JOHN R. TUNHEIM, Chief Judge, United States District Court
In June 2012, defendant General Mills, Inc. ("General Mills") terminated approximately 850 employees as part of a corporate restructuring plan called "Project Refuel." Elizabeth McLeod and 32 other persons aged 40 or above ("plaintiffs") were among those laid off as part of the restructuring, and have brought this action alleging that they were improperly terminated in violation of the Age Discrimination in Employment Act of 1967 ("ADEA").
General Mills moves the Court to dismiss the plaintiffs' complaint under the Federal Arbitration Act ("FAA") and Federal Rule of Civil Procedure 12(b)(1), with prejudice, because each of the plaintiffs signed a binding arbitration agreement and general release agreement as a condition of receipt of a severance package. General Mills also moves to compel arbitration on an individual basis as per the arbitration agreement. General Mills additionally requests that, in the event that the motion to dismiss is not granted in its entirety, the Court strikes the collective action allegations contained in the Amended Complaint and stays the case pending arbitration. Finally, General Mills requests that the Court award reasonable expenses. Because the language of the Older Workers Benefit Protection Act of 1990 ("OWBPA"), specifically 29 U.S.C. § 626(f)(3), mandates that a dispute like this one be heard in a "court of competent jurisdiction," the Court will deny General
In June 2012, General Mills terminated approximately 850 employees as part of a corporate restructuring project called "Project Refuel." (Am. Compl. ¶¶ 2-3, Mar. 26, 2015, Docket No. 15.) The plaintiffs — 33 General Mills employees who were laid off as a part of Project Refuel — allege that the layoffs violated the ADEA because they "affected employees age 40 or over at much higher rates than younger employees." (Id. ¶¶ 3-4.) Additionally, the plaintiffs allege that General Mills was replacing employees terminated under Project Refuel with younger employees. (Id. ¶ 3.) In support of those allegations, the plaintiffs cite statistics, derived from employee termination data, which purportedly show that older employees were many times more likely than younger employees to be laid off during the restructuring. (Id. ¶¶ 86-103.) They accuse General Mills of engaging in an overarching pattern or practice of age discrimination. (Id. ¶¶ 7478.)
Specifically, the plaintiffs provide the following biographical information about each plaintiff named in the action:
Release/Arbitration Agreement Approximate Exhibit Number Age at Years 2 of (McLeod Carlson,Plaintiff Termination Former Position General Mills Docket No. 8; BaehrEmployment — Zimprich, Docket No. 21) Elizabeth 59 Building Coordinator 31 Ex. 8 McLeod Heidi 49 Senior Scientist II 22 Ex. 10 O'Sullivan Sherri Slocum 51 Principal Scientist 22 Ex. 12 Ivette Harper 44 Senior Scientist II 20 Ex. 4 Robert West 53 Senior Facility 19 Ex. 14 Engineer Kevin Stemwell 54 Senior Analyst III 17 Ex. 13 Stephen Miller 61 Network Security 16 Ex. 9 Analyst 3 Peggy Maxe 42 Trade Finance Analyst 15 Ex. 7 Karalyn 44 Senior Research Food 14 Ex. 6 Littlefield Scientist II Colleen 62 Administrative 10 Ex. 3 Friedrichs Assistant Arlene Hornilla 46 Senior Patent Counsel 9 Ex. 5 Marilyn Epp 64 Administrative 8 Ex. 2 Assistant Dwight 55 Contract Operations 6 Ex. 11 Sevaldson Manager Ann Carlson 53 Senior Manager of 2 Ex. 1 Employee Benefit Michael Baehr 53 Investment Recovery 35 Ex. 1 Administrator Gabriele Bauer 56 Senior Human 26 Ex. 2 Resources Analyst
Mark Davis 48 Security Access 11 Ex. 3 Coordinator Susanne 47 Customer Operations 25 Ex. 4 Dehnke Specialist II Frank Delaney 57 Senior Manager, 22 Ex. 5 Strategic Business Ventures Paula Freeman-Brown 54 IS Manager 34 Ex. 6 Barbara Fuglie 50 Senior Technician, 33 Ex. 7 Snacks Group Richard Fuglie 53 Technologist 18 Ex. 8 Christopher 54 Data Architect 26 Ex. 9 Gunn Michelle 44 Customer Accounts 26 Ex. 10 Laurence Receivable Specialist Robert Morris 57 Manager, Warehouse 16 Ex. 11 Management Systems Team Vicki Nellen-Jungers 45 Payroll Operations 7 Ex. 12 Analyst Heidi Neumann 57 Database Administrator 33 Ex. 13 Greg Norman 49 Senior Manager, 22 Ex. 14 Finance Group Michelle Race 49 Category Development 27 Ex. 15 Manager Susan Ryan 54 HR Service Center 35 Ex. 16 Analyst Timothy 57 Senior Application 18 Ex. 17 Schroeder Analyst Diane 53 Quality Specialist 29 Ex. 18 Sundquist Greg Zimprich 48 Director, Brand Public 19 Ex. 19 Relations
(Am. Compl. ¶¶ 22, 104-238; Decl. of Pam Velcheck ("First Velcheck Decl."), Exs. 1-14, Mar. 5, 2015, Docket No. 8; Decl. of Pam Velcheck ("Second Velcheck Decl."), Exs. 119, Apr. 9, 2015, Docket No. 21.)
At or about the date of their termination, each plaintiff signed a release and arbitration agreement ("release agreement") as a condition of receipt of an
(E.g., Second Velcheck Decl., Ex. 1 at 2.) The arbitration agreements are expressly governed by the Federal Arbitration Act ("FAA"). (Id.)
In addition to requiring binding arbitration, the agreement also contains a broad release from all causes of action or claims against General Mills, including claims arising under the ADEA. (Id.; Am. Compl. ¶ 8.) Specifically, the release states:
(E.g., Second Velcheck Decl., Ex. 1 at 2.)
The plaintiffs filed their initial complaint on February 11, 2015, alleging, among other claims, that General Mills improperly terminated the employment of 14 former employees due to their age, in violation of the ADEA. (Compl. ¶¶ 1-26, Feb. 11, 2015, Docket No. 1.) General Mills then filed a motion to dismiss the plaintiffs' complaint and compel individual arbitration, due to the release agreements signed by the plaintiffs. (Mot. to Dismiss & Compel Arbitration, Mar. 5, 2015, Docket No. 5.) General Mills also seeks to strike the complaint's collective action allegations, and reasonable expenses. (Id.)
On March 26, 2015, the plaintiffs timely filed an amended complaint which added an additional 19 plaintiffs, but that otherwise remained substantially the same as the initial complaint. (Am.Compl.) Specifically, the amended complaint, like the initial complaint, asserts the following five counts: (1) ADEA declaratory judgment claim, seeking a declaration that the release agreements are unenforceable because they were not signed "knowingly and voluntarily" by the plaintiffs as prescribed by the ADEA and the OWBPA; (2) ADEA collective action claim, alleging disparate treatment age discrimination; (3) ADEA individual claims, alleging disparate treatment age discrimination; (4) ADEA collective action claims, alleging disparate impact age discrimination; and (5) ADEA individual claims, alleging disparate impact age discrimination. (Am. Compl. ¶¶ 245-76.)
Two weeks later, General Mills filed an amended motion to dismiss and compel
The parties submitted additional briefing, but incorporate by reference all of the arguments made in their original motion to dismiss briefing. Per order of the Court, the Equal Employment Opportunity Commission ("EEOC") and the AARP also filed amicus briefs in opposition to General Mills' motion to dismiss.
In reviewing a motion to dismiss brought under Federal Rule of Civil Procedure 12(b)(6), the Court considers all facts alleged in the complaint as true to determine if the complaint states a "`claim to relief that is plausible on its face.'" See, e.g., Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594 (8th Cir.2009) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009)). To survive a motion to dismiss, a complaint must provide more than "`labels and conclusions' or `a formulaic recitation of the elements of a cause of action.'" Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). Although the Court accepts the complaint's factual allegations as true, it is "not bound to accept as true a legal conclusion couched as a factual allegation." Bell Atl. Corp., 550 U.S. at 555, 127 S.Ct. 1955 (internal quotation marks omitted).
"A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937. "Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility," and therefore must be dismissed. Id. (internal quotation marks omitted). Rule 12(b)(6) also authorizes the Court to dismiss a claim on the basis of a dispositive legal issue. Neitzke v. Williams, 490 U.S. 319, 326-27, 109 S.Ct. 1827, 104 L.Ed.2d 338 (1989).
As evidenced by the FAA, there is a strong federal policy in favor of enforcing arbitration agreements. Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). If claims are arbitrable under the FAA, the claims must be referred to arbitration, and the judicial proceedings must be stayed pending that arbitration. See id.; 9 U.S.C. §§ 2, 3. In determining whether a claim is arbitrable, the court must first decide whether a valid agreement to arbitrate exists between the parties, and then decide whether the specific dispute falls within the scope of that agreement. Daisy Mfg. Co. v. NCR Corp., 29 F.3d 389, 392 (8th Cir.1994). In engaging in the inquiry, the Court applies "ordinary state law contract principles to decide whether parties have agreed to arbitrate a particular matter." Simitar Entm't, Inc. v. Silva Entm't, Inc., 44 F.Supp.2d 986, 992 (D.Minn.1999).
ADEA claims cannot be waived unless the waiver is "knowing and voluntary." 29 U.S.C. § 626(f). The OWBPA amended the ADEA, making a variety of changes. Relevant here, the OWBPA made it harder for companies to cajole employees, upon termination, to give up their ADEA
Specifically, Title II of the OWBPA created requirements with which waivers of ADEA rights must comply. See Pub.L. No. 101-433, § 201, 104 Stat. 978 (1990). Under the OWBPA, a waiver of ADEA rights must comply with the following requirements in order for a waiver to be considered knowing and voluntary:
29 U.S.C. §§ 626(f)(1)(A)-(H)
The OWBPA also states that "[i]n any dispute that may arise over whether any of the [waiver] requirements [listed above]... have been met, the party asserting the validity of a waiver shall have the burden of proving
General Mills argues that the plaintiffs' complaint must be dismissed, or at a minimum stayed, and that the Court must enter an order compelling the plaintiffs to resolve these claims in arbitration. The company contends that, irrespective of the plaintiffs' contention that their waivers of their substantive ADEA claims in the release agreements did not meet the requirements of the OWBPA in Section 626(f)(1), (Am Compl. ¶¶ 245-51), the arbitration provision of the release agreements is still binding and compels the plaintiffs to make their argument regarding the validity of their waiver of substantive ADEA rights in an arbitral forum, not in federal court. Whatever they may say about the broader release agreements, since the plaintiffs do not in any way challenge the validity of their arbitration agreements (e.g., that the signatures were forged or that they were forced to sign under duress), General Mills claims the arbitration provisions are valid and enforceable and there is nothing left for this Court to decide. Faber v. Menard, Inc., 367 F.3d 1048, 1052 (8th Cir. 2004) ("The Supreme Court has established that an arbitral forum is, as a general matter, adequate to preserve statutory rights and adjudicate statutory claims."); id. (stating that an arbitration agreement will generally be upheld "unless a party can show that it will not be able to vindicate its rights in the arbitral forum").
Indeed, in general, even if the broader agreement, of which an arbitration agreement is just a part, is held invalid, the Supreme Court has held that the arbitration provisions are severable and still valid. Buckeye Check Cashing, Inc. v. Cardegna, 546 U.S. 440, 448-49, 126 S.Ct. 1204, 163 L.Ed.2d 1038 (2006) (noting that the Supreme Court's decision in Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967), "permits a court to enforce an arbitration agreement in a contract that the arbitrator later finds to be void"); see also Nitro-Lift Techs., LLC v. Howard, ___ U.S. ___, 133 S.Ct. 500, 503, 184 L.Ed.2d 328 (2012) (distinguishing between "attacks on the validity of the contract [waiving substantive claims]" and "attacks on the validity of the arbitration clause itself," and noting that the former "are to be resolved `by the arbitrator in the first instance, not by a federal or state court.'" (quoting Preston v. Ferrer, 552 U.S. 346, 349, 128 S.Ct. 978, 169 L.Ed.2d 917 (2008))); Rent-A-Center, West, Inc. v. Jackson, 561 U.S. 63, 71-72, 130 S.Ct. 2772, 177 L.Ed.2d 403 (2010) (noting that an arbitration provision is severable from the remainder of the contract, and that any challenge to the underlying agreement belongs in arbitration, but that federal courts can hear challenges as to the validity of the arbitration provision specifically under 9 U.S.C. § 2). Here, then, General Mills argues that even if the plaintiffs are right that their substantive waivers of ADEA claims are invalid because they do not comply with the requirements of Section 626(f)(1) of the OWBPA, the arbitration provisions would still be severable, valid, and enforceable.
The Supreme Court has, to some extent, considered whether any such command exists in the ADEA. In Gilmer v. Interstate/Johnson Lane Corp., the defendant company hired Robert Gilmer as a Manager of Financial Services. 500 U.S. 20, 23, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991). His registration application with the New York Stock Exchange — which he filled out upon starting the job — included an arbitration provision. Id. After being terminated due to what he alleged was his age, Gilmer filed an age discrimination lawsuit in federal court. Id. at 23-24, 111 S.Ct. 1647. The defendants moved to compel arbitration, and the Court granted certiorari to resolve a split amongst the circuits regarding the arbitrability of ADEA claims. Id. at 24, 111 S.Ct. 1647. Gilmer conceded that the ADEA said nothing explicitly to preclude arbitration provisions, but argued instead that the text and history of the ADEA evinced congressional intent to preclude them. Id. at 26-27, 111 S.Ct. 1647. The Court rejected this argument, finding that waiver of a judicial forum would not contravene the clear language of the statute, or its underlying purposes. Id. at 27-29, 111 S.Ct. 1647. The Court also rejected Gilmer's argument that an arbitral forum is inadequate for vindicating his rights. Id. at 30-32, 111 S.Ct. 1647. The Court concluded that the plaintiff had "not met his burden of showing that Congress, in enacting the ADEA, intended to preclude arbitration of claims under that Act." Id. at 35, 111 S.Ct. 1647. Of course, the OWBPA was brand new at the time of the decision in Gilmer, so it is helpful to look to more recent decisions on the subject.
14 Penn Plaza LLC v. Pyett involved the plaintiffs' attempt to challenge an arbitration provision in union members' collective bargaining agreement. 556 U.S. 247, 251, 129 S.Ct. 1456, 173 L.Ed.2d 398 (2009). The plaintiffs argued that "an individual employee must personally `waive' a `[substantive] right' to proceed in court for a waiver to be `knowing and voluntary' under the ADEA." Id. at 259, 129 S.Ct. 1456. In other words, since Section 626(f)(1) states that an individual may not waive a right or claim unless the waiver is knowing and voluntary, and since the plaintiffs argued that a "right or claim" under that provision included the right to proceed in court, a joint waiver of the judicial forum in a collective bargaining agreement that did not comply with Section 626(f)(1) was not knowing and voluntary and was therefore invalid. Id.
The Court disagreed, holding that "the agreement to arbitrate ADEA claims is not the waiver of a `substantive right' as that term is employed in the ADEA"
The plaintiffs offer a variety of arguments for why these cases do not require the Court to uphold the arbitration provision in the release agreements. First, they argue that the ADEA includes a jury trial right, Hammaker v. Brown & Brown, Inc., 214 F.Supp.2d 575, 578-79 (E.D.Va. 2002) ("It is well settled that the ADEA confers the right to a jury trial. 29 U.S.C. § 626(c)(2)."), and that, under Section 626(f)(1), any waiver of that right must be knowing and voluntary, see Thiele v. Merrill Lynch, Pierce, Fenner & Smith, 59 F.Supp.2d 1060, 1064-65 (S.D.Cal.1999) (holding that "the plain language [o]f [the OWBPA] requires that waivers of any statutory ADEA rights[, including the right to a jury trial,] must meet the § 626(f)(1) [waiver] requirements"). The problem with that argument is that 14 Penn Plaza clearly held the opposite, implicitly overruling cases like Thiele. In 14 Penn Plaza, the Supreme Court explicitly stated that an arbitration agreement did not need to meet the "knowing and voluntary" requirements of Section 626(f)(1). 556 U.S. at 259, 129 S.Ct. 1456. As a result, the plaintiffs' argument that their waiver of their right to proceed in court must meet the requirements of the OWBPA in Section 626(f)(1) fails under explicit Supreme Court precedent.
More persuasively, however, the plaintiffs argue that Section 626(f)(3) controls in this case. That provision states that in "any dispute that may arise over whether any of the requirements, conditions, and circumstances set forth in [Section 626(f)(1)] have been met, the party asserting the validity of a waiver
General Mills cites CompuCredit v. Greenwood for the proposition that an arbitral forum is a sufficient substitute for a court of competent jurisdiction. ___ U.S. ___, 132 S.Ct. 665, 181 L.Ed.2d 586, 670-71 (2012). CompuCredit, while not an ADEA or OWBPA case, provides a useful gloss on Gilmer and the Court's ADEA cases. In CompuCredit, the Supreme Court stated that it had "repeatedly recognized that contractually required arbitration of claims satisfies the statutory prescription of civil liability in court." Id. The Court reached this conclusion by discussing its earlier ADEA decision in Gilmer. It recounted that Gilmer had analyzed a pre-OWBPA provision of the ADEA, namely the provision in Section 626(c)(1) that states, today, that a person suffering ADEA harms "`
The key distinction between the Gilmer decision and the very recent CompuCredit gloss on Gilmer, and this case, is that those decisions discuss Section 626(c)(1), while the plaintiffs' argument is based on Section 626(f)(3). In other words, while the Gilmer and CompuCredit decisions rest on a statutory provision that read at the time of Gilmer that a plaintiff could bring a suit "in any court of competent jurisdiction," Gilmer, 500 U.S. at 29, 111 S.Ct. 1647 (internal quotation marks omitted), and that now reads that "[a]ny person aggrieved
The Court finds that this distinction is critical in this case and concludes that the plain language of Section 626(f)(3) requires General Mills to defend the validity of the plaintiffs' release agreements in court, not in an arbitral forum. It is a contrary congressional command precluding arbitration in the narrow circumstances presented in this case: a dispute over the validity of a waiver of substantive claims under the OWBPA's waiver requirements found in Section 626(f)(1). First, despite General Mills' citation to Gilmer, 14 Penn Plaza, and CompuCredit, and to various out-of-circuit cases
General Mills argues this provision is not nearly as clear as other congressional commands that preclude arbitration agreements. See, e.g., 7 U.S.C. § 26(n)(2) ("No predispute arbitration agreement shall be valid or enforceable, if the agreement requires arbitration of a dispute arising under this section."); 18 U.S.C. § 1514A(e)(2) ("No predispute arbitration agreement shall be valid or enforceable, if the agreement requires arbitration of a dispute arising under this section."). While it is true that Section 626(f)(3) is not as explicit as some provisions that preclude arbitration, the provision should also be viewed in the context of the OWBPA and its history, more broadly. When viewed in context, it is clear that Congress wanted courts to interpret and apply the OWBPA waiver provisions at Section 626(f)(1), to ensure waivers meet their requirements. Most obviously, throughout its discussion of the purposes underlying the OWBPA's ADEA waiver provisions, the Senate Report on the OWBPA repeatedly refers to the critical role
This history, combined with the language of Section 626(f)(3), makes clear that, in the narrow circumstances of cases like this one, an arbitration provision is precluded. As a result, the Court will deny General Mills' motion to dismiss and compel arbitration and, instead, will allow this case to proceed for further motion practice and an eventual determination by the Court as to whether the release agreements
Based on the foregoing, and all the files, records, and proceedings herein,
Additionally, given that the Court's decision precludes enforcement of the arbitration provision at this point, and that the waiver of collective action is an integral part of that provision, the Court in denying General Mills' motion to dismiss also denies the company's request to compel arbitration on an