U.S.C.A. § 623 (West 1985 & Supp. 1993), by requiring all terminated employees, regardless of age, to sign a general release of all claims against the corporation in order to qualify for enhanced separation benefits. Pursuant to Federal Rule of Civil Procedure 12(b)(6), defendant SmithKline Beecham Corporation ("SmithKline") has filed a motion to dismiss Count II of plaintiff's amended complaint. SmithKline has also filed a motion for attorneys fees, pursuant to Rule 11, for costs incurred in filing its motion to dismiss. For the reasons set forth below, I shall deny both motions.
Plaintiff's amended complaint alleges the following facts, which I must accept as true for purposes of the motion to dismiss. SmithKline is a corporation that manufactures and markets prescription and over-the-counter pharmaceutical and consumer products. Plaintiff was hired by a predecessor of SmithKline in 1964, and was employed until February 2, 1992, when his job was terminated as part of a workforce reduction. At the time of his termination, plaintiff was fifty-one years old and was a computer shift supervisor at SmithKline's corporate data center.
SmithKline offered its terminated employees a separation benefit plan that included a lump sum payment
and three months continued health and dental benefits. The plan also offered enhanced benefits to terminated employees who signed a general release of all claims against SmithKline.
The enhanced benefits included a larger lump sum payment and six months continued health and dental coverage. Under the plan, plaintiff was entitled to a lump sum payment equal to fifteen months salary if he signed the release, or twelve months salary if he declined to sign the release. Plaintiff did not sign the general release.
Plaintiff's amended complaint sets forth two counts alleging age discrimination in violation of ADEA. Count I states that SmithKline terminated plaintiff's employment because of his age. Count II alleges that SmithKline's separation benefit plan offers enhanced benefits in exchange for a surrender of rights, but requires that older employees surrender more rights than younger employees for the exact same enhanced benefits.
II. MOTION TO DISMISS
In determining a motion to dismiss, all assertions in the complaint are assumed to be true, and all reasonable inferences are drawn from the complaint in favor of the non-moving party. Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406, 1410 (3d Cir.), cert. denied, 115 L. Ed. 2d 1007, 111 S. Ct. 2839 (1991). The complaint can be dismissed only if plaintiff has alleged no set of facts upon which relief can be granted. Id.
ADEA prohibits employers from "discriminating against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's age." 29 U.S.C.A. § 623(1) (West 1985). Count II of plaintiff's amended complaint alleges that SmithKline's separation benefit plan discriminates based on age. Although Count II asserts a novel legal issue, it clearly states a claim for relief under ADEA. Yet SmithKline vigorously insists plaintiff has failed to state a valid claim, and has set forth essentially four arguments in favor of its motion to dismiss. I am not persuaded by any of these arguments.
First, SmithKline cites sections of ADEA and Third Circuit precedent addressing the validity of signed waivers. This support is completely inapposite, as plaintiff never executed the general release, and does not now challenge the validity of a signed waiver.
Rather, Count II alleges that the separation benefit plan violates ADEA because it offers enhanced benefits in a manner that discriminates based on age. SmithKline has cited no authority directly addressing this issue.
Second, SmithKline contends that its separation benefit plan does not discriminate because all employees are required to release all claims against the company, regardless of each individual employee's legal rights. The effect of the release, however, is that persons age forty and older are required to release more than that required of persons under age forty in order to receive the same enhanced benefits. SmithKline has not shown, therefore, that the plan is not discriminatory as a matter of law. Cf. Massarsky v. General Motors Corp., 706 F.2d 111, 120 (3d Cir.), cert. denied, 464 U.S. 937, 78 L. Ed. 2d 314, 104 S. Ct. 348 (1983) (disparate impact analysis requires showing that facially neutral employment practice had a significantly discriminatory impact); E.E.O.C. v. Governor Mifflin School District, 623 F. Supp. 734, 741 (E.D. Pa. 1985) (holding that disparate impact analysis may be applied in ADEA cases).
Third, SmithKline asserts that under plaintiff's theory, an employer could never secure a release of ADEA claims. The plaintiff does not, however, claim that it is always unlawful to seek a waiver of ADEA claims. Rather, plaintiff argues that an employer could secure a release of ADEA claims by offering additional consideration beyond that offered for a release of all claims except ADEA claims. SmithKline has not demonstrated, therefore, that plaintiff's theory would render § 626(f) invalid.
Finally, SmithKline argues that the EEOC "considered and rejected the precise claim that the plaintiff has raised before this Court in Count II," and that "the interpretation by the EEOC is entitled to great deference." (Def.'s Sur Reply Supp. Mot. Dismiss at 3-4). SmithKline's argument is misguided.
SmithKline is correct that courts ordinarily defer to the reasonable interpretation of a statute by the agency charged with its administration. See Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 843-44, 81 L. Ed. 2d 694, 104 S. Ct. 2778 (1984). The "interpretation" that SmithKline proffers, however, is the determination, issued by the EEOC district office that investigated plaintiff's complaint, concluding that there was not reasonable cause to believe there had been a violation of ADEA. (Def.'s Sur Reply Supp. Mot. Dismiss Exhibit A).
This determination, however, is not entitled to the same deference afforded formal agency issuances, such as regulations, guidelines, policy statements, or administrative adjudications. See Gregory v. Ashcroft, 115 L. Ed. 2d 410, 111 S. Ct. 2395, 2414 n.3 (1991) (White, J., concurring in part and dissenting in part) (citing Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 109 S. Ct. 468, 473-74, 102 L. Ed. 2d 493 (1988)).
The EEOC determination does not, therefore, foreclose relief on the claim in Count II.
Because Count II alleges facts which may demonstrate that SmithKline's separation plan discriminates based upon age, and because SmithKline has failed to demonstrate that plaintiff has not asserted a cognizable claim, I therefore deny SmithKline's motion to dismiss.
III. RULE 11 SANCTIONS
The purpose of Rule 11
is to "impose on counsel a duty to look before leaping and may be seen as a litigation version of the familiar railroad crossing admonition to 'stop, look, and listen." Lieb v. Topstone Indus. Inc., 788 F.2d 151, 157 (3d Cir. 1986). Compliance requires that counsel conduct "a reasonable investigation of the facts and a normally competent level of legal research to support the presentation." Id.
SmithKline argues that Rule 11 sanctions are appropriate in this case because plaintiff's claim that the separation plan violates ADEA is "totally unfounded, and flies in the face of the express terms of the statute itself." (Def.'s Mem. Supp. Mot. Dismiss at 11.) SmithKline also argues that "plaintiff's counsel has utterly failed to undertake a reasonable investigation of the legal underpinnings of the claim asserted in Count II of the Amended Complaint. If he had done so, he could not have reasonably believed that Count II had any legal validity." Id.
As discussed above, however, although novel, plaintiff's claim does not contradict the express terms of § 626(f). Further, SmithKline has failed to cite any directly controlling cases addressing plaintiff's claim, and has failed to demonstrate that plaintiff's arguments are not well grounded in fact, or well grounded in law, or that there is any indication that plaintiff's complaint was asserted for an improper purpose. I have denied the motion to dismiss; I therefore will not award SmithKline counsel fees.
An appropriate order follows.
AND NOW, this 27th day of September, 1993, upon consideration of SmithKline Beecham Corporation's motions to dismiss Count II of plaintiff's amended complaint and for attorney's fees (Document Number 6), together with supporting memoranda of law and the papers submitted in response thereto, it is hereby ORDERED that the motions are DENIED.
BY THE COURT:
JOHN R. PADOVA, J.