December 26, 2013
Institutions often make a “deal” with an individual faculty member that is memorialized in something less formal than a lawyer-drafted contract, and there is always that lingering question as to whether it will be “enforceable” if and when the time comes. A recent decision involving Northwestern University is good news for institutions in this regard. Here, a faculty member had requested from the Dean a year’s leave so that he could visit at another institution. The Dean indicated that she would provide that leave, along with a second leave to take place three academic years into the future (with the faculty member teaching in the intervening years) provided the faculty member would then retire at the end of that second leave. Ultimately a “deal” was struck and the Dean followed up with a letter to the faculty member that provided “…I will accept your resignation from the …faculty effective with your retirement on August 31, 2012….” The letter went on to explain his leave and teaching responsibilities. In 2011, the faculty member was reminded that the next year would be his last and then he would be retired. He balked, indicating that he did not want to retire and insisting that he had never agreed to retire. He filed an EEOC charge and upon receiving his right to sue letter, commenced an action in U.S. District Court in Chicago. The District Court ruled against him and he appealed to the U.S. Court of Appeals for the Seventh Circuit, which also found for the University. First, the faculty member argued that the University discriminated against him by offering retirement packages to older employees but not younger ones. After recognizing that employers would have little reason to offer retirement/early retirement packages to new workers, the Seventh Circuit confirmed that the Age Discrimination in Employment Act (ADEA) simply “does not forbid offers that favor older workers over their younger colleagues.” Next the faculty member argued that he construed his arrangement with the University as giving him an option to retire after the 2011-2012 year, but it was never his intent that he had to retire. The Court had no trouble describing the arrangement reflected in the letter from the Dean a “contract.” Nor did it have any trouble interpreting this agreement as committing the faculty member to retire no later than the end of the 2011-2012 year. The faculty member’s non-sensical “understanding” – that it remained his option – would have had the University giving him two years worth of paid leave in exchange for only the possibility that he might retire after the 2011-2012 year (which of course was a possibility anyway). As the Court observed: “People pay to acquire options; they do not get options (and two years’ pay) handed to them for nothing.” Thus the Court rejected the faculty member’s interpretation as unreasonable. In a welcomed explanation of judicial reasoning, the Court observed: “judges understand written agreements to mean what reasonable people understand them to mean.” When so much happens between an institution and its faculty through less formal arrangements, often reflected in simple letters, it is good to know that Courts will recognize them and, along the way, provide a common sense interpretation.