Deren v. Digital Equipment

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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