Case: Peterson v. Seagate US LLC

On May 25, 2007, employees terminated by the defendant, Seagate, LLC, filed a lawsuit in the United States District Court for the District of Minnesota under the Age Discrimination in Employment Act (ADEA), and the Declaratory Judgment Act, 28 USC §2201. Plaintiffs, represented by private attorneys, asked the court for declaratory relief under the Declaratory Judgment Act relating to the enforceability of a purported release and waiver signed by many of the Plaintiffs upon their termination. Plaintiffs claimed that they were subjected to adverse treatment in the terms, conditions, and privileges of their employment and termination due to their age.

Plaintiffs also alleged that they did not knowingly and voluntarily waive their ADEA claims because the signed releases were invalid under the OWBPA, which sets specific criteria for effective written releases of federal age discrimination claims. The plaintiffs claimed that among other defects, the releases misrepresented the number of employees selected for termination, omitted employees from the list of those selected for termination, were not written in a manner reasonably calculated to be understood by the average employee, and failed to disclose the selection criteria and eligibility factors used to select individuals for termination. Plaintiffs claimed they suffered actual damages in the form of lost salary and wages, retirement and insurance benefits, and other forms of compensation reasonably believed to exceed $100,000 per plaintiff.

The claim is pursuant to events in 2004, when Seagate laid off employees at its Normandale and Shakopee facilities in Minnesota. It gave the terminated workers severance benefits conditioned on the signing of a release that purported to waive any age discrimination claims against the employer. Plaintiffs claimed that they were asked to sign the releases immediately, without allowing them to consider it or to consult with an attorney, and that a Seagate Human Resources employee stood at the door of the facility to collect the signed releases from the terminated employees.

Two of the terminated employees who did not sign releases filed the age discrimination charges with EEOC. Some 19 additional plaintiffs joined the plaintiffs in the ADEA class suit, even though they had signed releases and never filed EEOC charges. The court also said the administrative charges filed by the plaintiffs referred to the 2004 terminations and indicated that the pair were bringing charges on behalf of themselves and other similarly situated employees over age 40 that Seagate had terminated.

On November 20, 2007, Seagate submitted a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, arguing that those 19 plaintiffs lack any claim for declaratory relief under the OWBPA or for individual relief under the ADEA. The company contended the waivers are valid as a matter of law, fully compliant with the OWBPA's requirements, and effectively block the plaintiffs' ADEA claims. Seagate also contended that plaintiffs who did not file EEOC charges may not seek individual relief under the ADEA. Seagate contended that its written release form complied with the OWBPA and specified that terminated employees had 45 days in which to decide to sign, as required by the act. The company argued that the plaintiffs are imposing a "hypertechnical statutory application" in interpreting the releases. Seagate contended that the pressure plaintiffs reported was "nothing more than the reality that eligibility for separation benefits was lawfully conditioned on signing the releases."

Observing that plaintiffs' allegations must be accepted as true at the motion to dismiss stage, Judge Michael J. Davis denied Seagate's motion regarding the validity of the releases under OWBPA. He pointed out that under relevant case law, an effective release must comply with each OWBPA prerequisite and that "substantial compliance" with the act's requirements is "not adequate." The plaintiffs may proceed with their bid for a declaratory judgment that the releases are invalid under OWBPA and therefore do not block their age bias claims, the court decided.

On January 22, 2008, defendants moved for an order to certify, for interlocutory appeal, the November 20, 2007 denial of their motion to dismiss. Defendants sought certification on two grounds: whether the plaintiffs had properly exhausted their administrative remedies with respect to their age discrimination claims, and whether the Special Incentive Retirement Plan (SIRP) release that a plaintiff signed is valid and enforceable. On February 14, 2008, Judge Davis denied the motion for certification, stating that the defendants were simply challenging the Court's application of settled law. Judge Davis also stated that the defendants failed to demonstrate substantial grounds for a difference of opinion warranting interlocutory relief.

On May 28, 2008, plaintiffs moved for partial summary judgment as to the invalidity of the releases signed by the employees upon their termination. Under the OWBPA, an individual cannot waive any right or claim under the ADEA unless the waiver is knowing and voluntary. Some of the terms were different for waivers that involved "reduction in force" (RIF) releases. Some of the terminated employees signed RIF releases, and others signed Special Incentive Employment Program (SIRP) releases. 154 employees were affected by the RIF at the Normandale facility. The RIF releases were declared invalid because they failed to disclose the proper required information of all terminated employees at the Normandale facility with respect to the 2004 RIF, they were unintelligible, and they prohibited signers from filing EEOC charges, all of which violate the OWBPA. Judge Davis declared that the releases offered to those plaintiffs terminated pursuant to the 2004 RIF were invalid as a matter of law.

On October 23, 2008, Judge Davis granted plaintiffs' motion to authorize notice to potential class members, which consisted of all individuals who were employed by defendants in any United States location and who were 40 years of age or more on the date in 2004 when defendants offered them a retirement separation agreement or a termination separation agreement.

On February 8, 2011, the court granted plaintiffs' motion for summary judgment as to the invalidity of the 2004 SIRP releases because they violated the 45-day consideration period for such releases under federal law. Then, on August 15, 2011, the defendants' motion for decertification was granted in part and denied in part. The court declared that only those plaintiffs terminated through RIF may proceed as a collective action. This was because the SIRP was a separate employment action that was different in scope, communication and effect than the RIF, and employees terminated through one program are not similarly situated to those employees terminated from the other program. Seagate also asserted that the SIRP was intended as a voluntary program, while the RIF was involuntary, so the employees who volunteered to participate in SIRP suffered no adverse employment action and were thus not similarly situated with the RIF plaintiffs. Taking into consideration the relevant factors in determining whether to decertify a class--age variance, type of termination, division in the company in which they worked, employment status, supervisors and salaries--the Court found that employees terminated through SIRP were not similarly situated with employees terminated through RIF. Thus, the defendants' motion for decertification was granted for the plaintiffs who signed the SIRP releases.

With respect to the RIF program, the court held that at this stage, the plaintiffs have met their burden of putting forth sufficient evidence that age discrimination may have been the standard operating procedure with respect to those employees selected for termination through the RIF, and defendants' motion to decertify was denied with respect to employees who signed the RIF releases.

Additionally, on August 15, 2011, defendants' motion for partial summary judgment as to plaintiffs' disparate impact claim was granted.

On September 29, 2011, the court dismissed without prejudice the claims of 9 plaintiffs who had signed the SIRP releases. Then, on November 15, 2011, the parties reached a settlement. On January 24, 2012, the parties stipulated that the case be dismissed with prejudice. The case was then dismissed with prejudice on January 26, 2012.