Court Opinion

ID: 9460204
Source: CourtListenerOpinion
Date Created: 2023-08-04 21:44:31.281189+00
Date Added: 2024-06-11T17:36:31.479344
License: Public Domain

FRIENDLY, Circuit Judge
(dissenting) :
Agreeing that this case is governed by the principles set out in Accardi v. Pennsylvania Railroad Co., 383 U.S. 225, 86 S.Ct. 768, 15 L.Ed.2d 717 (1966), I dissent from the conclusion that Accardi requires us to hold that the severance benefit here at issue is a perquisite of seniority. If it is not that but rather one of the “other benefits offered by the employer relating to employees on furlough or leave of absence in effect with the employer at the time such person was inducted into such forces,” Palma-rozzo must lose, since it is agreed that time on furlough or leave of absence did not qualify for the severance payments.
The union and the railroad in Accardi had negotiated the severance payments to cushion the blow of a severe cutback in employment. Under the arrangement, any fireman with less than 20 years seniority was discharged, while those with 20 years or more were given the option of staying on. Those discharged or opting to quit were awarded severance pay, based upon the amount of “compensated service” they had accumulated with the railroad. The Court noted that the “compensated service” scheme was rather “bizarre,” 383 U.S. at 230, 86 S.Ct. 768, 15 L.Ed.2d 717, in that the requirement for a “year” of compensated service could be met by working one day a month for seven months; this was consistent with the plan’s obvious objective to distinguish betweeen old and new firemen. It was thus the details of the plan that led the Court to decide that the allowances were actually based on *594seniority, not on the total amount of service rendered by the employee. The Court made clear that only because of its determination that the severance pay scheme in Accardi was “based primarily on the employees’ length of service with the railroad” did it hold the Act applicable. Accardi thus requires a close inquiry into whether the benefits in each case are based primarily on the employee’s length of service or on the actual total service rendered by the employee ; the case-by-case review disdained by the majority is precisely what is required by the statute as construed by the Supreme Court. If Congress had meant that employees entering military service should be treated in all respects on their return precisely as if they had been working all along, its language was singularly inept to express this.
Coca-Cola paid into the union fund 20 cents for every hour worked by each employee. Out of this fund, the union provided employees with several benefits, including pension, death and severance payments. As the majority notes, the union plan premised severance benefits on the number of hours worked per year, awarding one quarter unit of credit for each 400 hours worked up to 1600 hours. Five credits were required to earn a minimum of $200 in severance pay, the amount that Palmarozzo claims is due him here. It is true that this scheme tended to give greater rewards to those who left the job with greater seniority. However, seniority and total compensated work naturally tend to correlate fairly highly. Even a scheme that scaled severance payments according to the precise number of hours worked would incidentally give greater rewards to employees with higher seniority since they would normally have accumulated more credits. The crucial point is that the scheme in this case is gauged, albeit not with precise exactitude, by the amount of work done, not by the length of service with the company. The plan thus does not constitute a manifestation of seniority sufficient to bring it within § 9(b) of the Act, 50 U. S.C. App. § 459(b) (B) (i). I would not require that Palmarozzo be credited for work he did not perform.1
The cases cited by the majority do not support its position that the severance benefit in this case is a perquisite of seniority. The most closely analogous recent case, Hoffman v. Bethlehem Steel Corp., 477 F.2d 860 (3 Cir. 1973), cuts quite the other way. The Third Circuit noted, 477 F.2d at 863:
The trial court has properly observed there is a distinction between rights which accrue with the passage of time and those for which some further act is required. Those which accrue with the passage of time are sen*595iority rights which are protected under § 9(b). Those for which some other act is required, such as days of work, are not seniority rights protected by § 9(b) and would not accrue after the veteran returns.
Although the Hoffman court found that the unemployment benefit plan in question was almost as “bizarre” as that in Accardi and thus held that the benefits in that case were based on seniority, the court’s distinction between rights that accrue with the passage of time and those predicated on some further act by the employee would lead to a reversal here. Most of the courts that have applied § 9(b) have employed an analysis similar to that used in Hoffman.
It is true that in a per curiam decision in Eagar v. Magma Copper Co., 389 U.S. 323, 88 S.Ct. 503, 19 L.Ed.2d 557 (1967), a divided Court awarded an employee vacation and holiday rights even though, because of military duty, he was not technically employed at the times required for eligibility under the company’s rules. In Eagar, however, the veteran who had met the work requirements would have been eligible for the benefits if he had simply been on the company’s payroll at the relevant times whether he had been working or not. Since Accardi had held that the absent employee must be treated as if he had kept his job continuously throughout the period of his military service, it made sense to hold that Eagar should not be denied a right contingent merely on technical employment throughout the relevant period. In “paid vacation” cases subsequent to Eagar, the courts have generally scrutinized vacation eligibility plans to determine whether they turned on seniority or work actually done. Both the Fifth Circuit in Dugger v. Missouri Pacific Railroad Co., 403 F.2d 719 (5 Cir. 1968), aff’g 276 F.Supp. 496 (S.D.Tex.1967), cert, denied, 395 U.S. 907, 89 S.Ct. 1752, 23 L.Ed.2d 222 (1969), and the Tenth in Kasmeier v. Chicago, Rock Island & Pacific Railroad Co., 437 F.2d 151 (10 Cir. 1971), have held vacation benefits not to be perquisites of seniority where the employees had to satisfy a substantial work requirement before becoming eligible for the benefits. Upholding a 110-day work requirement as a .prerequisite-to vacation benefits, the Kasmeier court wrote, “Whereas in Accardi the compensated service requirement was a mere label to obscure the real nature of the payments, in this controversy the 110-day requirement is not a mere facade to veil the true nature of the benefits; it is a legitimate, uniformly applied condition precedent to vacation benefits.” 437 F.2d at 154. In Ewart v. Wrought Washer Mfg. Co., 477 F.2d 128, 129 (7 Cir. 1973), the Seventh Circuit upheld a veteran’s vacation claim, but suggested that a different result might follow if the vacation rights were “purely additional compensation for services actually rendered.” Similarly, in Hollman v. Pratt & Whitney Aircraft, 435 F.2d 983, 988-989 (5 Cir. 1970), the court made it clear that vacation rights would be granted to veterans only if “they would automatically accrue . . . but for induction.” See also Tuttle v. U. S. Plywood Corp., 293 F.Supp. 401 (D.Or. 1968); Connett v. Automatic Electric Co., 323 F.Supp. 1373 (N.D.Ill.1971); Fees v. Bethlehem Steel Corp., 335 F. Supp. 487 (W.D.Pa.1971).2
In any event, the “paid vacation” cases are distinguishable from the case at *596bar. In virtually all- of those cases, the “work requirement” prerequisite to being granted vacation rights was expressed in terms of a minimum number of days on the job.3 Such a requirement is close to the requirement, as in Eagar, that the employees be “on the payroll” for a specified period prior to the vacation or holiday in order to be entitled to paid time off. In this case, however, the work requirement amounted to much more than a requirement that the employee be technically on the payroll. The entire operation of the compensation plan depended upon a rough equivalence between the employer’s contribution for employee hours worked and the credits earned by the employee for working those hours. The work requirement was no sham; on the contrary, it was central to the operation of the severance benefit scheme.
In analyzing employee benefits of other kinds, courts have uniformly inquired whether the benefits are awarded merely for tenure, or are intended as compensation for acquired expertise or work actually performed. It is only when an employer has provided automatic promotions or pay increases to his employees on the basis of length of service rather than work that the courts have held the employer must restore the veteran at a pay or job level that he would have attained if he had continued in the company’s employment during the period of his military service. Hatton v. Tabard Press Corp., 406 F.2d 593 (2 Cir. 1969) ; Power v. Northern Illinois Gas Co., 388 F.2d 427 (7 Cir. 1968); Wienberg v. United States, 425 F.2d 1244 (Ct.Cl. 1970); Wood v. Southern Pac. Co., 447 F.2d 486 (9 Cir. 1971). Courts have used the same analysis for absence allowance credits, Bradley v. General Motors Corp., 283 F.Supp. 481 (E.D.Mo. 1968); pension eligibility, Litwicki v. PPG Indus., 84 L.R.R.M. 2538 W.L.Pa. Sept. 19, 1973); and general welfare benefits, Gentile v. United States Trucking Corp., 355 F.Supp. 960 (S.D.N.Y. 1973). See Haggard, Veterans’ Reemployment Rights and the “Escalator Principle,” 51 B.U.L.Rev. 571 (1971). The decision here seems counter to the strong current of authority.
Finally, the majority relies on the “escalator” metaphor, which has been employed extensively in construing the “seniority, status and pay” language of § 9(b). This principle is that if the passage of time would automatically have elevated the employee to a higher level, the veteran is entitled to assume that level upon his return; in Mr. Justice Douglas’ language, the veteran “does not step back on the seniority escalator at the point he stepped off. He steps back on at the precise point he would have occupied had he kept his position continuously during the war.” Fishgold v. Sullivan Drydock & Repair Corp., 328 U.S. 275, 284-285, 66 S.Ct. 1105, 1111, 90 L.Ed. 1230 (1946). But when the employer or the union in good faith conditions benefits on performance rather than mere tenure, it is not required to place the veteran in a position he could only have obtained through his own work as an employee. The escalator metaphor does not fit such cases; rather the employer should not be required to put the veteran in a position he could have obtained only by climbing up the stairs.
I would reverse the judgment of the district court and direct it to dismiss the complaint.

. The operation of the severance pay plan poses further difficulties to the majority’s conclusion which it appears to overlook. Unlike Accardi, this case involves a payment made by the union, not the employer. The collective bargaining agreement binds the employer only to pay 20 cents per hour up to 40 hours per week into the union Retirement Fund. The Fund, wholly a union plan, then provides severance payments out of the income from the employer’s contributions. While I agree that employers generally should not be permitted to subvert the statute by delegating all fringe benefit payments to the union, this case presents some troubling problems in this regard. The employer’s only duty under the statute is to restore the employee to a position of “like seniority, status, and pay.” If the collective bargaining agreement had fixed employees’ wages at a rate 20 cents per hour higher than here, and the union had increased its dues by the same amount, putting the extra 20 cents into the Retirement Fund, I would not anticipate that the employer would be liable for any deprivation of seniority benefits for returning veterans. The case here does not seem significantly different. The employer’s payments into the Fund are clearly based on work actually done, not on seniority, and under the circumstances of this case, he should not be required either to make payments into the fund for hours the employee did not work, or to make payments that the employee claims are due him out of the union’s own fund. However, since I conclude that neither the employer’s payments nor the union’s benefit plan are based on seniority, I do not find it necessary to reach the difficult question of when § 9(b) applies to union obligations stemming from, or related to a collective bargaining agreement.

. The Eighth Circuit, in Morton v. Gulf, Mobile & Ohio Railroad Co., 405 F.2d 415 (8 Cir. 1969), and the Sixth Circuit in Edwards v. Clinchfield Railroad Co., 408 F.2d 5 (6 Cir. 1969), aff’g 278 F.Supp. 751 (E.D. Tenn.1967), appear to be to the contrary. See also Saleck v. Great Northern Ry., 277 F.Supp. 936 (D.Minn.1967) ; Barry v. Smith, 285 F.Supp. 801 (D.Mass.1968) ; cf. Messina v. Consolidated Freightways Corp., 315 F. Supp. 340 (W.D.N.Y.1970).
The majority cites the Ninth Circuit’s brief opinion in Locaynia v. American Airlines, Inc., 457 F.2d 1253 (9 Cir.), cert, denied, 409 U.S. 982, 93 S.Ct. 317, 34 L.Ed.2d 246 (1972), as undercutting the work requirements test for vacation benefits. I do not read that opinion so broadly. The vacation plan at issue in Locaynia premised eligibility on periods of “continuous service” with the company, much like the plan in Eagar. The court directed its attention to the “narrow *596issue” of whether “this vacation pay [was] a perquisite of seniority.” 457 F.2d at 1255 (emphasis added). Nothing in the opinion indicates that the court would hold that a veteran was entitled to vacation pay if the plan in question contained a liona fide work requirement. A district court in the same circuit has recently read Loeaynia as limited to vacation plans not including a work requirement. Young v. Southern Pacific Trans. Co., 84 L.R.R.M. 2546 (C.D.Cal. Sept. 19, 1973).

. The only post-Bagar “paid vaction” case I have been able to find in which there was a work requirement expressed in total number of hours of compensated service is Tuttle v. tl. S. Plywood Corp., supra, 293 F.Supp. 401. The court there held that the work requirement took the vacation benefit out of the scope of § 9(b).