Ruling for Employer in ADEA Putative Class Action Reversed Because Severance Pay Release Ineffective Under OWBPA

Former employees of IBM who signed a release of claims in return for severance pay and benefits resulting from a RIF, sued for age discrimination. The EEOC issued them right to sue letters after dismissing their charges of discrimination on the ground that the releases satisfied the Older Worker Benefit Protection Act (OWBPA) minimum requirements for ?knowing and voluntary??? waiver?? of?? ADEA?? rights.???? ?The OWBPA requires that a release be ?written in a manner calculated to be understood by such individual, or by the average individual eligible to participate.??? The employees alleged that the ?release covering ADEA claims and a covenant not to sue excepting them created confusion over whether ADEA claims were excepted from the release.? ?IBM filed a counterclaim for breach of the releases and moved to dismiss the complaint under Rule 12(b)(6), which the district court granted. ?Engaging in a helpful discussion of the statutory prerequisites of waiver under the ADA, the Court of Appeals found they were not met, and so reversed.?? The Court reasoned that the average employee would not know what to make of the language releasing ?all claims? in light of the covenant not to sue IBM in the same document which contained the proviso that the ?covenant not to sue does not apply to actions based solely under the ADEA.?? ?Any legal difference between the meaning of a release and a covenant not to sue, the Ninth Circuit declared, would be lost on IBM employees. ?The infirmity was not cured by IBM?s statement in the release that employees should seek the advice of an attorney. ?Syverson v. IBM Corp., No. 04-16449 (Aug. 31, 2006, Berzon, Rawlinson, Callahan).