Williams v. Phillips Petroleum Co. - 23 F.3d 930 (5th Cir. 1994)

Rule:

Normally the release of federal claims is governed by federal law. Public policy favors voluntary settlement of claims and enforcement of releases, but a release of an employment or employment discrimination claim is valid only if it is "knowing" and "voluntary." Once a party establishes that his opponent signed a release that addresses the claims at issue, received adequate consideration, and breached the release, the opponent has the burden of demonstrating that the release was invalid because of fraud, duress, material mistake, or some other defense. An appellate court examines the totality of circumstances to determine whether the releasor has established an appropriate defense.

Facts:

In 1992, Phillips Petroleum Company, Phillips Gas Holding Company, Inc. ("PGHC"), and Phillips 66 Company, a division of Phillips Petroleum Company, reduced their work forces at their Houston Chemical Complex ("HCC"). Phillips Petroleum Company laid off over 500 employees in Bartlesville, Oklahoma, and provided them with sixty days' advance written notice. HCC laid off twenty-seven employees who worked at three different locations in the Houston area and did not give any of them sixty-day written notices. HCC laid off five employees in December 1991, sixteen employees from March to July 1992, and six employees in September 1992. From March through June 1992, PGHC laid off forty employees who worked in three different single sites of employment. PGHC gave all the employees who worked in Bartlesville and four employees who worked in Houston sixty days' written notice of the layoff. The remaining laid-off PGHC employees did not receive sixty days' notice. Notably, the plaintiffs all signed releases after their terminations in exchange for enhanced layoff benefits. The releases stated that signing the release was a condition to participation in the company's enhanced supplemental layoff pay plan, advised the employee to consult an attorney, gave ample time to consider the release, and specifically covered all claims relating to the individual's employment or layoff. Those who were laid off by HCC filed the instant action for alleged violations of the Worker Adjustment and Retraining Notification Act (“WARN”), 29 U.S.C. §§ 2101-2109, alleging that Phillips Petroleum Company and two of its officers, W.W. Allen, and C.J. Silas (collectively "Phillips"), laid them off without providing the sixty-day written notice required by WARN. The district court granted summary judgment to Phillips in an order and separate judgment entered on June 8, 1993. The first set of plaintiffs tried to have those who were laid off from Bartlesville join the action, but this was denied.

Issue:

Were the post-termination releases signed by the plaintiffs invalid?

Answer:

No.

Conclusion:

There is no obligation under WARN or the common law for the defendants to mention WARN for the releases to be valid. The releases stated that they included all claims relating to the "time of my employment or to my layoff…." WARN applies to layoffs and the releases addressed all claims related to the plaintiffs' layoffs; thus, the releases barred WARN claims. Further, concerning the plaintiffs' education and business experience, there no evidence suggesting that they could not read or understand the releases. The cases relied upon by the plaintiffs are distinguishable by whether the individual who signed the release understood the claims released. There is nothing in the record establishing a genuine issue of material fact that the plaintiffs did not know what they were doing. Even further, there is no evidence that plaintiffs were denied an opportunity to negotiate, nor that they were given a "take it or leave it" offer. The releases informed each employee that he should consult a lawyer and allowed a reasonable period, in most instances up to forty-five days, to consider the releases. The plaintiffs signed the releases and never asserted in their declarations that Phillips had precluded them from negotiating. There is no evidence sufficient to create a genuine issue of material fact. In sum, the releases were clear, simple, and easily understood. The release precluded all claims related to the plaintiffs' "employment" or "layoff." This is not technical jargon, and it covers the plaintiffs' WARN claims. The plaintiffs do not indicate what provisions could have been incomprehensible to them, as they were written in plain English. There is also no evidence of duress that could have forced them to sign involuntarily.