Charles William Joe v. First Bank System

UNITED STATES COURT OF APPEALS
FOR THE EIGHTH CIRCUIT
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Nos. 98-2294/98-2398
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Charles William Joe and *
Thomas P. McNally, *
*
Appellants/Cross-Appellees, *
* Appeal from the United States
v. * District Court for the
* District of Nebraska
First Bank System, Inc., *
A National Banking Association, *
*
Appellee/Cross-Appellant. *
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Submitted: April 22, 1999
Filed: February 11, 2000
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Before RICHARD S. ARNOLD AND WOLLMAN,1 Circuit Judges, and WOLLE,2
District Judge
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WOLLE, District Judge.
1
The Honorable Roger L. Wollman became Chief Judge of this Court on April 24,
1999.
2
The Honorable Charles R. Wolle, United States District Judge for the Southern
District of Iowa, sitting by designation.
Appellants Charles W. Joe and Thomas P. McNally assert that First Bank
System (FBS), now known as U.S. Bancorp, violated the Workers Adjustment and
Retraining Notification Act (WARN Act), 29 U.S.C. §§ 2101-2109. Joe and McNally
were employed at an Omaha office of FirsTier Bank, N.A. (FirsTier) when their
employer merged with FBS, causing a mass layoff as defined by the WARN Act. A
jury trial resulted in special verdicts (1) determining that Joe intended to release FBS
from all claims when he signed a release upon receipt of severance benefits, and (2)
that FBS had provided adequate WARN Act notice more than sixty days before Joe
and McNally were terminated on February 16, 1996.3 Ruling on post-verdict motions,
the trial court dismissed Joe’s claim based on the release he had signed, then upheld
McNally’s claim that he had not received WARN Act notice within sixty days of
termination, as required for compliance. The court entered judgment dismissing Joe’s
claim and awarding McNally back pay for the ten workdays by which the notice fell
short. All three parties appeal, but we affirm the judgments entered by the trial court.4
I. Joe was terminated on February 16, 1996, the day the merger was completed.
A day or two before, an FBS manager gave Joe a written estimate of what FBS would
pay him in severance benefits, together with the Separation Agreement and General
Release it required him to sign. Joe took the papers to his attorney, discussed them
with the attorney, then signed the documents and received severance pay in the amount
of $22,663.70, together with additional pay for unused vacation. At trial, Joe
challenged the release on several grounds. The jury found he intended to release his
WARN Act claim, and the trial court ruled against him on contentions that the release
3
This lawsuit was commenced by thirty-seven terminated employees who sought
but were denied class action status. Only a few plaintiffs remained when trial began,
and Joe and McNally are the only two plaintiffs who have appealed.
4
The Honorable Thomas M. Shanahan, United States District Judge for the
District of Nebraska.
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had been signed before his claim accrued, had been signed under duress, and was
without consideration.
A. Evidence supports the jury’s special verdict finding Joe understood the
language and purpose of the Separation Agreement and General Release. The language
was unambiguous, providing in pertinent part:
As essential inducement to FBS to enter into this Agreement, and as
consideration for the promises of FBS in this Agreement, Employee
hereby releases and discharges FBS and FirsTier Financial, Inc., . . . and
all employee benefits plans sponsored by FBS and FirsTier Financial, Inc.
and the trusts, trustees, officers and agents of such plans, from all liability
for damages and agrees not to institute any claim for damages, by charge
or otherwise, nor authorize any other party, governmental or otherwise,
to institute any such claims, arising under or based upon any federal,
state, or local employment or discrimination laws, regulations or
requirements, including but not limited to . . . any contract, quasi contract,
or tort claims, whether developed or undeveloped, including but not
limited to those arising from or related to FBS’s or FirsTier Financial,
Inc.’s hiring of Employee, Employee’s employment with FBS or FirsTier
Financial, Inc. and Employee’s cessation of employment with FBS or
FirsTier Financial, Inc.
Joe and the attorney he consulted must have understood Joe was waiving all claims
arising out of his employment, including any WARN Act claim. Like any contract, the
scope of a release is determined by the parties’ intent when they sign it. Mutz v.
Citizens State Bank of Maryville, 966 F.2d 434, 438 (8th Cir. 1992).
Joe signed the release the day after his employment terminated. On that day, he
knew what WARN Act notice he had and had not received before he was terminated.
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He could have begun his WARN Act lawsuit before he signed the release. His claims
had accrued before he signed the release.
B. Joe presented no meaningful proof of duress, not surprising since Joe
had the release for two or three days and discussed it with his attorney. Public policy
favors the enforcement of voluntary settlement agreements containing release language
that is unambiguous, the circumstance here. See, e.g., Ulvin v. Northwestern Nat. Life
Ins. Co., 943 F.2d 862, 867 (8th Cir. 1991), cert. denied, 502 U.S. 1073 (1992)
(enforcing release of ADEA claim in consideration of severance payment); Leavitt v.
Northwestern Bell Tel. Co., 921 F.2d 160, 162-63 (8th Cir. 1990) (enforcing release of
ERISA claims though employee did not consult attorney); Lancaster v. Buerkle Buick
Honda Co., 809 F.2d 539, 541 (8th Cir.), cert. denied, 482 U.S. 928 (1987) (release of
ADEA claim upheld when employee received severance payment though no attorney
consulted).
C. In rejecting Joe’s contention that the Separation Agreement and
General Release was without consideration, the trial court made sequential rulings on
several issues. We uphold the trial court’s rulings and the release.
The severance payment to Joe was calculated and made pursuant to an FBS
Nebraska Severance Pay program which the parties stipulated was an ERISA plan.
FBS had amended the plan before the merger to condition payment of severance
benefits on the employee’s execution of a release.
Joe contends a FirsTier ERISA qualified severance pay plan that predated the
bank merger entitled him to a larger severance payment than the payment he received
under the FBS severance plan. He based this on language describing which FirsTier
employees would be eligible for severance and what they would receive. Because he
interpreted that plan’s benefits to pay him more than the amount he received under the
FBS plan, Joe argues he received no consideration when he signed the release. He
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cites Nebraska common-law decisions holding a release unenforceable if a payment is
one the released party already was under obligation to make. In re Nelson’s Estate,
127 Neb. 563, 256 N.W. 27 (1934); Sallander v. Prairie Life Ins. Co., 112 Neb. 629,
200 N.W. 344 (1924).
The trial court rejected Joe’s theory of no consideration. First the court reasoned
that the FBS severance payment was made under an ERISA plan, preempting Joe’s
claim of a Nebraska common-law contract right to severance pay under the FirsTier
plan. The trial court also held that FBS had no preexisting legal duty to pay Joe under
either severance plan, because no severance benefits vested before the merger was
completed. See Inter-Modal Rail Employees Ass’n v. Atchison, Topeka & Santa Fe
Ry., 520 U.S. 510, 513-14 (1997). Several months before Joe and McNally were
terminated, FBS merged the former individual benefit plans and informed Joe and other
employees that severance would be paid only upon receipt of a signed separation
agreement and general release.
Joe’s claim under Nebraska law was preempted because it related to an
employee benefit plan. 29 U.S.C. § 1144(a); see California Div. of Labor Standards
Enforcement v. Dillingham Constr., 519 U.S. 316, 324 (1997) (ERISA preemption
clearly expansive). Under the amended FBS plan, FBS retained the right to condition
payment of any severance benefits on Joe first signing the release that he signed.
The trial court cited and relied on Warnebold v. Union Pac. R. R., 963 F.2d 222
(8th Cir.1992), in which our court upheld a release waiving an ADEA claim, with
severance payments as consideration. The trial court also noted that in Warnebold, our
court relied on a decision of the Court of Appeals for the Fourth Circuit that addressed
a factual situation quite similar to the circumstances here. In O’Shea v. Commercial
Credit Corp.. 930 F.2d 358, 362 (4th Cir.), cert. denied, 502 U.S. 859 (1991), the
terminated employee had contended that she was entitled to severance pay without
signing a release, and therefore the release was without consideration. The court
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upheld the release, however, on the ground that the employer had the right unilaterally
to amend or eliminate a severance plan or condition it upon signing of a release. We,
too, find the O’Shea decision persuasive authority for upholding the FBS release
defense.
We affirm the trial court’s decision dismissing Joe’s WARN Act claim.
II. Unlike Joe, McNally refused to sign the Separation Agreement and General
Release that FBS tendered to him, thereby keeping alive his WARN Act claim.
McNally contends FBS never gave him the information about his termination required
by the WARN Act; FBS in its cross-appeal contends that it gave McNally the required
information more than sixty days before McNally was terminated on February 16. The
jury agreed with FBS, finding sufficient information was given more than sixty days
before McNally was terminated. The trial court, however, held as a matter of law that
notice was not sufficient until FBS sent McNally a letter on January 3, forty-four
calendar days before his termination. We agree with that ruling.
Effective WARN Act notice must contain several categories of information,
including the likely date when the mass layoff will occur and the expected date when
the individual employee will be separated. 29 U.S.C. § 2102(a); 20 C.F.R. § 639.7(d).
The letter McNally received from FBS on January 3 gave him that information and
clarified earlier information that the statute required he be given. The newsletters and
notices FBS earlier posted or mailed its employees did not adequately inform McNally
when the merger would be complete and when he would be terminated.
Had the January 3 letter been sent by FBS to McNally at least sixty days before
he was terminated on February 16, it would have satisfied the WARN Act’s timeliness
requirement. But the January 3 letter to McNally was late by sixteen calendar days,
within which were ten workdays.
In its cross-appeal, FBS argues that it was in good faith in attempting to give
timely WARN Act notice, and the court should have exercised its discretion to find no
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violation or at least reduce the liability provided by the WARN Act. 29 U.S.C.
§ 2104(a)(4). We defer to the trial court’s advantage in observing FBS witnesses at
trial and making credibility decisions about good faith. No persuasive evidence
suggests that FBS believed its notices and memoranda before January 3 complied with
the WARN Act. To the contrary, the record suggests that FBS had information about
when the merger would be completed that it could have provided to McNally well
before it mailed him the January 3 letter that belatedly satisfied the WARN Act
information requirements. FBS did not sustain its good faith defense.
III. An employer who violates the WARN Act is liable for “back pay for each
day of violation.” 29 U.S.C. § 2104(a)(1)(A). McNally contends the trial court erred
in awarding damages for only ten workdays rather than the sixteen calendar days by
which the FBS notice fell short. We have twice rejected that reading of the statute and
follow our precedent in upholding the trial court’s award of back pay based on
workdays. See Teamsters Local 838 v. Laidlaw Transit, Inc., 156 F.3d 854, 855 (8th
Cir. 1998); Breedlove v. Earthgrains Baking Cos., 140 F.3d 797, 801 (8th Cir.),
cert. denied, 124 L. Ed. 2d 228 (1998).
We affirm the trial court’s judgment dismissing Joe’s WARN Act claim and
awarding McNally judgment against FBS for back pay for ten workdays.
AFFIRMED.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
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