Last month, the Sixth Circuit Court of Appeals affirmed the dismissal of race and age discrimination claims on the grounds that the plaintiff had signed a valid release of all discrimination claims. Jamil v. Mercedes-Benz Financial Services USA, LLC, No 24-1871 (6th Cir. 2/4/25). The plaintiff was highly educated, experienced with contracts and had over 4.5 months to consider the severance agreement (which provided her with 18 months of pay to bridge her to retirement age). The Court rejected her allegation that her signature was not knowing and voluntary in light of her education, experience and amount of severance pay, and her admission that the agreement was straightforward, and that she chose not to consult with an attorney. It also rejected her claim that she had been mislead about the reason for her termination or that this would invalidate the agreement. Finally, it denied her motions to extend discovery when she waited four months to notice depositions.
According to the Court’s opinion, the plaintiff had several
advanced college degrees and worked for more than 10 years as a finance
executive, with several oversees assignments.
After conflicting with a supervisor about whether to extend credit to
particular dealerships, she was informed that she was being sent back to the
USA instead of to her next overseas assignment and that she would have to
accept a demotion, if any positions were even still available, or sign a
severance agreement within 4.5 months. The
severance agreement provided for 18 months of severance and contained a waiver
of all employment discrimination claims.
After being told that no positions at her level or immediately inferior
level were available and after learning that others had received transfers upon
their repatriation which she had desired, she signed the severance agreement,
but later filed claims for age and race discrimination. The trial court granted the employer’s
motion for summary judgment and denied her motions to extend discovery.
Federal law governs the validity of a release of employment
discrimination claims.
To determine whether a release was
knowingly and voluntarily executed, we assess: “(1) plaintiff’s experience,
background, and education; (2) the amount of time the plaintiff had to consider
whether to sign the waiver, including whether the employee had an opportunity
to consult with a lawyer; (3) the clarity of the waiver; (4) consideration for
the waiver; as well as (5) the totality of the circumstances.” . . . Under the
last factor, we consider whether fraud, duress, or other breach-of-contract
defenses render the severance agreement unenforceable.
The Court of Appeals rejected her argument that the release
was not binding because she had four college degrees and experience with
lawyers from her 10 years as a finance executive. It rejected her argument that her contract experience
was not with severance agreements because she also admitted that the agreement
was straightforward and so she did not need to consult with an attorney.
The Court agreed that 4.5 months to consider the terms of
the agreement was far more than necessary. “As much as she now asserts that
some terms were unclear, it was her “obligation to seek [counsel] before she
signed if she felt she did not understand the [agreement].”
In addition to her admission that the terms were straightforward,
the Court noted that “ “a law degree” was unnecessary “to grasp the import of
these terms.” It did not find that the
18 months of salary was unfair or insufficient was consideration.
Finally, it rejected her allegation that she had been
deceived into signing the agreement by numerous representations that there were
no open positions available when, in fact, there were comparable positions that
the employer filled with other employees being repatriated. The Court noted that the final straw which
motivated her to sign the agreement was learning that a position she had desired
was filled with another co-worker. She
had suspected for a while that her former supervisor was blocking her from
being rehired.
Simply put, while . . . human resources department may have overstated
the company’s financial difficulties, the record shows that [she] signed the
contract with her eyes wide open. [She] knew there were no positions available
for her, but that such positions were available to others. The key inquiry here
is whether [her] release of claims was knowing and voluntary, and she
voluntarily signed the agreement with full knowledge. The
totality-of-the-circumstances factor favors [the employer].
NOTICE: This summary is designed merely to inform and alert
you of recent legal developments. It does not constitute legal advice and does
not apply to any particular situation because different facts could lead to
different results. Information here can change or be amended without notice.
Readers should not act upon this information without legal advice. If you have
any questions about anything you have read, you should consult with or retain
an employment attorney.
