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It is referred to as “drafting” the release. But often the term “drafting” could be replaced by the word-processing phrase “blocking and moving.” As such, the language of one release looks similar to the language of another. This tends to be true for both end-of-employment and end-of-litigation releases. A recent decision from the 8th U.S. Circuit Court of Appeals should refocus attention on both the language used in end-of-employment releases and the employer’s actions in providing the release. In Thomforde v. International Business Machines Corp., the 8th Circuit considered whether Dale Thomforde’s release of claims as part of IBM’s involuntary termination program in 2001 satisfied the waiver requirements of the Older Workers Benefits Protection Act. COVENANT AND RELEASE Thomforde was an 18-year employee of IBM when his position was eliminated in mid-2001. At his termination meeting, Thomforde was provided with a document titled “General Release and Covenant Not to Sue Agreement.” The document’s introduction referred to “this General Release and Covenant Not to Sue.” The agreement stated that “this release covers, but is not limited to, claims arising from the [ADEA] as amended, � and any other federal, state or local law dealing with discrimination.” Elsewhere, the agreement stated that “you agree that you will never institute a claim of any kind against IBM � including, but not limited to, claims related to your employment with IBM or the termination of that employment � if you violate this covenant not to sue by suing IBM �, you agree that you will pay all costs and expenses of defending against the suit � . This covenant not to sue does not apply to actions based solely under the [ADEA], as amended. That means that if you were to sue IBM � only under the [ADEA], as amended, you would not be liable under the terms of the release for their attorney fees and other costs and expenses of defending it against the suit.” Thomforde read the agreement and, apparently confused by the language regarding whether he could sue under the ADEA, asked his supervisor if the exception for ADEA claims contained in the covenant meant that he could sue IBM if the case was limited to such claims. His supervisor referred the question to IBM’s legal department and ultimately responded by e-mail: “regarding your question on the General Release and Covenant Not to Sue, the wording is as intended by IBM. The site attorney was not comfortable providing an interpretation for you and suggested you consult with your own attorney.” ADEA CLAIM VIABLE? Thomforde did, in fact, meet with his attorney and concluded that he could sign the agreement and still pursue his claim of age discrimination as long as they were limited to those under the ADEA. As such, on the day that he signed the agreement, Thomforde gave his supervisor a letter complaining about his reduced retirement benefits and making a second request for an extended leave of absence, which had previously been denied. The letter also stated that Thomforde would be filing a complaint with the EEOC instituting legal action “as allowed under the general release and covenant agreement.” Thomforde made good on his threat and, after receiving a notice of right to sue from the EEOC, filed a claim of age discrimination under the ADEA. IBM moved for summary judgment on the grounds that Thomforde had released all of his claims, including those under the ADEA. IBM claimed that the covenant not to sue was an entirely different provision from the release which did not “undo” his release of the ADEA claims, but merely exempted Thomforde from liability for attorney fees associated with defending a suit. Thomforde’s principal argument in response was that the waiver did not conform to the OWBPA requirement that it be written in a manner calculated to be understood by an individual signing the agreement and, therefore, was neither “knowing” nor “voluntary.” The district court granted summary judgment in favor of IBM and the appeal followed. OWBPA STRICTLY APPLIED The 8th Circuit began its discussion by noting that the Supreme Court applied the OWBPA strictly in the Oubre case, in finding that if an employer fails to meet any of the statutory requirements associated with a release of age discrimination claims, the waiver is ineffective as a matter of law. There would be, therefore, no waiver if the agreement was not “written in a manner calculated to be understood by such individual, or by the average individual eligible to participate.” The court found that Thomforde’s reading of the agreement, that the covenant not to sue allowed him to bring an action based solely under the ADEA, was at least plausible, particularly to a layperson. In Black’s Law Dictionary, a “release” of claims and a “covenant not to sue” serve different purposes. The necessity to cite Black’s on this point seemed to indicate, by definition, that an average layperson would not appreciate the difference between these two concepts. In fact, the court recognized “the differences between a release and covenant not to sue are fairly amorphous and may not be readily apparent to a lay reader � . [O]nce IBM choose to use the legal terms of art in the agreement, IBM had a duty to carefully explain the provisions.” Not only did IBM not explain the distinction between a release and a covenant not to sue, but it used the terms interchangeably. This was demonstrated principally by the opening line of the agreement, which referred to the terms jointly as “the release.” SIMILAR FACTS IN DELAWARE It is worth noting that the Thomforde court relied on a recent district court decision from the District of Delaware decision Cole v. Gaming Entertainment in finding that the agreement did not comply with the OWBPA. The Cole court was faced with an issue similar to that in Thomforde. In Cole, however, the principal issue was that the employer had failed to give Cole sufficient time to consider the release and had failed to adequately advise him of his right to seek counsel. Specifically, while the release in Cole stated that he would have 21 days within which to consider it, Cole was told in a meeting at which the release was presented that he needed to sign it by the end of the day or the offered severance would be withdrawn. Furthermore, the release presented to Cole stated that “employee acknowledges that he/she has been advised to consult with an attorney prior to executing this agreement, and has either done so or has freely chosen not to do so.” The court found that the use of such passive language did not meet the OWBPA’s requirement that the individual is to be “advised in writing to consult with an attorney” (along with the undisputed fact that there was no testimony that Cole had been told to seek a lawyer). The Cole court finally found that a lack of negotiation concerning the release added to finding that it was neither knowing nor voluntary. The Thomforde case, read in conjunction with Cole, should have counsel and their clients reviewing the specific language of the releases used in order to ensure that they are in compliance with the OWBPA. While IBM’s language seemed unnecessarily ambiguous, the peril of an invalid release is highlighted by the case. Sid Steinberg is a partner in Post & Schell’s business law and litigation department. He concentrates his national litigation and consulting practice in the field of employment and employee relations law. Steinberg has lectured extensively on all aspects of employment law, including Title VII, the FMLA and the ADA.

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