WASHINGTON -- A woman who took a company's severance package and promised not to sue should be able to keep the money, even though she later filed suit for discrimination, a Clinton administration lawyer told the Supreme Court yesterday.
In an important case in an era of corporate downsizing, lawyers arguing on behalf of Dolores Oubre told the court that she signed an illegal agreement not to sue, and, therefore, was entitled to keep all of her severance package.
As several justices noted, the case could affect millions of workers who accept buyouts on the condition that they will not later sue for discrimination.
Oubre's case arose when she agreed to waive all her legal claims against her Louisiana employer, Entergy Operations Inc., in exchange for a severance payment.
When she later sued, she argued the waiver was invalid because it did not specifically say she was giving up claims under the Age Discrimination in Employment Act, as the law requires. The law protects workers over 40 from job bias because of their age.
Congress approved the requirement in 1990, along with other safeguards to prevent employers from putting too much pressure on their workers to leave the company.
"This is a waiver that violates a statute," Beth Brinkmann, a Justice Department lawyer, told the justices. "We believe the waiver of the [age discrimination] claim is void."
As a result, Oubre should be able to sue for age discrimination even though she kept the severance package, Brinkmann said.
To rule otherwise, said Oubre's lawyer, Barbara Haynie, "would, in all practical purposes, render the act meaningless."
But Carter Phillips, a lawyer for Entergy, said allowing Oubre and others to keep their severance money and file lawsuits for discrimination violates a "bedrock principle" of the law.
It is a foundation of contract law, Phillips argued, that a worker should not be able to challenge the legality of a contract unless she returns any benefits, such as a severance package, she receives from it. Oubre refused to return the package, saying she was using part of it for living expenses.
Oubre quit her job in 1995, after she received a low ranking and learned she could be fired without benefits the next year. She signed an agreement that waived all her legal claims against Entergy, and, in exchange, got a $6,258 severance package. The package was for one month of administrative leave, plus one week's pay for each of her 14 years with the company.
Less than a year after she left Entergy, Oubre, who was 41, sued in federal court for discrimination under the Age Discrimination in Employment Act.
She maintained she never waived her legal rights because she wasn't expressly told that the waiver also included the age discrimination law. The law says any waiver must be "knowing and voluntary."
The court dismissed her suit. Because she kept the severance pay, the court ruled, she could not sue -- even though the buyout violated federal law because it did not specifically mention the age-discrimination act.
A federal appeals court affirmed the decision, but Oubre's lawyers said the ruling undermined the requirements contained in the age-discrimination act.
"If the waiver doesn't comply with the statute, it is an ineffective -- waiver, a void waiver," Haynie said. "The employee can go ahead with her lawsuit."
Pub Date: 11/13/97