. Further, the statute
makes no mention of whether there can ever be a valid ratification
in the more specific instance, presented by this case, of a release
of ADEA claims that fails to satisfy the statute's requirements.
Instead, the statute merely establishes prerequisites that must be
met for a release to be considered knowing and voluntary; the
imposition of these statutory requirements says absolutely nothing
about whether a release that fails to meet these prerequisites can
ever be ratified.
Not only does the text of the OWBPA make no mention of
ratification, but it also cannot be said that the doctrine is
inconsistent with the statute. The majority appears to reason that
ratification cannot apply in the ADEA context because releases
would be given legal effect where they should have none. As the
Court explains, "the release can have no effect on [the employee's]
ADEA claim unless it complies with the OWBPA."
Ibid. Or, put
another way, because petitioner's release did not comply with the
statute, "it is unenforceable against her insofar as it purports to
waive or release her ADEA claim."
Ante, at 428.
438
The Court's concerns, however, appear directed at ratification
itself, rather than at its application in the ADEA context.
Ratification
necessarily applies where a release is
unenforceable against one party at its adoption because of some
deficiency; the whole point of ratification is to give legal effect
to an otherwise voidable release. By defining the requirements that
must be met for a release of ADEA claims to be considered knowing
and voluntary, the OWBP A merely establishes one of the ways in
which a release may be unenforceable at its adoption. The OWBP A
does not suggest any reason why a noncomplying release cannot be
made binding, despite the original defect, in the same manner as
any other voidable release.
Nor does ratification conflict with the purpose of the OWBP A.
Ratification occurs only when the employee realizes that the
release does not comply with the OWBP A and nevertheless assents to
be bound. See 12 W. Jaeger, Williston on Contracts § 1527 (3d ed.
1970) (ratification may occur only after defect is discovered); 3
Restatement (Second) of Contracts § 381 (same). This is surely
consistent with the statutory purpose of ensuring that waivers of
ADEA claims are knowing and voluntary.2
The question remains whether the OWBP A imposes requirements
that a ratification must meet. Ratification of a voidable release,
like the release itself, must be knowing and voluntary. Otherwise,
it too is voidable by the innocent party. See 1
id., § 85,
Comment
b. Although the Court does not expressly address
this question, it appears that the Court's holding requires, at
minimum, that the statutory requirements apply in the ratification
context.
The OWBPA does not, however, clearly displace the common-law
definition of "knowing and voluntary" in the
2 Although the Court, relying on the statute's title, defines
the OWBPA's purpose broadly as "protect[ing] the rights and
benefits of older workers,"
ante, at 427, the statute itself
suggests only the more specific purpose of preventing unknowing or
involuntary waivers of ADEA rights and claims.
439
ratification context. The statute itself states that it applies
to waivers and is absolutely silent regarding ratification or
affirmation. Further, several of the statutory requirements cannot
be translated easily into the ratification context. The
requirements that an employee be given a period of at least 21 days
to consider the agreement, 29 U. s. C. § 626(f)(1)(F)(i), and that
he have a 7-day period in which to revoke the agreement, §
626(f)(1)(G), naturally apply in the context of the original
release, but seem superfluous when applied to ratification. For
example, when an employee has implicitly ratified the original
release by retaining the consideration for several months after
discovering its defects, a 21-day waiting period to consider the
agreement and a 7 -day revocation period have no place. An employee
thus may ratify a release that fails to comply with the OWBP A.
For many of the same reasons that the OWBP A does not abrogate
the doctrine of ratification, it also does not abrogate the tender
back requirement. Certainly the statute does not supplant the
tender back requirement in its entirety. Where a release complies
with the statute but is voidable on other grounds (such as fraud),
the OWBP A does not relieve an employee of the obligation to return
the consideration received before suing his employer; the OWBPA
does not even arguably address such a situation. And in the more
specific context of a release that fails to comply with the OWBP A,
the statute simply says nothing about whether there can ever be an
obligation to tender back the consideration before filing suit.
Nor is the tender back requirement inconsistent with the OWBP A.
Although it does create an additional obligation that would not
exist but for the noncomplying release, the doctrine merely puts
the employee to a choice between avoiding the release and retaining
the benefit of his bargain. After all, this doctrine does not
preclude suit but merely acts as a condition precedent to it; the
employee need only return the consideration before the statute of
limitations period has
440
run. And despite the Court's concern that "[i]n many instances a
discharged employee likely will have spent the moneys received and
will lack the means to tender their return,"
ante, at 427;
see also
ante, at 431 (BREYER, J., concurring),3 courts have
interpreted the tender back doctrine flexibly, such that immediate
tender is not always required. See D. Dobbs, Law of Remedies § 9.4,
p. 622 (1973);
Fleming v.
United States Postal Service
AMF O'Hare, 27 F.3d
259, 260 (CA7 1994). If anything, the Court's holding creates a
windfall for an employee who may now retain the consideration
received from his employer while at the same time filing suit.
Finally, it is clear that the statutory requirements have no
application to the tender back requirement. The tender back
doctrine operates not to make the voidable release binding, as does
ratification, but rather precludes a party from simultaneously
retaining the benefits of the release and suing to vindicate
released claims. See
supra, at 436-437. That is, the
requirement to tender back is simply a condition precedent to suit;
it has nothing to do with whether a waiver was knowing and
voluntary. Nothing in the statute even arguably implies that the
statutory requirements must be met before this obligation
arises.
In sum, the OWBPA does not clearly and explicitly abrogate the
doctrines of ratification and tender back. Congress, of course, is
free to do so. But until it does, these common-law doctrines should
apply to releases of ADEA claims, just as they do to other
releases. Because the Court of Appeals determined that petitioner
had indeed ratified her
3 The statements of the majority in this regard, like much of
the majority opinion generally, imply that noncomplying releases
are void as against public policy, rather than voidable. That
certainly is not the case. See n. 1,
supra. And JUSTICE
BREYER does not explain why his alternativepermitting the employer
to seek restitution-survives the OWBPA while the tender back
requirement does not. See
ante, at 433.
441
release, and there is no reason to think that this determination
was in error, I would affirm. I therefore respectfully dissent.
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