Wastak v. Lehigh Valley Health

Opinions of the United
2003 Decisions States Court of Appeals
for the Third Circuit
6-11-2003
Wastak v. Lehigh Valley Health
Precedential or Non-Precedential: Precedential
Docket No. 02-2111
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PRECEDENTIAL
Filed June 10, 2003
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 02-2111
JOHN R. WASTAK,
Appellant
v.
LEHIGH VALLEY HEALTH NETWORK
Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civil No. 00-cv-04797)
District Court Judge: Honorable Herbert J. Hutton
Argued March 10, 2003
Before: RENDELL, AMBRO and MAGILL,*
Circuit Judges.
(Filed June 10, 2003)
Donald P. Russo, Esq. [ARGUED]
117 East Broad Street
P.O. Box 1890
Bethlehem, PA 18016
Counsel for Appellant
* The Honorable Frank J. Magill, Senior Circuit Judge of the United
States Court of Appeals for the Eighth Circuit, sitting by designation.
2
Jonathan B. Sprague, Esq.
[ARGUED]
Post & Schell
1800 John F. Kennedy Boulevard
19th Floor
Philadelphia, PA 19103
Counsel for Appellee
Benjamin N. Gutman, Esq.
[ARGUED]
Equal Employment Opportunity
Commission
1801 L. Street, N.W.
Washington, DC 20507
Counsel for Amicus-appellant Equal
Employment Opportunity
Commission
OPINION OF THE COURT
RENDELL, Circuit Judge.
John Wastak appeals from an order entered in the
District Court on March 27, 2002, granting summary
judgment in favor of his former employer, defendant Lehigh
Valley Health Network, with regard to Wastak’s allegations
of age discrimination. The District Court held that Wastak’s
suit was precluded by a valid release agreement, pursuant
to which Wastak, in exchange for various benefits, waived
his right to assert any claims arising out of his employment
or termination. We will affirm.
I.
In January of 1990, Lehigh Valley Health Network hired
John Wastak as the Administrator for its Department of
Psychiatry. Wastak held the position for eight years, during
which time Wastak believed that Lehigh Valley was satisfied
with his performance, and that his employment was secure.
Sometime in 1997, Wastak began negotiations to lease
office space for the Department. That December, however,
3
the Psychiatry Department Chair, Dr. Michael Kauffman,
directed Wastak to cease the discussions. Subsequently,
the Department engaged in the lease negotiations with a
different employee as its representative.
On March 12, 1998, Lehigh Valley fired Wastak, who was
fifty-seven years old at the time. Dr. Kauffman indicated
that the termination was a result of Wastak’s conducting
inappropriate lease negotiations. Wastak was given a
proposed Separation Agreement and Release (“Release”),
along with a letter explaining and supplementing its
provisions. The Release states, in pertinent part:
Wastak . . . herein agrees that [he will not] file a
charge, complaint, lawsuit or other claim against
[Lehigh Valley] . . . for any acts, omissions or
statements arising out of any aspect of Wastak’s
employment or termination of Wastak’s employment
with [Lehigh Valley]. By way of example only and
without limiting the immediately preceding sentence,
Wastak promises not to file a claim or lawsuit under
Title VII of the Civil Rights Act of 1964, the Age
Discrimination in Employment Act (29 U.S.C. § 621),
Section 1981 of the Civil Rights Act of 1866, the Equal
Pay Act of 1963, the Rehabilitation Act of 1973 and
Civil Rights Act of 1991, Pennsylvania Human
Relations Act, Employee Retirement Income Security
Act, 29 U.S.C. §§ 1001 et seq., and any other state or
federal equal employment opportunity law or statute.
In addition, Wastak agrees not to file any cause of
action or claim relating to the breach of an oral or
written contract, misrepresentation, defamation,
interference with contract and intentional or negligent
infliction of emotional distress, and any other common
law claims and all claims for counsel fees and costs.
The Release also relevantly provided that (1) if litigation
was brought in violation of the covenant not to sue, the
prevailing party would be entitled to reasonable costs and
attorneys’ fees; (2) performance of each party was
contingent on the other party’s compliance with the terms
of the agreement; (3) the Release contained all the promises
and understandings of the parties; (4) Wastak was advised
by Lehigh Valley to seek an attorney; (5) Wastak had
4
twenty-one days within which to sign the Release, and (6)
Wastak could revoke acceptance of the Release within
seven days of signing.
In exchange for his execution of the Release, Lehigh
Valley offered Wastak income protection for a period of
thirty-six weeks, paid biweekly. Under the provisions of the
agreement, Wastak was guaranteed remuneration
equivalent to his Lehigh Valley salary, whether or not he
secured other employment during the benefits period. Thus,
if Wastak accepted lower-paid employment prior to the end
of the period, Lehigh Valley would cover the difference in
salary, but Wastak’s benefits would terminate if he was
able to secure employment at a salary equal to or exceeding
his salary at Lehigh Valley. Lehigh Valley also promised
Wastak the free use of a professional outplacement firm.
As noted above, the Release provided that Wastak could
sign the agreement anytime within twenty-one days, and
Lehigh Valley advised Wastak to consult an attorney before
signing. Unfortunately, however, Wastak’s attempts to
secure counsel were unsuccessful as, for various reasons,
none of the three lawyers Wastak contacted could or would
represent him. Nonetheless, Wastak signed the Release.
The day of his termination, Lehigh Valley told Wastak
that it intended to hire a replacement for him. Nine months
later, in December of 1998, Wastak, who was then fifty-
eight, learned that Lehigh Valley had replaced him with a
forty-four year old woman. Then suspecting that he was
fired as a result of age discrimination, Wastak secured legal
counsel, and on July 20, 1999 — 495 days after his
termination — filed an age discrimination charge with the
Equal Employment Opportunity Commission (“EEOC”).
Under 29 U.S.C. § 626(d)(2), however, the EEOC charge was
required to be filed within 300 days of the accrual of the
cause of action. On March 1, 2000, the EEOC dismissed
the charge as untimely.
That August, Wastak filed suit in the Court of Common
Pleas of Lehigh County, claiming age discrimination in
violation of the Pennsylvania Human Relations Act, 43 P.S.
§§ 951, et seq. (“PHRA”), and the Age Discrimination in
Employment Act, 29 U.S.C. § 623 et seq. (“ADEA”). A month
5
later, Lehigh Valley removed the action to the federal court
in the Eastern District of Pennsylvania. In an opinion dated
March 27, 2002, the District Court granted Lehigh Valley’s
Motion for Summary Judgment on the basis of the Release.
The District Court rejected Wastak’s claims that the waiver
was void under the provisions of the Older Workers Benefit
Protection Act, 29 U.S.C. § 626 (“OWBPA”), or that the
agreement was otherwise invalid because he did not enter
into it knowingly and voluntarily. According to the District
Court, the Release executed by Wastak and Lehigh Valley
was legally valid, and by its plain language barred the suit
by Wastak under the PHRA or ADEA. Wastak then filed this
timely appeal.
The District Court had jurisdiction pursuant to 28 U.S.C.
§ 1331 and 28 U.S.C. § 1367, and we have jurisdiction
under 28 U.S.C. § 1291. Our review of a district court’s
grant of summary judgment is plenary, and we apply the
same standard as the district court. See Abramson v.
William Paterson College of N.J., 260 F.3d 265, 276 (3d Cir.
2001). Summary judgment is appropriate when there are
no genuine issues of material fact and, viewing the evidence
in the light most favorable to the non-moving party, the
moving party is entitled to judgment as a matter of law. See
Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317(1986); Abramson, 260 F.3d at 276.
II.
Wastak initially takes the position that the District Court
erred in finding that this particular claim is barred because
his cause of action is not covered by the terms of the
Release. He asserts that it arose long after he executed the
Release, i.e., when he learned that Lehigh Valley had
replaced him with a younger employee. Additionally,
Wastak makes a number of attacks on the validity of the
Release itself. According to Wastak, the Release is without
legal effect because it failed to satisfy the exacting
standards of the OWBPA. He argues that the Release
invalidly prohibited him from filing a charge with the
EEOC, was structured to discourage him from filing such a
charge, and is independently invalid because it provided for
the recovery of costs and attorneys’ fees in violation of
6
EEOC regulations. Finally, Wastak asserts that the Release
was unsupported by adequate consideration, and was not
entered into knowingly and voluntarily.
In addition to responding to Wastak’s arguments, Lehigh
Valley asserts that Wastak’s claim must be dismissed
simply because it was untimely. Although the EEOC did in
fact find the claim time-barred, Wastak maintains that we
should consider the relevant statute of limitations to have
been equitably tolled given the circumstances of this case.
Because we affirm the District Court’s conclusion that the
Release was valid and, accordingly, barred Wastak’s filing
of these claims, we need not reach the various timeliness
issues.
A.
By the plain terms of the Release, Wastak agreed not to
bring any actions against Lehigh Valley arising from his
employment or termination under the PHRA or ADEA. Yet
Wastak contends that his present age discrimination
causes of action are not barred by the Release because the
claims had not yet accrued when the Release was executed.
Under the OWBPA, employees may not waive their rights to
ADEA claims that “arise after the date the waiver is
executed.” 29 U.S.C. § 626(f)(1)(C). Thus, if Wastak’s
present causes of action did not arise until after the
Release was executed, they could not have been waived in
the Release and Lehigh Valley cannot now raise the Release
as a defense.
Wastak asserts that his age discrimination claims did not
accrue until December 1998, when he learned of his
replacement by a younger worker and was thus potentially
enabled to establish his prima facie case. We cannot agree.
Wastak’s argument misconceives the nature of the
“discovery rule” in employment discrimination cases, and is
precluded by our decision in Oshiver v. Levin, Fishbein,
Sedran & Berman, 38 F.3d 1380 (3d Cir. 1994).
In Oshiver, we considered the timeliness of claims made
by a female attorney, Oshiver, under Title VII and the
PHRA. On April 10, 1990, Oshiver was dismissed from her
position as an hourly attorney for a law firm. Id. at 1384.
The firm indicated that she was being terminated because
7
of insufficient work, but stated that they would contact her
if another hourly attorney or associate position became
available. Id. In May of 1991, Oshiver discovered that the
firm had hired a male attorney to replace her, and in
January of 1992, Oshiver learned that a male attorney had
been hired as an associate. Id. That December, Oshiver
filed a lawsuit alleging wrongful discharge and wrongful
failure to hire. Id.On appeal, we upheld the District Court’s dismissal of
Oshiver’s claims as untimely. Like Wastak, who argues that
his claim did not arise until he learned that he had been
replaced by a younger individual, Oshiver argued that her
claim did not arise, and the limitations period did not begin
to run, until she first discovered that the firm had replaced
her with a male attorney. Id. at 1385. We rejected that
argument, stating that under the discovery rule a cause of
action accrues the moment the plaintiff “either is aware, or
should be aware, of the existence of and source of an
injury.” Id. at 1386. Thus, with regard to Oshiver’s claim of
discriminatory discharge, we stated:
[W]e have no difficulty in concluding that for purposes
of the discovery rule, Oshiver “discovered” the injury on
April 10, 1990, the very date defendant law firm
informed her of her discharge. Simply put, at the
moment the law firm conveyed her dismissal to her,
Oshiver became aware (1) that she had been injured,
i.e., discharged, and (2) that this injury had been
caused by another party’s conduct.
Id. at 1390-91.
Similarly, here it is clear from the record that Wastak’s
injury was complete and discovered when Lehigh Valley
terminated him. At that point, Wastak knew both of his
injury — the discharge — and the cause of his injury —
Lehigh Valley’s decision to terminate his employment.
Wastak argues strenuously that he had little reason to
believe that he was the victim of age discrimination until he
learned that he had been replaced by a younger employee.1
1. In addition, Wastak argues that he was unable to make out a prima
facie case until he was replaced. However, in Pivirotto v. Innovative
8
That may well be true, but it has little to do with whether
his claim was prospective in March of 1998, a question that
depends solely on when his claim accrued under the
discovery rule.2 And, as we made clear in Oshiver, “a claim
accrues in a federal cause of action upon awareness of
actual injury, not upon awareness that this injury
constitutes a legal wrong.” Id. at 1386; see also id. at 1391(“That Oshiver may have been deceived regarding the
underlying motive behind her discharge is irrelevant for
purposes of the discovery rule.”); accord Amini v. Oberlin
College, 259 F.3d 493, 498-500 (6th Cir. 2001) (holding
that the statute of limitations began to run when the
plaintiff was notified of the employment action at issue);
Bennett v. Coors Brewing Co., 189 F.3d 1221, 1235 (10th
Cir. 1999) (“While the hiring of new, younger employees
might be evidence of Coors’ alleged discriminatory intent at
the time appellants left Coors, it is the alleged
discriminatory ‘discharge’ that appellants seek to redress.”);
Thelen v. Marc’s Big Boy Corp., 64 F.3d 264, 267 (7th Cir.
1995) (“A plaintiff ’s action [under the ADEA] accrues when
he discovers that he has been injured, not when he
determines that the injury was unlawful. . . . [Appellant’s]
injury was his termination.”); Dring v. McDonnell Douglas
Systems, Inc., 191 F.3d 344, 347 (3d Cir. 1999), we held that “a plaintiff
claiming discriminatory firing need not prove, to make out a prima facie
case, that she was replaced by someone outside the relevant class.” All
that is necessary is “evidence adequate to create an inference” that he
was fired because of his age. Id. at 355 (quotations omitted). And, as the
District Court noted, “The Record reflects that the Plaintiff believed
inferences of age discrimination existed at the time of his discharge.”
2. By contrast, such considerations may be relevant to the question of
whether the statute of limitations should be considered equitably tolled
under particular factual circumstances. See, e.g., Oshiver, 38 F.3d at
1389 (“[W]here a defendant actively misleads the plaintiff regarding the
reason for the plaintiff ’s dismissal, the statute of limitations . . . will be
tolled, until the facts which would support the plaintiff ’s cause of action
are apparent, or should be apparent to a person with a reasonably
prudent regard for his or her rights.”). Indeed, much of Wastak’s brief is
devoted to arguing that his claim was not untimely under principles of
equitable tolling. As stated above, however, we need not reach these
arguments because Wastak’s suit is barred by the valid Release.
9
Corp., 58 F.3d 1323, 1328 (8th Cir. 1995) (“In the context
of an ADEA action, . . . the limitations period begins to run
when the plaintiff receives notice of a termination
decision.”). See generally Forbes v. Eagleson, 228 F.3d 471,
485 (3d Cir. 2000) (applying discovery rule); New Castle
County v. Halliburton NUS Corp., 111 F.3d 1116, 1124-25
(3d Cir. 1997) (same).
Wastak’s present suit alleges age discrimination in
violation of the PHRA and ADEA, claims which, under the
discovery rule, accrued on March 12, 1998, the date of his
discharge. We must therefore reject Wastak’s argument that
his claims are not precluded by the Release because they
arose after the execution of that document.
B.
Wastak makes several challenges to the Release itself,
relying heavily on the OWBPA, which amended the ADEA
and governs the validity of waivers of ADEA rights. See,
e.g., Oubre v. Entergy Operations, Inc., 522 U.S. 422, 426-
27 (1998) (discussing the OWBPA generally); Long v. Sears
Roebuck & Co., 105 F.3d 1529, 1534-35 (3d Cir. 1997)
(same). The OWBPA provides that all ADEA waivers must
be “knowing and voluntary,” and mandates that no waiver
is to “be considered knowing and voluntary unless at a
minimum” it satisfies each of a set of listed requirements.
29 U.S.C. § 626(f)(1). The statutory requirements are fairly
straightforward, and the Release executed here appears to
satisfy each of the enumerated prerequisites for a knowing
and voluntary waiver.3 However, Wastak and the EEOC,
3. The OWBPA’s minimum waiver requirements are as follows:
(A) the waiver is part of an agreement between the individual and
the employer that is written in a manner calculated 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 chapter;
(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;
10
who appears before us as amicus, argue that for various
reasons this Release does not in fact satisfy the OWBPA’s
stringent requirements and, thus, “can have no effect on
[his] ADEA claim.” Oubre, 522 U.S. at 427.
Wastak’s first argument involves a challenge to the
specific language in the Release that provided that he
agreed not to “file a charge, complaint, lawsuit or other
claim against [Lehigh Valley].” Wastak asserts that this
charge-filing ban conflicts with the following section of the
OWBPA:
No waiver agreement may affect the Commission’s
rights and responsibilities to enforce this chapter. No
waiver may be used to justify interfering with the
protected right of an employee to file a charge or
(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.
29 U.S.C. § 626(f)(1).
11
participate in an investigation or proceeding conducted
by the Commission.
29 U.S.C. § 626(f)(4). Accordingly, Wastak argues that the
Release is rendered void because in it he agreed not to file
a charge with the EEOC. While perhaps superficially
appealing, Wastak’s argument is undermined by the
language, structure, and legislative history of the OWBPA,
as well as relevant case law.4 In addition, the EEOC’s
reliance on policy arguments is unavailing. We will discuss
each of these aspects in turn.
In interpreting any statute, we begin with the statute’s
plain language. See, e.g., Kaiser Aluminum & Chem. Corp.
v. Bonjourno, 494 U.S. 827, 835 (1990); Mitchell v. Horn,
318 F.3d 523, 535 (3d Cir. 2003). Unlike the preceding
subsections of the statute, § 626(f)(4) does not deal with the
validity of waiver agreements at all. See Thiessen v. General
Electric Capital Corp., 232 F. Supp. 2d 1230, 1242-43 (D.
Kan. 2002). Rather, its language is very specific and
provides only that waivers may not (1) “affect the
Commission’s rights and responsibilities to enforce” the
ADEA, or (2) “be used to justify interfering with the
protected rights of an employee” to file an EEOC charge or
participate in an EEOC investigation. 29 U.S.C. § 626(f)(4).
In stark contrast to the mandatory prerequisites listed for
waiver agreements under § 626(f)(1), then, there is no clear
statutory indication that a waiver agreement that contains
a provision that runs afoul of the provisions of § 626(f)(4) is
suspect, let alone invalid. Indeed, the language suggests
just the opposite. The statute essentially states that,
whatever its provisions, a privately executed waiver
4. Wastak asserts that the OWBPA “explicitly states that the party
seeking to enforce the terms of an ADEA waiver agreement carries the
burden of proof at all times,” and argues that the District Court erred in
failing to appreciate that Lehigh Valley bore the burden of proving the
waiver’s validity. The statute, however, allocates the burden of proof to
“the party asserting the validity of a waiver” only in connection with
subsections (1) and (2) of § 626. 29 U.S.C. § 626(f)(3). Thus, Wastak’s
primary challenge to the validity of the Release, namely, that it violates
paragraph § 626(f)(4), does not fall within the ambit of the statute’s
burden of proof allocation. We are convinced, however, that this Release
is valid whichever party was to have borne the burden of proof.
12
agreement cannot alter or obstruct the EEOC’s ability to
exercise its rights and responsibilities, and that an
employer may not invoke a waiver in an attempt to impede
an employee’s participation in EEOC procedures. Both
requirements appear to contemplate the validity of an
underlying waiver of a legal action and deal only with the
administrative process — namely, the right of the EEOC to
do its job and the right of the employee to file a claim with
the agency. At most, the statutory language can be read to
mean only that a provision that purports to, for example,
alter the EEOC’s rights to pursue and investigate a claim
that is filed, is unenforceable. See EEOC v. Johnson &
Higgins, Inc., 91 F.3d 1529, 1536 (2d Cir. 1996) (stating
that where the EEOC has the authority to enforce the
ADEA, “that authority cannot be altered by a waiver of the
rights of a private party — even a private party with a direct
interest in the subject of concern to the EEOC”). In sum,
the statute is clear that any attempt by an employer to
enforce a contractual provision prohibiting an employee
from filing a charge or participating in an EEOC
investigation would be ineffectual, but there is no indication
that the mere presence of that contractual language would
void an otherwise knowing and voluntary waiver.
Moreover, here there was no apparent violation of the
clear terms of § 626(f)(4). Wastak does not allege that the
Release “affect[ed] the Commission’s rights and
responsibilities,” or that Lehigh Valley interposed the
Release or otherwise “use[d] [it] to justify interfering with”
Wastak’s protected right to file that charge. Wastak in fact
filed an EEOC charge, and Lehigh Valley does not take
issue with the filing of that charge, but only with the
subsequent filing of a lawsuit in violation of the terms of
the Release.
The structure of § 626(f) supports this plain meaning
interpretation. The statute is divided into four subsections.
As noted above, the first enumerates a list of mandatory
prerequisites for a valid waiver. The second sets forth a
narrow exception to those requirements. The third allocates
the burden of proof with regard to disputes about the first
two subsections, placing on the party asserting the waiver
the burden to prove that it was made knowingly and
13
voluntarily. Finally, § 626(f)(4), the subsection in question,
clarifies that even otherwise statutorily compliant waiver
agreements cannot be used to interfere with the EEOC’s
exercise of its duties, or with an employee’s right to
complain to the agency. The provision is crucially distinct
from the list of necessary prerequisites for a valid waiver.
See Thiessen, 232 F. Supp. 2d at 1242-43. Had Congress
intended that a charge-filing ban of the sort found here
would operate to invalidate a waiver, it could have either
stated so explicitly, or, more consistently with the structure
of the statute, simply included a provision similar to
§ 626(f)(4) within the list of enumerated prerequisites in
§ 626(f)(1). It did neither.
The legislative history suggests, moreover, that
Congress’s choice in structuring § 626(f) as it did was not
merely fortuitous. Neither the Senate Report nor the House
Report contain the slightest indication that § 626(f)(4) was
to be considered among the prerequisites for a valid waiver.
Further, the Senate Report, which accompanied the version
of the legislation ultimately adopted by Congress, and
which offers the only specific discussion of this subsection,
distinctly suggests that the requirements of the subsection
were not meant to void an otherwise knowing and voluntary
waiver. Under the subheading “Right to Participate in
EEOC Proceedings,” the Senate Report states, in full:
The legislation provides that a waiver may not interfere
with the EEOC’s rights and responsibilities to enforce
the ADEA, nor may such a waiver be used to interfere
with the employee’s protected right to file a charge or
to participate in an EEOC investigation or proceeding.
The Committee intends this provision as a clear
statement of support for the principle that the
elimination of age discrimination in the workplace is a
matter of public as well as private interest. No waiver
agreement may be permitted to interfere with the
achievement of that goal. This position is consistent
with the holding and reasoning of EEOC v. Cosmair,
Inc., 821 F.2d 1085 (5th Cir. 1987). An employee may
validly waive the right to recover in his own lawsuit as
well as the right to recover in a suit brought by the
Commission on his own behalf.
14
S. Rep. 101-263, at 35 (1990), reprinted in 1990
U.S.C.C.A.N. 1509, 1541.
Notably, the Report does not refer to or even hint at the
potential invalidity of particular waivers. To the contrary,
the resounding message is that § 626(f)(4) was meant only
to establish that waiver agreements between employers and
employees have no effect on the EEOC’s ability to carry out
its public duties, and that the employer may not use a
waiver to interfere with the employee’s rights to participate
in EEOC processes. That is, the intent of the subsection is
not to impose new restraints on private waivers, but to
ensure that those waivers do not materially interfere with
the EEOC’s pursuit of the public’s interest in eradicating
age discrimination from the workplace. A waiver’s release of
rights to pursue or participate in a lawsuit, as Lehigh
Valley interposes here — which is essentially the focus of
the remainder of § 626 — remains intact.
We note further that, because it was specifically endorsed
in the Senate Report, EEOC v. Cosmair, Inc., 821 F.2d 1085(5th Cir. 1987), is particularly instructive. There the Court
of Appeals for the Fifth Circuit considered the case of an
employee who filed a charge with the EEOC alleging age
discrimination after signing a waiver in exchange for
severance benefits. Id. at 1087. The employee’s EEOC
charge, however, did not request relief. Id. Subsequently,
the employer terminated the employee’s severance benefits,
claiming that the employee had violated the waiver
agreement. Id.The court began by noting that EEOC charges are
distinct from typical employee claims against an employer
in that their purpose “is not to seek recovery from the
employer but rather to inform the EEOC of possible
discrimination.” Id. at 1089. Accordingly, the court found
that the employee, who had waived “all actions, causes of
action, claims and demands whatsoever,” had not actually
waived his right to file an EEOC charge. Id. Further, to the
extent the agreement was meant to forfeit such rights, the
court noted that “[a]llowing the filing of charges to be
obstructed by enforcing a waiver of the right to file a charge
could impede EEOC enforcement of the civil rights laws.”
Id. at 1090. It thus concluded that any “waiver of the right
15
to file a charge is void as against public policy,” and,
therefore, that “any attempt by [the employee] to waive his
right to file a charge is void.” Id. at 1090. The court made
clear, however, that “the fact that a waiver of the right to
file a charge is void does not invalidate a waiver of a cause
of action with which it is conjoined.”5 Id. at 1091.
As stated above, the Senate Report indicated that
§ 626(f)(4) was meant to be consistent with both the
“holding and reasoning” of Cosmair. Accordingly, two
conclusions may be permissibly drawn from that decision
about Congress’s intent for § 626(f)(4), both of which
support our analysis thus far. First, the provision was
intended to prohibit employers from using waivers to
interfere with the filing of a charge by, for instance, refusing
to perform under the agreement if an EEOC claim is filed.
In Cosmair, the court held that an employer’s recourse to a
waiver provision under such circumstances would be
unenforceable, and the statute similarly renders such
attempts clearly ineffectual. Second, a knowing and
voluntary waiver of the right to sue is not void solely
because it also references a charge-filing ban, a conclusion
explicitly adopted by the court in Cosmair. See Cosmair,
821 F.2d at 1091; see also, e.g., McCall v. U.S. Postal
Service, 839 F.2d 664, 666 n* (Fed. Cir. 1988) (“[E]ven if
McCall’s attempted waiver of his right to file EEOC charges
is void, that would not affect the validity of the other
portions of the agreement.”). Notably, the court in Cosmair
cited for this proposition the Restatement of Contracts,
recognizing that the conclusion is largely driven by a
straight-forward application of well-settled principles of
contracts law. See Cosmair, 821 F.2d at 1091 (citing
Restatement (Second) of Contracts § 184(1) (1981) (“If less
5. The court also stated that “although an employee cannot waive the
right to file a charge with the EEOC, the employee can waive not only
the right to recover in his or her own lawsuit but also the right to recover
in a suit brought by the EEOC on the employee’s behalf.” Cosmair, 821
F.3d at 1091. This holding was echoed in the Senate Report. See S. Rep.
101-263, at 35 (1990), reprinted in 1990 U.S.C.C.A.N. 1509, 1541 (“An
employee may validly waive the right to recover in his own lawsuit as
well as the right to recover in a suit brought by the Commission on his
own behalf.”).
16
than all of an agreement is unenforceable . . . a court may
nevertheless enforce the rest of the agreement in favor of a
party who did not engage in serious misconduct if the
performance as to which the agreement is unenforceable is
not an essential part of the agreed exchange.”)).
We recently had occasion to consider a similar set of
questions in Spinetti v. Serv. Corp. Int’l, 324 F.3d 212 (3d
Cir. 2003). At issue in Spinetti was the enforceability, under
Pennsylvania law, of an employment arbitration agreement
that included certain provisions that conflicted with federal
law. Id. at 213. We held that the offensive provisions could
be severed without disturbing the enforceability of the
remainder of the agreement. Id. at 213-14. Although our
decision in Spinetti is in some ways distinguishable from
the case before us, several of the principles underlying that
decision are equally applicable here. As Judge Aldisert
pithily noted, “You don’t cut down the trunk of a tree
because some of its branches are sickly.” Id. at 214. Put
simply, the presence of a sickly charge-filing ban does not
render this Release involuntary, unknowing, or otherwise
void.
Perhaps recognizing the fatal weaknesses in Wastak’s
argument that this Release is void solely because it
contains an unenforceable charge-filing ban under
§ 626(f)(4), the EEOC offers an alternative but related
argument for invalidating the waiver. The EEOC maintains
that this Release does violate one of § 626(f)(1)’s
enumerated prerequisites for a knowing and voluntary
waiver because it is not “written in a manner calculated to
be understood by” the employee. 29 U.S.C. § 626(f)(1)(A).
According to the EEOC, by including the unenforceable
prohibition on filing a charge, the agreement misrepresents
Wastak’s rights. “Since the waiver misstates Wastak’s legal
rights,” the EEOC urges, “it is not written in a manner
calculated to be understood as required by § 626(f)(1)(A).”
We are unable to accept the EEOC’s conceptual leap.
Although the EEOC is clearly correct to the extent it asserts
that the agreement purports to deny Wastak a right he
actually had, it has not offered a convincing rationale as to
how that misstatement renders the agreement not
understandable. We can find nothing at all inherently
17
incomprehensible about the language of the Release, and,
indeed, Wastak admitted that he generally understood the
terms of the Release. During a deposition, Wastak testified
that, a few days after his termination, he was able to calm
down and read the relevant documents, and that he
understood that he was agreeing not to sue Lehigh Valley
in exchange for thirty-six weeks of salary continuation and
outplacement services. Further, neither Wastak nor the
EEOC has pointed to anything in the language, structure,
or legislative history of the OWBPA that supports the
proposition that the Release’s misstatement of Wastak’s
legal rights on this issue renders the entire waiver
unknowing or involuntary under the statute. The EEOC’s
argument would incorporate the provisions of § 626(f)(4)
into the minimum requirements for a knowing and
voluntary waiver listed in § 626(f)(1) by way of the section’s
general mandate that waivers be written in an
understandable fashion. Absent some compelling
justification, we will not read the statute in a way that
disturbs its meaning.
The EEOC’s final recourse is to policy arguments, and it
maintains that “[e]nforcing Wastak’s waiver would hinder
[its] efforts to enforce the ADEA.” However, as we have
noted, the waiver enforced by the District Court was solely
as to Wastak’s right to bring a lawsuit, and refusing to
recognize a statutorily compliant and otherwise valid waiver
would be equally contrary to statutory policy. Further, it is
worth reiterating that no such imposition ever occurred in
this case, as the EEOC was in fact presented with Wastak’s
claim. Finally, the EEOC’s generalized claim of hindrance is
neither adequately explained nor supported. Instead, the
EEOC simply asserts that a ruling in Lehigh Valley’s favor
will encourage and embolden employers to include
unenforceable charge-filing bans or other similar
concoctions in their waiver agreements in wrongful
attempts to dissuade terminated employees from filing
EEOC charges or otherwise exercising their rights. We
rejected a nearly identical argument from the EEOC in
Spinetti, see Spinetti, 324 F.3d 223, and we remain
unconvinced.6
6. We reiterate that this is not a case in which the employer clearly
prohibited resort to administrative process, or in which the employee
18
Wastak also argues that the Release was invalid because
it violated 29 C.F.R. § 1625.23(b). That regulation states:
No ADEA waiver agreement, covenant not to sue, or
other equivalent arrangement may impose any
condition precedent, any penalty, or any other
limitation adversely affecting any individual’s right to
challenge the agreement. This prohibition includes, but
is not limited to, provisions requiring employees to
tender back consideration received, and provisions
allowing employers to recover attorneys’ fees and/or
damages because of the filing of an ADEA suit. This
rule is not intended to preclude employers from
recovering attorneys’ fees or costs specifically
authorized under federal law.
Id. Wastak alleges that Section V of the Release, in
particular, violates this regulation. That section provides:
In the event that suit is filed in breach of this covenant
not to sue, it is expressly understood and agreed that
either understood that he was not permitted to file an EEOC charge, or
did not do so based on the waiver. To the contrary, the plaintiff here
seeks to void a waiver agreement because it contained the word “charge”
in the prohibition section, notwithstanding the fact that he in fact
pursued an administrative charge and does not contend that he was
actually misled or disadvantaged by the language in any way. Wastak
came before the district court desirous of proceeding in court, something
he clearly agreed not to do. The only issue before us is whether, given
the statutory provisions at issue and the facts before us, we would
permit him to avoid the agreement he entered into.
We note, however, that a regulation that became effective after the
incident before us clearly precludes the inclusion of provisions that
prohibit resort to administrative process. See 29 C.F.R. § 1625.22(i)(2)
(“No waiver agreement may include any provision prohibiting any
individual from . . . [f]iling a charge or complaint, including a challenge
to the validity of the waiver agreement, with [the] EEOC.”). The presence
of such a prohibition in a waiver agreement that is subject to this
regulation could certainly lead a court to find, under proper
circumstances, that the waiver “ha[d] the effect of misleading,
misinforming, or failing to inform” the plaintiff, 29 C.F.R. § 1625.22(b)(4),
thus rendering the waiver not “knowing and voluntary,” and, therefore,
invalid. But, again, that is not this case.
19
this covenant shall constitute a complete defense to
any such suit. In the event litigation is brought to
enforce the terms of this paragraph, the prevailing
party shall be entitled to recover reasonable costs and
attorneys’ fees.
We can find no conflict between the provisions of the
Release and the terms of § 1625.23. The EEOC’s anti-
retaliatory regulation plainly prohibits employers from
imposing any penalty or limitation upon the employee’s
right to challenge the validity of waiver agreements. But
Wastak has not pointed to any term in the Release that
could arguably be said to violate that provision. Despite
Wastak’s suggestions to the contrary, the Release does not
“allow[ ] [Lehigh Valley] to recover attorneys’ fees and/or
damages because of the filing of an ADEA suit,” as
prohibited in the statute. 29 C.F.R. § 1625.23. Instead, it
provides only for prevailing party costs and fees. See, e.g.,
65 Fed. Reg. 77,438, 77,442 (Dec. 11, 2000) (stating that
the regulation prohibits “the use of provisions allowing the
recovery of damages and/or attorneys’ fees simply because
suit has been filed” (emphasis added)). Such a provision
does not impose a limitation or condition on the ability to
challenge the waiver, but, rather, represents a recognized
and accepted contractual arrangement for the shifting of
fees at the termination of litigation.7 Under such an
7. Wastak also appears to argue that this provision of the Release
violates public policy in that it conflicts with the ADEA’s provision that
explicitly authorizes attorneys’ fees to prevailing plaintiffs only. See 29
U.S.C. § 626(b) (incorporating 29 U.S.C. § 216(b)). We note, however, that
a fee-shifting arrangement made pursuant to an enforceable contract is
one of the primary common law exceptions to the American rule of fee
allocation, Alyeska Pipeline Serv. Co. v. Wilderness Soc’y, 421 U.S. 240,
257 (1975), and there is little reason to believe that in enacting the
ADEA Congress intended to abrogate those exceptions. See, e.g.,
Turlington v. Atlanta Gas Light Co., 135 F.3d 1428, 1437 (11th Cir. 1998)
(allowing employer-defendant in ADEA suit to recover attorneys’ fees
under common law exception for claims brought in bad faith); 65 Fed.
Reg. 77,438, 77,442 (Dec. 11, 2000) (agreeing with this line of decisions);
accord Hoover v. Armco, Inc., 915 F.2d 355, 356-57 (8th Cir. 1990); Gray
v. New England Tel. & Tel., 792 F.2d 251, 260 & n. 1 (1st Cir. 1986);
Morgan v. Union Metal Mfg., 757 F.2d 792, 796 (6th Cir. 1985); Cesaro
v. Thompson Publ’g Group, 20 F. Supp. 2d 725, 726 (D.N.J. 1998); Miller
v. State Chem. Mfg. Co., 706 F. Supp. 1166, 1172 (M.D. Pa. 1988).
20
arrangement, a plaintiff who levels a successful attack on a
waiver agreement will benefit by being entitled to recover
his fees and costs. This is not the penalty proscribed by the
regulation, which would punish the mere initiation of a
suit, even if that suit was ultimately meritorious. In short,
Wastak has offered absolutely no basis on which to
conclude that the relevant terms of this Release could be
construed as violating § 1625.23.8
Wastak’s penultimate argument is that the Release is
invalid because it was not supported by consideration. He
cites to the OWBPA’s mandate that all valid waivers be “in
exchange for consideration in addition to anything of value
to which the individual already is entitled.” 29 U.S.C.
§ 626(f)(1)(D). According to Wastak, Lehigh Valley’s offer of
severance benefits did not constitute adequate
consideration because the benefits took the form of income
protection and therefore would cease if Wastak secured
other employment at an equal or higher salary during the
relevant period. This argument is without merit.
Notwithstanding the fact that Lehigh Valley also provided
Wastak with the free use of an outplacement firm, the
thirty-six weeks of income protection was substantial and
certainly “in addition” to what Wastak was entitled to upon
his termination — nothing.
Finally, Wastak argues that the Release violated the
general principles of the OWBPA in that, regardless of
whether it satisfied the specific minimum prerequisites set
forth in § 626(f)(1), it was not made knowingly and
voluntarily. He relies on the fact that he was unable to
secure counsel to review the relevant documents, and
8. We similarly reject Wastak’s argument that the Release violated
§ 1625.23 because the reciprocal obligations clause of the contract was
an unlawful limitation on his right to challenge the agreement, since
Lehigh Valley could discontinue the payment of benefits if he posed such
a challenge. The EEOC regulation is appropriately concerned with, for
example, “provisions requiring employees to tender back consideration
received, and provisions allowing employers to recover attorneys’ fees
and/or damages because of the filing of an ADEA suit.” 29 C.F.R.
§ 1615.23. But there is little reason to believe, as Wastak suggests, that
it is intended to disturb the longstanding contract principle that one
party’s performance is excused by the other party’s breach.
21
asserts that he did not understand the nature and content
of the Release. He also claims that at the time the Release
was executed he was suffering from “psychological trauma”
due to his termination and its accompanying financial
consequences.
The record here belies any claim that Wastak signed this
Release unknowingly or involuntarily.9 Although Wastak
testified that he was, understandably, not familiar with the
particular statutory citations in the Release, when asked
directly whether he understood that “in return for the 36
weeks of salary continuation and the out placement
services, [he was] agreeing not to sue or file a lawsuit
9. Neither party has raised the issue of the proper standard under which
we should evaluate Wastak’s general claim that the Release was not
knowing and voluntary apart from the requirements of the OWBPA. The
statute provides that its requirements set only a “minimum,” 29 U.S.C.
§ 626(f)(1), which, the legislative history states, “must be satisfied before
a court may proceed to determine factually whether the execution of a
waiver was ‘knowing and voluntary.’ ” S. Rep. No. 101-263, at 32 (1990),
reprinted in 1990 U.S.C.C.A.N. 1509, 1537; see also H.R. Rep. No. 101-
664, at 51 (1990). Notably, with regard to that factual inquiry, the
legislative history explicitly endorses the “totality of circumstances”
approach we employed prior to the passage of the statute. See S. Rep.
No. 101-263, at 32, reprinted in 1990 U.S.C.C.A.N. 1509, 1537; H.R.
Rep. No. 101-664, at 51; see also Cirillo v. Arco Chem. Co., 862 F.2d
448, 451-52 (3d Cir. 1988) (analyzing waiver under a totality of the
circumstances test); Coventry v. U.S. Steel, 856 F.2d 514 (3d Cir. 1988)
(same). In Long v. Sears Roebuck & Co., 105 F.3d 1529 (3d Cir. 1997),
to which some courts have cited for the proposition that the OWBPA
completely preempts application of the pre-OWBPA totality of the
circumstances analysis, we held only that the OWBPA precludes
application of the common law doctrines of ratification and tender-back,
and specifically stated that “the OWBPA was enacted to ‘establish[ ] a
floor, not a ceiling.’ ” Id. at 1539 (quoting Soliman v. Digital Equip. Corp.,
869 F. Supp. 65, 69 n.13 (D. Mass. 1994)); see also Bennett v. Coors
Brewing Co., 189 F.3d 1221, 1229 (10th Cir. 1999) (holding that
satisfaction of the OWBPA’s statutory requirements is not sufficient to
establish knowing and voluntary waiver and that courts must inquire
into the totality of the circumstances); Griffin v. Kraft General Foods, Inc.,
62 F.3d 368, 373-74 (11th Cir. 1995) (same); EEOC v. Johnson &
Higgins, 5 F. Supp. 2d 181, 186 (S.D.N.Y. 1998) (same). We conclude,
therefore, that general considerations that bear on the issue, apart from
the statutory prerequisites, are relevant.
22
against Lehigh Valley,” Wastak answered that he did. As for
Wastak’s claim that he signed the waiver involuntarily given
his financial circumstances and fragile mental state, while
Wastak correctly notes that such claims should usually be
decided by a jury, we agree with the District Court that
Wastak has not come forth with sufficient evidence to
create a genuine issue of material fact with regard to any
lack of understanding or voluntariness on his part in
signing the Release. Wastak testified that he was able to
comprehend the nature of the Release. He was also of a
sufficient mental state to make several attempts to retain
legal counsel. Wastak asserts that after he was terminated
he faced the prospect of serious financial pressures,
conditions that ultimately caused him to suffer severe
depression and anxiety, for which he sought psychological
treatment and medication. There is, however, no evidence
in the record to support the claim that he was experiencing
mental impairments when he signed the Release, and the
law is clear that the existence of financial pressure to sign
a waiver is insufficient to establish that it was executed
involuntarily. See, e.g., Cirillo v. Arco Chem. Co., 862 F.2d
448, 452 n.2 (3d Cir. 1988) (“[E]conomic pressure alone is
insufficient to establish a claim of duress that would void
an otherwise valid release.”); Three Rivers Motor Co. v. Ford
Motor Co., 522 F.2d 885, 893 (3d Cir. 1975).
Wastak’s complaint also seeks relief under the PHRA, but
that claim is similarly barred by the Release. As correctly
noted by the District Court, the statutory provisions of the
OWBPA apply only to ADEA claims, and thus, the effect of
the Release with regard to the state PHRA claims is
“determined by the ordinary meaning of the language
contained therein.” Strickland v. Univ. of Scranton, 700 A.2d
979, 986 (Pa. Super. Ct. 1997). Here, the Release
unambiguously prohibits Wastak from pursuing claims
under the PHRA, and Wastak has come forth with no
evidence of fraud, duress or other circumstances sufficient
to invalidate the agreement. See, e.g., Bowersox Truck Sales
& Serv., Inc. v. Harco Nat’l Ins. Comp., 209 F.3d 273, 279
(3d Cir. 2000) (stating, in a case involving Pennsylvania
law, that “ ‘[a] signed release is binding upon the parties
unless executed and procured by fraud, duress, accident or
mutual mistake.’ ” (quoting Three Rivers Motors, 522 F.2d
23at 892); Davis v. Gov’t Employees Ins. Co., 775 A.2d 871,
875 (Pa. Super. Ct. 2001) (same); Strickland, 700 A.2d at
986 (same).
III.
John Wastak and Lehigh Valley executed a valid release
pursuant to which Wastak agreed to waive his right to
bring ADEA and related claims arising out of his
employment and termination in exchange for thirty-six
weeks of income protection and other benefits. Accordingly,
we hold that the present claims are barred, and that the
District Court correctly entered summary judgment in favor
of Lehigh Valley.
For all of the foregoing reasons, the order of the District
Court will be AFFIRMED.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit