Estle v. Int'l Bus. MacHs. Corp.

23 F.4th 210
CourtCourt of Appeals for the Second Circuit
DecidedJanuary 20, 2022
Docket20-3372
StatusPublished
Cited by14 cases

This text of 23 F.4th 210 (Estle v. Int'l Bus. MacHs. Corp.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Estle v. Int'l Bus. MacHs. Corp., 23 F.4th 210 (2d Cir. 2022).

Opinion

20-3372 Estle v. Int’l Bus. Machs. Corp.

2 United States Court of Appeals 3 for the Second Circuit 4 5 August Term, 2021 6 7 (Argued: September 29, 2021 Decided: January 20, 2022) 8 9 Docket No. 20-3372 10 _____________________________________ 11 12 STEVEN ESTLE, MARGARET AHLDERS, 13 LANCE SALONIA, CHERYL WITMER, 14 Plaintiffs-Appellants, 15 16 v. 17 18 INTERNATIONAL BUSINESS MACHINES CORPORATION, 19 Defendant-Appellee. 20 _____________________________________ 21 Before: 22 23 LEVAL, SACK, and PARK, Circuit Judges. 24 25 Plaintiffs are former IBM employees who entered into severance agreements 26 in which they agreed not to join any collective actions against IBM asserting claims 27 under the Age Discrimination in Employment Act of 1967 (“ADEA”), 29 U.S.C. 28 §§ 621–634. Plaintiffs sued IBM to challenge the validity of those collective-action 29 waivers, arguing that they were not “knowing and voluntary” because IBM failed 30 to make certain disclosures to Plaintiffs as required for the waiver of “any right or 31 claim” under the ADEA. 29 U.S.C. § 626(f)(1). The district court (Gardephe, J.) 32 granted IBM’s motion to dismiss for failure to state a claim, and Plaintiffs 33 appealed. 34 The result in this case follows directly from the Supreme Court’s decision in 35 14 Penn Plaza LLC v. Pyett, 556 U.S. 247 (2009). There, the Court held that § 626(f)(1) 1 of the ADEA applied to “substantive right[s],” like “the statutory right to be free 2 from workplace age discrimination,” but not procedural ones, like “the right to 3 seek relief from a court in the first instance.” Id. at 259, 265–66 (citation omitted). 4 Collective-action waivers, like arbitration clauses, address procedural, not 5 substantive rights, and thus do not require special disclosures under § 626(f)(1) of 6 the ADEA for their acceptance to be “knowing and voluntary.” The district court 7 correctly held that 14 Penn Plaza governs this case and granted IBM’s motion to 8 dismiss Plaintiffs’ complaint. We affirm. 9 10 DAVID G. WEBBERT, Johnson, Webbert & 11 Garvan, LLP, Augusta, ME (Carol J. Garvan, 12 Shelby Leighton, Johnson, Webbert & 13 Garvan, LLP, Augusta, ME; Joseph M. 14 Sellers, Shaylyn Cochran, Cohen Milstein 15 Sellers & Toll PLLC, Washington, DC; 16 Jeffrey Neil Young, Solidarity Law, 17 Cumberland, ME, on the brief), for Plaintiffs- 18 Appellants. 19 20 MATTHEW W. LAMPE, Jones Day, New York, 21 NY (Traci L. Lovitt, Jones Day, New York, 22 NY; Alison B. Marshall, Jones Day, 23 Washington, DC, on the brief), for Defendant- 24 Appellee. 25 26 PARK, Circuit Judge:

27 Plaintiffs are former IBM employees who entered into severance agreements

28 in which they agreed not to join any collective actions against IBM asserting claims

29 under the Age Discrimination in Employment Act of 1967 (“ADEA”), 29 U.S.C.

30 §§ 621–634. Plaintiffs sued IBM to challenge the validity of those collective-action

31 waivers, arguing that they were not “knowing and voluntary” because IBM failed

2 1 to make certain disclosures to Plaintiffs as required for the waiver of “any right or

2 claim” under the ADEA. 29 U.S.C. § 626(f)(1). The district court (Gardephe, J.)

3 granted IBM’s motion to dismiss for failure to state a claim, and Plaintiffs

4 appealed.

5 The result in this case follows directly from the Supreme Court’s decision in

6 14 Penn Plaza LLC v. Pyett, 556 U.S. 247 (2009). There, the Court held that § 626(f)(1)

7 of the ADEA applied to “substantive right[s],” like “the statutory right to be free

8 from workplace age discrimination,” but not procedural ones, like “the right to

9 seek relief from a court in the first instance.” Id. at 259, 265–66 (citation omitted).

10 Collective-action waivers, like arbitration clauses, address procedural, not

11 substantive rights, and thus do not require special disclosures under § 626(f)(1) of

12 the ADEA for their acceptance to be “knowing and voluntary.” The district court

13 correctly held that 14 Penn Plaza governs this case and granted IBM’s motion to

14 dismiss Plaintiffs’ complaint. We affirm.

15 I. BACKGROUND

16 A. Facts

17 In May 2016, Defendant IBM terminated Plaintiffs Steven Estle, Margaret

18 Ahlders, Lance Salonia, and Cheryl Witmer, all of whom were 56 or 57 years old

3 1 at the time, as part of a reduction in force. IBM offered a severance package to

2 Plaintiffs that included a lump-sum payment equal to one month’s salary, six to

3 twelve months of health and life insurance coverage, career counseling services,

4 and reimbursement for job-related skills training. In exchange, each Plaintiff

5 agreed to sign a separation agreement containing a collective-action waiver, which

6 stated as follows:

7 TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, 8 YOU AND IBM AGREE THAT NO COVERED CLAIMS MAY BE 9 INITIATED, MAINTAINED, HEARD, OR DETERMINED ON A 10 MULTIPARTY, CLASS ACTION BASIS OR COLLECTIVE ACTION 11 BASIS EITHER IN COURT OR IN ARBITRATION, AND THAT YOU 12 ARE NOT ENTITLED TO SERVE OR PARTICIPATE AS A CLASS 13 ACTION MEMBER OR REPRESENTATIVE, OR COLLECTIVE 14 ACTION MEMBER OR REPRESENTATIVE, OR RECEIVE ANY 15 RECOVERY FROM A CLASS OR COLLECTIVE ACTION 16 INVOLVING COVERED CLAIMS EITHER IN COURT OR 17 ARBITRATION. 1 18 19 Each Plaintiff signed the separation agreement. 20 21 B. Procedural History

22 Plaintiffs sued IBM in the United States District Court for the Southern

23 District of New York seeking a declaration that the collective-action waiver in the

1 “Covered Claims” include claims under the ADEA, the West Virginia Human Rights Act, and “any and all claims or disputes that have not or cannot be released by private agreement as a matter of law.” Estle v. Int’l Bus. Machs. Corp., 19-CV-2729 (S.D.N.Y.), Dkt. 35, Ex. 1.

4 1 separation agreement is invalid under the ADEA and an injunction barring IBM

2 from enforcing the waiver against Plaintiffs. IBM moved to dismiss for failure to

3 state a claim under Federal Rule of Civil Procedure 12(b)(6), and the district court

4 granted the motion. The district court relied on 14 Penn Plaza to conclude that—

5 “for purposes of Section 626(f)—‘right’ means a ‘substantive right’” and, because

6 it determined that “the right to bring a collective action is not a substantive right,”

7 the district court held that “Plaintiffs’ collective action waiver does not waive a

8 ‘right’ for purposes of Section 626(f) . . . .” App’x at 39–40. Plaintiffs timely

9 appealed.

10 II. DISCUSSION

11 A. Standard of Review

12 “We review the grant of a Rule 12(b)(6) motion to dismiss de novo. We accept

13 the factual allegations as true and draw all reasonable inferences in favor of the

14 plaintiff.” Specht v. City of New York, 15 F.4th 594, 599 (2d Cir. 2021) (cleaned up).

15 B. Statutory Requirements

16 The ADEA generally prohibits employment discrimination on the basis of

17 an employee’s age. See 29 U.S.C. § 623.

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