Behr v. Aadg, Inc.

DENNIS BEHR, et al. Plaintiffs, v. AADG, INC., d/b/a Curries, Defendant.

No. 14-CV-3075-CJW

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF IOWA CENTRAL DIVISION

July 29, 2016

MEMORANDUM OPINION AND ORDER

TABLE OF CONTENTS

I. INTRODUCTION ............................................................................... 2

II. PROCEDURAL HISTORY ................................................................... 2

III. FACTUAL BACKGROUND ................................................................ 3

IV. SUMMARY JUDGMENT STANDARD ................................................... 6

V. STATUTORY INTERPRETATION OF OWBPA ........................................ 7

VI. DISCUSSION ................................................................................ 14

A. No Genuine Issue of Any Material Fact Exists ....................................... 15

B. Compliance with the Requirement for a 45-day Consideration Period ........... 16

C. Compliance with the Disclosure Requirement for Non-terminated Employees 20

D. Compliance with the Disclosure Requirement for the Eligibility Factors ....... 27

E. Compliance with the Disclosure Requirement for the Decisional Unit .......... 31

F. Inclusion of an Attorney's Fees Provision in the Separation Agreement ....... 33

VI. CONCLUSION .............................................................................. 35

I. INTRODUCTION

The matters before the court are the plaintiffs' motion for partial summary judgment (Doc. 31)¹ and defendant AADG, Inc.'s cross-motion for summary judgment (Doc. 40). At issue is the enforceability of a separation agreement wherein plaintiffs waived their right to sue their employer for age discrimination. On April 6, 2016, the court held a hearing on the parties' pending motions for summary judgment. The parties were given 14 days from the date of the hearing to file additional briefing if they wished. On April 20, 2016, both parties submitted post-hearing briefs which the court has considered. Doc. 73, 74. Thus, the motion for summary judgment is fully submitted.

The court has thoroughly considered all briefing and arguments in this matter. After much deliberation and research into this difficult statutory landscape, the court finds that, as a matter of law, defendant's waiver is invalid and unenforceable. Thus, the court grants plaintiffs' motion for partial summary judgment and denies defendant's cross-motion for summary judgment. Plaintiffs may continue to assert their age discrimination claims against defendant.

II. PROCEDURAL HISTORY

Plaintiff Dennis Behr commenced this lawsuit on November 21, 2014. Mr. Behr filed a complaint with jury demand alleging a violation of the Age Discrimination in Employment Act of 1967 (ADEA), 29 U.S.C. § 621 et seq., by his former employer, defendant AADG, Inc., d/b/a Curries (defendant). Doc. 2. Mr. Behr moved for conditional class certification seeking to certify the class of 13 employees—who were over 40 years of age—fired through defendant's reduction in force (RIF) plan. Doc. 15. Through an amended complaint, plaintiff Glenn Willier was added as a party plaintiff tothe suit. Doc. 25. The court granted conditional class certification. Doc. 28. Potential class members include: Dale Glenn and Robert Lauen (Doc. 37), Michael Eppens (Doc. 41), and Curtis Blaine Darnell (Doc. 43) (hereinafter collectively referred to as "plaintiffs"). Defendant filed a counterclaim for compensation and attorney's fees under the Separation Agreement.² Doc. 5.

On November 20, 2015, plaintiffs filed a motion for partial summary judgment and a request for oral argument. Doc. 31. Plaintiffs seek partial summary judgment on the invalidity of ADEA claim waivers in a "Separation Agreement, General Release and Covenant Not to Sue" (Separation Agreement) they signed upon termination of their employment. In response to plaintiffs' motion for partial summary judgment, defendant filed a resistance (Doc. 38), and a cross-motion for summary judgment asserting the waiver is enforceable (Doc. 40). Plaintiffs then filed a resistance to defendant's cross-motion for summary judgment and requested oral argument. Doc. 50. Defendant filed a reply in support of its cross-motion. Doc. 65.

III. FACTUAL BACKGROUND

Defendant manufactures metal frames and doors as well as composite, commercial, and steel doors, at a plant located in Mason City, Iowa (the plant). Doc. 31-1, at 2; 38-2, at 1. As of February 17, 2014, approximately 600 employees worked at the plant. Doc. 38-2, at 2. At the plant, employees were generally divided between direct and indirect labor groups. See Doc. 42-1 at 2. The direct labor group (sometimes referred to as "Direct Production" employees) included employees involved in the actual production of finished products on the manufacturing floor who added value to theproduct in the manufacturing process. Id. The indirect labor group included employees in management, services, and support work. Id.

Both the President and the Director of Operations were informed in February of 2014 that they needed to cut $1.4 million in indirect personnel costs at the plant. Doc. 38-1, at 3. Defendant therefore conducted a "Reduction in Workforce" or "RIF." Id. at 2. All employees working in direct production were ineligible for the RIF program in February 2014. Doc. 38-1, at 3-4. In other words, only employees in the indirect labor group were eligible for the RIF. Id. The director of human resources obtained a list of all employees at the plant, removed those with "DP," or Direction Production designations by their names, and thereby created a list of indirect labor group employees. Doc. 42-1, at 2; P. App. 25-28. The list of 175 indirect labor group employees generated by defendant included names, ages, and job descriptions or titles (such as customer service, door foreman, or draft tech). Id. Defendant identified fourteen employees whose jobs would be terminated. Doc. 38-2, at 2; P. App. 24-28, 35. Defendant identified these employees for many different reasons, including redundant layers of supervision or management and/or their positions were eliminated, because they had indicated they were voluntarily retiring within the year, performance, and part-time status. Doc. 38-2, at 5. Defendant placed an "x" in a column next to the job title for each of those employees. P. App. 25-28.

On or about February 17, 2014, defendant advised all fourteen employees that their employment would be terminated as part of the RIF. Doc. 31-1 at 4-5. Of the fourteen employees terminated, thirteen were older than 40 years of age. Id.³ Defendant provided each terminated employee with a Separation Agreement. Doc. 42-1, at 3. TheSeparation Agreement included a waiver of ADEA claims against defendant; in other words, if the employees signed the Separation Agreement, they would waive their right to sue alleging age discrimination. Id. 3-5. If the employee signed the Separation Agreement, then defendant would provide the employee with severance compensation. Id. at 3. The Separation Agreements provided that the employees had forty-five (45) days to consider the Separation Agreement and that the employees could revoke the ADEA waiver and releases within seven days after signing the Separation Agreement. Doc. 32-1, at 4.

On February 20, 2014, a few days after defendant terminated the employees and provided them a copy of the Separation Agreement, defendant mailed to each terminated employee two attachments, marked Exhibit A and Exhibit B, referenced in the Separation Agreement. Id. at 1; 42-1, at 3-4. Defendant did not provide the employees with these documents at the time of their termination because there was concern that employees would begin sharing them around the plant and cause confusion and speculation regarding the RIF before defendant could inform each of the employees of their termination. Doc. 42-1, at 4. Exhibit A lists each of the fourteen terminated employees by title and age. Doc. 31-6, at 1. Exhibit B consists of a list of 161 ages, in order from age 23 to 68, described as "Ages as of 2/20/2014 of persons at [the plant] not selected for employee termination program." Id. at 2.

Each of the fourteen terminated employees signed the Separation Agreement and received severance compensation. Doc. 42-1, at 3. For example, under the Separation Agreement, plaintiff Behr received a total of $8,347.92 in payments and reimbursement of $2,449.59 for health care coverage. Doc. 5, at 4. Each of the terminated employees signed the Separation Agreement well before the expiration of the forty five day period provided. Doc. 42-1, at 5. None revoked their waivers within the seven days provided in the Separation Agreement. Id.

IV. SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a). "An issue is 'genuine' if the evidence is sufficient to persuade a reasonable jury to return a verdict for the nonmoving party." Schilf v. Eli Lilly & Co., 687 F.3d 947, 948-49 (8th Cir. 2012) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). A fact is material when it "might affect the outcome of the suit under the governing law." Anderson, 477 U.S. at 248. Thus, "the substantive law will identify which facts are material." Schilf, 687 F.3d at 949 (quoting Anderson, 477 U.S. at 248) (internal quotation mark omitted). "To establish a genuine issue of material fact, [a party] may not 'merely point to self-serving allegations, but must substantiate allegations with sufficient probative evidence that would permit a finding in [his] favor.'" Argenyi v. Creighton Univ., 703 F.3d 441, 446 (8th Cir. 2013) (quoting Davidson & Assocs. v. Jung, 422 F.3d 630, 638 (8th Cir. 2005)). Typically, the moving party must support its motion by using "the record, including depositions, documents, electronically stored information, affidavits or...