Oubre v. Entergy Operations, Inc.
139 L. Ed. 2d 849, 522 U.S. 422, 1998 U.S. LEXIS 646 (1998)
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Rule of Law:
A release of claims under the Age Discrimination in Employment Act (ADEA) that does not satisfy the specific statutory requirements of the Older Workers Benefit Protection Act (OWBPA) is unenforceable, and an employee's retention of the consideration paid for the release does not constitute a ratification that bars a subsequent ADEA lawsuit.
Facts:
- Dolores Oubre worked as a scheduler for Entergy Operations, Inc. at a power plant in Louisiana.
- In 1994, Oubre received a poor performance rating.
- On January 17, 1995, Oubre's supervisor gave her the option of improving her performance or accepting a voluntary severance package.
- Oubre was given 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, 1995, Oubre signed a release, agreeing to waive all claims she might have against Entergy.
- In exchange for the release, Entergy paid Oubre $6,258 in six installment payments.
- The release agreement procured by Entergy failed to comply with the OWBPA in at least three respects: it did not give Oubre enough time to consider it, it did not provide a seven-day revocation period, and it did not specifically reference claims under the ADEA.
- Oubre did not return or offer to return the $6,258 she received from Entergy.
Procedural Posture:
- Dolores Oubre filed a charge of age discrimination with the Equal Employment Opportunity Commission (EEOC), which dismissed the charge but issued a right-to-sue letter.
- Oubre filed suit against Entergy Operations, Inc. in the U.S. District Court for the Eastern District of Louisiana, alleging age discrimination in violation of the ADEA.
- Entergy moved for summary judgment, arguing that Oubre had ratified the defective release by keeping the severance money.
- The District Court granted summary judgment in favor of Entergy.
- Oubre, as appellant, appealed the decision to the U.S. Court of Appeals for the Fifth Circuit.
- The Court of Appeals affirmed the District Court's judgment for Entergy, the appellee.
- The U.S. Supreme Court granted Oubre's petition for a writ of certiorari.
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Issue:
Does an employee's failure to return severance payments ratify a release of an Age Discrimination in Employment Act (ADEA) claim that is voidable for not complying with the requirements of the Older Workers Benefit Protection Act (OWBPA), thereby barring the employee from suing the employer?
Opinions:
Majority - Justice Kennedy
No. A release that fails to comply with the Older Workers Benefit Protection Act (OWBPA) cannot bar an Age Discrimination in Employment Act (ADEA) claim, and the employee's retention of the severance payment does not ratify the invalid release. The OWBPA establishes a self-contained statutory regime that is separate and apart from common law contract principles like ratification and tender back. The statute's command is clear that an employee 'may not waive' an ADEA claim unless the waiver meets the OWBPA's strict, unqualified requirements. To allow common law ratification would frustrate the statute's purpose of protecting older workers, as discharged employees who have spent their severance money would be unable to challenge noncompliant releases, thus tempting employers to risk noncompliance.
Concurring - Justice Breyer
No. A 'tender back' requirement for the severance payment is improper because it would effectively act as a form of ratification, barring suit from workers who may have already spent the funds and undermining the OWBPA's protections. However, the noncompliant release is voidable, not void. This distinction is important because it means that once an employee files an ADEA suit (thereby voiding the release), the employer is not barred by the statute from seeking restitution of the severance payment, potentially as a setoff against any damages award the employee might win.
Dissenting - Justice Thomas
Yes. The OWBPA does not explicitly abrogate the long-established common law doctrines of ratification and 'tender back.' For a statute to displace a common law principle, it must 'speak directly' to the issue. The OWBPA only defines the requirements for a 'knowing and voluntary' waiver; it is silent on whether a noncompliant but voidable waiver can be subsequently ratified by conduct, such as retaining the benefits. Therefore, traditional contract principles should apply, and Oubre's retention of the severance payment after learning of the release's defects constituted a ratification, which should bar her suit.
Dissenting - Justice Scalia
Yes. The Older Workers Benefit Protection Act (OWBPA) does not abrogate the common-law doctrine requiring an employee to 'tender back' consideration before challenging a release. Because Oubre did not return the money she received, her suit should be barred under this established principle. Ratification is a separate issue that does not need to be reached, as the failure to tender back is sufficient to affirm the lower court's judgment.
Analysis:
This decision significantly strengthens the protections afforded to older workers under the OWBPA by preventing employers from using common law contract defenses to circumvent the statute's strict requirements. It establishes that the OWBPA creates a unique statutory scheme that displaces contrary common law principles, placing the full burden of compliance on the employer. The ruling ensures that employees who accept severance are not inadvertently trapped into waiving their ADEA rights, especially those who lack the financial means to return the payment before filing a lawsuit. Future litigation may still address the employer's ability to recover the severance payment through claims like restitution or setoff after a suit is filed, as noted in the concurrence.
