Laid-off IBM workers can't sue for age bias as a group - appeals court

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A man wearing a protective mask walks past an office building with IBM logo in Sydney, Australia. REUTERS/Loren Elliott

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  • Workers can waive ability to sue as a group without employers' disclosures
  • Plaintiffs claim they were laid off so IBM could hire younger workers

(Reuters) - Severance agreements signed by former IBM Corp employees bar them from suing as a group over claims that they were laid off to make room for younger workers, a U.S. appeals court ruled on Thursday.

A unanimous three-judge panel of the 2nd U.S. Circuit Court of Appeals said provisions in the agreements that waived the workers' rights to bring class-action claims were valid, because the ability to sue as a class is not a substantive right under the federal law prohibiting age discrimination in employment.

A spokesperson for New York-based IBM, which is represented by Jones Day, declined to comment. The plaintiffs' lawyers at Johnson Webbert & Garvan did not immediately respond to a request for comment.

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The Age Discrimination in Employment Act (ADEA) says that workers can only waive "any right or claim" under the law if employers first disclose the ages of employees who are subject to layoffs.

The four plaintiffs in the 2019 lawsuit said IBM failed to do so when it laid them off, so the class-action waivers they signed could not be enforced. The plaintiffs were in their late 50s when they lost their jobs, and say they were pushed out so IBM could hire more millennials.

IBM has denied wrongdoing in the case and similar lawsuits filed in recent years. Last March, a federal judge in Manhattan significantly narrowed the pool of former IBM workers who could opt into a 2018 age-bias class action. The company in that case did not claim that class members had signed waivers.

A different judge in Manhattan dismissed Thursday's case in 2019, saying the waivers signed by the plaintiffs were valid. The judge cited a 2009 U.S. Supreme Court decision that said the ability to bring ADEA claims in court rather than arbitration is a procedural right, and not a substantive one that would trigger the law's disclosure requirements.

The 2nd Circuit on Thursday agreed that the Supreme Court ruling applied and that similarly to the forum question at issue in the 2009 case, the ability to bring a class-action claim is a procedural right that can be waived.

The decision is in line with rulings from the five other federal appeals courts to consider the issue.

The case is Estle v. International Business Machines Corp, 2nd U.S. Circuit Court of Appeals, No. 20-3372.

For the plaintiffs: David Webbert of Johnson Webbert & Garvan

For IBM: Matthew Lampe of Jones Day

(NOTE: This article has been updated to add that IBM declined to comment on the decision.)

Read more:

IBM failed to disclose ages of laid-off workers - lawsuit

IBM says older workers left for many reasons, but bias not one of them

IBM laid off older workers in push to recruit millennials - lawsuit

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Dan Wiessner (@danwiessner) reports on labor and employment and immigration law, including litigation and policy making. He can be reached at daniel.wiessner@thomsonreuters.com.