Elizabeth McLeod v. General Mills, Inc. ( 2017 )

United States Court of Appeals
For the Eighth Circuit
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No. 15-3540
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Elizabeth McLeod; Heidi O’Sullivan; Sherri Slocum; Ivette Harper; Robert West;
Kevin Stemwell; Stephen Miller; Peggy Maxe; Karalyn Littlefield; Colleen
Friedrichs; Arlene Hornilla; Marilyn Epp; Dwight Sevaldson; Ann Carlson;
Michael Baehr; Gabriele Bauer; Mark Davis; Susanne Dehnke; Frank Delaney;
Paula Freeman-Brown; Barbara Fuglie; Richard Fugile; Christopher Gunn;
Michelle Laurence; Robert Morris; Vicki Nellen-Jungers; Heidi Neumann; Greg
Norman; Michelle Racepla; Susan Ryan; Timothy Schroeder; Diane Sundquist;
Greg Zimprich, for and on behalf of themselves and other persons similarly situated
lllllllllllllllllllll Plaintiffs - Appellees
v.
General Mills, Inc.
lllllllllllllllllllll Defendant - Appellant
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Equal Employment Advisory Council; Chamber of Commerce of the United States
lllllllllllllllllllllAmici on Behalf of Appellant(s)
AARP; Equal Employment Opportunity Commission
lllllllllllllllllllllAmici on Behalf of Appellee(s)
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Appeal from United States District Court
for the District of Minnesota - Minneapolis
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Submitted: November 16, 2016
Filed: May 11, 2017
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Before BENTON and SHEPHERD, Circuit Judges, and STRAND, District Judge.1
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BENTON, Circuit Judge.
The Age Discrimination in Employment Act, as amended by the Older Workers
Benefit Protection Act, permits waivers of ADEA rights and claims—but only if they
are “knowing and voluntary” as defined by statute. 29 U.S.C. § 626(f)(1). In a
waiver dispute, “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.” § 626(f)(3). Here, General Mills, Inc., terminated employees and offered
them benefits in exchange for releasing all ADEA claims and arbitrating release-
related disputes. Thirty-three employees who signed releases request a declaratory
judgment that the releases were not “knowing and voluntary.” They also bring
collective and individual ADEA claims. General Mills moved to compel arbitration,
and the district court denied that motion. Having jurisdiction under 9 U.S.C.
§ 16(a)(1)(B), this court reverses and remands.
I.
In June 2012, General Mills announced it was terminating about 850
employees. General Mills offered them severance packages in exchange for signing
release agreements. By the agreements’ terms, employees release General Mills from
all claims relating to their terminations—including, specifically, ADEA claims. The
1
The Honorable Leonard T. Strand, United States District Judge for the
Northern District of Iowa, sitting by designation.
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agreements also state that claims covered by the agreements will be individually
arbitrated:
[I]n the event there is any dispute or claim arising out of or relating to
the above release of claims, including, without limitation, any dispute
about the validity or enforceability of the release or the assertion of any
claim covered by the release, all such disputes or claims will be resolved
exclusively through a final and binding arbitration on an individual basis
and not in any form of class, collective, or representative proceeding.
Thirty-three former General Mills employees who signed agreements sued
General Mills under the ADEA. They allege, first, that their ADEA claim waivers
were not “knowing and voluntary” as defined by § 626(f)(1) and related regulations,
and request a declaratory judgment that the agreements do not waive their ADEA
rights. They also allege that the terminations discriminated on the basis of age, and
bring disparate-treatment and disparate-impact claims, both collectively and
individually. General Mills moved to dismiss and compel arbitration on an individual
basis. The district court denied the motion.
II.
“This court reviews a determination concerning the arbitrability of a dispute
de novo.” Owen v. Bristol Care, Inc., 702 F.3d 1050, 1052 (8th Cir. 2013). The
Federal Arbitration Act “requires courts to enforce agreements to arbitrate according
to their terms . . . unless the FAA’s mandate has been ‘overridden by a contrary
congressional command.’” CompuCredit Corp. v. Greenwood, 132 S. Ct. 665, 669
(2012) (citation omitted), quoting Shearson/American Express Inc. v. McMahon,
482 U.S. 220, 226 (1987). “[I]f a dispute presents multiple claims, some arbitrable
and some not, the former must be sent to arbitration even if this will lead to piecemeal
litigation.” KPMG LLP v. Cocchi, 132 S. Ct. 23, 24 (2011) (per curiam).
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A.
Plaintiffs assert, for the first time on appeal, that the agreements do not cover
their ADEA claims. They argue that the agreement to arbitrate applies only to claims
“relating to” the release of claims, and their substantive ADEA claims are not related
to the release of claims. They are wrong. The agreements’ “relating to” sentence
shows the parties’ intent to arbitrate both disputes about the release and substantive
ADEA claims. The arbitration provision applies to “any . . . claim . . . relating to the
above release of claims, including . . . the assertion of any claim covered by the
release.” The agreements explicitly state that a claim “relates to” the release of claims
if it asserts a claim covered by the agreements. ADEA claims are covered by the
agreements. Absent a contrary congressional command, General Mills can compel
employees who signed the agreements to arbitrate their ADEA claims.
B.
The parties disagree whether there is a “contrary congressional command”
overriding the FAA’s mandate to enforce their agreements to arbitrate (1) substantive
ADEA claims and (2) disputes about the validity of the former employees’ waivers.
1.
No “contrary congressional command” overrides the FAA’s mandate to enforce
the parties’ agreements to arbitrate substantive ADEA claims. The former employees
invoke § 626(f); they do not allege that the agreements are invalid on any other
statutory or common law basis. Section 626(f)(1) provides, “An individual may not
waive any right or claim under this chapter unless the waiver is knowing and
voluntary,” and lists a number of minimum requirements. See § 626(f)(1)(A)-(H).
Section 626(f)(3) describes how to prove a waiver:
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In any dispute that may arise over whether any of the requirements,
conditions, and circumstances set forth in [§ 626(f)(1)-(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 . . . .
The former employees’ logic is this: First, by moving to compel arbitration of
their claims, General Mills is “asserting the validity of a waiver,” forcing them to
forego their “right” to a jury trial and their “right” to proceed by class action. Second,
if General Mills wants to assert the validity of that waiver, it “shall” (which they read
as “must”) do so “in a court of competent jurisdiction” (which they read as “not in
arbitration”).
The logic fails at step one. In asking the court to compel arbitration of the
former employees’ claims, General Mills is not asserting the validity of a “waiver.”
In § 626(f), “waiver” refers narrowly to waiver of substantive ADEA rights or
claims—not, as the former employees argue, the “right” to a jury trial or the “right”
to proceed in a class action.
This issue is largely controlled by 14 Penn Plaza LLC v. Pyett, 556 U.S. 247
(2009). There, the Supreme Court addressed the meaning of “rights or claims” under
§ 626(f)(1)(C), which prohibits waiver of “rights or claims that may arise after the
date the waiver is executed.” The Court held that an agreement to bring future claims
in arbitration was not a waiver of “rights or claims”: “The decision to resolve ADEA
claims by way of arbitration instead of litigation does not waive the statutory right to
be free from workplace age discrimination; it waives only the right to seek relief from
a court in the first instance.” 14 Penn Plaza, 556 U.S. at 265-66. See also id. at 259
(explaining that an “agreement to arbitrate ADEA claims” is not a waiver of “the
‘right’ referred to in § 626(f)(1)”). 14 Penn Plaza thus interprets one of § 626(f)(1)’s
references to “right[s] or claim[s]” to mean substantive rights to be free from age
discrimination, not procedural “rights” to pursue age discrimination claims in court.
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Here, the specific “rights” the former employees cite are not “rights” under
§ 626(f)(1). The former employees say that § 626(c)(2) gives them a “right” to a jury
trial on ADEA claims. But 14 Penn Plaza forecloses categorizing a jury trial as a
§ 626(f)(1) “right.” Since no “rights or claims” are waived by agreeing to bring
claims in arbitration, a jury trial is not a § 626(f)(1) “right.”
The former employees and amicus AARP try to distinguish 14 Penn Plaza by
noting that it involved a pre-dispute agreement rather than a release of already-
accrued claims. They argue that “rights or claims” under § 626(f)(1)(C) has a
different meaning than “right or claim” under § 626(f)(1). This argument ignores the
structure of § 626(f)(1). The two “right[s] or claim[s]” phrases appear in consecutive
sentences, creating a “natural presumption” that the phrases “have the same
meaning.” See Environmental Def. v. Duke Energy Corp., 549 U.S. 561, 574
(2007), quoting Atlantic Cleaners & Dyers, Inc. v. United States, 286 U.S. 427, 433
(1932). The context does not rebut this presumption. Section 626(f)(1) refers to
“right[s] or claim[s]” four times. Each reference describes the same “right[s] or
claim[s]” and places a specific limitation on waiver of those “right[s] or claim[s].”
Because an individual waives no “rights or claims” under § 626(f)(1)(C) by agreeing
to bring ADEA claims in arbitration, an individual similarly waives no “right or
claim” under § 626(f)(1) by agreeing to bring ADEA claims in arbitration.
The former employees also say that § 626(b), by incorporating 29 U.S.C.
§ 216(b), gives them a “right” to bring a class action. Section 626(b) provides, “The
provisions of this chapter shall be enforced in accordance with the powers, remedies,
and procedures provided in sections” including § 216(b). Section 216(b) says, “An
action to recover . . . liability . . . may be maintained . . . in any . . . court of competent
jurisdiction by any one or more employees for and in behalf of himself or themselves
and other employees similarly situated.” Section 626(b)’s incorporation of § 216(b)
“expressly authorizes employees to bring collective age discrimination actions ‘in
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behalf of . . . themselves and other employees similarly situated.’” Hoffmann-La
Roche Inc. v. Sperling, 493 U.S. 165, 170 (1989), quoting § 216(b).
Standing alone, § 216(b) does not create a non-waivable substantive right;
rather, its class-action authorization can be waived by a valid arbitration agreement.
Owen, 702 F.3d at 1052-55. Section 626(b)’s incorporation of § 216(b) does not
elevate the procedural class-action authorization to a substantive § 626(f)(1) “right.”
A close reading of § 626(b) shows why. Section 626(b) says the ADEA “shall be
enforced in accordance with the powers, remedies, and procedures provided in
sections” including § 626(c) and § 216(b). Section 626(c) says aggrieved persons
“may bring” court actions; § 216(b) says class actions “may be maintained.” Under
14 Penn Plaza, § 626(c)’s authorization of court actions does not create a § 626(f)(1)
“right.” Because § 216(b) and § 626(c) have similar language and context, § 216(b)’s
authorization of class actions similarly does not create a § 626(f)(1) “right.”
In moving to compel arbitration of the former employees’ ADEA claims,
General Mills did not assert the validity of a waiver of “the statutory right to be free
from workplace age discrimination.” See 14 Penn Plaza, 556 U.S. at 265. Section
626(f) is not a “contrary congressional command” overriding the FAA’s mandate to
enforce the agreements to arbitrate ADEA claims. Since the agreements require
individual arbitration of the former employees’ ADEA claims, the district court
should have granted General Mills’s motion as to those claims.
2.
The former employees contend that the issue for declaratory
judgment—whether the purported waivers of their substantive ADEA claims were
“knowing and voluntary” under § 626(f)(1)—is not arbitrable. They note that
§ 626(f)(3) says that “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
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voluntary” as defined in § 626(f)(1). They argue that the mandatory “shall have the
burden of proving in a court of competent jurisdiction” (emphases added) is a
contrary congressional command that overrides the FAA’s directive to enforce the
agreements.
Although neither party contests this court’s jurisdiction over the declaratory
judgment claim, this court must independently determine whether the claim presents
an Article III case or controversy. In re McCormick, 812 F.3d 659, 661 (8th Cir.
2016). To satisfy the case-or-controversy requirement, a declaratory judgment action
must be “definite and concrete, touching the legal relations of parties having adverse
legal interests,” “real and substantial,” and “admi[t] of specific relief through a decree
of a conclusive character, as distinguished from an opinion advising what the law
would be upon a hypothetical state of facts.” MedImmune, Inc. v. Genentech, Inc.,
549 U.S. 118, 127 (2007) (alteration in original), quoting Aetna Life Ins. Co. v.
Haworth, 300 U.S. 227, 240-41 (1937). “Basically, the question in each case is
whether the facts alleged, under all the circumstances, show that there is a substantial
controversy, between parties having adverse legal interests, of sufficient immediacy
and reality to warrant the issuance of a declaratory judgment.” Id., quoting Maryland
Cas. Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273 (1941).
An Article III case or controversy may exist where a private party threatens an
enforcement action that would cause an imminent injury. See id. at 130-31. Here,
though, the former employees do not plead that General Mills threatens any
enforcement of the ADEA claim waiver, let alone enforcement that would cause them
imminent injury. Instead, they request a declaration of their rights under a
hypothetical set of facts. They want to know their legal rights if, in the future,
General Mills asserts that the waivers of their substantive ADEA rights were
“knowing and voluntary” under § 626(f)(3). The hypothetical nature of the claim is
clear from the amended complaint:
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If and to the extent that General Mills maintains that any purported
waiver of ‘any right or claim’ under the ADEA contained in a Release
Agreement form signed by any of Plaintiffs (or by other similarly
situated person who may hereafter opt in to this action) is effective, then
the parties have an actual controversy, and the Court should issue
declaratory relief confirming that the Release Agreement forms signed
by such persons were not ‘knowing and voluntary’ under the ADEA and
therefore, as a matter of law, did not that [sic] waive or impair any right
or claim under the ADEA.
(emphases added). The former employees acknowledge that they have a justiciable
claim only “if and to the extent” General Mills asserts the validity of their substantive
ADEA claim waivers. At present, the injury (as pled by the former employees) is
“conjectural” or “hypothetical”—not “actual” or “imminent” as required to satisfy
Article III. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992). See also
MedImmune, 549 U.S. at 128 n.8 (quoting Lujan).
No Article III case or controversy arises when plaintiffs seek “a declaratory
judgment as to the validity of a defense” that a defendant “may, or may not, raise” in
a future proceeding. Calderon v. Ashmus, 523 U.S. 740, 747 (1998). In Ashmus,
prisoners sued state officials who had threatened to invoke a statute that allowed
qualifying states to raise a shorter statute of limitations against habeas petitions, and
granted other procedural benefits. See id. at 742-43. The prisoners requested a
declaration that the state did not qualify for the statutory benefits. See id. at 743. The
Court held there was no case or controversy:
The ‘case or controversy’ actually at stake is the class members’ claims
in their individual habeas proceedings. Any judgment in this action thus
would not resolve the entire case or controversy as to any one of them,
but would merely determine a collateral legal issue governing certain
aspects of their pending or future suits.
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Id. at 747. Accord Coffman v. Breeze Corp., 323 U.S. 316, 324 (1945) (finding no
case or controversy where patent owner sought declaratory judgment that Royalty
Adjustment Act was unconstitutional because “the constitutionality of the Act is
without legal significance and can involve no justiciable question unless and until
appellant seeks recovery of the royalties, and then only if appellee relies on the Act
as a defense”).
The “controversies” here are not whether the former employees waived their
substantive ADEA rights. Rather, the “controversies” are the ADEA claims
themselves, which the declaratory judgment action will not resolve. If the former
employees won, they would still have to arbitrate the merits of the claims. If the
former employees lost, they could still sue General Mills so long as General Mills did
not raise waiver as an affirmative defense. The district court did not have jurisdiction
over the former employees’ declaratory judgment claim.2
III.
On remand, the district court should dismiss the former employees’ declaratory
judgment claim for lack of jurisdiction, and grant General Mills’s motion to compel
individual arbitration of the remaining substantive ADEA claims. The district court
may decide whether to stay this action or dismiss it pending resolution of the
arbitrations. See Unison Co. v. Juhl Energy Dev., Inc., 789 F.3d 816, 821 (8th Cir.
2015).
2
This holding does not mean that a declaratory judgment claim that a waiver
was not “knowing and voluntary” under § 626(f) could never present an Article III
case or controversy. See, e.g., Newman v. District of Columbia Courts, 125 F. Supp.
3d 95, 106-08 (D.D.C. 2015) (collecting cases and explaining that jurisdiction might
exist if an agreement requires “tender back” of benefits or imposes penalties for
pursuing substantive ADEA claims).
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This court does not decide whether General Mills can assert the validity of its
waiver in arbitration. Because this court does not have jurisdiction over the
declaratory judgment action, this court does not reach the question of the import of
§ 626(f)(3)’s instruction that “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.”
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The judgment of the district court is reversed, and the case is remanded for
proceedings consistent with this opinion.
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