Ex-IBM Workers Fail to Show Class Waivers Violate Age Bias Law

IBM workers who were age 55 or older when they were part of a 2016 layoff can’t pursue age discrimination claims as a class or collective because age bias law doesn’t impact such group status, the Southern District of New York ruled.

The workers all signed agreements with International Business Machines Corp. in order to receive severance when they were laid off in the May 2016 “resource action,” the court said. That agreement expressly waived their right to proceed as a class and to sue for age or other job bias, the court said.

And a federal law the workers cited—the Older Workers Benefit Protection Act—that requires employers to provide certain information to older workers before they can waive their right to sue for age discrimination doesn’t extend to waivers of the right to proceed as a class or collective, the U.S. District Court for the Southern District of New York said.

Class or collective action rights are a procedural mechanism and the OWBPA only covers the substantive right to sue for age bias, Judge Paul G. Gardephe said. That conclusion flows from the U.S. Supreme Court’s 2009 decision in 14 Penn Plaza LLC v. Pyett, he said.

The justices held in that case that a union’s agreement that its members pursue Age Discrimination in Employment Act claims in arbitration rather than court was binding because it didn’t relinquish the members’ ultimate right to vindicate their ADA protections.

The 14 Penn Plaza decision necessarily drew a distinction between substantive and procedural rights, Gardephe said.

The Second Circuit ruled in Sutherland v. Ernst & Young LLP in 2013 that the ability to bring a collective action isn’t a substantive right, so it therefore is procedural under the OWBPA, the judge said.

Every court to address the issue since 14 Penn Plaza has agreed the OWBPA provision in question doesn’t apply to procedural rights, the judge said Monday.

The IBM resource action at issue here was just one of numerous layoffs by the company since 2001, Gardephe said. The severance agreement IBM used until 2013 included the information required by the OWBPA, but the agreement was changed in 2014, he said.

The amended agreement also states workers must arbitrate employment claims.

Johnson, Webbert & Young LLP and Cohen Milstein Sellers & Toll PLLC represent the workers. Jones Day represents IBM.

The case is Estle v. Int’l Bus. Machs. Corp., 2020 BL 359734, S.D.N.Y., No. 1:19-cv-02729, 9/21/20.