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IBM Secures Dismissal of Employees’ Age Discrimination Class Action

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Dubai, UAE - March 4, 2012: IBM headquarters in Dubai, UAE. IBM headquarters is located in the vast territory of Dubai Internet City. One of the oldest and largest companies in the world in the production of equipment to computers and servers

The Southern District of New York issued a ruling effectively ending an Age Discrimination in Employment Act (ADEA) case brought by just over two dozen former International Business Machines Corporation (IBM) employees. On Thursday, Judge Jesse M. Furman declined to exercise jurisdiction over the dispute, citing the lack of an actual controversy.

As previously reported, the consolidated cases involve former workers 40-years-of-age and older who allege that IBM ousted them as part of a company-wide overhaul intended to introduce younger talent. They also signed severance agreements and in exchange, agreed to bring ADEA claims against IBM in arbitration.

All but two of the plaintiffs in the action did so, leading Judge Furman to describe them as “Post-Arbitration Plaintiffs.” In each case, the arbitrator dismissed the claims as untimely.

In this suit, the plaintiffs sought a declaratory judgment that two provisions of their arbitration agreements were unenforceable: a provision that governs the timeliness of their arbitration claims and a confidentiality clause. Last November, IBM moved to dismiss while the plaintiffs moved for summary judgment and additionally, asked for leave to amend their complaints to add a claim for fraudulent inducement.

Assessing the claims, the court concluded that “as an exercise of its discretion, [] it is not appropriate to entertain jurisdiction over the Post-Arbitration Plaintiffs’ claims.” Judge Furman pointed to the Post-Arbitration Plaintiffs’ concession that they already arbitrated their ADEA claims, lost, chose not to file any motions to vacate the arbitral decisions within the Federal Arbitration Act’s three-month deadline, but instead, waited two years to initiate the declaratory relief action.

Under Second Circuit precedent, the court said factors weighed against an exercise of jurisdiction. “There is no ‘useful purpose’ that a declaratory judgment would serve at this point; nor is there any ‘uncertainty’ in the parties’ legal relations for the Court to resolve,” the opinion said. Lastly, Judge Furman dismissed the two remaining plaintiffs’ claims for lack of ripeness. The court explained that the contingency that would make their claims justiciable is unlikely to ever occur, yet dismissed them without prejudice should their claims ripen.

The decision follows several others issued earlier this month in favor of IBM in the age discrimination claim realm. In one decision, Judge Valerie Caproni granted partial summary judgment in favor of IBM, limiting the plaintiffs’ arguments going forward in a parallel case.

The plaintiffs are represented by Lichten & Liss-Riordan P.C. and IBM by Jones Day.

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