Source: https://law.justia.com/cases/federal/appellate-courts/F2/725/211/58322/
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Matched Legal Cases: ['§ 623', '§ 216', '§ 626', '§ 623', '§ 623', '§ 623', '§ 616', '§ 255', '§ 216', '§ 216', '§ 623', '§ 623', '§ 621', '§ 623', '§ 623']

33 Fair Empl.prac.cas. 1816,33 Fair Empl.prac.cas. 945,33 Empl. Prac. Dec. P 34,045,4 Employee Benefits Ca 2684equal Employment Opportunity Commission, Appellant, v. Westinghouse Electric Corporation, Appellee, 725 F.2d 211 (3d Cir. 1984) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Third Circuit › 1984 › 33 Fair Empl.prac.cas. 1816,33 Fair Empl.prac.cas. 945,33 Empl. Prac. Dec. P 34,045,4 Employee Benef...
33 Fair Empl.prac.cas. 1816,33 Fair Empl.prac.cas. 945,33 Empl. Prac. Dec. P 34,045,4 Employee Benefits Ca 2684equal Employment Opportunity Commission, Appellant, v. Westinghouse Electric Corporation, Appellee, 725 F.2d 211 (3d Cir. 1984)
US Court of Appeals for the Third Circuit - 725 F.2d 211 (3d Cir. 1984) Argued Sept. 13, 1983. Decided Dec. 29, 1983. As Amended Jan. 20, 1984. Rehearing and Rehearing In Banc Denied Jan. 31, 1984
EEOC maintains that Westinghouse's policy of excluding employees 55 years or older from LIB payments violated Section 4(a) of the ADEA.2 29 U.S.C. § 623(a). EEOC charges that Westinghouse "has willfully violated and is now willfully violating" the provisions of the ADEA by continuing its policy of denying LIB to employees on the basis of age. (App. at 5). EEOC seeks recovery of severance pay, liquidated damages and a permanent injunction prohibiting Westinghouse's enforcement of the eligibility provision of the LIB Plan insofar as it results in the denial of LIB to any employee because of his eligibility for retirement benefits under Sections 16(c) and 17 of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 216(c), 217.
Throughout the employees' journey to have this case decided on the merits of their claim of illegal age discrimination, they have been confronted with numerous barriers to preclude any relief. These barriers include Westinghouse's defense that this action was time-barred under the applicable statutes of limitations in Section 4(e). 29 U.S.C. § 626(e). Westinghouse also asserts that regardless of the applicability of the statute of limitations, its conduct was sanctioned by the ADEA in that it was excused under the specific exceptions in either Section 4(f) (1) or 4(f) (2). 29 U.S.C. §§ 623(f) (1), 623(f) (2).
Section 4(f) (1) permits an employer to differentiate among employees on the basis of age if "age is a bona fide occupational qualification reasonably necessary to the normal operation of the particular business, or where such differentiation is based on reasonable factors other than age." 29 U.S.C. § 623(f) (1). Section 4(f) (2) allows an employer "to observe the terms of a bona fide seniority system or any bona fide employee benefit plan such as a retirement, pension, or insurance plan, which is not a subterfuge to evade the purposes" of the Act. 29 U.S.C. § 623(f) (2). On the basis of these defenses, Westinghouse moved for summary judgment.
This court is required to ascertain the existence of any disputed issues of material fact by viewing the record in the light most favorable to the party opposing the motion. All inferences, doubts and issues of credibility are resolved against the party moving for summary judgment. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S. Ct. 993, 994, 8 L. Ed. 2d 176 (1962) (per curiam); Ely v. Hall's Motor Trans. Co., 590 F.2d 62, 66 (3d Cir. 1978). In this case, the EEOC challenges Westinghouse's summary judgment victory below; therefore, we must accept as true the EEOC's properly plead factual allegations. Bishop v. Wood, 426 U.S. 341, 348, 96 S. Ct. 2074, 2079, 48 L. Ed. 2d 684 (1976); Mahler v. United States, 306 F.2d 713, 715 (3d Cir.), cert. denied, 371 U.S. 923, 83 S. Ct. 290, 9 L. Ed. 2d 231 (1962). Moreover, we must draw all reasonable inferences against Westinghouse. EEOC v. Home Insurance Company, 672 F.2d 252, 257 (2d Cir. 1982).
We will analyze first, the issues pertaining to timeliness under ADEA statute of limitations; and second, the issues of whether the district court erred in concluding that Westinghouse had valid substantive defenses under either Section 4(f) (1) or 4(f) (2).
The ADEA has two different statutes of limitations by incorporation of the statutes of limitations in the Portal-to-Portal Act. A three-year statute of limitations applies in cases of willful violations and all other violations are subject to a two year statute of limitations. 29 U.S.C. § 616(e) (incorporating 29 U.S.C. §§ 255, 259).
We must first consider whether it was error for the district court to summarily decide the willfulness issue. Willfulness is a question of fact which necessarily raises questions of the appellees' state of mind, knowledge, intent and belief regarding the propriety of their actions. Cacchione v. Erie Technological Products, Inc., 526 F. Supp. 272, 275 (W.D. Pa. 1981); Allen v. Colgate-Palmolive Co., 539 F. Supp. 57, 66 (S.D.N.Y. 1981). A summary judgment order is not defeated, however, merely because an issue of fact exists; the factual issue in dispute must be material to the resolution of the dispute. Allen v. Colgate-Palmolive Co., 539 F. Supp. at 66.
The materiality or immateriality of Westinghouse's alleged willfulness in this case, is dependent upon our determination of whether Westinghouse has advanced a valid defense to an ADEA violation under either Section 4(f) (1) or 4(f) (2). We must also determine when the cause of action accrued and when it was tolled. If the date on which this cause of action accrued was more than three years from the filing of the complaint, willfulness is not relevant and summary judgment was properly granted. If, however, the complaint was filed between the second and third year that the cause of action accrued, willfulness is relevant and can be assessed in terms of whether Westinghouse has a complete defense to this charge of age discrimination. Our problem ab initio is to determine when the action accrued and when it was tolled.
The original complaint in this action was filed on March 28, 1980. Westinghouse "counseled" the 65 employees between January 12, 1977 and March 17, 1977 by advising them they were ineligible for LIB. The district court believed that the alleged discriminatory practice was the denial of LIB and therefore, the limitations period started to run with the "counseling" on ineligibility, and that such "counseling" constituted notice of the alleged violation of the ADEA. Relying on the Supreme Court decision in Delaware State College v. Ricks, 449 U.S. 250, 101 S. Ct. 498, 66 L. Ed. 2d 431 (1980), the district court thus held that even assuming arguendo a willful violation and the applicability of the three-year statute, this action was nevertheless untimely because the employees4 aged 55 and older received "counseling" as to ineligibility for LIB payments more than three years before the EEOC filed the original complaint. We must determine whether the statute of limitations began to run when the employees were "counseled" or when they were laid-off because of the plant closing.
The plaintiff in Ricks was formally denied tenure on March 13, 1974. Notwithstanding this denial of tenure, Ricks was offered and accepted a terminal one-year contract on June 26, 1974. After the expiration of the contract, suit was filed challenging the decision to deny him tenure on the basis of discrimination. Ricks argued that the limitation period commenced with the date of discharge--namely, the expiration of the terminal one-year contract. The district court determined that the 180-day statute of limitations period for filing with the EEOC started to run on June 26, 1974, the date Ricks was offered and accepted the terminal contract because that was the day Ricks was put on notice of the decision to deny him tenure. Our court ruled that the statute of limitations began to run when the contract expired since we were of the opinion that the initial decision to terminate an employee might be reversed prior to the specific termination date. Ricks v. Delaware State College, 605 F.2d 710, 713 (3d Cir. 1979).
The Supreme Court upheld the district court's decision that Ricks' claim was untimely. According to the Supreme Court, Ricks challenged only the decision to deny him tenure, but by asserting the date of discharge as the point at which the statute of limitations began to run, the Court determined that " [i]n effect, he is claiming a 'continuing violation'." Delaware State College v. Ricks, 449 U.S. at 257, 101 S. Ct. at 503. The allegations in the complaint, however, spoke only of the tenure decision as the discriminatory event and Ricks did not allege any facts suggesting discrimination in his actual discharge. Indeed, it was simply an inevitable effect of the decision to deny him tenure. See also Chardon v. Fernandez, 454 U.S. 6, 102 S. Ct. 28, 29, 70 L. Ed. 2d 6 (1981) (per curiam); United Airlines, Inc. v. Evans, 431 U.S. 553, 558, 97 S. Ct. 1885, 1889, 52 L. Ed. 2d 571 (1977); Bronze Shields, Inc. v. New Jersey Department of Civil Service, 667 F.2d 1074, 1083 (3d Cir. 1981), cert. denied, 458 U.S. 1122, 102 S. Ct. 3510, 73 L. Ed. 2d 1384 (1982).
In the case at bar, EEOC has alleged a continuing discriminatory policy and specific acts of discrimination that occurred after the development of this policy. Each denial of LIB to each of the 65 employees constituted a specific act which was part of Westinghouse's alleged continuing policy of discrimination on the basis of age. Thus, this case does not involve a discrete, isolated act such as the denial of tenure to one professor. Moreover, the instant case is distinguishable from Bronze Shields, supra, and Hood v. New Jersey Department of Civil Service, 680 F.2d 955 (3d Cir. 1982). In these cases, we declined to apply the continuing violation theory to the promulgation of discriminatory eligibility lists used in the hiring and promotion of police officers and fire fighters. We found it insufficient to base a finding of continuing violation merely on an allegation that the lists were in continued use. We concluded that plaintiffs must also allege specific instances of discrimination occurring because of the lists' continued use. Id.
A denial of LIB benefits could not occur until an employee was eligible to apply for LIB and until the claim was denied due to eligibility for early retirement. An employee did not have an enforceable demand until the claim was denied. See Paris v. Profit Sharing Plan, 637 F.2d 357, 361 (5th Cir. 1981), cert. denied, 454 U.S. 836, 102 S. Ct. 140, 70 L. Ed. 2d 117 (1981); Reiherzer v. Shannon, 581 F.2d 1266, 1272 (7th Cir. 1978). As stated earlier, to be eligible for LIB, an employee had to have been laid off as a result of plant closing. Thus, this case is in a different factual setting than Ricks. Although the alleged unlawful practice was the adoption and implementation of the policy, a cause of action could not accrue until the discrimination manifested itself by virtue of the policy actually being applied to individual employees at the time of the plant closing through individual LIB claim rejections. See Bethel v. Jendoco Constr. Corp., 570 F.2d 1168 (3d Cir. 1978); Crosland v. Charlotte Eye, Ear and Throat Hospital, 686 F.2d 208 (4th Cir. 1982). In this case, the plant closed on April 1, 1977. Thus, at the earliest, the statute begins to run as of that date. An April 1, 1977 starting date makes this action timely if a three-year statute applies.
The district court held that even assuming the application of the three-year statute, the only claim tolled in this action was that of Paul Meola because at the time the original complaint was filed, Paul Meola was the only employee specifically named as required under Section 16(c) of the FLSA. 29 U.S.C. § 216(c). The names of the employees were not listed in the caption of the original complaint; the only named plaintiff in the caption was EEOC. In the pleadings, the EEOC listed only one employee by name specifically--Paul Meola--but in the EEOC's effort to protect the class, they alleged that the suit was filed on behalf of
By their complaint, EEOC alleged that this action was commenced under both Sections 16(c) and 17 of FLSA, 29 U.S.C. §§ 216(c) and 217, which provide different remedies. (App. at 4). Section 16(c) provides for unpaid wages and liquidated damages when the violation is willful. On the other hand, Section 17 authorizes injunctive relief against withholding or denying LIB benefits. Only Section 16(c) requires the identification of an individual claimant in the complaint to stop the running of the statute of limitations period.
An action commenced under Section 17 is commenced for all purposes when the complaint is filed and the individual employees for whom relief is sought need not be named in the complaint. EEOC v. Gilbarco Inc., 615 F.2d 985, 990 (4th Cir. 1980); Hodgson v. Brookhaven General Hospital, 436 F.2d 719, 722 (5th Cir. 1970). The employees not specifically named in the original complaint in this case could conceivably be barred from relief under Section 16(c) but are not barred from relief under Section 17. Therefore, regarding relief under Section 17, the action was commenced and the statute tolled when the original complaint was filed.
Once a plaintiff in this type of suit has put forth a prima facie case of age discrimination, the burden shifts to the defendant to articulate some legitimate, nondiscriminatory reason for the challenged action. Texas Dep't of Community Affairs v. Burdine, 450 U.S. 248, 254, 101 S. Ct. 1089, 1094, 67 L. Ed. 2d 207 (1981); Smithers v. Bailar, 629 F.2d 892, 895 (3d Cir. 1980); Hagelthorn v. Kennecott Corp., 710 F.2d 76, 81 (2d Cir. 1983); EEOC v. Baltimore and Ohio Railroad Co., 632 F.2d 1107, 1110 (4th Cir. 1980), cert. denied, 454 U.S. 825, 102 S. Ct. 113, 70 L. Ed. 2d 98 (1981). Westinghouse claims that its actions are excused under Section 4(f) (1) as based on reasonable factors other than age. 29 U.S.C. § 623(f) (1). Furthermore, Westinghouse defends the denial of LIB to those individuals entitled to early retirement on the grounds that these actions were taken in observance of the terms of a bona fide employee benefit plan, not a subterfuge intended to evade the purposes of ADEA. Thus, Westinghouse argues that its action is excused under Section 4(f) (2). 29 U.S.C. § 623(f) (2).
Section 4(f) (1) Defense
Section 4(f) (1) of the Act provides that it is not unlawful for an employer to take any action otherwise prohibited under ADEA where the differentiation is based on reasonable factors other than age. The district court reasoned that in this case there is no ADEA violation because the layoff was the result of a plant closing:
(App. at 87) (emphasis added). These "other factors", in the court's opinion, included the level of employees' earnings and years of service with the employer. The court went on to say, however, that " [a]ge is inevitably involved and cannot be excluded as a factor in making the arrangements." (App. at 93).
Westinghouse bears the burden of going forward with evidence to demonstrate reasonable factors, other than age, justifying its action. Marshall v. Westinghouse Electric Corp., 576 F.2d 588, 592 (5th Cir. 1978). Westinghouse asserts that the employees involved here were denied LIB benefits because of their eligibility for early retirement. However, even if this contention is supported by sufficient proof, there is authority for our finding that eligibility for early retirement is too closely related to age to be given credence as a valid justification.7
Because of the close relationship between eligibility for early retirement and age, the obvious effect of Westinghouse's practice was to deny LIB to older workers who had accumulated through years of service more credit years than their younger counterparts. Leftwich v. Harris-Stowe State College, 702 F.2d 686, 691 (8th Cir. 1983). If eligibility for early retirement can be used to justify the denial of LIB to older employees, the purpose of the ADEA will be defeated. Congress enacted this statute "to promote employment of older persons based on their ability rather than age" and "to prohibit arbitrary age discrimination in employment." 29 U.S.C. § 621.
In view of the fact that Westinghouse has articulated no other factor or justification to serve as a legitimate non-discriminatory reason for the denial of LIB payments under the circumstances of this case, we conclude that Westinghouse has failed to establish a Section 4(f) (1) defense.
Section 4(f) (2) Defense
Finally, we will consider whether Westinghouse has established a defense under Section 4(f) (2). Section 4(f) (2) provides that it shall not be unlawful for an employer to observe the terms of a bona fide employee benefit plan, such as a retirement, pension, or insurance plan, which is not a subterfuge to evade the purposes of the ADEA. 29 U.S.C. § 623(f) (2).8 In establishing a Section 4(f) (2) defense, the burden is on Westinghouse to demonstrate the existence of three elements: (1) Westinghouse must have been acting in observance of the terms of (2) a bona fide employee benefit plan (3) which is not a subterfuge to evade the purposes of the ADEA. Smart v. Porter Paint Co., 630 F.2d 490, 493 (7th Cir. 1980); See United Airlines, Inc. v. McMann, 434 U.S. 192, 98 S. Ct. 444, 54 L. Ed. 2d 402 (1977); Zinger v. Blanchette, 549 F.2d 901 (3d Cir. 1977), cert. denied, 434 U.S. 1008, 98 S. Ct. 717, 54 L. Ed. 2d 750 (1978); Brennan v. Taft Broadcasting, 500 F.2d 212 (5th Cir. 1974). Because we conclude, infra, that the LIB Plan was not a bona fide employee benefit plan, we do not reach the other two components of the defense.9 (1) Bona Fide Employee Benefit Plan
Westinghouse argues, and the district court agrees, that Westinghouse's LIB Plan qualifies as a bona fide employee benefit plan under Section 4(f) (2) of the ADEA. Section 4(f) (2) states in pertinent part:
The district court concluded that the LIB Plan is "a welfare benefit plan since it provides insurance for unemployment." (App. at 77). Apparently, the underlying assumption is that the LIB Plan qualifies under 4(f) (2) merely because it provides employees with "insurance" against unemployment.
The prerequisites to qualifying under 4(f) (2), however, are much more stringent. By the express language of 4(f) (2), a plan qualifies if it is a retirement, insurance or pension plan. We are aware that the words "such as retirement, pension or insurance" were added in a descriptive sense, not excluding other kinds of employment benefit plans. Brennan v. Taft Broadcasting Co., 500 F.2d at 215. Even though these words are descriptive, their description contains substance. These words are to be interpreted as indicative of the types of plans in which Congress intended to allow age distinctions; they are of the type whereby the cost of benefits increases with age.
The typical retirement and pension plan inevitably takes account of age. This was one of the points of Justice White's concurring opinion in United Air Lines [v. McMann, 434 U.S. 192, 98 S. Ct. 444, 54 L. Ed. 2d 402 (1977),] when he observed that all retirement plans necessarily make distinctions based on age. The desirable goals of actuarial soundness and full funding, to help achieve which ERISA was enacted, cannot be achieved without differences that take account of age. It was in recognition of that basic fact of life and death that Sec. 623(f) (2) was included in the Act.
Furthermore, the fact that the LIB Plan is tied to Westinghouse's Pension Plan does not negate the fact that it is more analogous to a "fringe benefit" than to the types of employee benefit plans covered under 4(f) (2). Fringe benefit plans unrelated to the age cost factor are not included in the 4(f) (2) exception.
The LIB Plan in this case is similar to the city's sick leave plan in Alford v. City of Lubbock, 664 F.2d 1263 (5th Cir. 1982), cert. denied, 456 U.S. 975, 102 S. Ct. 2239, 72 L. Ed. 2d 848 (1982). The Fifth Circuit held that the state's retirement plan was "bona fide" but that the city's policy of denying accrued sick leave pay to city employees whose retirement was not covered by the state retirement plan, was not part of a bona fide employee benefit plan. The court stressed the independence of the sick pay policy from the state retirement pension, or insurance plan. 664 F.2d at 1272. The Alford court also addressed the city's argument that the sick leave payment policy was tied to length of service and held that the city
In the case at bar, Westinghouse's Pension Plan is "bona fide" to the extent that, viewing it alone, it is genuine and actually pays benefits. United Airlines v. McMann, 434 U.S. at 195, 98 S. Ct. at 446; Crosland v. Charlotte Eye, Ear and Throat Hospital, 686 F.2d 208, 212, n. 3 (4th Cir. 1982); Marshall v. Hawaiian Telephone Co., 575 F.2d at 766. The LIB Plan, however, is functionally independent of the Pension Plan although interrelated in one respect--ineligibility for LIB is dependent upon eligibility for early retirement. The mere fact that the benefits available to employees under the Pension Plan were to be considered when determining eligibility for LIB, however, does not merge the two plans into a single "coordinated benefit plan." EEOC v. Borden's Inc., 551 F. Supp. 1095, 1099 (D. Ariz.), appeal docketed, No. 83-1701 (9th Cir. Feb. 17, 1983). On the contrary, this interaction shows that the LIB Plan is not an integral part of the Pension Plan.
Consequently, this court concludes that the record does not support the application of the Section 4(f) (2) exception as regards to this element.
In short, we conclude that genuine issues of material fact remain as to whether Westinghouse's policy of denying LIB to older workers was a willful violation of ADEA, calling into play the three-year statute of limitations and whether the employees were notified of the plant closing. Additionally, Westinghouse simply has not established a complete defense under either Section 4(f) (1) or 4(f) (2) on the record before this court. Thus, this case will be remanded to the district court on the issues of willfulness, notice and the applicable statute of limitations.
Examples of the types of justifications deemed excusable under Section 4(f) (1) include those in the cases of de Loraine v. MEBA Pension Trust, 499 F.2d 49 (2d Cir. 1974), cert. denied, 419 U.S. 1009, 95 S. Ct. 329, 42 L. Ed. 2d 284 (1974), and Bittar v. Air Canada, 512 F.2d 582 (5th Cir. 1975). In Bittar, which exemplifies the types of justifications voiced in wrongful discharge cases, the defendant-employer produced evidence of numerous instances of unsatisfactory job performance. In de Loraine, the withdrawal of permission for retired engineers to return to work to satisfy an increased demand for engineers was justified or excused on the basis of a cessation of such demand. We conclude that "eligibility for early retirement" is not as analytically separable from age as are the factors advanced in the above cases. The nexus to age is simply too strong to allow it as a justification
This court notes that Section 4(f) (2) was amended in 1978 to expressly prohibit involuntary early retirement premised on age. 29 U.S.C. § 623(f) (2), as amended, Pub. L. 95-256, Sec. 2(a), Apr. 6, 1978, 92 Stat. 189. Though it is arguable that the prohibition in the 1978 statute would be violated by enforcement of Westinghouse's policy of denying LIB to employees over age 55 (with 10 or more years of service and eligible for early retirement) and it might constitute involuntary early retirement by not according the employees an option as to form of benefits, we nevertheless decline to give retroactive effect to the 1978 Amendments in this case
This court and other courts of appeals have held that these 1978 Amendments should be given prospective application only and should not apply retroactively to involuntary retirements occurring before enactment on April 6, 1978. Sikora v. American Can Co., 622 F.2d 1116, 1121 (3d Cir. 1980); Jensen v. Gulf Oil Refining and Marketing Co., 623 F.2d 406, 409 (5th Cir. 1980); Smart v. Porter Paint Co., 630 F.2d 490, 497 (7th Cir. 1980). We will do likewise in this instance.
Whether or not Westinghouse acted in observance of the terms of the plans at issue here is dependent upon the proper construction of the terms and interrelationship of the LIB Plan and the Pension Plan. The phrase "to observe the terms of" has been interpreted to mean that the terms of the plan must expressly sanction the practice or expressly give the employer the option of engaging in the activity. See Smart v. Porter Paint Co., 630 F.2d 490 (7th Cir. 1980); Zinger v. Blanchette, 549 F.2d 901 (3d Cir. 1977), cert. denied, 434 U.S. 1008, 98 S. Ct. 717, 54 L. Ed. 2d 750 (1978); Sexton v. Beatrice Foods Co., 630 F.2d 478 (7th Cir. 1980); EEOC v. Baltimore and Ohio R. Co., 632 F.2d 1107 (4th Cir. 1980); Marshall v. Hawaiian Telephone Co., 575 F.2d 763 (9th Cir. 1978); Cheng v. GAF Corp., 566 F. Supp. 350 (S.D.N.Y. 1982)
We believe that the proper interpretation of these plans is a question to be best resolved by the company and the union by way of the arbitration process, therefore, we will not address this element of the 4(f) (2) defense.
Moreover, whether or not Westinghouse's 1976 amendment to the Pension Plan which lowered the age for early retirement for those employees laid off as a result of plant closing constituted "a subterfuge" to evade the purposes of the ADEA as alleged by the EEOC is a disputed issue of material fact. The record is silent as to Westinghouse's purpose or motive. See United Airlines v. McMann, 434 U.S. at 203, 98 S. Ct. at 450; Smart v. Porter Paint Co., 630 F.2d at 495; Crosland v. Charlotte Eye, Ear and Throat Hosp., 686 F.2d at 215-16; EEOC v. Home Ins. Co., 672 F.2d 252, 263 (2d Cir. 1982).