Case Name: June M. BETTS, Plaintiff-Appellee, v. HAMILTON COUNTY BOARD OF MENTAL RETARDATION AND DEVELOPMENTAL DISABILITIES (86-3676) and Ohio Public Employees Retirement System of Ohio, (86-3676/4034), Defendants-Appellants
Court: United States Court of Appeals for the Sixth Circuit
Jurisdiction: United States
Decision Date: 1988-06-03
Citations: 848 F.2d 692
Docket Number: Nos. 86-3676, 86-4034
Parties: June M. BETTS, Plaintiff-Appellee, v. HAMILTON COUNTY BOARD OF MENTAL RETARDATION AND DEVELOPMENTAL DISABILITIES (86-3676) and Ohio Public Employees Retirement System of Ohio, (86-3676/4034), Defendants-Appellants.
Judges: Before MERRITT, MARTIN and WELLFORD, Circuit Judges.
Reporter: Federal Reporter 2d Series
Volume: 848
Pages: 692–701

Head Matter:
June M. BETTS, Plaintiff-Appellee, v. HAMILTON COUNTY BOARD OF MENTAL RETARDATION AND DEVELOPMENTAL DISABILITIES (86-3676) and Ohio Public Employees Retirement System of Ohio, (86-3676/4034), Defendants-Appellants.
Nos. 86-3676, 86-4034.
United States Court of Appeals, Sixth Circuit.
Argued June 19, 1987.
Decided June 3, 1988.
Andrew I. Sutter, argued, Nancy J. Miller, Asst. Attys. Gen., Columbus, Ohio, for Ohio Public Employees Retirement System.
Arthur M. Ney, Jr., Thomas E. Deye, argued, Asst. Pros. Attys., Cincinnati, Ohio, for Hamilton County Bd. of Mental Retardation and Developmental Disabilities.
Robert F. Laufman, argued, Cincinnati, Ohio, for Betts.
Alfred Miller, Steven S. Honigman, Peter N. Greenwald, Nancy K. Eisner, New York City, American Ass’n. of Retired Persons, amicus curiae, for appellee.
Susan E. Rees, argued, EEOC, Gwen Young Reams, Washington, D.C., Johnny J. Butler, Mark S. Flynn, amicus EEOC, for appellee.
Before MERRITT, MARTIN and WELLFORD, Circuit Judges.

Opinion:
BOYCE F. MARTIN, Jr., Circuit Judge.
Defendants Hamilton County Board of Mental Retardation and Developmental Disabilities and Public Employees Retirement System of Ohio appeal from an order granting June Betts' motion for summary judgment and declaratory judgment in this age discrimination case.
Betts worked for the Mental Retardation Department of Hamilton County and was covered by the state retirement system and the Age Discrimination in Employment Act, 29 U.S.C. § 621-34. Her work degenerated because of medical problems until she became disabled at age sixty-one. After negotiations, she was given the choice of two alternatives: an unpaid medical leave or length of service retirement. She was not offered disability retirement as a third choice. She was not allowed to have a disability pension because of a provision in Ohio's pension law preventing persons over sixty from receiving disability pensions and allowing them only to receive regular age retirement pensions. Betts accepted length of service retirement and now receives $158.50 per month in benefits. A similarly situated younger employee would have been entitled to a disability benefit of $355.02 per month.
In granting Betts' motion for summary judgment, the district court held that the plan violated the Act. The district court found that the plan was discriminatory on its face and in its effect and did not qualify for the bona fide employee benefits plan exception to the Act. Specifically, the district court concluded that the plan did not qualify under the exception because it is not the type of plan covered by the exception and because the defendants did not act in observance of the plan when they forced Betts into retirement because of her age.
Under 29 U.S.C. § 623(a)(1), an employer may not use age as a basis on which to discriminate against an employee in the compensation, terms, conditions, or privileges of employment. When there is direct evidence that a benefit plan discriminates on the basis of age, the plan is unlawful unless it falls within the bona fide employee benefit plan exception of 29 U.S.C. § 623(f)(2). In 1978, Congress further limited this exception by providing that plans that fall within the exception are nevertheless unlawful if they permit or require the involuntary retirement of an individual because of age. In amending section 623(f)(2), Congress expressly repudiated the Supreme Court's decision and reasoning in United Airlines v. McMann, 434 U.S. 192, 98 S.Ct. 444, 54 L.Ed.2d 402 (1977), which held that a bona fide benefit plan that treated older employees differently and predated the Act need not be justified by any business purpose. H.R.Conf. Rep. No. 95-950, 95th Cong., 2d Sess. 8, reprinted in 1978 U.S.Code Cong. & Admin.News 504, 529. In light of this legislative intent, the district court noted that the "critical factor in [the] determination of whether defendants' plan is the type of plan exempted is whether it is based upon age-related cost factors, as set forth in the regulatory interpretation of that section." 631 F.Supp. 1198, 1204 (S.D.Ohio 1986). See 29 C.F.R. 860.120(a)(1); 29 C.F.R. 860.120(f)(1)(iii). We agree. Under the Act, an age-based benefit plan which denies disability retirement to older employees in favor of forcing length of service retirement is unlawful unless it can be justified by a substantia] business purpose. As the Seventh Circuit recently declared, "where, as in the present case, the employer uses age &emdash;not cost, or years of service, or salary&emdash; as the basis for varying retirement benefits, he had better be able to prove a close correlation between age and cost if he wants to shelter in the safe harbor of [29 U.S.C. § 623(f)(2)]." Karlen v. City Colleges of Chicago, 837 F.2d 314, 319 (7th Cir.1988). Accord Equal Employment Opportunity Commission v. City of Mt. Lebanon, Pennsylvania, 842 F.2d 1480, 1493 (3d Cir.1988), ("By adding § 623(f)(2), Congress intended to relieve employers of the "burden of providing equal benefits to all employees only when the cost of providing lower benefits to older workers is approximately equal to the cost of providing greater benefits to younger workers.").
In her motion for summary judgment, Betts argued that the plan could not be justified by any business purpose. Under the disability plan, two employees with the same number of service years and the same final salary are treated indentically unless one of the two employees is 60 or older. Betts argued that there was no economic justification for providing the younger employee with disability benefits while denying disability benefits to the older employee. To the contrary, Betts suggested that this arrangement is likely to cost the employer more because the employee who becomes disabled at a younger age should draw more in benefits over the course of his lifetime than the employee who becomes disabled at 60 or older.
Despite having every opportunity, the defendants declined to introduce any cost figures or other economic justification for the different treatment of employees over sixty. Consequently, the district court reached its conclusion that "the benefit package . is not justified by significant cost considerations" without the benefit of having the issue fully briefed by both parties. The defendants now argue that, at a minimum, this court should remand the case to allow them to put evidence before the district court concerning age-related cost considerations. The defendants do not contend that the district court prevented them from presenting evidence of cost considerations. Cf. Cipriano v. Board of Education of City School District, 786 F.2d 51 (2d Cir.1986). In fact, the record indicates that, despite Betts' arguments that the plan cannot be justified by cost considerations, the defendants made no effort to submit any evidence on the subject. Consequently, we have no choice but to affirm the district court's entry of summary judgment in favor of Betts; a non-moving party who, in the face of a motion -for summary judgment, makes no effort to satisfy his burden of production is not entitled to a second opportunity to satisfy his burden once the motion has been granted.
Finally, we find that the district court did not abuse its descretion in awarding attorney's fees.
The judgment of the district court is affirmed.
. Ohio Revised Code § 145.35 provides:
Application for disability retirement may be made by a member or by a person acting in his behalf, or by the member's employer provided the member has at least five years of total service credit and has not attained age sixty and is not receiving disability benefits under any other Ohio state or municipal retirement programs. (Emphasis added.)
. Section 623(f)(2) now provides:
It shall not be unlawful for an employer .
(2) 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 this chapter, except that no such employee benefits plan shall excuse the failure to hire any individual, and no such seniority system or employee benefits plan shall require or permit the involuntary retirement of any individual specified by section 631(a) of this title because of the age of such individual;....
. 29 C.F.R. 860.120(a)(1) provides:
The legislative history of this provision indicates that its purpose is to permit age-based reductions in employee benefits plans where such reductions are justified by significant cost considerations. Accordingly, [29 U.S.C. § 623(f)(2)] does not apply, for example, to paid vacations and uninsured paid sick leave, since reductions in these benefits would not be justified significant cost considerations. Where employee benefit plans do meet the criteria in [29 U.S.C. § 623(f)(2) ], benefit levels for older workers may be reduced to the extent necessary to achieve approximate equivalency in cost for older and younger workers. A benefit plan will be considered in compliance with the statute where the actual amount of payment made, or cost incurred, in behalf of an older worker is equal to that made or incurred in behalf of a younger worker even though the older worker may thereby receive a lesser amount of benefits or insurance coverage.
29 C.F.R. 860.120(f)(l)(iii) provides:
[W]here the employees who are disabled at younger ages are entitled to long-term disability benefits, there is no cost based justification for denying such benefits altogether, on the basis of age, to employees who are disabled at older ages. It is not unlawful to cut off long-term disability benefits and coverage on the basis of some non-age factor, such as recovery from disability. Nor is it unlawful to terminate benefits or coverage, on the basis of age, at age 70. Reductions on the basis of age before age 70 in the level or duration of benefits available for disability are justifiable only on the basis of age-related cost considerations as set forth elsewhere in this section.