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Nature of Suit Code: 442
Nature of Suit: Civil Rights Employment
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 23, 1994 Decided February 28, 1995

Nos. 93-7134 & 93-7144

WILLIAM G. MAHONEY; ROY S. DE LON,

APPELLEES

v.

RFE/RL, INC.,

APPELLANT

Appeal from the United States District Court

for the District of Columbia

(91cv01842)

N. Frank Wiggins argued the cause and filed the briefs for appellant.

Jane M. Picker argued the cause for appellees. With her on the brief were Kenneth J. Kowalski,

Gordon J. Beggs and William Bransford.

Before: SILBERMAN, HENDERSON, and RANDOLPH, Circuit Judges.

Opinion for the court filed by Circuit Judge RANDOLPH.

RANDOLPH, Circuit Judge: If an American corporation operating in a foreign country would

have to "violate the laws" of that country in order to comply with the Age Discrimination in

Employment Act, 29 U.S.C. § 623(f)(1), the company need not comply with the Act. The question

here is whether this "foreign laws" exception in § 623(f)(1) applies when the overseas company, in

order to comply with the Act, would have to breach a collective bargaining agreement with foreign

unions.

RFE/RL, Inc. is a Delaware non-profit corporation. It is funded but not controlled by the

federal government, Ralis v. RFE/RL, Inc., 770 F.2d 1121, 1125 (D.C. Cir. 1985), and is best known

for its broadcast services, Radio Free Europe and Radio Liberty. RFE/RL's principal place of

business is Munich, Germany. In 1982, the company entered into a collective bargaining agreement

with unions representing its employees in Munich. One of the provisions of the labor contract,

modeled after a nation-wide agreement in the German broadcast industry, required employees to

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1Section II.5.a) 5) of the collective bargaining agreement states:

Regular employment ends through: retirement; at the latest, however, at the end

of the month in which the employee reaches age 65, in which case notice of

termination is not required, and/or in accordance with pertinent provision of the

RFE/RL Inc. pension plans. 

2

In 1984 employers were permitted to enforce mandatory retirement of employees reaching the

age of 70. Compare Pub. L. No. 95-256, 92 Stat. 189 (1978) with Pub. L. No. 99-592, 100 Stat.

3342 (1986). 

retire at age sixty-five.1In 1982, the Age Discrimination in Employment Act had no extraterritorial

reach and, from all that appears, this portion of the RFE/RL collective bargaining agreement was

entirely lawful. See Ralis v. RFE/RL, Inc., 770 F.2d at 1124.

Congress amended the Act in 1984 to cover American citizens working for American

corporations overseas. Pub. L. No. 98-459, 98 Stat. 1767, 1792-93 (codified as amended at 29

U.S.C. §§ 623(h), 630(f)). RFE/RL initially thought its American employees in Munich would

therefore no longer have to retire at the age of sixty-five, as the collective bargaining agreement

provided, and could continue to work until they were seventy if they so chose.2In order to

implement this understanding, the company applied to the "Works Council" for limited exemptions

from its contractual obligation. Works Councils (Betriebsräte) exist in allGerman firms with twenty

or more workers. See Christopher S. Allen, Principles of the Economic System, in GERMANY AND

ITS BASIC LAW: PAST, PRESENT AND FUTURE; A GERMAN-AMERICAN SYMPOSIUM 339, 348 (Paul

Kirchhof & Donald P. Kommers eds., 1993). They are bodies elected by both unionized and

nonunionized employees. Their duties include insuring that management adheres to all provisions of

union contracts. Departures from contractual requirements are illegal without the Works Council's

approval. Rejecting RFE/RL's requests, the Works Council here determined that allowing only those

employees who were American citizens to work past the age ofsixty-five would violate not only the

mandatory retirement provision, but also the collective bargaining agreement's provision forbidding

discrimination on the basis of nationality.

RFE/RLappealed theWorks Council's decisions with respect to several employees, including

plaintiff De Lon, to the Munich Labor Court and lost. The Labor Court agreed with the Works

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Council that RFE/RL must uniformly enforce the mandatory retirement provisions because

exemptions would unfairly discriminate against German workers. The Labor Court also held that the

company'sretaining employees over the age ofsixty-five despite the collective bargaining agreement

would be illegal. RFE/RL negotiated with the unions to delete the mandatory retirement provision

from the collective bargaining agreement, but to no avail.

The company terminated plaintiff De Lon in 1987, and plaintiff Mahoney in 1988. Both

plaintiffs were working for the company in Munich, both are United States citizens, and both were

discharged pursuant to the labor contract because they had reached the age ofsixty-five. The parties

agree that RFE/RL thereby violated the Age Discrimination in Employment Act unless the "foreign

laws" exception applied. The Act prohibits employers from discriminating against employees on the

basis of age. 29 U.S.C. § 623. "Employee" includes "any individual who is a citizen of the United

States employed by an employer in a workplace in a foreign country" (29 U.S.C. § 630(f)); and it

is common ground that the Act covers RFE/RL.

On cross-motions for summary judgment, the district court found that company liable for

violating the Act, ruling that the "foreign laws" exception (29 U.S.C. § 623(f)(1)) did not apply to

breaches of collective bargaining agreements. Mahoney v. RFE/RL, Inc., 818 F. Supp. 1 (D.D.C.

1992). The case then proceeded to trial on the issue of damages. A final judgment was entered May

10, 1993. The court amended this in a Revised Order, entered June 8, 1993, and another Order,

entered July 7, 1993. RFE/RL appeals the judgment establishing its liability and the award of

damages for violating the Act. Mahoney and De Lon cross-appeal the judgment setting the amount

of their damages.

The "foreign laws" exception to the Act states:

It shall not be unlawful for an employer, employment agency, or labor

organization

(1) to take any action otherwise prohibited under subsections (a), (b), (c), or

(e) of this section where ... such practices involve an employee in a workplace in a

foreign country, and compliance with such subsections would cause such employer,

or a corporation controlled by such employer, to violate the laws of the country in

which such workplace is located;

29 U.S.C. § 623(f)(1).

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The district court held § 623(f)(1) inapplicable because the mandatory retirement provision

"is part of a contract between an employer and unionsboth private entitiesand has not in anyway

been mandated by the German government. Second, the provision does not have general application,

as laws normally do, but binds only the parties to the contract." Mahoney, 818 F. Supp. at 3.

Although "the mandatory retirement provision in the union contract had "legal' force in Germany in

the sense that it was legally binding," the court found this to be "precisely the sense in which such

contracts in this country may be said to have "legal' force; yet they are not ordinarily thought of as

"laws.' " Id.

The decision of the Supreme Court in Norfolk & Western Railway v. American Train

Dispatchers' Ass'n, 499 U.S. 117 (1991), standsfirmly against the district court'sinterpretation. But

the parties unaccountably failed to mention the case to the district court, and failed again even to cite

the decision on appeal. If Norfolk & Western had been brought to the district court's attention, we

have no doubt that it would have ruled the other way.

Norfolk & Western held that a rail carrier's exemption under 49 U.S.C. § 11341(a) "from all

other law" included a "carrier'slegal obligations under a collective-bargaining agreement." 499 U.S.

at 127. This meaning of "law" was, to the Court, clear and certain. Id. at 133. "A contract," the

Court reasoned, "has no legal force apart from the law that acknowledges its binding character." Id.

at 130. A contract depends on laws to enforce it and make it effective. Id. To drive the point home

the Court quoted extensively from its prior opinions. "The obligation of a contract is "the law which

bindsthe partiesto performtheir agreement.' " Home Bldg. &Loan Ass'n v. Blaisdell, 290 U.S. 398,

429 (1934) (quoting Sturges v. Crowninshield, 17 U.S. (4 Wheat.) 122, 197 (1819)). It is the law

that gives "legal and binding effect to collective agreements." Detroit &T.S.L.R.R. v. United Transp.

Union, 396 U.S. 142, 156 (1969). "Laws which subsist at the time and place of the making of a

contract, and where it is to be performed, enter into and form a part of it, as fully as if they had been

expressly referred to or incorporated in its terms. This principle embraces alike those laws which

affect its construction and those which affect its enforcement or discharge." Farmers & Merchants

Bank of Monroe v. Federal Reserve Bank of Richmond, 262 U.S. 649, 660 (1923).

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The point of Norfolk & Western is that when a company failsto comply with a labor contract

it violates "law," which is why the statutory exemption from "law" relieved carriers of their

contractual obligations. Section 623(f)(1) of the Age Discrimination in Employment Act is

indistinguishable. See West Virginia Univ. Hosps., Inc. v. Casey, 499 U.S. 83, 98-99 (1991). If

RFE/RL had not complied with the collective bargaining agreement in this case, if it had retained

plaintiffs despite the mandatory retirement provision, the company would have violated the German

laws standing behind such contracts, as well as the decisions of the Munich Labor Court. In the

words of § 623(f)(1), RFE/RL's "compliance with [the Act] would cause such employer ... to violate

the laws of the country in which such workplace is located." Domestic employers of course would

never face a comparable situation; the Supremacy Clause of the Constitution would force any

applicable state laws to give way, U.S. CONST. art. VI, cl. 2; and provisions in collective bargaining

agreements contrary to the Act would be superseded. Congressional legislation cannot, however, set

aside the laws of foreign countries. When an overseas employer's obligations under foreign law

collide with its obligations under the Age Discrimination in Employment Act, § 623(f)(1) quite

sensibly solves the dilemma by relieving the employer of liability under the Act.

American Airlines, Inc. v. Wolens, 115 S. Ct. 817 (1995), decided after the oral argument in

this case, does not alter our decision. The Court there construed a preemption clause in the Airline

Deregulation Act of 1978: "[N]o state ... shall enact or enforce any law ... relating to [air carrier]

rates, routes, or services." 49 U.S.C. app. § 1305(a)(1). When American Airlines retroactively

modified its frequent flyer program, those participating in the program sued in state court claiming

that American had violated a state consumer protection statute and had breached its contract with

them. The Court held that § 1305(a)(1) preempted the state consumer protection statute but not the

state common law enforcing contracts.

Asto the common law, theCourtsaid that American's contractsmust have legalforce because

the stability and efficiency of the market depended on the enforcement of agreements. 115 S. Ct. at

824. But if, because of preemption, the state courts could not invoke common law to enforce

American's private contracts, no one could enforce them. The Department of Transportation lacked

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authority to adjudicate "private contract disputes." Id. at 825. Furthermore, the Federal Aviation

Act of 1958, as amended, 49 U.S.C. app. § 1301 et seq., contained a savings clause that had to be

squared with the preemption clause. The savings clause preserved "the remedies now existing at

common law," 49 U.S.C. app. § 1506. In order to make sense of this provision, and to ensure the

continued enforcement of contracts, the Court concluded that the reference to "law" in the

preemption clause did not invalidate state contract law. 115 S. Ct. at 826. The Court distinguished

Norfolk & Western on the ground that if it interpreted "law" to include "the obligations imposed by

contract," as Norfolk & Western had interpreted the term, it could not make "sense of the statute as

whole." Id. at 824 n.6.

Unlike the situation in American Airlines, construing the foreign laws exception in the Age

Discrimination in Employment Act consistently with Norfolk & Western would not render the Act

senseless. Just the opposite. That construction agrees with § 623(f)(1)'s evident purposeto avoid

placing overseas employersin the impossible position of having to conform to two inconsistent legal

regimes, one imposed from the United States and the other imposed by the country in which the

company operates. Moreover, if American Airlines had ignored the savings clause and preempted

state contract law, it would have created an intolerable system in which private contracts would not

be legally enforceable. No such problem is presented here. We recognize that RFE/RL's collective

bargaining agreement is legally enforceable, which necessarily means that breaching the agreement

in order to comply with the Act would, in the language of § 623(f)(1), "cause" RFE/RL "to violate

the laws of" Germany.

Plaintiffs complain that RFE/RL could have bargained harder for a change in the labor

contract. But application of § 623(f)(1) does not depend on such considerations. The collective

bargaining agreement here was valid and enforceable at the time of plaintiffs' terminations, and

RFE/RL had a legal duty to comply with it. There is not, nor could there be, any suggestion that

RFE/RL agreed to the mandatory retirement provision in order to evade the Age Discrimination in

Employment Act. Such provisions are, the evidence showed, common throughout the Federal

Republic of Germany, and RFE/RL entered into this particular agreement before Congress extended

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the Act beyond our borders.

Because we hold that § 623(f)(1) relieved RFE/RL of liability for terminating plaintiffs, we

do not pass on the issue of damages raised in plaintiffs' cross-appeal.

Reversed.

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