ERD Case No. 8600691, EEOC Case No. 055862795
ERD Case No. 8600731, EEOC Case No. 055862796

On October 21, 1987, an administrative law judge (ALJ) for the Department of Industry, Labor and Human Relations issued an order in the above-captioned matter requiring that the Complainants, as a condition to maintaining claims of age discrimination against the Respondent, tender back the consideration they received under agreements releasing the Respondent from all employment-related claims. The Complainants filed a petition for Commission review of that portion of the ALJ's order requiring return of the consideration received to Respondent. The Respondent filed an answer to the Complainants' appeal asserting, among other things, that the Complainants' petition for review was not filed within 21 days from the date of the ALJ's decision, and that the ALJ's Order is interlocutory in nature and review should not be made until the final order is issued disposing of the issues in the case. Both parties subsequently submitted written arguments to the Commission.

Based upon a review of the record in its entirety, the Labor and Industry Review Commission (LIRC) hereby issues the following:


That the decision of the ALJ (copy attached) is modified as follows:

In paragraph 4 of the FINDINGS OF FACT, the word "partially" is added before the phrase "paid for by the company" first appearing in that paragraph.

As modified, the decision of the ALJ is affirmed and shall stand as the FINAL ORDER herein.

Dated and mailed October 25, 1988.

/s/ Hugh C. Henderson, Chairman

/s/ Carl W. Thompson, Commissioner

/s/ Pamela I. Anderson, Commissioner



The Respondent's assertion that the Complainants' petition for review was not timely filed appears to have stemmed from the Equal Rights Division's mistaken notice advising the parties that a petition for review was filed in the matter on November 13, 1987. The record discloses that the Complainants' petition for review was first filed at the Equal Rights Division's Madison office on November 11, 1987. Said petition was thus filed within 21 days from the date of the ALJ's October 21, 1987 decision.


Also, because the ALJ labeled his order as interlocutory, the Respondent argues that the Complainants are barred from appealing the order to the Commission. The Respondent cites an earlier Commission decision in Opolka v. Kolbe Millwork (LIRC December 20, 1979), as standing for the proposition that LIRC has declared that it lacks jurisdiction to hear appeals of nonfinal orders. The Respondent misconstrues Opolka. In Opolka, both parties sought LIRC review of an ALJ's determination of probable cause, apparently prior to an attempt at settlement through conference, conciliation or persuasion, and before a hearing on the merits. There the Commission ruled that it had no authority to hear the parties' appeals because the Act specifically states that upon a finding of probable cause the Department was either to endeavor to eliminate the discrimination through conference, conciliation or persuasion, or schedule the matter for a hearing on the merits. Nowhere in the Act does it state that the Commission's jurisdiction is limited to hearing appeals of final orders.

Referencing another Commission decision, Vega v. The Larsen Company (LIRC July 3, 1985), the Respondent does correctly point out that it has been the Commission's general practice to decline review of nonfinal ALJ orders. However, this practice is based on the policy considerations of avoiding unnecessary delays and disruption of the orderly process of adjudicating cases before the Department, not because of any limitations on Commission jurisdiction. Commission review of this case does not run afoul of those policy considerations. The ALJ has determined that the Complainants may maintain their claim of age discrimination against the Respondent only if they tender back the consideration received in exchange for signing agreements releasing the Respondent from all employment-related claims. The Complainants have asserted that they are unable to return the consideration received and that there will be no further proceedings on their discrimination claim unless the ALJ's order in this matter is reversed. Under the circumstances presented here the adjudicatory process before the Department is not being disrupted; it has concluded for the Complainants.  The Complainants are unable to return the consideration received and thus cannot continue on with their claim before the Department. In reality, the practical effect of the ALJ's decision is that it constitutes a final decision on the Complainants' claims.


The Complainants assert that there are several legal and equitable arguments for concluding that no tender back of any money or value of benefits received is required. Complainants first argue that they believe, and the ALJ so found, that the special benefits (extra pay and payment of health and life insurance benefits) they received were offered as compensation for their long years of service to the company. The Complainants cite finding of fact #24 where the ALJ states:

24. In all contacts with employes concerning this package of early retirement benefits, the Respondent consistently and frequently represented to the employes that the additional benefits extended to them (the retiree status and benefits notwithstanding their having been selected for layoff, and the two year monetary payoff) were being extended in consideration for their long years of service. No representation was ever made by the Respondent (save the recitation in the "Agreement" that the release and the two year payout were mutual consideration) that the benefits were extended in consideration of or in exchange for a promise not to sue the company for age discrimination in the selection of employes for layoff.

However, it is quite clear that the actual intent of this finding of the ALJ was to show the absence of a voluntary and knowing waiver of certain rights on the part of the Complainants. The ALJ acknowledged in this very same finding that the written agreement itself specifically stated that the two year monetary payout was in exchange for the releases. Moreover, both Complainants admitted to having read the Agreement at least once, and while they may not have understood that by signing the Agreement they would be giving up certain rights, both admit that they did understand they would not get the special benefits without signing and returning the Agreement. The Complainants' lack of understanding of the nature of the release that they signed does not support their further argument that the Agreement, in fact, was not the basis for the special benefits. The Respondent never promised to pay Complainants any amount unless they signed the Agreement, and they fully understood this.

The Complainants further argue that there is no reason for them to return anything to the Respondent because the facts found by the ALJ only voided the clauses of the agreement forbidding Complainants to bring any employment-related claim, while the Complainants' "agreement to retire" in return for their pension, extra benefits (health/medical insurance) and 24 months pay, which was determined in part by length of service, was determined to be enforceable." Complainants argue that the Respondent received the full benefit of the bargain that the ALJ found it made with Complainants.

Complainants' argument is not correct. As previously noted, the record is clear that the special compensation provided to the Complainants was specifically tied to the Complainants' signing the Agreement forbidding them from bringing any employment-related claims against Respondent. Respondent never made any promise to pay any amount without the Complainants signing the Agreement. Recognizing this, what the ALJ concluded that although the Complainants did not knowingly and voluntarily waive their right to file a claim of age discrimination, the Complainants could not retain the consideration they received pursuant to those agreements while maintaining an age discrimination claim against the Respondent. (See Conclusions of Law #2 and #3.)

Second, the Complainants have argued that the Agreement was one which included not only the written clauses stating that the monthly payments were received in consideration for Complainants' releases of all employment-related claims against the Respondent, but also an "orally agreed-on clause" that the monthly payments were consideration for long years of loyal service to the company. Complainants again assert that only clauses 4 and 5 of the Agreement were declared invalid and unenforceable by the ALJ, while the rest of the "full oral and written Agreement" stands. The Complainants argue that the ALJ's conclusion that the full agreement is unenforceable is unnecessarily broad (referencing Conclusion of Law #3 made by the ALJ); that if the full agreement is unenforceable, it would appear that the Complainants would have to also "'give back' their retirement status (because) they were not terminated and so they should be ordered restored to their jobs and forwith awarded a sum representing back pay minus retirement received." (Complainants' initial brief at p. 12) This assertion is erroneous. The fact is, the Complainants were already slated for termination as part of a required reduction in force before they signed the Agreement. At that point the Respondent owed the Complainants no more than basic discharge benefits and vested pension rights. Such benefits did not include the special compensation Complainants were given in exchange for relinquishing all employment-related claims against the Respondent. Again, the Respondent never promised to pay the Complainants the special benefits unless they signed the Agreement containing the releases.

Complainants further argue that in contract terms the Complainants had only asked for partial recision of the agreement, an action which is permitted under Wisconsin law, citing Charron v. Northwestern Fuel Co., 149 Wis. 240, 134 N.W. 1048 (1912), and Gay v. D.M. Osborne & Co., 102 Wis. 641, 78 N.W. 1079 (1899). Complainants argue that there is thus no basis for requiring return of the consideration received for services to the company.

In Charron, 149 Wis. 240, 134 N.W. 1048 (1912), a laborer who was injured while in the employment of the fuel company entered into an alleged settlement for the sum of $280 when he was not competent. The employer turned the check over to the employe's wife and the proceeds were used by her without his knowledge or consent. The court recognized the principle of partial recision stating that partial recision is sometimes allowed in the interests of justice (citing Gay) but found no need to apply those principles because it had not been established that the alleged releasor had ever received the compensation for the release.

In Gay, an agent was employed to receive and sell merchandise for his principal for a fixed period of time. At the end of the fixed period he was to deliver all goods remaining and pay for those sold. When adjusting his accounts at the end of the period the agent pretended to produce and exhibit all goods unsold, resulting in a shortage of a large amount of goods, for which the principle took a note with security (mortgage) for a portion of the shortage. The principal thereafter discovered that the agent had some of the goods, and with knowledge that the value of those goods unaccounted for were in excess of the note and mortgage, foreclosed the mortgage. The question presented was did the principal's foreclosure of the mortgage preclude him from reclaiming the goods discovered after the agent's adjustment of his account. The agent argued in part that the principle could not claim the goods discovered after the settlement without totally rescinding such settlement; that it was a necessary prerequisite to such claim that the principal should have returned the note and mortgage and restored the agent to the situation existing prior to the settlement. The court recognized that application of the exception to the doctrine requiring total recision and restoration was required in order to avoid great injustice and held that the principal could rescind the settlement as to the goods discovered after the settlement and reclaim such goods. Noting the fraud on the part of the agent, the court stated that requiring the principal to totally return the consideration received to the agent "would have enabled the wrongdoer to make a profit by the rescission and put the person injured in a far worse plight after the rescission than before." p. 647.

The instant case is much different than Charron or Gay. First of all, the ALJ found, and the Commission agrees, that there was no fraud. Further, unlike the situation in Gay, requiring the Complainants to return the consideration they received in order to maintain a discrimination claim against the Respondent will not put them in a far worse plight after the recision than before. The Complainants were slated for termination in the reduction in force, whether or not they executed the agreement. To apply the doctrine of partial recision in this case would eliminate the only obligation the Complainants had with regard to the agreement: no suit against the Respondent.

Thirdly, the Complainants contend that the principal of tenderback of consideration -- when attempting to break a release or after a release has been broken and before proceeding on to the other matters -- is not applicable in this case. Complainants begin by citing the cases of Mueller v. Michels, 184 Wis. 324 (1924) and Hall v. Bank of Baldwin, 143 Wis. 303 (1910), as support. In Mueller, the plaintiff sought the return of real estate and personal property which he had given in exchange for properties of far less value that were improperly valuated by the party procuring the exchange. In Hall, the court was confronted with a situation in which the plaintiff parted with cash in exchange for some notes, and a land company which the defendant knew was worthless.

However, these cases also involve fraudulent behavior on the part of the party inducing the release. Further, these cases refer to situations in which the releasor has parted with something of known and tangible value in exchange for the consideration. The court was ill at ease in making the party attempting to break the contract or release responsible for restoring what was given to the party procuring the release or contract because of the established value of property that had been given up in exchange. The Administrative Law Judge noted that the instant case is very different from that type of situation. At page 18 of the decision, Judge Nance states:

Complainants urge in their brief that it (the consideration received) need not be returned now, since the receipt of that consideration can be taken into account (as an offset, or as a credit to the respondent) when a remedial order is finally structured. This argument, however, assumes that the Complainants will win the case. The fact of the matter is, of course, that they might well lose. Even in that case, they would still be obliged to return the consideration they received. They might, though, be disinclined to do so if they lost and this would likely result in the Respondent having to commence collateral proceedings to recover the amounts (possibly in other litigation).

As asserted by the Respondent, the Administrative Law Judge correctly noted that in this case there is no clearly established thing of value which the Complainants gave up. They still have to prove their case of discrimination. This situation is thus factually distinguishable from the cases cited by Complainants.

Complainants next turn to the case of Doyle v. Teasdale, 263 Wis. 328, 57 N.W.2d 381 (1952), which was cited by the ALJ in his decision. The Complainants argue that while the court in Doyle sets forth the general rule that tender back of a consideration received is a condition precedent to maintain an action to set aside a release, when doing so it cited two treatises -- 76 C.J.S., Release, p. 663, sec. 37; Anno: 134 A.L.R. 6; and Charron v. Northwestern Fuel Co., (49 Wis. 240, 134 N.W. 1048 (1912) -- and these authorities also discuss and identify exceptions to the general rule requiring tender as a condition precedent to an action to set aside a release. Complainants argue that the exceptions noted in these authorities are supportive of the Complainants position that they need not tender hack the consideration they have received.

As already noted above, Charron (as well as the Gay case cited in Charron) do not support the Complainants' position.

Complainants go on to argue, however, that several other cases, while concerned with tender in the context of a fraudulent contract, do not limit the application of the equitable principles in regard to tender requirements only to fraudulent contracts, citing Bowe v. Gage, 127 Wis. 245, 106 N.W. 1074 (1906); Fosha v. O'Donnell, 120 Wis. 336, 97 N.W. 924 (1904); Gates v. Raymond, 106 Wis. 657, 82 N.W. 530 (1900); and two previously discussed cases, Hall v. Bank of Baldwin and Mueller v. Michels, supra. However, the fact is that the element of fraud was involved in all of these cases, and, moreover, the defrauded person had suffered an established loss of items of known value.

In Bowe, a real estate broker employed to procure a purchaser, after extending considerable effort to obtain a possible purchase, on representation by the principle that he had decided to keep the land and not sell it, was induced to accept a small sum in full for his services. The principle, however, at once proceeded to sell his land to the very customer brought to his notice by the broker. The court held that the principal had made a false representation of an existing material fact, and that the broker did not have to return the monies received prior to suit because such amount constituted partial payment of an actual existing debt due the broker. The court stated that under these circumstances application of the money in this manner was, in practical effect, a return of the money to the principal. Summarizing the equitable principles governing a tender back, the court stated that "the whole doctrine of refund upon repudiation of a contract of settlement is not technical, but equitable, and requires merely that the practical rights of the other party shall not thereby be prejudiced; that he shall be no worse off than if he had never made the contract of settlement." 127 Wis. at 250.

In Fosha, the court was again confronted with a plaintiff who was entitled to the amount that was paid by the defendant and more. In that case the plaintiff's attorney had signed a release after receiving partial payment ($75) on three notes that were outstanding. The defendant attempted to hold out the release signed as evidence that all three notes were taken care of by the release, whereas the plaintiff thought that the payments simply applied to one outstanding note. The plaintiff had no idea that her attorney had entered into the release and upon discovering the error on the part of her attorney, completely disavowed such an accord and satisfaction. Finding that the liability existed in the plaintiff's favor upon the notes, the court stated that it could not perceive how application of the $75 in part payment to the same debt could be unjust to the defendant.

Gates is an example of a fraudulent transaction not requiring tender back of the consideration. In that case the defendant, an owner of a horse, was fraudulently induced to consume large amounts of alcohol and became involved in a poker game in which he lost his money and his horse. The court riled that if the defrauded person is rendered incapable of fully restoring the latter to his former position, to that extent such restoration is not necessary to a rescission of such sale or agreement.

Aside from any question of fraud, in the instant case the Complainants have no actual existing debt to which the consideration they have received may be applied. An actually existing debt is clearly distinct from the mere possibility of proving discrimination and the applicable make-whole relief. Requiring a tender back of the consideration Complainants received will not make them worse off than if they had never made the contract of settlement.

Citing a second authority, the Corpus Juris Secundem reference, the Complainants quote from the list of exceptions to the general rule requiring tender as follows:

. . . [W]here there is fraud in the procurement or execution of the release, it is void, and its validity may be attacked without restoration or tender; and a release has been held void and subject to attack without restoration or tender, in the absence of a meeting of the minds, or where a releasor who is free from negligence is deceived as to the nature of the instrument executed by him, or has no intention to sign a release or such a release as the one executed, . . . Even in jurisdictions in which the general rule is that a tender or return of the consideration must be made, it has been recognized that the rule is not inflexible and that there are exceptions thereto, and in the final analysis, the question of whether the rule applies in a given case depends on the facts of such case . . . . [T]he consideration for the release need not be returned where an action is brought on a claim not in contemplation at the time of the execution of the release . . . . [T]ender has been excused where it appears that the releasor did not know that money received by him was given as consideration for the release. There is authority excusing restoration or tender where the releasor is unable to restore; but there is also authority holding the contrary . . . Return or tender has been excused where the court has it within its power fully to protect the interest of the releasee . . . . (76 C.J.S. Release 37, 666-667; citations omitted, emphasis added)

However, the ALJ acknowledged that there were exceptions to the general rule that there must be tender back of consideration as a condition precedent to maintaining an action to set aside a release. A review of the ALJ's decision shows that at page 17 of his Memorandum Opinion, the ALJ states:

. . . the Administrative Law Judge has concluded that none of the exceptions to the general rule are applicable here. Those exceptions that are recognized relate to cases in which there is some wrongful or inequitable conduct on the part of the party procuring the release, such as fraud or overreaching, or where the release is set aside as being .contrary to public policy. None of the situations are present here.

Referencing the underscored exception that tender is not required in the absence of a meeting of the minds, the Respondent correctly points out that the case which is referred to for that premise, Picklesimer v. Baltimore and O.R. Co., 84 N.E.2d 215, 151 Ohio St. 1 (1949), does not reflect such a statement at all, but in fact goes only to the distinctions between fraud in the execution of the settlement and fraud in the inducement of a settlement. In Picklesimer, the court acknowledged that a release obtained by fraud in the execution of the settlement is void, and no return or tender of consideration received is necessary; however, where an individual is simply induced by some fraudulent representation to execute the release, the release is only voidable and requires restoration or tender of the consideration before the validity of the release may be attached. Based on the facts of this case it has been found that no fraud was involved.

As for the underscored exceptions that no tender is required where a releasor free from negligence is deceived as to the nature of the instrument being executed, or has no intention to sign a release, the facts of this case do not show that either of these exceptions should apply. The cases cited as support for those exceptions included cases where the injured party entering into a release either had little education (7th grade), was not allowed to read the agreement, was semiconscious or in such mental and physical condition as to not be able to understand the transaction, or was given one agreement to read, but had another substituted for it when it came time for the injured party to sign the settlement agreement. _ While in the instant case there was not a great deal of time for the Complainants to evaluate the agreement due to the expediency in which the Respondent was required to act, the agreement was given to the Complainants and they were provided an opportunity to ask Respondent questions about it. Further, both were high school graduates and held responsible positions with the company.

With respect to the exception Complainants underscore regarding excusing a tender back of consideration if the releasor did not understand that the money received was in return for a release, the Respondent again correctly points out that the case supposedly supportive or such proposition (Michalsky v. Centennial Brewin Co., 48 Mont. 1, 134 P. 307 (1913), is greatly distinguishable from the facts here. Michalsky involved a plaintiff who was injured while in the employment of a brewing company. In reply to the employer's defense that a full release had been executed by the employe, the employe claimed no recollection of the alleged release, but if he had signed it, he claimed he did so while suffering great pain from his injuries and while under the influence of opiates and without any understanding and appreciation of what was going on. The court held that under these circumstances the release was wholly void. In the instant case there is no question that the Complainants signed the agreements. Furthermore, both admit that they signed the agreements so they could obtain the special benefits that came with signing the agreement.

After listing the above-quoted exceptions the Complainants themselves conceded that "[M]ost of the cases in this treatise (C.J.S.) deal with fraudulent contracts (and that) . . . none of the cases involve a fact situation closely similar to their present one" (Complainants' initial brief, p. 16); however, they go on to argue that the principles invoked in determining application of the tender rule are nonetheless clearly relevant here citing a 1982 Texas appellate decision, Indemnity Insurance Co. of North America v. Kelley, 44 S.W.2d 756. In that case the court ruled that a tender was not necessary where one showed that the entire amount received by him has been expended for necessities and he was unable to return it, but offers to allow the amount to be set off against any judgment which he may obtain. The Complainants claim that they have spent the entire amount of the consideration they received but are willing to allow such amount to be set off against any judgment in their favor. However, first of all it must be noted, as conceded by the Complainants, that there is also authority holding contrary to Indemnity Insurance. Secondly, and more important though, the fact is that even in the Indemnity Insurance case, the court was impressed by the fact that at the time the releasor made the agreed settlement he was so under the influence of opiates, administered by a physician to alleviate pain, to be incapable of understanding the nature and effect of that agreement. Thus, the element of fraud did have a considerable influence on the court.

With respect to the second treatise on the principle of tender noted in Doyle --134 ALR 6-- the Complainants assert that that authority recommends that an equitable approach be taken to the tender rule and that its application be dependent on the facts and circumstances of the individual case, but again Complainants admit that the cases cited in support thereof mainly involve fraudulently obtained releases. Complainants also cited the section concerning "Circumstances indicating no settlement actually agreed on," at p. 91 of the treatise for the proposition that an exception has been made to the tender back rule where a plaintiff denies that the settlement asserted by the defendant was actually made. However, the Complainants can hardly claim this section to be applicable in their cases when the agreement itself specifically stated that the consideration given was for their release of all employment-related claims against the Respondent.

Complainants also assert that federal law also serves as a guide to implementation of the Wisconsin Fair Employment Law and cite three cases, Eatmon v. Bristol Steel & Iron Works, 38 FEP Cases 1364, 769 F.2d 1503 (11th Cir. 1985), EEOC v. Cosmair, Inc., 44 FEP Cases 573 (5th Cir. 1987), and Henn v. Natl. Geographic Society, 40 FEP Cases 1187 (N.D. Ill. 1986), which allegedly support their position that no return or tender is required in the instant case. Those cases are inapposite. In Eatmon, the court found there was no requirement to tender back the consideration received pursuant to a settlement between the employer and the Office of Federal Contract Compliance of the Department of Labor because it was found that federal common law governed enforcement of the agreement, rather than state law which mandated tender back of the consideration. But even more important, in that case the validity of the releases was not contested. In Henn there was no indication the employes had signed any releases and there was no court discussion regarding tender back of consideration. The court held that the former employes who had accepted the benefits of an alleged discriminatory retirement program were not estopped from asserting their rights under the Age Discrimination in Employment Act.

In EEOC v. Cosmair, the court found that the employer's termination of severance benefits following the former employe's filing of charges with the EEOC to be improper. This was not a case where there was a request for tender back of consideration. The court found that the employe's filing of a "charge" would not constitute a break of his release which waived "all actions, causes of action, claims and demands whatsoever," inasmuch as a charge merely described the employer's alleged discrimination and contained no demand for relief.

Next, the Complainants argue that strict application of the tender rule, without regards for equitable factors, such as inability to restore the consideration, will for many pose an insurmountable harrier to litigation under age discrimination laws. Complainants argue that they needed the consideration received to live on, that there are very few complainants who could afford to pay out large sums of money in order to assert their rights and that it will also likely be the rule that many of those complaining of age discrimination will be in the present Complainants' situation, "having accepted a small sum in return for signing a 'release' before they are aware that they may have a cause of action. "While the Complainants' argument here is not without some merit the force of such argument is limited in two important respects. First, the various instances in which the courts have found exception to the tender rule involved fact situations where one party clearly acted fraudulently, and/or the defrauded party had parted with something of known and tangible value in exchange for the consideration received. Second, there is no guarantee that the Complainants will prevail in a hearing on the merits of their claim. If they cannot now return the consideration they have received for signing the agreement, how will they be able to return the consideration if they do not prevail on their claim? As noted by the ALJ, should the Complainants lose this would likely only result in the Respondent having to commence collateral proceedings to recover said consideration.

Finally, the Complainants assert that because the agreement signed by them only stated that they agreed to release the Respondent from all employment-related claims in consideration for two years of monthly payments, the ALJ's inclusion of the costs of life and health insurance benefits in his calculation of the consideration Complainants must return in order to maintain a claim of discrimination is mistaken. However, the record clearly establishes that the Respondent offered the health and life insurance benefits only as a part and parcel of the total special early retirement benefits package, that the Complainants completely understood this to be the case, and further, that the Complainants signed the agreements which released the Respondent from all claims not only because they wanted the 24 months of extra pay, but also because they wanted continued coverage (for life) under the Respondent's group health insurance plan which was to be partially paid by the Respondent and continued coverage (for life) under the Respondent's life insurance program which was to be fully paid by the Respondent. Under these circumstances, the cost for the health and life insurance benefits received by the Complainants must be included as part of consideration they must tender back in order to maintain claims of age discrimination against the Respondent.


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