Court Opinion

ID: 9477397
Source: CourtListenerOpinion
Date Created: 2023-08-05 06:22:49.38787+00
Date Added: 2024-06-11T17:45:51.849084
License: Public Domain

HUTCHINSON, Circuit Judge,
concurring.
I concur in the judgment of the Court but write separately to disassociate myself from any suggestion in the Court’s opinion that the only means available to an employer, seeking to defend a discrimination charge against its benefit plan, is to demonstrate “cost justification” pursuant to 29 C.F.R. § 820.120(d)(1).1 The regulations offer one defense to the employer. However, an employer who does not proffer data demonstrating “cost justification” may still be entitled to a jury’s determination as to whether his benefits plan is a “subterfuge to evade the purposes of [the ADEA].” 29 U.S.C.A. § 623(f)(2) (West 1985). Accord*1495ing to the Supreme Court in United Air Lines, Inc. v. McMann, 434 U.S. 192, 203, 98 S.Ct. 444, 450, 54 L.Ed.2d 402 (1977), the term subterfuge in § 623(f)(2) means “a scheme, plan, stratagem, or artifice of evasion.”
Unfortunately, the legislative history to the ADEA offers little insight into the limits of the § 623(f)(2) defense. Comment, Interpreting Section 4(f)(2) of the ADEA: Does Anyone Have a “Plan”?, 135 U.Pa.L.Rev. 1055, 1055 (1987). In McMann, the Supreme Court chose to apply the “ordinary” definition to the term subterfuge in § 623(f)(2). McMann, 434 U.S. at 203, 98 S.Ct. at 450. Subterfuge, according to the McMann Court, requires some showing of artifice. Id. To my mind, this examination calls for scrutiny of the employer’s subjective intent. In other words, an employer may be able to invoke the § 623(f)(2) defense upon a showing that it sought, in good faith, to comply with the objectives of the ADEA. Since the statute contemplates such a good faith defense, I would allow Mt. Lebanon on remand the opportunity to elicit facts demonstrating its good faith. The Court’s emphasis on the objective criterion of 29 C.F.R. § 820.120(d)(1) unduly restricts Mt. Lebanon’s ability to defend the charge of discrimination.
It is the role of an administrative agency to execute legislative policy; neither agencies nor courts are free to rewrite acts of Congress. Williamson Shaft Contracting Co. v. Phillips, 794 F.2d 865, 869 (3d Cir.1986). The Court’s focus on cost considerations, pursuant to the regulations, connotes an emphasis on objective factors rather than the subjective analysis suggested in § 623(f)(2). While evidence demonstrating compliance with the objective factors is probative on the issue of the employer’s good faith, the inquiry does not end there. In the absence of objective data, the employer should nevertheless be able to demonstrate its subjective good faith.
This approach is consistent with that of the Second Circuit. In Cipriano v. Board of Education, 785 F.2d 51, 58 (2d Cir.1986), the Court stated that the regulations:
seem to put a fairly heavy burden on the employer to justify any age-based distinctions in employee benefit plans on the basis of “age-related cost justifications.” While we would not wish to be understood as endorsing every detail of the regulations, we cannot simply disregard them. All that we now decide is that even in the case of voluntary early retirement plans the employer ... must come up with some evidence that the plan is not a subterfuge to evade the purposes of the ADEA by showing a legitimate business reason for structuring the plan as it did.
Admittedly, the decision in Cipriano is limited to a voluntary early retirement plan. However, the Court’s reluctance to afford the regulations the force of law is clear. See also Potenze v. New York Shipping Ass’n, 804 F.2d 235, 238 (2d Cir.1986) (both intent of employer and regulations relevant on subterfuge issue), cert. denied, — U.S. —, 107 S.Ct. 1955, 95 L.Ed.2d 528 (1987); Cook v. Pan American World Airways, Inc., 647 F.Supp. 816, 825 (S.D.N.Y.1986) (showing of legitimate business reason sufficient to show seniority system not subterfuge), aff'd per curiam, 817 F.2d 1030 (2d Cir.), cert. denied, — U.S. —, 108 S.Ct. 259, 98 L.Ed.2d 217 (1987).
On the limited record there is conflicting evidence on the issue of whether Mt. Lebanon was acting in good faith when it sought to provide disability benefits to its employees. On remand, it should be given a chance, in the absence of objective data demonstrating “cost justification,” to persuade a jury that it was acting in good faith when it sought the advice of its insurers and its counsel on how to comply with the ADEA. I believe the final determination as to whether Mt. Lebanon’s MEIT plan is a subterfuge to avoid the objectives of the ADEA is more properly left to a local jury than a Washington regulator. Therefore, I would permit the District Court to submit to a jury the question of whether Mt. Lebanon adopted its varied benefit plans as a “scheme, plan, stratagem, or artifice of evasion” of the ADEA.

. These cost justification regulations now appear at 29 C.F.R. § 1625.10 (1987). See Opinion of the Court, at n. 8.