Labor & Employment Law I JUNE 15, 2017

Former Employees Must Arbitrate ADEA Claims on Individual Basis

In June 2012, General Mills announced it was terminating about 850 employees. General Mills offered them severance packages in exchange for signing release agreements. By the agreements’ terms, employees released General Mills from all claims relating to their terminations—including, specifically, ADEA claims. The agreements also stated that claims covered by the agreements would be individually arbitrated:

[I]n the event there is any dispute or claim arising out of or relating to the above release of claims, including, without limitation, any dispute about the validity or enforceability of the release or the assertion of any claim covered by the release, all such disputes or claims will be resolved exclusively through a final and binding arbitration on an individual basis and not in any form of class, collective, or representative proceeding.
Thirty-three employees who signed releases sued and requested a declaratory judgment that the releases were not “knowing and voluntary.” They also brought collective and individual ADEA claims.
General Mills moved to dismiss and compel business arbitration on an individual basis. The district court denied the motion, and General Mills appealed.
The appeals court noted that in moving to compel arbitration of the former employees’ ADEA claims, General Mills did not assert the validity of a waiver of “the statutory right to be free from workplace age discrimination.” Section 626(f) of the ADEA is not a “contrary congressional command” overriding the Federal Arbitration Act’s mandate to enforce agreements to arbitrate ADEA claims. Since the agreements required individual arbitration of the former employees’ ADEA claims, the district court should have granted General Mills’ motion as to those claims.
The former employees contended that the issue for declaratory judgment—whether the purported waivers of their substantive ADEA claims were “knowing and voluntary” under § 626(f)(1)—was not arbitrable.
The appeals court observed that the “controversies” here were not whether the former employees waived their substantive ADEA rights. Rather, the “controversies” were the ADEA claims themselves, which the declaratory judgment action would not resolve. If the former employees won, they would still have to arbitrate the merits of the claims. If the former employees lost, they could still sue General Mills so long as General Mills did not raise waiver as an affirmative defense. Under the circumstances, the district court did not have jurisdiction over the former employees’ declaratory judgment claim.
On remand, the district court was directed to dismiss the former employees’ declaratory judgment claim for lack of jurisdiction, and to grant General Mills’ motion to compel individual arbitration of the remaining substantive ADEA claims. The case is McLeod v. General Mills, Inc., 856 F.3d 1160 (8th Cir. 2017).