Oubre v. Entergy Operations Inc.

PETITIONER:Oubre
RESPONDENT:Entergy Operations Inc.
LOCATION:Knowles’ Car

DOCKET NO.: 96-1291
DECIDED BY: Rehnquist Court (1986-2005)
LOWER COURT: United States Court of Appeals for the Fifth Circuit

CITATION: 522 US 422 (1998)
ARGUED: Nov 12, 1997
DECIDED: Jan 26, 1998

ADVOCATES:
Beth S. Brinkmann – Argued the cause for the United States, as amicus curiae, by special leave of court, supporting the petitioner
Barbara G. Haynie – Argued the cause for the petitioner
Carter G. Phillips – Argued the cause for the respondent

Facts of the case

In 1994, Dolores Oubre, a scheduler at a power plant run by Entergy Operations, Inc., was given the option of either improving her job performance or accepting a voluntary arrangement for her severance. Accepting a severance package, Oubre signed a release of all claims against Entergy. Entergy failed to comply with several requirements for a release under the Age Discrimination in Employment Act (ADEA), as set forth in the Older Workers Benefit Protection Act (OWBPA). After receiving all of her severance pay, Oubre filed a charge of age discrimination with the Equal Employment Opportunity Commission. Oubre then sued Entergy, alleging constructive discharge on the basis of her age in violation of the ADEA and state law. Entergy argued that Oubre had ratified the defective release by failing to return the $6,258 in severance she had received. The District Court entered summary judgment for Entergy. The Court of Appeals affirmed.

Question

Is an employee’s release of claims under the Age Discrimination in Employment Act unenforceable if the release did not comply with the requirements of the Older Workers Benefit Protection Act?

William H. Rehnquist:

We’ll hear argument now in Number 96-1291, Delores Oubre v. Entergy Operations, Inc.–

Ms. Haynie.

Barbara G. Haynie:

Mr. Chief Justice, and may it please the Court:

After 2 years of careful consideration, in response to a regulatory void, Congress enacted the Older Worker Benefit Protection Act to protect the rights of older workers who were in greater force leaving… being forced to leave the work place.

The Older Worker Benefit Protection Act mandates that an older worker may not waive their rights secured under the ADEA unless such waiver is knowing and voluntary as defined by the act.

If an employer chooses to utilize a waiver of age discrimination rights, Congress requires an employer to provide the older worker with the requisite information and time to assess the value of the right to be waived.

The Fifth Circuit Court of Appeals’ adoption of the common law contract principles of ratification and tender-back in addressing a situation where the employer uses a waiver which is… does not comply with the Older Worker Benefit Protection Act will in all practical purpose render the act meaningless.

Anthony M. Kennedy:

What would happen in the case if the day after the release is signed, but before any money changed hands, the employer says, we’ve made a mistake, it’s a good faith mistake, we didn’t know about the ADEA, we want to rescind the release?

Barbara G. Haynie:

Well, Your Honor, pursuant to the statute there is a revocation period of 7 days after the release is signed.

Anthony M. Kennedy:

No, but this is the employer.

Barbara G. Haynie:

I understand.

There will be a 7-day–that release is not effective pursuant to–

Anthony M. Kennedy:

Well, let’s change the hypothetical.

Suppose… I want the release to be effective.

Barbara G. Haynie:

–7 days after it.

The employer would not have the right to rescind the release.

It is an invalid release with regard to ADEA claims if it does not comply with the statute.

If they rescind the release to all other waivers, I believe the plaintiff or the older worker will have the right to proceed against the employer.

Anthony M. Kennedy:

But in other words you couldn’t have–

–doesn’t have to rescind it.

Excuse me.

You couldn’t have an equitable action to rescind the release at the employer’s behest?

Let’s assume a good faith mistake on his part.

Barbara G. Haynie:

No, sir.

If the waiver does not comply with the requirements of the act, it is a void waiver pursuant to–

Anthony M. Kennedy:

Well then, he wouldn’t have to pay… he wouldn’t have to pay any of the money, either?

Right.

If it’s void, he wouldn’t have to pay the money.

Barbara G. Haynie:

–Well, the problem with not having to pay the money, Your Honor, is that the waiver includes, and particularly in this case, many other actions, other than a waiver of ADEA–

Anthony M. Kennedy:

That’s, it seems to me, one of the points, is that this might very well be valid as to everything but the ADEA.

Barbara G. Haynie:

–And I believe that–

Anthony M. Kennedy:

There’s a lot of talk on void and voidable, but this covers so many claims that it seems to me that’s something that may be more of a problem for the respondent than for you.

Barbara G. Haynie:

–I believe it would be void to the ADEA claims.

I believe that–

David H. Souter:

As to them, then, the employer can, on day eight, say, I’m not going to pay anything insofar as it might be attributable… let’s assume, keep the example, that he broke down the various considerations and said, with respect to this particular claim I’m not going to pay anything because it’s void, because it violates the statute.

That would be legally proper, I take it, on your view.

Barbara G. Haynie:

–That’s correct, Your Honor, that would be, and the plaintiff can go forward and pursue their age discrimination claim in court.

Antonin Scalia:

But in order to determine how much harm we’re doing by saying these things are void from the outset I think we should be realistic and know that most of them do not assign a certain amount of money to the ADEA release and a certain amount of money to various other releases, and I doubt very much, when it’s not broken out that way, whether you can say the contract is valid in part and invalid as to that one little item.

I mean, this is a standard question of severability.

I don’t know how you can rip that contract apart, especially when the ADEA claim is a very major part of the consideration.

Do you know any other contract that’s picked apart like that where it’s just partially valid and we’re going to enforce all the rest of it?

Barbara G. Haynie:

Well, I think Congress has clearly spoken here that if the waiver drafted by the employer does not comply with the Older Worker Benefit Protection Act–

Antonin Scalia:

Right.

Barbara G. Haynie:

–That waiver is nonenforceable–

Antonin Scalia:

Therefore that portion of the contract is bad, and I would say the whole contract is bad.

Barbara G. Haynie:

–because I do believe the other portions of that waiver remain valid.

If the employer does not break out the enumeration for each right to be waived, that’s the argument to save the set-off for the remedial phase of the trial.

Antonin Scalia:

So all the employers who have these, have made these commitments can now simply stop paying money.

Barbara G. Haynie:

If they choose to stop paying money and have not enumerated out which moneys are going to be designated for which rights are being waived, then I believe the plaintiff has a simple right of breach of contract for all other rights that they had signed, if the money has stopped.

Antonin Scalia:

No, but a contract is… you can’t pick apart a contract like that.

If the contract’s void, it’s void.

Barbara G. Haynie:

Well, I–

Antonin Scalia:

What do you mean, he’s breached it?

How much money is he supposed to pay, two-thirds of the full contract, or… I mean, how do you decide how much?

Barbara G. Haynie:

–I–

Antonin Scalia:

The full amount?

Barbara G. Haynie:

–I agree, Your Honor, I believe that’s one of the practical problems of this case, and that’s why the tender back at the very beginning of a case to bar plaintiff to going into court is very prac… impractical.

Antonin Scalia:

What I am worried about is, you are destroying cause… you are destroying entitlements to these payments on the part of all older workers who have been terminated, including the majority of them who do not have any ADEA claims.

I’m not sure you’re doing them a favor.

You’re saying if the employer is confident enough that this worker doesn’t have an ADEA claim he can just say, I’m sorry, we made a mistake.

Barbara G. Haynie:

Well, I believe that’s what Congress has established–

Sandra Day O’Connor:

Well, Ms. Haynie, we aren’t sure about that, because Congress did not expressly say such an agreement that fails to comply with these requirements is void, as they have done in some other legislation.

They don’t say that, so at common law I suppose an agreement where the employer was guilty of some kind of fraud, duress, or coercion would be voidable, wouldn’t it?

Barbara G. Haynie:

–That’s correct.

Sandra Day O’Connor:

Voidable at the option of the person defrauded.

Maybe this contract is voidable, not void.

Congress didn’t say, one way or another.

Barbara G. Haynie:

I believe the phrase, may not waive, is tantamount to announce, or proclaiming void any waivers which do not comply with the Older Worker Benefit Protection Act for those rights secured under the ADEA.

Stephen G. Breyer:

But why?

Why would Congress wanted to have done that, because what you’re being told, I think, from Justice Scalia and others, is let’s imagine… let’s imagine that a… that we have 100,000 workers who are quitting, and each of them has a contract, and they all promise not to bring claims, and each of them is paid [dollars] 5,000 for that promise.

All right.

Now, very few of them will have real ADEA claims.

Very few.

But suppose they’re all like this, that they didn’t comply with the rule exactly.

Now, on your theory one day every employer is going to wake up to the fact that he hasn’t bought a single thing for his [dollars] 5,000, and somebody might go around and collect the lawsuits and sue everybody and get the money back, so you’d be taking from 100,000 or 90 of the 100,000, [dollars] 5,000 each have to go right back.

On the other hand, if you’re wrong, all that happens is when somebody has a good claim they have to put up a little bit of money up front, whatever the proportionate amount of the ADEA part is, which might be [dollars] 500, and the lawyer could front it for him.

So why would Congress want the result that you want, which would seem to put at risk hundreds of thousands of workers to have to give back the money who would have no claim… the employer would sue them… and at the same time to protect some lawyer from not having to put up a very little money up front.

Now, I’m putting it strongly, but it’s exactly that practical consideration that I’m very disturbed about in terms of your position.

Barbara G. Haynie:

Your Honor, with regard to the practical–

Stephen G. Breyer:

It’s not practical, it’s legal, and what I’m asking is, why would Congress have wanted that result?

Barbara G. Haynie:

–Congress was very clear in enacting this statute to protect the rights of older workers when negotiating with employers when they’re forced out of the work place.

They are not arm-length negotiators.

Congress put in very specific requirements an employer must meet so that an employee knows they are giving up a valuable right in exchange for that consideration.

If they’re given adequate considera… or information, and there is some specter of discrimination, then the employer can go… the employee can go back to the employer and negotiate for a greater severance or say, no, I’m not going to sign this.

Without that knowledge, and without the time to consider it in a coercion case, then the employee is really left with no option but to take the money.

Stephen G. Breyer:

We’re not talking about the same thing.

What I’m talking about is, I agree with you the contract is no good.

I agree with you the employee can sue.

I agree with you that that provision in the contract promising not to sue is worthless.

It’s no good.

Stephen G. Breyer:

The question involved is whether, before he brings the lawsuit, he has to give back a proportionate share of the money that he’s been paid for his promise not to sue.

I would imagine if they’re paying five or [dollars] 6,000 for such a promise he’d have to give [dollars] 500 back, or… and the lawyer could put it up front.

Barbara G. Haynie:

Well–

Stephen G. Breyer:

So what is the big problem about… that you’re worried about?

Barbara G. Haynie:

–The problem is twofold, Your Honor.

First, the monetary amount could be greater.

The employee expends the money looking… for living expenses while looking for other employment.

The second problem is, who is to decide what the proportionate share will be?

That’s going to have to be decided by a trier of fact, a judicial tribunal.

That means you’re in court already.

David H. Souter:

Well, can a proportionate share be determined?

How do we determine the proportionate share?

Barbara G. Haynie:

The proportionate share can be determined at the end of the litigation, when a trial judge has taken into–

Sandra Day O’Connor:

Well, I thought courts have routinely said they are unable to make that kind of a determination.

I mean, they can’t do that.

Barbara G. Haynie:

–Well, if you–

Sandra Day O’Connor:

You get a… you either have to give it all back or none, as I see it.

I don’t see how that could possibly be made.

Barbara G. Haynie:

–If you require the plaintiff to tender back all the money received, then it is the employer who receives the windfall there, because the employee has waived many other rights under that waiver.

The employer can raise the defense.

Anthony M. Kennedy:

But if you say the contract is void, then what you’re doing is saying that the ADEA tail wags the State law dog with respect to all releases.

You are saying that all State law releases, State claim releases are, I take it, void because the contract is not severable.

Barbara G. Haynie:

No, I don’t believe that, Your Honor.

I don’t believe that.

I believe Congress spoke directly and specifically to those rights secured under the ADEA.

Ruth Bader Ginsburg:

Ms. Haynie, suppose–

–Ms. Haynie, did… maybe I misunderstood your argument, but I thought your position was, may not waive is… leaves employer and employee without any authority, without any power to do anything with respect to the ADEA claim.

That being so, you construe this contract as though what may not be done wasn’t done, so that the only thing that would be covered would be the non-ADEA claims.

Maybe you’re not making that argument.

Barbara G. Haynie:

No, I am making that argument, Your Honor, that again the statute speaks specifically to ADEA claims, and those are the… that is the waiver that is void.

Barbara G. Haynie:

That is the waiver that is nonenforceable against the plaintiff who signs it.

All other waivers of claims can be possibly enforceable against the plaintiff, unless the plaintiff can show that it was not an involuntary waiver.

William H. Rehnquist:

What if it was just an ADEA claim here, so that we didn’t have the problem of breaking out a partial amount, and the… would you say that the employee did not have to tender it back?

Barbara G. Haynie:

That’s correct, Your Honor.

If the waiver does not comply with the statute it is an ineffective waiver.

It is a void waiver.

The plaintiff can go forward with the lawsuit, and if there is some–

William H. Rehnquist:

The plaintiff just gets to keep it, then?

Barbara G. Haynie:

–Well, there’s a concern with regard to equity amongst the parties.

William H. Rehnquist:

Well, there’s a considerable concern.

Barbara G. Haynie:

It can come at the remedial phase of the trial–

William H. Rehnquist:

Well, but–

Barbara G. Haynie:

–with either an offset–

William H. Rehnquist:

–Well, supposing the plaintiff loses at the trial.

Barbara G. Haynie:

–I believe that part of the incentive in complying with the statute is a loss of that money, the severance pay, if you do not draft a valid waiver under the Older Worker Benefits Act.

William H. Rehnquist:

You mean–

–That’s totally contrary to any concept of the law of contracts.

Barbara G. Haynie:

Well, this is… we’re not dealing with the law of contracts.

William H. Rehnquist:

Well, you may be dealing with the law of contracts except as Congress has otherwise provided.

You’re arguing for a very expansive construction of a particular language of Congress.

Barbara G. Haynie:

I believe, Your Honor, that it’s warranted in this case.

The legislative history is replete and is quite full with Congress’ intent.

William H. Rehnquist:

We don’t ordinarily get into legislative history.

Barbara G. Haynie:

And I understand, Your Honor, but Congress’ intent to occupy this entire area.

In fact, the respondent has conceded that in enacting this statute there is as Federal statutory standard for knowing and voluntary.

It is all-encompassing.

There is no room for judicial common law development here.

David H. Souter:

No, but you don’t have to have judicial common law development with respect to the protections of this statute, I suppose, in order to recognize that if on a void contract there is a total failure of consideration the employer at least would have the right to bring action for the return of the consideration that he has furnished, and do you deny that he would have such an action?

Barbara G. Haynie:

Your Honor, to require the tender back would be to engraft on the statute–

David H. Souter:

I’m not talking about tender-backs.

David H. Souter:

I’m simply saying, let’s assume that your conclusion is correct, and we recognize it.

The employer says… and by the way, we’re operating here on the hypothesis that it’s only the age claim that’s involved.

The employer says, I got nothing.

There has been a total failure of consideration.

I want my money back.

The employer can sue for it, can’t he?

He may have a tough time collecting it.

You’ve pointed out, and I’m sure you’re right, that in most of these cases the money has been spent, but the… we don’t have to deny the employer the cause of action to get the consider… to get his consideration back in order to enforce this act, do we?

Barbara G. Haynie:

–Well, Your Honor, there may be some State claims in restitution or unjust enrichment that the employer could bring.

David H. Souter:

That’s what I’m talking about.

Barbara G. Haynie:

Certainly.

David H. Souter:

You’re not denying that, are you?

Barbara G. Haynie:

No, certainly I’m not denying that.

David H. Souter:

Okay.

Barbara G. Haynie:

And to try to place the–

David H. Souter:

And you’re not denying, in fact I think you suggest it, that if your client should win, quite properly if the employer has brought his claim there could be a set-off against the recovery.

Barbara G. Haynie:

–That’s correct, Your Honor.

Sandra Day O’Connor:

Ms. Haynie, could I–

–And State law might operate as well to say that it’s not severable, that you can’t decide how much goes to ADEA and how much consideration–

–Yes, right.

–went to these other claims.

That’s possible, too, isn’t it?

Barbara G. Haynie:

It’s possible, Your Honor, but I believe the trial court will be in the best position, after all the evidence is taken in–

Antonin Scalia:

Well–

Barbara G. Haynie:

–to assess the values of this claim.

Antonin Scalia:

–is that right?

Ms. Haynie, suppose I sell you five tickets on horses in a horse race, okay.

One of them wins.

The other four don’t, okay.

Do you think that it’s fair if the contract should be rescinded as to only one of those tickets, one of the losing ones, that you should get back 20 percent of your money?

Barbara G. Haynie:

Well, Your Honor–

Antonin Scalia:

I mean, that is what is called an aleatory contract, a contract that depends on future events to some extent, as does any waiver of rights.

You don’t know whether the person has claims that he will sue on or not.

When he does have one, is it fair to say, well, that claim was one-fifth of the whole contract, we’ll give you one-fifth of your money back?

You can’t do that.

The one ticket for the winning horse is what the whole thing was about.

Barbara G. Haynie:

–I believe that is what the trial court is going to be charged with doing.

If you attempt to put the parties back into the places they were before the invalid waiver was offered to the employee, you must then give Ms. Oubre her lost wages, you must put her in a position again of making the decision as to whether she wants to stay with the company or leave the company, and you also must provide all the information required by the act, which the respondent has not done to date in this case.

David H. Souter:

Let me ask you a factual question.

we’ve all been making the same assumption here, but let me just question the assumption.

Is there any way of knowing, in the run-of-the-mill situation in which there is a release and the object, the obvious principal purpose of the release is the age claim, whether in those cases there tends to be a, in fact, others unrelated claims?

I mean, for example, in this case, was she an employee at-will, so… or was she subject to some kind of a cause requirement so that she would have had a lost wage claim?

Because if most of these releases in the real world are simply releases of nothing but the age claim, then this problem that’s being raised would loom smaller than it might otherwise be.

How do we… is there any way for us to know?

Barbara G. Haynie:

Well, I could tell you factually for this situation she was an at-will employee, and certainly these waivers contain… I’ve never seen a waiver that just contains an ADEA waiver.

David H. Souter:

Right.

I’m sure that’s right.

Barbara G. Haynie:

They contain numerous other waivers with regard to Worker’s Compensation.

David H. Souter:

–be crazy not to, but in fact, do you–

Barbara G. Haynie:

All other waivers.

David H. Souter:

–Is there any way for us to know whether it’s really covering anything else in most cases?

Barbara G. Haynie:

I believe that the language of the waiver–

David H. Souter:

Oh, I know what the language of the waiver says, but I mean, in fact, are there any real claims… is there any way for us to know whether there are in fact any substantial claims in most of these cases, other than the age claim?

Barbara G. Haynie:

–Well, if the plaintiff brings the suit, obviously, or files her claim against… files her claim with the EEOC, or, you know, the State regulatory agency–

Ruth Bader Ginsburg:

This would waive title VII claims, too, I suppose.

This waiver, if I remember correctly, waived any and all claims.

It didn’t mention any specific ones.

Barbara G. Haynie:

–That’s correct, Your Honor.

Ruth Bader Ginsburg:

But apart from State law claims and title VII claims raised with sex discrimination, would there be anything else that might be included in that?

Barbara G. Haynie:

Well, there’s Workers’ Compensation claims.

Barbara G. Haynie:

There could be any other causes of action that may have come up.

William H. Rehnquist:

Thank you, Ms. Haynie.

Ms. Brinkmann.

Beth S. Brinkmann:

Mr. Chief Justice, and may it please the Court:

To respond to the concerns that the Court has raised, we would agree that the congressional scheme that has been established here addresses these concerns in that Congress gave the courts broad equitable authority, and the Court recognized that in McKennon, that that equitable authority is something that the district courts in ADEA cases exercised to take into account concerns of employers.

That is consistent with the common law trend, also.

As respondent pointed out in its brief, the common law tender-back was not required in equity, generally.

It was only for settlement releases, and in those cases those were… the cases we’ve seen are ones that only had one topic of the release, so by suing you were undoing the release.

But in cases like this, this is a waiver that violates a statute.

At common law, that was one of the major bases for not enforcing a contract.

Sandra Day O’Connor:

Well, is it void or voidable?

At common law, it would have been voidable for fraud or coercion or duress, and this is a substitute for that.

This is a statutory expression of conditions that have to be there to avoid any kind of coercion or fraud, isn’t it?

Beth S. Brinkmann:

We believe–

Sandra Day O’Connor:

So why isn’t it voidable at the instance of the employee?

Beth S. Brinkmann:

–Your Honor, we do believe it goes beyond that, the requires provision of information, a lot more protection than the common law.

Whether–

Anthony M. Kennedy:

Well, is it void?

Beth S. Brinkmann:

–We believe that the waiver of the ADEA claim is void, Your Honor.

At common law what they would have done with something like that, they would have applied the practice of divisibility.

When there was an illegal contract for gambling, or something that violated an antitrust statute, they would look and see if that statute was divisible.

If it was not divisible, often illegal contracts parties were left as they were.

There were some exceptions to that.

Anthony M. Kennedy:

What is it… is it divisible in most cases here, do you think?

Beth S. Brinkmann:

I think it may very well be.

I mean, part of the thing that is even more complicated, Your Honor, much more consideration was given for the [dollars] 6,000 than an ADEA waiver.

Petitioner resigned from her job, in addition to waiving other claims, so there’s a lot of equity, and that’s exactly what courts of equities would look at, and that’s why that decision was made at the remedy phase of the proceeding, where the court could take into account those equitable concerns, and we–

Antonin Scalia:

Ms. Brinkmann, if the void waiver leaves the parties where they were, then doesn’t someone who is asserting that the waiver violates the statute by bringing a lawsuit, doesn’t that person have to return… in order to be consistent in the pleading, doesn’t the person have to return whatever money that person has acquired under the contract?

Beth S. Brinkmann:

–Your Honor, we–

Antonin Scalia:

You say it’s void.

Beth S. Brinkmann:

–No.

We believe that Congress made clear in this statute that waivers were void if they did not comply with these requirements.

Antonin Scalia:

Right.

Beth S. Brinkmann:

And that means that that waiver violates the statute.

Antonin Scalia:

Right.

Beth S. Brinkmann:

So it’s an illegal waiver.

Antonin Scalia:

Right.

Therefore, if you assert that that has happened, you should return the money when you bring the lawsuit.

Beth S. Brinkmann:

No, Your Honor.

Antonin Scalia:

Otherwise you’re being inconsistent with your theory.

Beth S. Brinkmann:

At common law a tender-back was just not that… all… Farnsworth, Dobbs, and all of your discussions make clear that tender-back was not that–

Antonin Scalia:

I don’t… I don’t even care about the common law.

I just care about someone who comes in and asserts that this contract is void, but wants to keep the money the person has under the contract, or at least use it to hire the lawyer to bring the lawsuit.

Beth S. Brinkmann:

–The problem–

Antonin Scalia:

And then if you lose you keep the money, but if you win, oh, I’ll cough up the money, but I’ll get more.

Beth S. Brinkmann:

–The problem is the statute, Your Honor.

It’s Congress.

Antonin Scalia:

The Congress… the statute says nothing about this.

Beth S. Brinkmann:

No, but–

William H. Rehnquist:

The statute says nothing about it.

Beth S. Brinkmann:

–But you are creat… you would be creating another condition precedent to bringing suit, and Congress was very clear about what was required in that event, and it–

William H. Rehnquist:

Where was that clarity manifested?

Beth S. Brinkmann:

–We believe in–

William H. Rehnquist:

What section of the statute?

Beth S. Brinkmann:

–In 626, Your Honor.

It’s enfolding respondent’s brief in the appendix.

(f)(1) makes quite clear Congress expressly said an individual may not waive any right or claim–

William H. Rehnquist:

We know that, but you’re saying that Congress made expressly clear that no tender back would be required.

Where is that?

Beth S. Brinkmann:

–Well, Your Honor, we believe that–

William H. Rehnquist:

I thought you said Congress made expressly clear.

Beth S. Brinkmann:

–Yes.

We believe, when you look at the… for example, (f)(3), where Congress foresaw that there would be disputes among parties about the validity of these waivers, Congress specifically said the burden would be on the employer, or the person asserting the validity of the waiver.

In this case it would be–

William H. Rehnquist:

What does that have to do about tender back?

Beth S. Brinkmann:

–Because tender back, Your Honor, was to put up the money to counter the presumption of the validity of the contract, and here it’s to the contrary.

Congress has supplanted that, and I think it’s important to–

William H. Rehnquist:

That certainly is not an express provision about tender back, is it?

Beth S. Brinkmann:

–No, but Your Honor, in case–

William H. Rehnquist:

I thought you said it was.

Beth S. Brinkmann:

–No, because I think that the tender back clearly conflicts with the purposes and the construct, the mechanism which Congress created.

To impose–

David H. Souter:

Ms. Brinkmann, may I ask you to address a specific point there?

I thought one of the strongest, if not the strongest argument for the position that you and the petitioner take is that if you require a tender back, the prohibition in the statute is a dead letter, because in fact you’re dealing with people who are not going to have the money to tender back, not because they went to the race track because they used it to pay the rent and buy the food.

Is there anything we can look at to find out whether that… that seems to have an intuitive appeal to it.

Is… has it gotten anything more than an intuitive appeal?

Are there statistics anywhere, or is there anything in the record to the effect that that is so?

Beth S. Brinkmann:

–Certainly, Your Honor.

In the first section of the ADEA, 621, Congress made a specific find or example that older workers are much less likely to retain and regain employment once they’re terminated, so it’s a specific class.

The legislative history also concerns information about that.

Also, even where courts have applied a tender-back requirement as Judge Posner did in his opinion for the Seventh Circuit in a title VII case, he recognized that where there was a situation in which living expenses would preclude the bringing of the suit, that would not be permitted as a matter of equity.

He also pointed out that, you know, perhaps an offer would be sufficient, would be offset at the remedial phase.

David H. Souter:

In other words, I will… I offer to pay you back if I get the money from which I can do it.

Beth S. Brinkmann:

That’s an offset remedy, and I just have to urge the Court to realize that to adopt the court of appeals approach would be to put the workers exactly back where they were before enactment of the statute.

Sandra Day O’Connor:

Well, are you saying that we have to enact as a matter of Federal common law some rule about tender-back, or do we look to State law to see what the normal contract situation would be?

Beth S. Brinkmann:

No, Your Honor.

We believe that Congress has spoken, has established this very specific scheme–

Sandra Day O’Connor:

Well, we… suppose we don’t find an express provision in the statute governing tender-back.

Do we look to the State law where the contract was created?

Beth S. Brinkmann:

–No, Your Honor.

Sandra Day O’Connor:

Or do we try to create some Federal legal principle to cover this?

Beth S. Brinkmann:

No, Your Honor.

We believe Congress created that because to impose tender-back would be nullify the statute–

Anthony M. Kennedy:

Well, where do you get the offset authority?

Beth S. Brinkmann:

–The equitable authority of the court.

That’s clear, and this Court has, you know, agreed with that in McKennon.

Anthony M. Kennedy:

Why does the court have equitable authority at the end of the case but not the beginning?

Beth S. Brinkmann:

Congress gave it remedial authority in 626(b)… or… yes, 626(b) of the act, and made clear all the remedies that the court could give, and it’s important to realize that at this point if this worker has to make a choice of whether to have the severance pay or a waiver, that worker is exactly where they were before passage of the act.

Stephen G. Breyer:

I don’t understand that.

Am I missing a… I mean, I only have one question, really, for this side of the case, and I couldn’t find the answer in any brief, and it seemed so obvious I must be missing something.

That is, I absolutely take in your point that if the worker has to front the money sometimes they won’t have it, and maybe their lawyer wouldn’t give it to them.

I see that as a problem.

I don’t think it makes the worker back at stage zero, but it could be a problem.

But if we agree with you, everyone’s been pointing out that in all the millions of retirements contracts in the United States, every one that doesn’t comply with all this is void, and why won’t, at some day, some clever person work out that he could go from employer to employer, buy up tens of thousands of suits, and all the people who don’t have ADEA claims will have to give back several thousand dollars to their employer?

I mean, it’s the people who don’t have the claim who vastly outnumber the ones who do, who would be suddenly left high and dry, on your theory, at the mercy of whether an employer would just decide to sue him for the money back.

Beth S. Brinkmann:

Your Honor–

Stephen G. Breyer:

Now, that seems to me an obvious point, but no one mentions it, and therefore I must be missing something, so I want you to tell me what I’m missing.

Beth S. Brinkmann:

–I think Your Honor is pointing out the fact that it’s unclear whether a worker could even avoid this waiver if they wanted to enforce–

Stephen G. Breyer:

No.

I’m talking about workers who don’t… they’re happy.

There are millions of them.

They have their contracts and they have [dollars] 6,000 to boot, and they don’t have a dream of a claim, and those workers, on your theory, it seems to me, if the provision in the contract is void, are at the mercy of any lawyer working for an employer who would ask for the money back.

Beth S. Brinkmann:

–Again, Your Honor, we don’t believe so.

It’s an illegal contract that is not enforceable even at the common law–

Stephen G. Breyer:

If it’s not enforceable, why… it’s the fourth time I’ve said the exact… I must be not be saying it well.

Suppose it’s not enforceable.

It’s then void.

There is no such provision.

Each worker is there with [dollars] 4,000 that he got.

Why can’t the employer just sue him to get the [dollars] 4,000 back?

Stephen G. Breyer:

He was unjustly enriched.

Beth S. Brinkmann:

–Your Honor, may I answer?

Stephen G. Breyer:

Yes.

Beth S. Brinkmann:

At common law there could… we don’t want to preclude that there would never be an unjust enrichment situation.

Perhaps it was some egregious unjust enrichment, but at common law those would have been exceptions to the principle that illegal contracts were against public policy and the parties were left as they were.

William H. Rehnquist:

Thank you, Ms. Brinkmann.

Beth S. Brinkmann:

Thank you, Your Honor.

William H. Rehnquist:

Mr. Phillips, we’ll hear from you.

Carter G. Phillips:

Thank you, Mr. Chief Justice, and may it please the Court:

It seems to me that the bulk of the discussion that’s gone on today suggests as strongly as anything that I could propose to you why it is that we would do far better to leave the common law in place, providing us with a set of guideposts that can be applied on a regular basis and on a case-by-case basis, and recognize that section 626(f) is a very pointed–

John Paul Stevens:

Mr. Phillips, let me just raise a question that… you know somebody’s got to ask you a question about this.

I agree with everything in your brief about the common law, the equities, the fairness, but the statute never says anything about void or voidable, but the statute does say, an individual may not waive this claim unless the waiver complies with the statute, and in this case the waiver did not comply with the statute.

If they do not come up with the money to pay you in advance, is it not true you claim you would have a defense to the suit which would be a waiver?

Carter G. Phillips:

–If they do not pay it… no.

No, no.

It’s not the waiver argument.

What we’re saying is that they’ve forfeited their rights as a matter of common law by their failure to comply with an independent State law duty to tender back the consideration.

It doesn’t revive the waiver.

John Paul Stevens:

What is your defense to the suit?

Is it not the document that she signed?

Carter G. Phillips:

No.

The… it’s not.

It is the failure to tender back, and the failure to pay the consideration.

John Paul Stevens:

Why should she have to… what in the statute compels her to tender anything back?

Carter G. Phillips:

Nothing in the statute compels her to tender it back.

It is a bedrock principle of the common law and contract law.

John Paul Stevens:

You say she has not… you say there’s just no waiver issue at all, then.

Carter G. Phillips:

I’ve lost the waiver issue, Your Honor.

That’s right.

She is perfectly available to come forward into court and bring her claim.

Carter G. Phillips:

We do not fear, and I don’t think any of the employers in these cases fear having these age discrimination cases go forward if that’s what they want to do, but what we are concerned about, and what the common law protects, is our right to say, look, you have to put the money in.

That’s the consideration you have to pay as a condition of coming in.

That is a wholly independent legal requirement that’s been embedded in the common law for 200 years.

John Paul Stevens:

But if she had never signed a contract she wouldn’t have to do that.

If she’d never signed the waiver she would not have to do that.

Carter G. Phillips:

If we had given her money in return–

John Paul Stevens:

Say she signed no document whatsoever, and you just said to her, we think you’ve been a wonderful employee, we don’t think you’re going to sue us, here’s a lot of money.

Would she have to give that back?

Carter G. Phillips:

–Of course she’d have to give that back.

The point is, is if you want to get–

John Paul Stevens:

To bring an ADEA suit?

Why?

If she never signed a release she wouldn’t have to give anything back, would she?

Carter G. Phillips:

–As I understand the State common law–

John Paul Stevens:

Would you… I’m asking you, would you have a defense to this case if she had not signed a release?

Carter G. Phillips:

–If she had not signed the release.

No.

Ultimately we–

John Paul Stevens:

So the heart of your defense is the fact she signed a document that she has not rescinded.

Carter G. Phillips:

–No, but that’s not… no.

No, Justice Stevens.

The heart of my defense is that the common law recognizes an independent obligation, apart from whether the release is waived or not waived, that you must as a condition of coming to court pay back moneys that have been paid to you as a part–

John Paul Stevens:

If you want to avoid a release.

That’s what… the payback is in order to make something that is voidable… keep it alive.

Carter G. Phillips:

–You can construe it that way, but that’s not the way the common law views it.

Common law imposes it as an independent–

John Paul Stevens:

I agree with you on the common law entirely.

My question is, how can you get around the statutory language that says she may not waive unless you comply with the statute, and you’re saying she did waive?

Carter G. Phillips:

–I will go back to the Court’s opinion in United States v. Olano, which draws a clear distinction between waiver, which is the knowing and voluntary relinquishment of a known right and the implications of that, and it’s a narrow concept, and a forfeiture of your rights which arises because you don’t fulfill your independent common law duties, and that’s what we have here, is an independent common law duty to put forward the consideration.

John Paul Stevens:

But that duty would not arise unless she’d signed a waiver.

Carter G. Phillips:

That–

Antonin Scalia:

Mr. Phillips, your argument does not assume that the waiver is valid.

Carter G. Phillips:

–No.

Antonin Scalia:

It just assumes that the waiver was signed.

Carter G. Phillips:

Correct.

Antonin Scalia:

Isn’t that quite different?

Carter G. Phillips:

Yes.

You’re right.

Antonin Scalia:

It’s essential to your case that she signed a piece of paper.

It is not essential to your case that that waiver be valid.

Carter G. Phillips:

That’s correct.

Indeed–

David H. Souter:

But it–

Carter G. Phillips:

–Indeed, we readily concede that it’s an invalid waiver.

It’s just not void.

David H. Souter:

–It’s essential to your case that she signed the piece of paper, and that the piece of paper has the effect that Justice Stevens has been positing in his question.

The signature is not a mere incidental fact of history.

It has an operative effect.

Carter G. Phillips:

I understand that, Justice… Your Honor, but the bottom line here, the problem with that is, is how far are you going to take statutory language to do damage to the common law, and basically what this Court–

David H. Souter:

Or you might pose the question, how far are you going to allow a common law process in effect to thwart the statute, and if, in fact, we are correct in the intuitive assumption that has been suggested here, that in most of these cases in which this is going to be a serious question the worker is simply not going to be in a position to make the tender, then, in fact, on your theory the statute is a dead letter.

Carter G. Phillips:

–Well, let’s step back for a second, because that is… there is no support anywhere, empirical, that I know of, that that’s true.

I mean, the principle of tender-back has been available for 200 years.

There’s not a shred of evidence anywhere–

David H. Souter:

Yes, but the statute hasn’t been.

I mean, we’re in this position because we’ve got a fairly unequivocal-looking statute, and the fact that the common law may have operated without the hindrance of statute for 200 years leaves us, I think, exactly where Justice Stevens is.

Carter G. Phillips:

–Well, no, but there have been principles by which one can void or declare unenforceable contracts for 200 years, and there has been a tender-back requirement that applies to that.

Sandra Day O’Connor:

But the tender-back–

–Well, what was the common law, though, if it was void?

Was it the situation that the parties might be left where the law found them at the time it was voided?

Carter G. Phillips:

Yes, that is my general understanding.

Sandra Day O’Connor:

So there might not be a tender-back requirement.

Carter G. Phillips:

Right, if it… if–

Sandra Day O’Connor:

If it were totally void.

Carter G. Phillips:

–That’s correct, if it’s totally void.

On the other hand, there is not a shred of evidence that Congress intended to declare these totally void, for the reasons I think Justice Breyer’s agrument describes–

Sandra Day O’Connor:

But your argument depends upon our determining that the waiver is voidable.

Carter G. Phillips:

–That’s correct, Your Honor.

If it’s voidable–

Sandra Day O’Connor:

And if, in fact, it’s void, we’re faced with something else.

Carter G. Phillips:

–That’s correct.

Antonin Scalia:

Why–

–Again–

Carter G. Phillips:

I agree with that, because–

Anthony M. Kennedy:

–In response to Justice Stevens’ point that I still think we’d better get straight, if we’re the trial court, you don’t say that the suit cannot proceed because the money was not paid back.

You say the suit was not… cannot proceed because (a) the money was not paid back, and (b) that allows you to plead the waiver.

Carter G. Phillips:

–That’s correct.

Anthony M. Kennedy:

But the statute says the individual can’t waive.

Carter G. Phillips:

But the point of the ultimate… the significance in terms of how the law operates, and it’s true in Louisiana as it is in every other State, that is, if… you know, the fundamental principle is, you pay back as a condition.

It is true that I… they… I have both components of it, but the part that precludes you from going forward and has precluded plaintiffs from going forward for 200 years is the failure to tender back the consideration.

Antonin Scalia:

Mr. Phillips–

–But not under Federal statutes like the FELA.

Carter G. Phillips:

Well, the FELA is exactly on point in my favor on this, Your Honor, because there the language of section 55 says as plainly as possible any contract or device to limit the liability of an employer is void, and it says it in so many words.

John Paul Stevens:

But that’s significant in this case for another reason.

This waiver is void only insofar as it waives FE… ADEA claims.

It doesn’t purport to make the entire document void.

It just says it cannot operate as a waiver of this particular cause of action.

So it’s void pro tanto.

Carter G. Phillips:

Well, that goes back to Justice Scalia’s question about severability.

William H. Rehnquist:

Your point is that the FELA language about void does not find a counterpart in the ADEA.

Carter G. Phillips:

Exactly.

Carter G. Phillips:

Congress had a model it could follow in this context.

It had not only a statute that describes the matter as void, it also had a decision of this Court that enforced that statute in a way that eliminated the tender-back requirement, and Congress didn’t follow that model here.

John Paul Stevens:

But there’s a very good reason.

It did not want to create the specter that Justice Breyer’s example creates of creating everything void.

It just said it’s void insofar as it affects this particular claim.

Carter G. Phillips:

But it doesn’t–

John Paul Stevens:

It didn’t say void.

Carter G. Phillips:

–It doesn’t say that either.

John Paul Stevens:

It says, it shall not operate as a waiver of this narrow claim.

Carter G. Phillips:

Right.

It seems to me Congress knows how to–

John Paul Stevens:

But you can’t give effect to that language, as I understand your position, and still say she has to tender back.

Carter G. Phillips:

–But Your Honor, if the position of the common law would have set aside the contract for reasons of coercion or duress or fraud or any of those other reasons, it’s still, under those circumstances, no more than voidable, and so it would seem–

Ruth Bader Ginsburg:

We have an example, Mr. Phillips of State law… of a State law that says may not waive, do you agree that that’s… the essence of this case is for us to construe what those words mean, may not waive, and I take that to be an instruction to the employer as well as to the employee, so may I ask you to respond to the question that I put to Ms. Haynie?

That is, one way to look at what Congress did, these words, may not waive, is to say, well, that’s a condition, that whatever else this contract does, it can’t do that.

The employer doesn’t have the power to put it in, the employee doesn’t have the power to agree to it, so the contract… the employer knowing that full well, by the way… the contract then must be construed to waive the host of other claims that are waivable, and it’s enforceable to the extent that it doesn’t include the one thing that Congress says thou shalt not.

So it’s perfectly good to waive title VII, to waive a slew of other claims.

Why isn’t that the most sensible reading of the may-not-waive language?

Carter G. Phillips:

–Because the language has to be… I mean, you can look at may-not-waive on its own, but the truth is, it’s a part of a provision that is designed to modify a very discrete element of the common law.

It eliminates the requirement and the burden on the employee to come forward and prove fraud, duress, or the other conditions that would justify setting aside a release.

Congress said, we’re not going to put employees to that burden.

We are going to eliminate that obligation.

We’re going to lower the burden that otherwise would exist.

But beyond that, Congress didn’t say, and in addition to that we mean to eliminate through the language, waiver, all other forfeitures of rights.

Ruth Bader Ginsburg:

No, just may not waive this one claim.

Carter G. Phillips:

But this one claim is–

Ruth Bader Ginsburg:

And you think they can waive… they can waive it?

Carter G. Phillips:

–No, of course not.

I’m not saying… they’re not waiving by failing to tender back.

That’s not a waiver.

Carter G. Phillips:

That is, as this Court said in Olano, a forfeiture, just as she’s not waiving if she fails to satisfy a statute of limitations or other restrictions on the ability to go forward.

The fact that she doesn’t do that doesn’t trigger 626 as a set of conditions on that forfeiture, even though we might colloquially describe that as a waiver.

That’s not what Congress meant in 626.

Antonin Scalia:

Mr. Phillips–

Carter G. Phillips:

The context is very narrow and specific.

Antonin Scalia:

–Mr. Phillips, I am surprised at your concession that if this contract is void the employee can keep all the money that he received.

You say that that’s the common law rule?

I know that contracts that are void for reasons of public policy–

Carter G. Phillips:

Right.

Antonin Scalia:

–If I hire you to murder someone and give you money, I can’t get my money back, or–

Carter G. Phillips:

That’s what I thought the question–

Antonin Scalia:

–if I pay you to fix prices or something like that.

Carter G. Phillips:

–Right.

Antonin Scalia:

But where a contract is void because the deal between the people is not… for example, void for want of consideration.

I give you money, and you’ve made an illusory promise in exchange.

Can I get… that’s a void con–

Carter G. Phillips:

No–

Antonin Scalia:

–Can I not get my money back?

Carter G. Phillips:

–No, I was using void in the much more stringent term.

Antonin Scalia:

Well, I–

Carter G. Phillips:

Which is the one I think that the question invited, was–

Antonin Scalia:

–Well, let me put it to you squarely.

Do you… are you concerned about the things that Justice Breyer is concerned about?

Carter G. Phillips:

–Of course.

I think those are fundamental reasons why you would not interpret this language–

Antonin Scalia:

Then you can’t say that a void contract leaves everybody where they are.

It depends on the basis for the voidness.

Carter G. Phillips:

–No, you’re absolutely right.

All I was answering was that as a matter of the… there are common law rules in which a particular finding of void leaves you without any ability–

Antonin Scalia:

Not every void–

Carter G. Phillips:

–No, you’re right.

David H. Souter:

–And this is not one of those, so in this case I take it your position… is it your position in this case that if this Court holds that the entire waiver is void, that any employer can sue to get the entire… in effect can sue to rescind the contract?

Carter G. Phillips:

I would assume that that follows quite naturally.

David H. Souter:

All right.

Now–

Carter G. Phillips:

And frankly I haven’t heard word one from the other side to counter that.

David H. Souter:

–My question is… and I don’t know the answer to this.

I wish I’d thought of it before argument, but my question, then, is this.

If I can remember back to first-year contracts I thought rescission was an equitable remedy.

Wouldn’t the court, if I’m right, simply say to the employer, no, you can’t get the entire consideration back because they waived a lot of… if this is true, you know, they waived other things besides the age claim, so I’ll give you part of it back.

I will come up… in effect, I’m going to do an intellectual… an equitable slice here.

Is that possible?

Carter G. Phillips:

No, that… no, and I don’t know who taught you first-year contracts, but my understanding–

[Laughter]

David H. Souter:

He was very good.

The pupil wasn’t, but the teacher was okay.

[Laughter]

Carter G. Phillips:

But my understanding of first year contracts is that if you come forward you have to bring back the entire consideration, and that is clearly the law–

Stephen G. Breyer:

Wait… wait.

Can I just go right into that, because my professor was Jack Dawson, who was a fabulous first-year–

[Laughter]

Any failing is one of my own memory.

But the… my belief… I thought of this, is, there is no contract.

We don’t have to rescind it.

There’s a contract, but the provision at issue is void… it’s not there.

Forget the word void.

Carter G. Phillips:

–I would say voidable.

Stephen G. Breyer:

It’s invalid.

Carter G. Phillips:

Invalid, un–

Stephen G. Breyer:

It’s gone.

Stephen G. Breyer:

Pretend it isn’t there.

Carter G. Phillips:

–Correct.

Stephen G. Breyer:

At that point, we have a human being called a worker who has some money that the employer paid him, and I would have guessed, because I don’t remember the course that well, that he is entitled, the employer, to get back the money to the extent that the employee has been unjustly enriched, and I would think that he has been unjustly enriched only to the extent that he received money for a promise not to sue which is invalid, i.e., only in respect to the ADEA claim.

Carter G. Phillips:

He–

Stephen G. Breyer:

And therefore, what happens all the time in unjust enrichment, we have difficult questions to look into, and therefore he wouldn’t get back [dollars] 6,000 here.

He would get back a proportionate share.

No.

The employee would have to give… why not?

Carter G. Phillips:

–Well, I mean, that is a rule that could have been adopted, but it is not the rule that was adopted–

Stephen G. Breyer:

Where?

Carter G. Phillips:

–and I think the reason is is because these are difficult–

Stephen G. Breyer:

Which rule wasn’t adopted where?

Carter G. Phillips:

–The tender-back requirement requires you to tender back the entirety of the consideration.

If you–

Stephen G. Breyer:

Entirety of consideration for what?

Carter G. Phillips:

–For the severance that you signed.

David H. Souter:

Well, but severance only if the–

–But that’s on the assumption that it’s voidable, and the assumption of the question is that it’s void.

Carter G. Phillips:

Well… no, we didn’t… no, that’s not true, Your Honor.

David H. Souter:

I’d–

Carter G. Phillips:

The assumption was that it is unenforceable.

Stephen G. Breyer:

–All right, I’ll take it… I’ll go to voidable, and–

Carter G. Phillips:

Right.

[Laughter]

So if I’m right about the assumption that it’s voidable, and I think I was right about that, then the common law rule… because voidable’s one that arises all the time.

You get it in fraud and coercion, et cetera.

It may apply to a part of the agreement, it may apply to all of the agreement.

The rule of tender-back, as I understand it, and again I may not have had the greatest first-year law professor, either, but as I understood the rule is, you have to tender back the entirety of the consideration.

Stephen G. Breyer:

–The entirety of the consideration for?

Carter G. Phillips:

For the underlying dispute between the parties.

Stephen G. Breyer:

For that portion–

Carter G. Phillips:

No, I don’t think it is.

Stephen G. Breyer:

–In other words, if he was paid [dollars] 10 million as part of a golden parachute, and the entire… and just in that golden parachute contract, which is 48 pages long, there’s only one line talking about a promise not to sue, he has to give back the whole [dollars] 4 million, or [dollars] 10 million?

Carter G. Phillips:

It seems like an unjust result, but as I understand the basic hornbook rule… I’m not saying there couldn’t be exceptions that would exist, but if you’re looking for the hornbook rule, and the rule as it exists in Louisiana, at least in cases that don’t pose that question, it’s pretty consistently that you bring back the entirety of the consideration, and let’s be–

Antonin Scalia:

Mr. Phillips, I used to teach first-year contract–

[Laughter]

Carter G. Phillips:

–I must say I’m happy I–

Antonin Scalia:

He was not my teacher.

[Laughter]

And I don’t know what the rule is generally about returning the whole thing or not, but I’m sure that where a contract contains several items, and the value all of those items depends upon future contingencies, you cannot await for… wait for one of those contingencies to occur, such as the bringing of a lawsuit, the discovery of a claim, and then say, well, you take back all the rest.

Give me… you know, I’ll give you back only the money I paid for the four horses that didn’t win.

Carter G. Phillips:

–That’s correct.

Antonin Scalia:

And the one horse that did win, I only paid 20 percent of the whole thing for that ticket.

I am sure that a court would not allow that.

I’m not sure you have to go as far as the general rule you’re pressing on the court.

Carter G. Phillips:

No, and I don’t mean to press that rule, and I ought to step back, because it seems to me what this tells us is you ought to look to the common law, and you ought to see how the States apply these principles rather than–

Antonin Scalia:

I’m interested in that.

Now, what are you asking… I’m not sure how much difference it makes in this case, but just as a matter of curiosity, I wasn’t clear from your brief, are you asking us to look to the law of a particular State here?

Carter G. Phillips:

–No, although that might be a suitable vehicle for deciding this case, but as it happens the law in Louisiana is exactly the Federal common law, law rule, and so it doesn’t make any difference.

In terms of the basic principle, is there a tender-back rule–

Antonin Scalia:

It’s nice to know what we’re doing.

I mean–

–May I–

–Well, you don’t think that Congress was enacting this law in the back… with the backdrop of State common law–

Carter G. Phillips:

–Oh, absolutely.

Sandra Day O’Connor:

–to several questions–

Carter G. Phillips:

Absolutely.

Sandra Day O’Connor:

–that it didn’t cover in the statute?

Carter G. Phillips:

Absolutely it did, but the real question is, if you–

Sandra Day O’Connor:

Well, do you think… are we really dealing here with whether we should construct some principle of Federal law to fill in a gap?

Carter G. Phillips:

–No.

Sandra Day O’Connor:

Is that what we’re talking about?

Carter G. Phillips:

No.

What we do have is a Federal question to decide where you look to the law, and my instinctive reaction is that you ought to look to the principles of State law and borrow those principles.

In this particular case, however, it makes no difference, because Louisiana, like the law of every other… all 50 States, and if there were a Federal common law rule what would be the Federal common law rule–

Anthony M. Kennedy:

May I ask–

–And you say that under the Federal common law… we have two cases.

Case one, there’s a release that says ADEA release, but it doesn’t comply with the statute.

Carter G. Phillips:

–Right.

Anthony M. Kennedy:

The other case is a case like this in which, let us say, there might have been some substantial State law claims that were released as well as the ADEA claim.

It also is void.

You say the two cases are exactly the same.

Carter G. Phillips:

Yes.

I think they should… well, they’re not the same in… with respect to being able to waive the rights, sure.

That… the statute takes care of that.

But with respect to the obligation to come forward and satisfy the tender-back obligation as an independent, legal obligation that the State common law and, frankly, Federal common law applies, yes, those are exactly the same.

John Paul Stevens:

Mr. Phillips, can I ask you another question?

I also took contracts in law school by the way.

[Laughter]

Supposing one reads the statute noting that it doesn’t use the word void or voidable, they’re simply saying that when you have a release which purports to release 19 different claims, and if one of those claims is an ADEA claim the release shall not be enforceable insofar as it purports to release that claim, because that would be a waiver… they don’t even talk about void or voidable… why wouldn’t that be a reasonable reading of this statute?

Carter G. Phillips:

Well, that doesn’t answer the question, though.

I mean, it’s a perfectly reasonable answer.

John Paul Stevens:

What question doesn’t it answer?

Carter G. Phillips:

It doesn’t answer the question whether you have an obligation to tender back as a precondition–

John Paul Stevens:

It says it shall not be enforceable, period, regardless of whether you’re able or willing or not to tender back.

Doesn’t… isn’t it perfectly clear what the mean… and isn’t that a fair reading of the plain language of this statute?

Carter G. Phillips:

–No, because that gives a meaning to the word waiver that is much broader than that term is entitled to carry.

John Paul Stevens:

The meaning is, it shall not be enforceable as to that narrow claim.

Carter G. Phillips:

That’s correct.

John Paul Stevens:

Yes.

Carter G. Phillips:

But it doesn’t mean–

John Paul Stevens:

And that’s much broader than the statutory language that says you may not waive that claim.

Carter G. Phillips:

–But all that says is… and again, I think it’s inappropriate to read that just as, may not waive.

I think you have to read it against the backdrop of all of those conditions that are imposed, because all of the conditions that are imposed in determining whether a waiver is voluntary and knowing are all conditions that would go to the question of coercion, duress, and all of the other–

John Paul Stevens:

Which, they put the employer on notice that if they want this to cut off the ADEA claim they must comply with these provisions, which your client didn’t comply with.

Carter G. Phillips:

–That’s correct.

John Paul Stevens:

Therefore, you have a perfectly valid document as to everything except the ADEA claim.

Carter G. Phillips:

Right.

John Paul Stevens:

So I don’t understand why that doesn’t fit the plain language of the statute.

Carter G. Phillips:

Because what fits the plain language, Justice Stevens, is, in the ordinary case she has an age discrimination claim.

She’s not happy with the release she signed.

She’s got [dollars] 6,000.

It is her obligation, in order to get into court in the first instance, to show fraud, coercion, duress, or some other justification for setting aside the agreement.

Congress stepped in… and this is an important right.

It seems to be lost sight of in this context.

Congress stepped in and modified that directly, saying, first of all, you don’t have to satisfy any of those requirements that ordinarily entitle a contract to be respected.

We’re going to drop the barrier significantly, and second, we’re going to impose upon the employer an ongoing obligation to prove that this was knowing and voluntary, a burden of proof that otherwise doesn’t exist.

By doing that… and if we don’t satisfy those requirements, she is free to go into court against those common law doctrines that would clearly prevent her from going into court, and that’s what Congress had in mind.

John Paul Stevens:

It’s the last part that’s not in the statute, that you’re bringing in against those common law doctrines.

You’ve just acknowledged that this modified the common law by saying you don’t have those thresholds, you have a statutory threshold–

Carter G. Phillips:

But I–

John Paul Stevens:

–which your client did not comply with.

Carter G. Phillips:

–But… and I understand that, but then I go back to the Court’s opinion in United States v. Texas, where it says, when Congress sits down and tries to modify the common law, we do not presume that Congress means to undo any broader than Congress states expressly in the language of the statute itself.

Therefore, it’s perfectly sensible to me under United States v. Texas to say 626(f) would get her into court if there are no other legal impediments to going into court, but it doesn’t go that extra step and offer her an opportunity to avoid a forfeiture, a forfeiture of her right that arises as an independent common law doctrine.

Ruth Bader Ginsburg:

But if the common law in a State were not the unreasonable position that a may-not-waive provision leaves both sides powerless, so the contract is construed, as Justice Stevens suggested, to cover everything else that could be covered to dispose of anything the parties could dispose of, but just as though it weren’t there, the thing that they can’t dispose of, so the common law, let’s, say, in New York or New Jersey was not as you described it to be in Louisiana, could we then say that for these kinds of claims the Age Discrimination Act is going to mean one thing in one State, another thing in another State, or that there will be the Federal common law so that you’d have the same rule in all the States?

Carter G. Phillips:

I think the farthest you can go with Federal common law is to deal with precisely how you analyze the precise waiver, because that comes from the statute, and if you have interstices within the application of 626(f), it seems to me those you would clearly fill in by reference to–

Sandra Day O’Connor:

Well now, in Hogue, which you say doesn’t directly apply here because in FELA Congress said it’s going to be void, but nonetheless at the end of the day in Hogue the Court said we’re going to require an offset at the end of the day.

If the plaintiff recovers something under the FELA claim we’ll offset whatever the employer already had paid.

Now, what about such a provision?

I guess the Court was crafting some principle of Federal law there.

Carter G. Phillips:

–Well, it seemed clearly to be crafting a principle of Federal law, and I’m not sure the approach the Court followed there would necessarily be the course they would follow here.

Sandra Day O’Connor:

Maybe it should do that here–

Carter G. Phillips:

No.

Sandra Day O’Connor:

–and does that partially meet your concern?

Carter G. Phillips:

Well, obviously, as between having an opportunity to get some money back at the end of the day or not, undoubtedly my client would prefer that alternative, but the truth is, what we seek to have vindicated here is the common law rule, recognized in all 50 States and as a matter of Federal common law, that you must come forward with the consideration at the outset of the litigation.

That–

Antonin Scalia:

Mr. Phillips, to come back to Justice Ginsburg’s question, what if there were different rules in Louisiana and New York, would a suit in New York come out differently?

Carter G. Phillips:

–If we’re talking–

Antonin Scalia:

If New York did not–

Carter G. Phillips:

–If we’re talking about no tender back requirement?

Antonin Scalia:

–No… well, a proportionate tenderback.

We’ll guess at some proportion.

Carter G. Phillips:

Yeah, my instincts are to say there ought to be different rules in those cases, that Congress–

Antonin Scalia:

For different States.

Carter G. Phillips:

–Yes, because Congress would have looked to the State–

Antonin Scalia:

What if New York had only adopted that rule for this statute, for an ADEA case, could it… could New York say, in ADEA cases, given the nature of this statute and what-not, we’re going to adopt that rule, although in all other cases in New York we won’t do it?

Carter G. Phillips:

–I mean, they… well… can they adopt that rule, that question is yes.

Would that be preempted, the answer to that is probably no.

The question is, would a Federal court be obliged to borrow that kind of a direct intrusion into the manipulation, or whether it would feel more comfortable saying that interferes with a Federal policy in a way that would require us to set it aside.

That seems to me a tough question to answer in the abstract, but those are the legal principles that I think would apply–

Antonin Scalia:

I think maybe we’d get into a lot of difficult questions if we say this is governed by State-by-State law.

I–

Carter G. Phillips:

–Well, but that’s true in lots of Federal statutes, Your Honor, and at least with respect to 626 and the important elements of protection of Federal law that are embodied in there, I’m not saying you look to State-by-State law there.

It seems to me clear the interstices of that provision, because it’s designed to oust common law, you have to come in with Federal rules to do that.

David H. Souter:

–Could this–

Carter G. Phillips:

But when you get out of that mold, then it seems to me you almost certainly in general look to State law, because that really will tell you the answer for most day-to-day primary activities–

David H. Souter:

–Mr Phillips–

Carter G. Phillips:

–and that’s my personal preference.

David H. Souter:

–Could we solve the problem this way, by saying that the tender-back requirement can be looked at as essentially a remedial condition.

We’re not going to give a remedy when the person keeps 100 percent of what, in fact, he is claiming inoperative, and therefore we’re going to leave the question of what has to be, in effect, tendered and ultimately paid back to the remedy stage.

David H. Souter:

At the remedy stage, the Federal court does have fairly broad powers to craft a remedy without any violation of Erie, and therefore solve both the problem of state variation and the tender-back problem by saying it’s going to be a remedial issue here.

What’s wrong with that?

Carter G. Phillips:

What’s wrong with that is, that’s not the scheme Congress adopted.

William H. Rehnquist:

Well, it’s also, what if the plaintiff loses the suit?

Carter G. Phillips:

That’s the other side of it.

You may never get anything back.

But the bottom line is that the tender-back rule is not a remedial rule.

It is a rule that serves the ends of justice and fairness, but it does so substantively.

It is a fundamental principle of contract law, it creates an independently recognized right, it is enforceable independently, and it is that right which she forfeited and which justifies the dismissal of her claim, and why the judgment of the Fifth Circuit should be affirmed.

If there are no other questions I’ll yield back my time.

William H. Rehnquist:

Thank you, Mr. Phillips.

The case is submitted.