When is the Release of an FELA claim Enforceable?
May 14th, 2015
When a railroad employee settles an injury claim brought pursuant to the Federal Employers' Liability Act (FELA) with a railroad, the railroad will always require the employee to sign a Release before the settlement is paid. A Release is a written agreement between the parties that states that in exchange for the payment of a settlement, the employee will not seek any additional damages from the railroad for that claim. Railroad attorneys have consistently sought to expand the scope of these Releases, and now regularly condition FELA settlements on the employee's agreement to waive their right to recover for all past and future claims against the railroad, whether known or unknown at the time of the settlement. Are these expansive Releases enforceable, and will they prohibit an employee from seeking a recovery under the FELA for an injury that arises after the Release was signed?
Congress included in the FELA a provision that prohibits a railroad from entering into a contract that provides it general immunity from FELA claims. Section 5 of the FELA states that "Any contract, rule, regulation or device whatsoever, the purpose or intent of which shall be to enable any common carrier to exempt itself from liability created by this chapter, shall to that extent be void." See 45 U.S.C. Section 55. This would prohibit, for example, a railroad in collective bargaining negotiations from offering a general wage increase to its employees in exchange for a waiver by the employees of their rights to damages under the FELA if they are hurt on the job. The Supreme Court has recognized, however, that Section 5 does not prohibit the use of a Release as a means of settling a disputed claim. As the terms of a proposed Release become more expansive, when does it go beyond a mere resolution of a single claim and become an attempt to provide a railroad general immunity?
Courts have taken two approaches to this issue. The "known claim" test was adopted by the Sixth Circuit Court of Appeals in Babbitt v. Norfolk & Western Railway Co. (6th Cir. 1997). Under that approach, the court stated that to "be valid, a release must reflect a bargained-for settlement of a known claim for a specific injury, as contrasted with an attempt to extinguish potential future claims the employee might have arising from injuries known or unknown by him." For a Release to be valid under the known claim test, the employee must be aware of a potential claim at the time of the settlement. An employee cannot waive his rights to pursue claims that he doesn't know exist.
Other courts take a less restrictive approach and follow the "known risk" test, which was first set forth in Wicker v. Consolidated Rail Corporation (3rd Cir. 1998). Under this approach, an employee may waive rights to pursue future claims, even if unknown at the time of a settlement, as long as the "scope of the release is limited to those risks which are known to the parties at the time the release is signed." For example, assume an employee twists his ankle at work when the ballast gives out under his feet and he approaches the railroad to settle a claim under the FELA. The railroad may include in the terms of the Release a detailed statement of the potential risks of working on ballast, including the risk of developing cumulative trauma (wear-and-tear) injuries to the employee's ankles, knees, hips and back. Even though the employee does not suffer from such a cumulative trauma injury at the time of the settlement, under the "known risk" test it may be argued that acceptance of the settlement is effective as a waiver of any future cumulative trauma claims to his lower extremities because he at least knew of the risk that those injuries might develop in the future. These broad terms would likely not be enforceable under the "known claim" test, because the employee was not aware at the time of the settlement that he had such an injury.
Which test to apply to any particular Release will depend on the judge and the jurisdiction, at least until the Supreme Court decides a case resolving the dispute between appellate courts. For now, it is important for railroad employees to be aware of the terms of the Release provided by the railroad at the time of an FELA settlement. A Release may operate to preclude future valid claims, even if the employee misunderstood the scope of the Release at the time it was signed.
Categories: Rail Law Blog