Invalid RIF Agreement Results in Big Plaintiff Verdict

Darrell VanDeusen
Darrell VanDeusen

Back when I was a baby lawyer in the mid-1980s, I remember a client who assured us that, contrary to our advice, what the client wanted to do was legally just fine.  “But it’s not what the law permits” we said.  “It’s what [very large company name redacted] does,” was the reply.  “And [very large company name redacted] just got hit with a multi-million dollar verdict against it for doing it,” we rejoined, “so do you want that happen to you too?”

That memory came back to me when I read about a recent $2 million plus jury verdict in a case against AT&T, after a judge determined that the release and severance agreement offered the plaintiff had not complied with the ADEA’s provisions for a knowing and voluntary release under the Older Workers’ Benefit Protections Act (OWBPA).    Ray v. AT&T, Inc., 2019 U.S. Dist. Lexis 5638 (E.D. Pa. 2019), sum. judgmt. denied in 2020 U.S. Dist. LEXIS 242931 (2020) (plaintiff’s verdict rendered Nov. 19, 2021).  Here’s that story.

Allison Ray was 49 when AT&T terminated her as the result of a reduction in force (RIF). She had been with the company in various positions for 24 years.  As is often the case with a RIF, the company offered Ray (and others affected by the RIF) a severance package in return for a release of claims.     

Ray signed the severance agreement.  Then she sued for age discrimination, alleging that the severance agreement was invalid and unenforceable, as it did not meet the OWBPA’s requirements. 

As most employment lawyers know (and you can thank former Sen. Ted Kennedy for this), the OWBPA sets statutory requirements for an ADEA waiver to be considered knowing and voluntary. 29 U.S.C. § 626(f)(1)(A)-(H).  When a group layoff occurs, the affected employees must be told of the group affected and the factors for selection, as well as those employees picked and not picked by ages and job titles, told to consult a lawyer, given 45 days to consider signing (and seven days to revoke), and – perhaps most difficult for some lawyers drafting these agreements – “written in a manner calculated to be understood by the average individual eligible for severance.”

Ray claimed the RIF agreement: (1) did not properly identify the decisional unit at issue; (2) was not provided at the requisite time; (3) was not written in a manner calculated to be understood by the average individual eligible to participate; (4) did not properly identify the pertinent eligibility factors; (5) did not appropriately discuss the applicable time limits; and (6) did not identify the job titles and ages of individuals eligible or selected for the program.

AT&T’s response (using better legal terms, of course) was “did too.”   But the court focused its concerns on the definition of the decisional unit.  Ray argued that AT&T’s identification of the decisional unit involved in the RIF was insufficient to provide any meaningful understanding as to its composition.  The judge agreed, finding that the “purported decisional unit definition, even combined with the attached list of employees sorted by age and job title, was not understandable to the average worker, and therefore failed to provide Ray with sufficient information to assess whether she was being discriminated against because of her age.”

The judge held that AT&T’s “circuitous decisional unit definition is precisely the type of disclosure the OWBPA seeks to prevent.”  The result:  an invalid agreement.   Next, AT&T filed a motion for summary judgment on the substantive ADEA claim, which the court also denied, holding that disputes of fact existed over whether age was a determining factor in Ray’s selection.  Interestingly, in that decision there was no discussion of the Supreme Court’s requirement of “but for causation” in Gross v. FBL Financial Services, Inc., 557 U.S. 167 (2009).  This seems odd, since proving “but for” is required under the ADEA.

Nevertheless, the case went to trial and Ray was rewarded with a $2.254 million dollar jury verdict (including backpay, front pay and liquidated damages).  Ray’s attorneys’ fees will also be recovered.    And remember, Ray got to keep the severance from the invalid RIF agreement.

What’s the takeaway here?  Employers sometimes can be too cute by half in trying to navigate around legal requirements, pushing the creative boundaries of what might work.   I don’t know if that is what happened here, but I do know that the better approach is almost always to be straightforward in applying the law – particularly when, as here, the OWBPA’s requirements are known to be strict and unqualified, incorporating no exceptions or qualifications, to paraphrase Oubre v. Entergy Operations, Inc., 522 U.S. 422, 426-27 (1998).  Otherwise, doing what [very large company name redacted] does may mean that you get to pay someone a lot of money too.


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