Recchia v. Kellogg Co.
951 F. Supp. 2d 676
D.N.J.2013Background
- Recchia, a 55-year-old former Kellogg warehouse supervisor, was terminated in a Blue Anchor, NJ facility during Kellogg’s K-Lean restructuring in 2009.
- He had been on approved medical leave for kidney cancer and alcohol dependency treatment shortly before termination.
- Kellogg’s Severance Plan offered twenty-six weeks of severance/pay and benefits contingent on signing a Release waiving claims under multiple statutes.
- Recchia signed the Release after a negotiation and after consulting with counsel, and Kellogg began severance payments on termination day.
- The Release included OWBPA disclosures and listed eligibility/retention data; Kellogg later stopped severance payments during the consideration period but continued later after Recchia signed the Release.
- Recchia filed suit alleging fraud/duress, ADEA, ADA, ERISA, and NJLAD claims; Kellogg moved for summary judgment and to seal exhibits.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity of the Release as a waiver under totality of circumstances | Recchia claims the release was involuntary (duress) and/or coerced | Kellogg contends the release was knowing and voluntary given consideration and counsel | Release valid under totality of the circumstances; Kellogg granted summary judgment on related claims |
| OWBPA compliance for ADEA waiver | OWBPA requirements were not satisfied for ADEA waiver | Release complied with OWBPA (focusing on eligibility/consideration and seven-day revocation) | Release valid for ADEA claims under OWBPA; Kellogg granted summary judgment on Counts II and III |
| Economic/Emotional duress as a basis to invalidate Release | Kellogg’s cessation of severance/insurance during consideration coerced Recchia | Cessation was not wrongful; adequate consideration and independent rights to COBRA existed | Duress not proven; Release sustained; Count I dismissed |
| Adequacy of consideration for signing Release | Consideration was inadequate relative to what would be received by staying employed | Twenty-six weeks of severance and continued benefits constituted sufficient consideration | Adequate consideration; weighs in favor of validity of Release |
Key Cases Cited
- Coventry v. U.S. Steel Corp., 856 F.2d 514 (3d Cir.1988) (totality-of-the-circumstances approach to waivers under NJ law/ERISA)
- Alexander v. Gardner-Denver Co., 415 U.S. 36 (U.S. 1974) (releases of Title VII claims must be knowing and voluntary)
- Lockheed Corp. v. Spink, 517 U.S. 882 (U.S. 1996) (release of employment-related claims permissible under ERISA when voluntary/knowing)
- Cuchara v. Gai-Tronics Corp., 129 F. App’x 728 (3d Cir.2005) (adopts totality-of-circumstances approach to waivers (ADA/ERISA))
- Wastak v. Lehigh Valley Health Network, 342 F.3d 281 (3d Cir.2003) (economic duress defense under NJ law requires more than financial pressure)
- Ruehl v. Viacom, Inc., 500 F.3d 375 (3d Cir.2007) (OWBPA interpretations; agency deference authority for program disclosures)
- Long v. Sears Roebuck & Co., 105 F.3d 1529 (3d Cir.1997) (time to consider release factors; deliberation period scrutiny)
- Cirillo v. Arco Chem. Co., 862 F.2d 454 (3d Cir.1988) (factors for totality-of-the-circumstances evaluation of waiver)
- Swarts v. Sherwin-Williams Co., 244 N.J. Super. 170, 581 A.2d 1328 (N.J. Super. Ct. App. Div.1990) (NJLAD waiver knowing/voluntary under NJ law)