Petition for Writ of Certiorari — Westinghouse Electric Corp. v. Equal Employment Opportunity Commission

Office - Supreme Court, U.

83-1779. FILED

No.

APR 30 1994

CLERK

ALEXANDER L. STEYVAS,

IN THE

Supreme Court of the United States

OCTOBER TERM, 1983

>

WESTINGHOUSE ELECTRIC CORPORA.IION,

Petitioner,

~—V¥5.——

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

THOMAS L. MORRISSEY,

744 Broad Street

Newark, New Jersey 07102

(201) 622-7711

Counsel for Petitioner

Westinghouse Electric Corporation

Of Counsel:

CARPENTER, BENNETT & MORRISSEY

Attorneys for Petitioner

744 Broad Street

Newark, New Jersey 07102

ROSEMARY A. HALL,

On the Petition.

QUESTIONS PRESENTED

1. Whether Section 4(f)(2) of the Age Discrimination in

Employment Act of 1967, 29 U.S.C. § 623(f)(2), which pro-

vides that it shall not be a violation of the Act to “observe the

terms of . . . any bona fide employee benefit plan such as a

retirement, pension, or insurance plan”, is limited to plans in

which age is a direct cost factor.

2. Whether this Court’s decision in Delaware State College

v. Ricks, 449 U.S. 250 (1980), mandates the conclusion that the

limitations period with respect to an allegedly discriminatory

denial of layoff benefits commences when the employee is told

the benefits are denied, or when the employee ceases employ-

ment and would have received the benefits if eligible therefor,

as the Third Circuit held.

PARTIES TO THE PROCEEDING

Petitioner:

Westinghouse Electric Corporation*

Respondent:

Equal Employment Opportunity Commission

, Pursuant to Rule 28.1 of the Rules of Court, the following is a list

naming all parent companies, subsidiaries (except wholly owned sub-

sidiaries), and affiliates of petitioner Westinghouse Electric Corpora-

tion:

Ateliers de Constructions Electriques de Charleroi, S.A.;

Compagnie des Dispositifs Semiconducteurs Westinghouse (CDSQ);

Electrocontroles Villares, Ltda.;

Electromar Industria Electrica Brasileira, S.A.;

Electromar Nordeste, S.A.;

Ercole Marelli & Company, S.p.A.;

Galileo Argentina C.1.S.A.;

Galileo Uruguaya, S.A.;

Living & Learning (Cambridge), Ltd.;

Mecanica Pesada, S.A.;

Mitsubishi Nuclear Fuel Co., Ltd.;

Motores Electricos de Juarez S.A. de C.V.;

Westinghouse Electric—MK Limited;

Ottermill Products Limited;

Schneider S.A.;

Tyree Industries Limited;

Tyree-Power Construction Limited;

Vektron, S.A.;

Cable TV General, Inc.;

El Paso Cablevision, Inc.;

Filmation Associates;

Focus Cable of Oakland, Inc.;

Gross Point Cable, Inc.;

Group W Cable of Lorain County, Inc.;

Group W Cable of North Central Chicago, Inc.;

Group W Cable of North West C\icago, Inc.;

Group W Cable of St. Paul, Inc.;

Kaiser Teleprompter of Hawaii, Inc.;

Piedmont Cablevision, Inc.;

Southwest Video Corp. (d/b/a Group W Cable);

Telcom Cablevision, Inc.;

Teleprompter of Columbia Heights/Hilltop, Inc.;

Teleprompter of St. Bernard, Inc. (d/b/a Group W Cable);

Teleprompter of Worcester, Inc.;

Bayou Cablevision Company;

Bridgeport Community Antenna TV Co.;

Saw Mill River Cablevision, Inc.;

Teleprompter of Avon Lake, Inc.;

Teleprompter of Denver, Inc.;

Teleprompter of Kentucky, Inc.;

Teleprompter of Milwaukee, Inc.;

Teleprompter of Sacramento, Inc.:;

Teleprompter of St. Paul, Inc.;

Teleprompter of Sheffield Lake;

Westinghouse Canada, Inc.;

Transformadores de Distribucion Trade, S.A.;

Westinghouse Electro Metalurgicas C.A.;

Industrias Electronicas, S.A.;

CMW Sistemas, Ltda. (CMWS);

CMW Equipamentos, Ltda.;

Industry Services Company of Saudi Arabia, Ltd. (ISOCOSA);

Westinghouse, S.A. (WESA);

Westinghouse Proyectos Electricos, S.A. (WEPESA);

Westinghouse Asia Controls Corp.;

CD SW Ireland Limited;

Westinghouse Electric Supply Company of Saudi Arabia

(WESCOCA);

IEM S.A.;

Wexico Systems and Services, Ltd.;

China Industry Services Co., Ltd.;

Transformadores TPL S.A.:

Metzenauer & Jung Gmbh;

Electro-Fanal S.A.;

Cemac Westinghouse Pty. Ltd.;

Westinghouse (Jamaica) Ltd..

TABLE OF CONTENTS

GRE a eae CRIME OR 6c cbs ceed ce ie deasenee

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ow Es Sere TTT eee ree Ee eT eee ere ee

STATEMENT OF JURISDICTION..................

aPC ee oko bbe k sh Caner Keneevaeeey es

STATEMENT OF THE CASE

A.

a a a el i gh Se oo

x: NOI on isc kc darw sce waineceeeeees

REASONS FOR GRANTING THE WRIT

I.

The definition of “employee benefit plan” as util-

ized in Section 4(f)(2) of the Age Discrimination in

Employment Act presents an important question

of broad application warranting review by this

Court; the restrictive definition adopted by the

Third Circuit is contrary to the statute’s plain

language, the legislative intent, and prior adminis-

trative interpretations; it will cause widespread

disruption of established employee benefit plans

and will impose large and unintended retroactive

liability upon numerous employers.............

The Third Circuit’s opinion that the limitations

period with regard to an allegedly discriminatory

denial of layoff benefits does not commence when

the employee is told the benefit is denied, but

PAGE

rather, when the employee ceases employment, is

in conflict with this Court’s decision in Delaware

State College v. Ricks, 449 U.S. 250 (1980)......

ee Er err rere eee re rr rer Tree

APPENDIX:

A.

Opinion of the United States Court of Appeals for

Se See EE ova Scan clcsacidapeeneubeanns

Memorandum of the United States District Court

for the District of New Jersey, dated March 17,

SE ahis £6 8S RN eee teen fe

Opinion of the United States District Court for

the District of New Jersey, dated July 29, 1982 ..

Memorandum of the United States District Court

for the District of New Jersey, dated November 1,

POE Sie ik Gack eu caves ceseees Lekus ae Raas SOR

. Order of the United States District Court for the

District of New Jersey, dated August 5, 1982....

Order of the United States District Court for the

District of New Jersey, dated November 1, 1982

. Judgment of the United States Court of Appeals

for the Third Circuit, dated December 29, 1983..

. Order of the United States Court of Appeals for

the Third Circuit denying petition for rehearing,

CHORE SOMUNTY BE THe nk win 0h ccepaewasesees

PAGE

12

17

la

26a

28a

62a

Vi

TABLE OF AUTHORITIES

Cases Cited PAGE

Abramson v. University of Hawaii, 594 F.2d 202 (9th

eg, REE EL OEE Oe Lee a res ee ene ea ere 13, 14

Alessi v. Raybestos-Manhattan, Inc., 451 U.S. 504

Bi Ee Le re st eg ere ee te ere 12

American Tobacco Co. v. Pattesoon, 436 U.S. 63 (1982) 7,9

Brennan v. Taft Broadcasting Co., 500 F.2d 212 (Sth Cir.

Bronze Shields, Inc. v. New Jersey Department of Civil

Service, 667 F.2d 1074 (3d Cir. 1981), cert. denied, 458

SP CE <i va to's oe Ve ease aad s 15, 16

Chardon v. Fernandez, 454 U.S. 6 (1981) ............ 15

Delaware State College v. Ricks, 449 U.S. 250 (1980) ....i, v,

6, 12, 13

EEOC v. Borden’s, Inc., 724 F.2d 1390 (9th Cir. 1984) 7

EEOC vy. Westinghouse Electric Corporation, 725 F.2d

Bee Se NR ae Me is arte ce daee dee ee eeala l

Paris v. Profit Sharing Plan, 637 F.2d 357 (Sth C’~.),

COE... GREE, SG FAD. BOO CIPO k ok vce ckaseeesccs 14

Price v. Litton Business Systems, Inc., 694 F.2d 963 (4th

Ce INN os Nake Cé waa RAR OER 2 aU A EOS 15

Reiherzer v. Shannon, 581 F.2d 1266 (7th Cir. 1978) ... 14

United Airlines, Inc. v. Evans, 431 U.S. 553 (1977)....15, 16

Vil

PAGE

Statutes Cited

Age Discrimination in Employment Act Amendments of

1978, Pub.L. 95-256, § 2(a), 92 Stat. 189........... 2

Age Discrimination in Employment Act of 1967, as

amended:

Sections 2 to 17, 29 U.S.C. §§ 621 to 634 ........ 2

Soctene 0a). 29 USA. SGEMON. ik cic ccs cacscess 5

Section 4(f)(2), 29 U.S.C. § 623(f)(2)............ passim

Civil Rights Act of 1870, 42 U.S.C. § 1981 ........... 13

Civil Rights Act of 1964, Title VII, as amended, 42

OS See ee ren rr eee 13

Employee Retirement Income Security Act of 1974, as

amended,

Pe Oe SE Oe OE nck ct teeketorueenseue’s 8

Ee ere ee 8

es eS hae UR eave kien seerwens 8

Fair Labor Standards Act of 1938, as amended:

oe Be ee. Be aoe os 6

ey Be Se ae ET cv en scs. . ooeoeuees 6

Labor Management Relations Act, 1947, as amended:

roe oe GS ere ee ree ee 8

Br a PE he he cee kesbauebad hee eaes 8

yp a Bs ee er er eee 2

Welfare and Pension Plan Disclosure Act, 1958, as

amended (repealed 1974):

I FL ere re er rere rer 8

Fk ee BL rer reree rere Terres 8

Vill

PAGE

Other Authorities

113 Come. Rec. 34,740 (ec. 4, PGT)... ww ccc eee eeean 10, 12

133 Come. Rec. 36, 740 Cec. 4, THGT)... 2 one ncencces 10

House Report No. 805, 90th Cong. Ist Sess., reprinted

in 1967 U.S. Code Cong. & Admin. News 2213 ..... 9

Senate Report No. 95-493, 95th Cong., 2d Sess., re-

printed in 1978 U.S. Code Cong. & Admin. News 504 1]

United States Department of Labor Interpretative Bul-

letin (1983):

ria RE ON Pre eeTeT TTT err eee Teer 10

rope Sf ee | fee ree ee rere errs 10

United States Department of Labor Wage Hour Opinion

gk, rane yee a ae ee ee na 11

IN THE

Supreme Court of the United States

OCTOBER TERM, 1983

—_>

WESTINGHOUSE ELECTRIC CORPORATION,

Petitioner,

—a

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION,

Respondent.

>

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

Petitioner, Westinghouse Electric Corporation [hereinafter

referred to as “Westinghouse”], prays that a writ of certiorari

issue to review the judgment and opinion of the United States

Court of Appeals for the Third Circuit in this proceeding.

Opinions Below

The opinion of the court of appeals reversing the Order of

the district court is reported at 725 F.2d 211 (3d Cir. 1983). It

appears in Appendix A to this Petition.

The memorandum, opinion and supplemental memorandum

of the United States District Court for the District of New

Jersey are not reported. They appear in Appendices B, C, and

D to this Petition.

STATEMENT OF JURISDICTION

The judgment of the court of appe>'* was entered on

December 29, 1983 (Appendix G). A timely petition for re-

hearing and rehearing en banc was filed; it was denied on

January 31, 1984 (Appendix H). This petition is filed within 90

days thereof.

The jurisdiction of this Court is invoked pursuant to 28

U.S.C. § 1254(1).

STATUTE INVOLVED

The following section of the Age Discrimination in Employ-

ment Act of 1967, 29 U.S.C. §§ 621 to 634 [hereinafter

referred to as the “ADEA”], is involved in this case:

Section 4(f)(2), 29 U.S.C. § 623(f)(2):

(f) It shall not be unlawful for an employer, employ-

ment agency, or labor organization—

= * * *

(2) to observe the terms of a bona fide seniority system

or any bona fide employee benefit plan such as a retire-

ment, pension, or insurance plan, which is not a subter-

fuge to evade the purposes of this chapter, except that no

such employee benefit plan snall excuse the failure to hire

any individual, and no such seniority sytem or employee

benefit plan shall require or permit the involuntary retire-

ment of any individual specified by section 631(a) of this

title because of the age of such individual.'

l At the time relevant to the instant action, the final clause of Section

4(f(2), prohibiting involuntary retirement, was not in effect. That

restriction was added by Pub.L. 95-256, § 2(a), April 6, 1978, 92 Stat.

189.

STATEMENT OF THE CASE

A. Facts.

In early 1977, Westinghouse closed its plant in Belleville,

New Jersey, and laid off all of its employees there. Employees

were provided benefits in accordance with the terms of the

Westinghouse Electric Corporation Pension Plan [hereinafter

referred to as the “Pension Plan”] and the Pension and

Insurance Agreement between Westinghouse and the Interna-

tional Union of Electrical Radio and Machine Workers, AFL-

CIO-CLC, dated July 12, 1976 [hereinafter referred to as the

“Pension and Insurance Agreement”]. Both were the result of

collective bargaining.”

The portions of the plans here at issue provided, in essence,

‘hat employees eligible for early retirement pension benefits

under the Pension Plan were not eligible for “Layoff Income

and Benefits” [hereinafter sometimes referred to as “LIB”]

under the Pension and Insurance Agreement. Article VI, Sec-

tion I(a) of the Pension and Insurance Agreement defined an

employee eligible fer LIB-as follows:

An Eligible Employe, as defined below, will receive

Layoff Income and Benefits in accordance with one or

more of Options (a), (b), and (c), listed below, from a

Total Maximum Sum available to him which is equal to

one (1) ‘Week’s Pay’ for each full year of his service with

the Company. An Eligible Employe is an employe with

two (2) or more full years of such service who is not

entitled to early retirement, as specified in the Westing-

house Pension Plan, and is not on disability or leave of

absence, who is laid off through no fault of his own for

2 The Pension and Insurance Agreement was negotiated directly as a

part of the parties’ collective bargaining agreement, and adoption and

maintenance of the Pension Plan was required by the terms of the

Pension and Insurance Agreement.

4

lack of work occasioned by reasons associated with the

business (such as changed customer ability and willingness

to buy as reflected in adjusted production requirements,

changed manufacturing processes, product discontinu-

ance or plant closing), and who has not been recalled to

work [Emphasis added.]

The Pension Plan, in turn, provided for three types of Early

Retirement. The first was available to employees age 60 and

above, with 10 or more years of credited service. The second

was available to employees laid off after reaching age 59 but

before reaching age 60, with at least ten, but not more than 30

years of credited service. The third was available to employees

laid off as a result of a location closedown after reaching age

55 but before reaching age 60, with ten or more years of

credited service.’

Through this interaction of the Pension Plan’s early retire-

ment provisions and the Pension and Insurance Agreement’s

LIB provisions, laid ofi 2mployees with sufficient years of

credited service were insured of receiving one form of income

continuation—either LIB or pension—but were prohibited

from receiving both. Because the early retirement pensions and

LIB were designed to serve the same purpose of income

continuation and insurance against lay-off, receipt of both was

considered “double dipping.”

The LIB benefit provided by the Pension and Insurance

Agreement is not a simple severance pay benefit. It is available

3 Both the LIB and Pension Plans were in effect prior to enactment of

the ADEA. The policy of denying LIB to employees eligible for early

retirement was instituted in 1960 and was continued in the 1966

Pension and Insurance Agreement. The applicable provisions of that

agreement were continued in the 1976 Pension and Insurance Agree-

ment, in effect at the times relevant herein. The early retirement

provision of the 1966 and 1976 Pension Plans also remained essentially

the same. The sole amendment was the lowering of the permissive early

retirement age for employees laid off a result of a location closedown,

from 60 to 55 years of age.

5

to employees on lay-off in a variety of circumstances and

forms, including a lump sum upon a layoff expected to last

more than six months, and income extension payments which

are integrated with government unemployment insurance, con-

tractual sickness and disability benefits, workers’ compensa-

tion, retraining allowances, and temporary disability laws .*

B. The Proceedings Below.

On April 14, 1977, a Westinghouse employee laid off as a

result of the Belleville plant closing filed an administrative

complaint of age discrimination with the United States Depart-

ment of Labor. He alleged that he had been improperly denied

Layoff Income and Benefits because of his eligibility for

Special Early Retirement Upon a Location Closedown, and

that he was legally entitled to both.

On March 28, 1980, the Equal Employment Opportunity

Commission [hereinafter referred to as the “EEOC”] filed a

complaint in the United States District Court for the District of

New Jersey. It alleged thet Westinghouse had violated Section

4(a) of the ADEA, 29 U.S.C. § 623(a), “by its failure to

provide severance pay to terminated employees aged 55 and

older who have ten years of service with the Defendant and

who are eligible for retirement benefits.” The prayer for relic

sought a permanent injunction and the payment of “severance

pay” and liquidated damages to the employee who had filed

the administrative charge, as well as to all other similarly

situated employees. An amended complaint, filed nearly a year

later on February 28, 1981, was identical but for the addition

of the names of 64 other employees alleged to have been

similarly affected.

On cross-motions for summary judgment, the district court

granted summary judgment in favor of Westinghouse. The

court held (1) that the Westinghouse Pension Plan and the

4 An extensive and detailed description of the LIB benefit is included

in the district court opinion, Appendix C at 43-51.

6

Pension and Insurance Agreement are bona fide employee

benefit plans within the meaning of Section 4(f)(2), and that

Westinghouse’s observance of their terms was, therefore, not a

violation of the ADEA; (2) that, in any event, the denial of

LIB to employees eligible for early retirement did not consti-

tute intentional age discrimination; and (3) that the EEOC’s

claims under 29 U.S.C. § 216(c) and § 217 were barred by the

statute of limitations.

The Third Circuit reversed and remanded. It held that the

Section 4(f)(2) bona fide employee benefit plan exception was

inapplicable because the Pension Plan and Pension and Insur-

ance Agreement were severable, and the portion of the Pension

and Insurance Agreement which provided for LIB was not an

“employee benefit plan” within the meaning of that Section. A

plan providing employee benefits is not an “employee benefit

plan” within the intendment of Section 4(f)(2), the Third

Circuit ruled, unless age is a direct cost factor in the calcula-

tion of benefits thereunder.

The Third Circuit also reversed the district court’s holding

that, under Delaware State College v. Ricks, 449 U.S. 250

(1980), the limitations period on each employee’s claim com-

menced when he was told, in anticipation of layoff, that he

would not receive LIB. The court found Ricks distinguishable

on the stated grounds that (1) the denial of LIB to various

employees constituted a “continuing violation”; and (2) that

because the employees’ right to receive LIB payments would

not have accrued until after their layoffs, their causes of action

for alleged discriminatory denial of same did not accrue until

that time.

REASONS FOR GRANTING THE WRIT

POINT I.

THE DEFINITION OF “EMPLOYEE BENEFIT PLAN” AS

UTILIZED IN SECTION 4(f)(2) OF THE AGE DIS-

CRIMINATION IN EMPLOYMENT ACT PRESENTS AN

IMPORTANT QUESTION OF BROAD APPLICATION

WARRANTING REVIEW BY THIS COURT; THE RE-

STRICTIVE DEFINITION ADOPTED BY THE THIRD

CIRCUIT IS CONTRARY TO THE STATUTE’S PLAIN

LANGUAGE, THE LEGISLATIVE INTENT, AND PRIOR

ADMINISTRATIVE INTERPRETATIONS; IT WILL

CAUSE WIDESPREAD DISRUPTION OF ESTABLISHED

EMPLOYEE BENEFIT PLANS AND WILL IMPOSE

LARGE AND UNINTENDED RETROACTIVE LIABILITY

UPON NUMEROUS EMPLOYERS.

Section 4(f)(2) of the ADEA provides that it shall not be a

violation of that Act to observe the terms of a “bona fide

employee benefit plan, such as a pension, insurance, of retire-

ment plan, which is not a subterfuge to evade the purposes of

the Act.” The Third Circuit decision herein holds, with vir-

tually no analysis or explanation, that as used in § 4(f)(2),

“employee benefit plan” is limited to plans in which age is a

direct cost factor. Petitioner respectfully submits that this

holding, adopted by the Ninth Circuit in EEOC v. Borden’s,

Inc., 724 F.2d 1390 (9th Cir. 1984), is contrary to the statute’s

plain language, the legislative history, and even prior adminis-

trative interpretations. It is judicial ratification of unauthor-

ized administrative legislation, which will cause widespread

disruption of established employee benefit plans and which will

impose significant and unintended retroactive liability.

As this Court stated in American Tobacco Co. v. Patterson,

456 U.S. 63, 68 (1982), “in all cases involving statutory

construction, ‘our starting point must be the language em-

ployed by Congress’, and we must assume ‘that the legislative

purpose is expressed by the ordinary meaning of the words

used’. (citations omitted). The statutory language here at issue

is clear and thus falls within this rule, but it was not applied as

written. Section 4(f)(2) exempts “an employee benefit plan,

such as a retirement, pension or insurance plan.” It does not

state that it applies only to employee benefit plans in which age

is a direct cost factor, as the court of appeals held.

Nor does the common meaning of “employee benefit plan”

Suggest the age/cost limitation imposed by the court of ap-

peals. The Emgioyee Retirement Income Security Act of 1974,

29 U.S.C. §§1001 to 1081, defines an employee benefit plan as

“any plan, fund, or program. . . for the purpose of providing

for its participants or their beneficiaries, through the purchase

of insurance or otherwise (A) medical, surgical, or hospital

care or benefits, or benefits in the event of sickness, accident,

disability, death or unemployment, or vacation benefits

... .” 29 U.S.C. § 1003(1); see 29 U.S.C. § 1003(3).° The

Labor Management Relations Act, 1947, 29 U.S.C. §§ 141 to

187, similarly defines an employee benefit plan as a program

for “medical or hospital care, pensions for retirement or death

of employees, compensation for injuries or illness resulting

from occupational activity or insurance to provide any of the

foregoing, or unemployment benefits or life insurance, disabil-

ity and sickness insurance, or accident insurance.” 29 U.S.C.

§ 186(c)(5).

In short, the common meaning of the language utilized by

Congress neither supports nor suggests the Third Circuit’s

conclusion that a plan providing welfare or pension benefits to

employees is not an “employee benefit plan” unless age is a

direct cost factor in the calculation of benefits thereunder.

5 The predecessor Welfare and Pension Plans Disclosure Act, 1958, 29

U.S.C. §§ 301 to 309, defined an “employee welfare benefit plan” as

“any plan, fund, or program. . . for the purpose of providing for its

participants or their beneficiaries, through the purpose of insurance or

otherwise, medical, surgical, or hospital care or benefits, or benefits in

the event of sickness, accident, disability, death, or unemployment.” 29

U.S.C. § 302(a)(1).

9

Nor does the descriptive phrase utilized by Congress, “such

as a retirement, pension, or insurance plan,” support the Third

Circuit’s age/cost restriction. Although age is actuarially sig-

nificant in many pension plans and some insurance plans, it is

not significant in all such plans. It was irrelevant in the profit

sharing plan in Brennan v. Taft Broadcasting Co., 500 F.2d 212

(Sth Cir. 1974), and is irrelevant in all individual account and

defined contribution pension plans. For this reason, the

descriptive phrase “such as a retirement, pension or insurance

plan” cannot properly be read as though it were a proviso,

“provided that age is a direct cost factor.” Had Congress

intended such a limitation—which is not reasonably inferable

from the common meaning of “employee benefit plan,” “re-

tirement plan,” “insurance plan,” or “pension plan” —it would

have included it. It is not for the Third Circuit or the EEOC to

create such a limitation for Congress.

Because the language of the statute is clear, it should be

conclusive under the rule of American Tobacco Co. v. Patter-

son, supra, making examination of the legislative history and

policy considerations unnecessary. However, if these additional

factors are considered, they serve only to reinforce the conclu-

sion that Congress intended precisely what it said in Section

4(f)(2): to exempt a// employee benefit plans from scrutiny

under the ADEA. The House Report on the bill as enacted

described the exception as follows:

It is important to note that [Section 4(f)(2)] applies to

new and existing employee benefit plans, and to both the

establishment and maintenance of such plans. This excep-

tion serves to emphasize the primary purpose of the

bill—hiring of older workers—by permitting employment

without necessarily including such workers in employee

benefit plans. The specific exemption was an amendment

to the original bill, is considered vita [sic] to the legisla-

tion, and was favorably received by the witnesses at the

hearings.

House Report No. 805, 90th Cong., Ist Sess., reprinted in 1967

U.S. Code Cong. & Admin. News 2213, 2217. This expansive

10

view of the exemption is reiterated throughout the legislative

history. Congressman Reid of New York emphasized that “the

bill takes into consideration the problems and interests of

employers . .. It also takes account of the problems of

employers in the field of pension and other benefit plans. The

bill would permit the hiring of older workers without requiring

that they necessarily be included in all employee benefit plans.”

113 Cong. Record 34,746 (Dec. 4, 1967) (emphasis added).

Congressman Perkins stated it succinctly: “Exceptions are

provided in order not to disrupt employee benefit programs,

seniority systems and the like.” 113 Cong. Rec. 34,740 (Dec. 4,

1967). Nowhere in the debates or in the reports accompanying

enactment of the ADEA is there even the slightest suggestion

that an employee benefit plan is not an “cmployee benefit

plan” under Section 4(f)(2) unless age is a direct cost factor in

the calculation of benefits thereunder.

Not even administrative interpretations provide uniform

support for the EEOC’s and the Third Circuit’s age/cost

restriction. A United States Department of Labor Interpretive

Bulletin, 29 C.F.R. § 860.120, sets forth detailed restrictions on

the definition of an employee benefit plan which require,

among other things, that the cost of benefits for all employees

be equal, regardless of age. The preface to the Bulletin justifies

this interpretation as follows: “The legislative history of [Sec-

tion 4(f)(2)] indicates that its purpose is to permit age-based

reductions in employee benefit plans where such reductions are

justified by significant cost considerations.” 29 C.F.R.

§ 860.120(a)(1). It is submitted that this statement is inaccurate

and that the administrative interpretation is, therefore, invalid.

Throughout the course of this litigation, the EEOC has been

unable to identify even a single statement in the legislative

history of the ADEA which suggests that Congress intended

exemption under Section 4(f)(2) to be limited to plans which

complied with a detailed cost equality formula such as that set

forth in the Interpretive Bulletin. Such a scheme, in fact, is

directly contrary to Congress’ statement that the purpose of

11

the exemption was to encourage the hiring of older workers

without necessarily including them in employee benefit plans.

Obviously, there can be no cost equality in that situation,

inasmuch as the cost of no benefits will never equal the cost of

any benefit.

Moreover, this outright exclusion of older workers from

benefit plans was specifically endorsed by the Department of

Labor, even while its cost-equality interpretation was in effect.

In 1978, then-Assistant Secretary of Labor for Employment

Standards Donald Ellisburg responding to questions by Sena-

tors Javits and Williams, stated that increasing the protected

age group to 70 would require an employer neither to credit

years of service beyond the plan’s normal retirement age nor to

pay the actuarial equivalent of normal retirement benefits to

employees who chose to work beyond their plan’s normal

retirement age. Senate Report No. 95-493, 95th Cong., 2d

Sess., reprinted in 1978 U.S. Code Cong. & Admin. News,

516, 518-19. In the same year, Wage-Hour Opinion Letter 451

was issued, holding a practice virtually identical to that in-

volved herein to be valid.

For these reasons, the Fifth Circuit correctly held in Brennan

v. Taft Broadcasting Co., 500 F.2d 212, 217 (Sth Cir. 1974),

that “[t]he primary difficulty with [the cost equality standard]

is that it attempts to use legislative history to override the

unambiguous language of the statute” (emphasis in original).°

In sum, Westinghouse respectfully submits that the Third

Circuit’s holding that “employee benefit plan”, as used in

Section 4(f)(2), is limited to plans in which age is a direct cost

factor is in error because it is in conflict with the unambiguous

language of the statute and clear legislative intent. West-

inghouse further submits that this decision is as important as

its impact is broad. Although the question of what constitutes

6 As discussed above, Westinghouse submits that the legislative history

does not support the EEOC’s interpretation.

12

an employee benefit plan arose in connection with an inte-

grated unemployment/retirement program in the case at bar,’

the Third Circuit’s opinion is not so limited. It excludes from

Section 4(f)(2) not just unemployment programs, but also all

health insurance in which costs are not age-based, all profit-

sharing retirement programs, and all defined contribution

retirement programs of any other nature. This new restriction,

not apparent on the face of the statute, will disrupt and require

the revamping of benefit plans covering hundreds of thousands

of employees. Even more important, because the restriction

has been imposed judicially, as an interpretation of an existing

Statute, the required revisions carry with them the potential of

three years’ retroactive liability. Surely, this was not what

Congress had in mind when it promised that Section 4(f)(2)

would assure employers that the ADEA would “not disrupt

employee benefit programs, seniority systems and the like.”

113 Cong. Rec. 34,740 (Dec. 4, 1967).

POINT II.

THE THIRD CIRCUIT’S OPINION THAT THE LIMITA-

TIONS PERIOD WITH REGARD TO AN ALLEGEDLY

DISCRIMINATORY DENIAL OF LAYOFF BENEFITS

DOES NOT COMMENCE WHEN THE EMPLOYEE IS

TOLD THE BENEFIT IS DENIED, BUT RATHER, WHEN

THE EMPLOYEE CEASES EMPLOYMENT, IS IN CON-

FLICT WITH THIS COURT’S DECISION IN DELAWARE

STATE COLLEGE v. RICKS, 449 U.S. 250 (1980).

The Third Circuit reversed the district court’s ruling that this

action is barred by the statute of limitations, holding that the

lower court erroneously interpreted and applied this Court’s

decision in Delaware State College v. Ricks, 449 U.S. 250

(1980). It is respectfully submitted that the grounds relied upon

7 Integrated benefit packages like that involved in the instant action

are not uncommon. In Alessi v. Raybestos-Manhattan, Inc., 451 U.S.

504 (1981), for example, this Court considered two corporate benefit

plans which integrated, inter alia, workers’ compensation benefits and

pensions, and held that this integration did not violate ERISA.

13

by the Third Circuit to distinguish and limit Ricks are not

valid, and that the effect of its opinion is to reinstate the rule

of its decision in Ricks, which decision was previously reversed

by this Court.

The plaintiff in Ricks alleged that he had been unlawfully

denied tenure in violation of 42 U.S.C. § 1981 and Title VII of

the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e, et seq. He

was advised that he had been formally denied tenure in March

1984. In June 1974, he was offered a “terminal” one-year

contract to expire in June 1975, and in April 1975, he filed an

administrative complaint with the EEOC.

The district court dismissed the action as untimely. Noting

that the only discrimination alleged was the denial of tenure, it

held that the limitations period began to run by June 26, 1974,

when plaintiff was advised that he would be offered a one-year

terminal contract.

The Third Circuit reversed the district court, in an opinion

by Judge Higginbotham. Although recognizing that the dis-

crimination alleged was the denial of tenure, the court none-

theless held that the limitations period did not begin to run

until the terminal contract expired and the plaintiff stopped

working. Three reasons for this ruling were articulated: (1) The

college could have changed its decision denying tenure, /d. at

712; (2) employees should not be required to institute litigation

while still working, because the litigation process will divert

attention from fulfillment of job duties, id. at 712; and (3)

there was a continuing discriminatory process from advice of

denial of tenure to actual termination of employment. /d. at

713.

This Court reversed. Because the alleged discriminatory act

was the denial of tenure, it reasoned, the limitations period

commenced when the tenure decision was made and communi-

cated to Ricks. 449 U.S. at 258. The Court rejected plaintiff’s

contention that the limitations period did not commence until

he felt the effects of the alleged discrimination (i.e., when his

employment terminated), quoting Abramson v. University of

14

Hawaii, 594 F.2d 202, 209 (9th Cir. 1979): “The proper focus is

upon the time of the discriminatory acts, not upon the time at

which the consequences of the acts become most painful.” 449

U.S. at 258.

It is respectfully submitted that this decision compels the

conclusion that the limitation period in the case at bar com-

menced as to each individual employee on the date he was told

that he would not receive LIB. Because it was the denial of LIB

which was complained of—not the termination of employ-

ment—the statute of limitations began to run with respect to

each employee on the date he was counselled by Westinghouse

and told that he would receive pension benefits but not LIB.

The analysis utilized by the Third Circuit to support its

contrary conclusion is in error.

The Third Circuit concluded that the “denial” of LIB

occured on the date the plant closed, because the employees

did not have enforceable claims for such until that time

(Appendix A at 14). However, the two pension cases cited in its

opinion do not support that conclusion. In Paris v. Profit

Sharing Plan, 637 F.2d 357, 360-61 (Sth Cir.), cert. denied, 454

U.S. 836 (1981), the Fifth Circuit held that the plaintiffs’

ERISA action accrued not when the subject plan was adopted,

but when the plaintiffs’ applications for benefits were denied.

“A cause of action accrues,” the court held, “when the events

upon which it is based occurred.” 637 F.2d at 361. In Reiherzer

v. Shannon, 581 F.2d 1266, 1271 (7th Cir. 1978), the Seventh

Circuit held that an action for benefits under ERISA accrued

“at the time the trustees of the pension plan deny an applica-

tion for benefits.” Neither decision holds, as the Third Circuit

did in the case at bar, that an employee who has been told he

has been denied the right to receive pension or other benefits

payable uporf the termination of employment has no cause of

action therefor until the actual termination of employment.

Nor has any other post-Ricks appellate decision held, as the

court below did, that a claim for denial of an employment

benefit does not accrue until the time the employee would have

ea 7

“St ieee

we eS ee

15

received the benefit but for the unlawful denial. That is

precisely the rule rejected by this Court in Ricks. In Ricks, the

plaintiff’s claim for denial of tenure accrued on the date he

was advised thereof, not on the date a grant of tenure would

have become effective.* in Chardon v. Fernandez, 454 U.S. 6

(1981), the plaintiffs’ claims for termination of employment

accrued on the dates they were advised that their employment

would be terminated, not on the later dates their employment

actually ended. In Price v. Litton Business Systems, Inc., 694

F.2d 963 (4th Cir. 1982), the plaintiff’s claim for termination

accrued on the date he was told he would be terminated, not

on the later date he stopped working or the even later date his

technical status as an employee terminated. “The filing period

runs from the time at which the employee is informed of the

allegedly discriminatory employment decision, regardless of

when the effects of that decision come to fruition.” 694 F.2d at

965,

In sum, the date of the plant closing herein was irrelevant to

the limitations question, because no discrimination was alleged

to have occurred at that time. Westinghouse presented an

uncontroverted affidavit in the district court setting forth the

dates on which the employees were told they would receive

pensions but not LIB. Under all of the above-cited cases, those

are the dates on which the limitations period as to each

employee’s claim began to run.

The Third Circuit’s conclusion that there was a “continuing”

violation is similarly in error, and in conflict with its own

decision in Bronze Shields, Inc. v. New Jersey Department of

Civil Service, 667 F.2d 1074 (3d Cir. 1981), cert. denied, 458

U.S. 1122 (1982), as well as this Court’s decision in United

Airlines, Inc. v. Evans, 431 U.S. 553 (1977).

8 Although the Third Circuit stated that “In Ricks, the professor was

eligible for tenure at the time he received notice of its denial,”

Appendix A at 14, there is nothing in any of the Ricks decisions to

Suggest that had Ricks been granted tenure, it would have been

effective immediately instead of at the start of the next academic term.

16

In Bronze Shields, the Third Circuit heid that the continued

use of discriminatory eligibility lists in hiring and promotion

did not in itself constitute a continuing violation. It distin-

guished that case in this action, however, stating that here,

unlike there, there were specific instances of discriminatory

conduct, i.e., the denial of LIB to each of the 65 employees

named in the Amended Complaint. Yet, the panel failed to

explain why the limitations period for each of those denials did

not run from the date the denial was made. Each denial of LIB

was a discrete act; the mere fact that 65 discrete acts occurred

does not make any one of them a continuing violation. The

maternity-leave and seniority policies at issue in United Air-

lines, Inc. v. Evans, 431 U.S. 553 (1977), were broadly applica-

ble to all female employees, yet this Court did not hold that the

existence of other discriminatory applications of that policy

transformed Ms. Evans’ claim into a continuing violation.

In sum, Westinghouse submits that the Third Circuit has

violated, not interpreted, the rule established by this Court in

Ricks. In so holding, it has not only confused the important

questions of limitations, but also has erroneously expanded the

definition of a continuing violation. It is, therefore, respect-

fully requested that this Court grant this petition and reverse

the judgment of the Third Circuit.

———

17

CONCLUSION

For the foregoing reasons, this petition a for writ of cer-

tiorari should be granted.

Respectfully submitted,

THOMAS L. MORRISSEY

744 Broad Street

Newark, New Jersey 0710z

(201) 622-7711

Counsel for Petitioner

CARPENTER, BENNETT & MORRISSEY

Attorneys for Petitioner.

ROSEMARY A. HALL,

On the Petition.

APPENDIX

la

APPENDIX A

Opinion of the United States Court of Appeals,

dated December 29, 1983

(As Amended for Clerical Corrections by Order

entered January 20, 1984)

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 83-5008

oe

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION,

Appellant

—V.—

WESTINGHOUSE ELECTRIC CORPORATION,

Appellee

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR

THE DISTRICT OF NEW JERSEY

(D.C. Civil No. 80-00853)

ee

Argued September 13, 1983

Before:

WEIS, HIGGINBOTHAM and SLOVITER,

Circuit Judges.

(Opinion Filed: December 29, 1983)

++

2a

DAVID L. SLATE

General Counsel

PHILIP B. SKLOVER

Associate General Counsel

VELLA M. FINK

Assistant General Counsel

COLLEEN M. O’CONNOR

SUSAN ELIZABETH REES (Argued)

Equal Employment Opportunity Commission

2401 E Street, N.W.

Washington, DC 20506

Attorneys for Appellant

THOMAS L. MORRISSEY

ROSEMARY A. HALL (Argued)

Carpenter, Bennett & Morrissey

744 Broad Street

Newark, NJ 07102

Attorneys for Appellee

aoe

OPINION OF THE COURT

A. LEON HIGGINBOTHAM, JR., Circuit Judge.

Plaintiff-appellant, Equal Employment Opportunity Com-

mission (“EEOC” or “the Commission”), appeals an order of

the United States District Court for the District of New Jersey

granting summary judgment to defendant-appellee, West-

inghouse Electric Corporation (“Westinghouse”). Appellant

brings this action on behalf of 65 employees and contends that

Westinghouse violated the Age Discrimination in Employment

Act (“ADEA” or “the Act”), 29 U.S.C. §§ 621-634 (1976), by

denying Layoff Income and Benefits to its employees aged 55

and older whose jobs were terminated by a plant closing.

Appellant argues that such denial was improperly based on the

employees’ entitlement to early retirement benefits.

3a

Viewing the record in the light most favorable to the appel-

lant, we are asked to decide three issues: First, whether this

action is time-barred under ADEA; second, assuming it is

timely, whether the district court held correctly that reasonable

factors other than age supported the denial of Layoff Income

and Benefits to employees entitled to early retirement pension

benefits; and third, whether Westinghouse’s actions were in

observance of the terms of a bona fide employee benefit plan

and therefore excluded from ADEA coverage.

We find that the district court erred in disposing of this case

by granting summary judgment. Therefore, we will reverse the

order granting summary judgment and we will remand this

case to the district court for trial.

S.

On April 14, 1977, Paul Meola, a Westinghouse employee,

filed an administrative complaint with the United States De-

partment of Labor challenging Westinghouse’s denial of Lay-

off Income and Benefits (“LIB”) under the Pension and

Insurance Agreement (“Pension and Insurance Agreement”).

Meola argued that his eligibility for “Special Early Retire-

ment” under the Westinghouse Electric Corporation Pension

Plan (“Pension Plan”) was an improper reason for denying

him LIB benefits. Before the dispute could be resolved by the

Department of Labor, however, Congress transferred enforce-

ment authority to the EEOC,' which initated this action below

on behalf of Paul Meola and other “similarly situated” em-

ployees on March 28, 1980. The EEOC later amended its

complaint on February 28, 1981 to add the names of 64

additional employees as injured parties in this suit.

All of these employees worked at the Westinghouse plant in

Belleville, New Jersey when it closed on April 1, 1977. West-

inghouse provided monetary benefits under the LIB Plan to

“eligible” employees who were “laid off through no fault of

l Reorg. Plan No. 1 of 1978, 3 C.F.R. 321 (1978), reprinted in 5

U.S.C.A. app. at 150 (West Supp. 1979), and in 92 Stat. 3781 (1978).

4a

[their] own for lack of work occasioned by reasons associated

with the business,” such as a plant closing. Appendix (“App.”)

at 23. The LIB Plan defines an “eligible” employee as follows:

An Eligible Employe is an employe with two (2) or

more full years of such service who is not entitled to early

retirement, as specified in the Westinghouse Pension Plan,

and is not on disability or leave of absence, who is laid off

through no fault of his own for lack of work occasioned

by reasons associated with the business (such as. . . [a]

plant closing), and who has not been recalled to work.

(App. at 251).

The LIB Plan permits eligible employees te choose between

two forms of peyment—lump-sum or weekly payments. Spe-

cifically, the Plan’s lump-sum option provides:

(a) Lump sum Payment up to Sixty (60) Days

Within sixty (60) days after a layoff which in Manage-

ment’s opinion will exceed six (6) months in duration, an

Eligible Employe may permanently sever his relationship

with the Company and may relinquish recall rights and

service credits for any purpose (except such rights as may

exist under the Pension Plan) and may thereupon receive

the Total Maximum Sum available to him, together with

vacation pay and any other sums due him, in a Lump

Sum Payment. If such employe has vested rights under

the Westinghouse Pension Plan, he may elect not to

withdraw his pension contributions, if any.

(App. at 252) (emphasis added). By electing weekly payments,

on the other hand, an employee neither severs his relationship

with Westinghouse nor risks his recall rights. (App. at 254).

Westinghouse operated this LIB Plan under the Pension and

Insurance Agreement which is part of the collective bargaining

agreement. (App. at 251-254).

Under this same collective bargaining agreement, Westing-

house must also maintain a pension plan. The pension plan in

effect at the time of the Belleville Plant closing was a recently

amended version of the 1966 Pension Plan which delineated

— ne Se

Sa

four categories of retirement—“normal retirement,” “early

retirement,” “deferred retirement” and “selected retirement.”

(App. at 175-176). For the purposes of this appeal, we will

focus on the “early retirement” and “selected retirement”

provisions.

Two “early retirement” options were available. An employee

with 10 or more years of service could retire on the first day of

the month following his 60th birthday. An employee with 10 or

more years of service who was /aid off after reaching his 59th

birthday, but before reaching his 60th birthday, who had not

returned to work, could retire on the first day of the month

following his 60*h birthday, provided that he had not elected to

receive a lump-sum payment related to the layoff. Finally,

under “selected retirement,” an employee with 30 or more

years of service could retire on the first day of any month after

his 62nd birthday and prior to his normal retirement date.

(App. at 175-78).

The early retirement and selected retirement provisions of

this Pension Plan were amended on August 1, 1976 to provide

that an employee with either more than 10 years of service, or

more than 30 years of service who is laid off as a result of plant

closing, after reaching his 55th birthday and before attaining

his 60th birthday, could retire so long as he had not received a

lump-sum payment occasioned by the lay off and had not

returned to work. (App. at 260, 276-277).

Under Westinghouse’s interpretation of the LIB Plan and

the Pension Plan, to be “eligible” for LIB, an employee must

not be “entitled” to early retirement as defined in the Pension

Plan. Thus, between January 12, 1977 and March 17, 1977,

Westinghouse “counseled” 65 employees who were 55 years or

older that they were ineligible for LIB because they were

“entitled” to early retirement. (App. at 51-53). Accordingly,

when the Belleville, New Jersey Plant closed on April 1, 1977

Westinghouse summarily placed these employees on early re-

tirement and denied them LIB benefits.

6a

Il.

EEOC maintains that Westinghouse’s policy of excluding

employees 55 years or older from LIB payments viclated

Section 4(a) of the ADEA.’ 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 enforce-

ment of the eligibility provision of the LIB Plan insofar as it

results in the denial of LIB to any employee because of isis

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 limita-

tions 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).

2 Section 4(a) proscribes age discrimination in employment. The

pertinent portion of the statute provides:

(a) It shall be unlawful for an employer—

(1) to fail or refuse to hire or to discharge any individual or

otherwise discriminate against any individual with respect to his

compensation, terms, conditions, or privileges of employment,

because of such individual’s age;

(2) to limit, segregate, or classify his employees in any way

which would deprive or tend to deprive any individual of

employment opportunities or otherwise adversely affect his sta-

tus as an employee, because of such individual’s age; or

(3) to reduce the wage rate of any employee in order to

comply with this chapter.

29 U.S.C. § 623(a).

Se ee ees

7a

Section 4(f)(1) permits an employer to differentiate among

employees on the basis of age if “age is a bona fide occupa-

tional qualification reasonably necessary to the normal opera-

tion 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) al _ws 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 insur-

ance 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.

The district court granted Westinghouse’s motion for sum-

mary judgment on several grounds. The court concluded that

this action was time-barred. Alternatively, the court held that,

even if timely, Westinghouse’s practices regarding the denial of

LIB to older workers were excused on the basis that (1) any

differences in consequences were based on reasonable factors

other than age and (2) that Westinghouse had acted in observ-

ance of the terms cf a bona fide employee benefit plan which

was not a subterfuge to evade tie purposes of the Act. (App.

at 65-94).

Ill.

The principles governing review of the grant or denial of a

motion for summary judgment are well settled. Rule 56(c) of

the Federal Rules of Civil Procedure provides that summary

judgment is appropriate only where “there is no genuine issue

as to any material fact and the moving party is entitled to a

judgment as a matter of law.” Fed. R. Civ. P. 56(c).

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 (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

8a

victory below; therefore, we must accept as true the EEOC’s

properly plead factual allegations. Bishop v. Wood, 426 U.S.

341, 348 (1976); Mahler v. United S:ates 306 F.2d 713, 715 (3d

Cir.), cert. denied, 371 U.S. 923 (1962). Moreover, we must

draw all reasonable inferences against Westinghouse. EEOC v.

Home Insurance Company, 672 F.2d 252, 257 (2d Cir 1982).

By reason of the district court’s dismissal of the cornplaint,

we must review each of the court’s alternative findings and

holdings. The district court’s decision was no model of clarity.

The court wrote three separate memorandum opinions, and in

the two subsequent opinions, it repudiated the holdings made

in the earliest opinion. While the court’s rationale was not

always clear, the result was always the same. In each instance

the court concluded that these 65 employees had no viable

claim. (App. at 63, 65, 96).

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 West-

inghouse had valid substantive defenses under either Section

4(f)(1) or 4(f)(2).

IV. TIMELINESS

The district court found this action to be time-barred in

several respects. To determine the significance of the district

court’s ruling on the statute of limitations issues, there are a

number of separate, but interrelated components which must

be considered.

First, critical to all employees is the issue of whether the

district court was correct in finding that, on this record, the

ADEA’s two-year statute of limitations applied rather than the

three-year statute of limitations. As a result of reliance on the

two-year statute of limitations, a// 65 employees were pre-

cluded from relief. This issue involves the presence or absence

of a “willful” violation.

Second, if the district court erred on its ruling as to the

applicability of the two-year statute of limitations and it

should have ruled that on this record a three-year statute of

sik ts eek cane aid. ae S

fe PN eee PP eee ee eee ge SS ee ae ee

9a

limitations applied, we must, nevertheless, make other subsidi-

ary findings to determine whether these employees have a

cause of action even under a three-year statute of limitations.

The district court reasoned that even if the three-year statute of

limitations applied, the cause of action started to accrue as to

each employee on the date when he was “counseled” as to

eligibility for LIB, and that the statute of limitations continued

to run until such time as the employee was specifically named

in a complaint or amended complaint. By this rationale, 64 of

the 65 employees had their claims time-barred. Paul Meola was

the only employee who overcame the barrier, and the other 64

employees had their claims dismissed, inter alia, on statute of

limitations grounds.

In order to decide whether the other 64 employees complied

with the three-year statute of limitations, we must ascertain (a)

when the statute of limitations started to run—at the time of

the counseling between January 12, 1977 and March 16, 1977,

or at the time of the plant closing on April 1, 1977, and (b)

when the statute of limitations was tolled—as to (i) Paul

Meola, the only employee specifically named when the original

complaint was filed on March 28, 1980, and as to (ii) the other

64 employees who were not specifically named until the com-

plaint was amended as of February 28, 1981.

We conclude that the district court erred as a matter of law

on these statute of limitation issues.

A.

Applicable Statutes of Limitations

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) (incorporat-

ing 29 U.S.C. §§ 255, 259).

If we decided to view the evidence and the law in the light

most favorable to Westinghouse, as did the district court, we

would find that this complaint was not filed within two years

SESE

10a

of either the counseling dates or the plant closing. Thus, if the

two-year statute applies, there is no cause of action. Moreover,

the original complaint was filed move than three years after the

completion of the last employee’s counseling on March 16,

1977 but less than three years after the plant closine on April 1,

1977. The amended complaint, which specifically named 64

additional employees, was filed three years and eleven months

after the plant closing. Thus, if the statute of limitations was

noi tolled as to those 64 employees until the date of the filing

of their amended complaint, those employees have no cause of

action because more than three years had elapsed.

A court must find the employees’ claim viable if it finds the

three-year statute of limitations applicable and that that statute

of limitations runs from the date of the closing of the plant to

the initiation of the original complaint, and that when the

initial complaint was filed all persons within the class were

protected regardless of whether they were explicitly named as

aggrieved employees in the complaint. If the latter rationale is

accepted, all of the employees had their claims timely filed.

The district court held that the three-year statute of limita-

tions was not applicable in this case. In its last opinion, the

court concluded in the section entitled “The Statute of Limita-

tions Revisited,” that there was no wiliful violation, and “so

the applicable statute of limitations is the two-year statute

rather than the three-year statute.” (App. at 92). The court

held that Westinghouse did not violate ADEA because the

court interpreted the LIB Plan and the Pension Plan as

allowing an employee the choice of taking LIB payments in a

lump-sum or taking early retirement benefits.’ Because the

employee had a choice, the court concluded that no unlawful

employer practice occurred. Alternatively, the district court

held that the employer’s actions were excused under the Act.

3 Westinghouse disagrees with the court's interpretation that these

Plans gave the employee the option of selecting either LIB payments or early

retirement benefits. In this case, and prior thereto, Westinghouse has always

maintained that an employee has no choice and if eligible, must take the

early retirement plan.

lila

(App. at 89). Since the three-year statute of limitations was

applicable only in cases involving willful violations of ADEA,

and since the lower court found no willful violation was

presented in this case, the court concluded that the three-year

statute did not apply. (App. at 92).

We must first consider whether it was error for the district

court to summarily decide the willfulness issue. Wilfullness is a

question of fact which necessarily raises questions of the

appellees’ state of mind, knowledge, intent and belief regard-

ing the propriety of their actions. Cacchione v. Erie Technolog-

ical 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, willfullness 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.

(1) The Accrual Problem

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

12a

therefore, the limitations period started to run with the “coun-

seling” 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 (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 employees* aged 55 and older received “counsel-

ing” as to ineligibility for LIB payments more than three years

before the EEOC filed the original complaint. We must deter-

mine whether the statute of limitations began to run when the

employees were “counseled” or when they were laid-off be-

cause of the plant closing.

We believe that the district court’s reliance on Ricks is

misplaced. Ricks stands for the proposition that a plaintiff

may not rely on the continuing violation theory to advance

claims about isolated instances of discrimination concluded in

the past, even though the effects persist into the present.

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 com-

menced 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 siatute 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. Dela-

ware State College, 605 F.2d 710, 713 (3d Cir. 1979).

4 There were 3 or 4 employees who may not have been defeated by the

court’s interpretation of the Ricks’ rationale, but they were found to be

barred from relief on other grounds. (App. at 96-99).

SEs ree

l3a

The Supreme Court upheld the disirict 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. The allegations in the

complaint, however, spoke only of the tenure decision as the

discriminatory event and Ricks did not allege any facts suggest-

ing discrimination in his actual discharge. Indeed, it was

simply an inevitable effect of the decision to deny him tenure.

See also Chardon v. Fernandez, 102 S.Ct. 28, 29 (1981)(per

curiam); United Airlines, Inc. v. Evans, 431 U.S. 553, 558

(1977); Bronze Shields, Inc. v. New Jersey Department of Civil

Service, 667 F.2d 1074, 1083 (3d Cir. 1981), cert. denied,

U.S. ___., 102 S.Ct. 3510 (1982).

In the case at bar, EEOC has alleged a continuing dis-

criminatory 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 Depart-

ment 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.

In the present action, the continuing violation is not pre-

mised only on the continued use or maintenance of the policy

at issue here. After the formal promulgation of this policy, the

specific instances of discrimination alleged are the application

l4a

of this policy of denying LIB to each of these individual

employees at the time of the plant closing. These specific

instances occurred when the Belleville plant closed and each of

the 65 employees was denied benefits.

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 (Sth Cir. 1981),

cert. denied, 454 U.S. 836 (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 em-

ployees 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.

Ricks is also distinguishable because the professor received

unequivocal notice that his tenure was denied. Thus again, we

must note the significantly different factual settings of the

Ricks case and the instant matter. In Ricks, the professor was

eligible for tenure at the time he received notice of its denial. In

this case, Westinghouse argues that the “counseling” on the

effects of its eligibility policy constituted notice. This fact is

disputed.

In Ricks, the plaintiff received a written notice on June 26,

1974 that he would be offered a one-year terminal contract that

would expire on June 30, 1975. In the view of the Supreme

Court, with such a notice, there was nothing else he had to do

to ascertain the college’s intentions as to his actual termination

date. Thus, in Ricks, there was precise specificity as to the date

lSa

of termination unlike the instant matter which is intertwined

with uncertainty as to whether the employees were even in-

formed as to when the layoff would actually take place. In

contrast to Ricks, there is no evidence, before this court,

indicating that the Westinghouse employees received any

notice—oral or written—of the actual date when the Belleville,

N.J. plant would be closed. Nor can we expect these employees

to have had some mystical powers of omniscience whereby

they knew the precise date management was to close the plant.

It is conceivable that in February 1977, those employees who

were not privy to management’s secrets might have been under

the impression that the Belleville, N.J. plant would not be

closed for months or even years. Furthermore, the mere

adoption of this controversial policy in and of itself cannot be

considered to constitute notice of the alleged discrimination

because there is an issue as to whether Westinghouse’s policy as

applied actually coincided with the terms of the LIB and

Pension Plans in effect at that time.’

Finally, even assuming an employee did receive notice that

even were he otherwise eligible for LIB, his eligibility for early

retirement made him ineligible for such benefits, an employee

would still not have standing to bring an action until he at least

was eligible to apply for LIB at the time of the plant closing.

The record does not reveal any mechanism for the employees

here to have filed for LIB benefits prior to actual plant closing.

Thus, unlike Ricks, where the plaintiff could have maintained

an action as of the date he was notified of the denial of tenure,

in this case, the employees could not have maintained an action

until denied LIB.

5 The policy was orally communicated and in that regard, vague in its

particulars. Moreover, it was contingent upon certain events, such as the

closing of a plant. The record before this court consists only of a list naming

the employees “counseled.” (App. at 51). At oral argument, Westinghouse

conceded that there is no information as to what these individuals were told

concerning the plant closing, whether they were told that they had a choice

with regard to LIB and early retirement or whether they were informed that

early retirement was mandatory. Therefore, even if the continuing violation

theory were not applied, there is a genuine issue of material fact as to

whether the 65 employees in fact received adequate and unequivocal notice.

l6a

(2) Tolling of the Statute

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

Paul Meola, Jane Doe, Richard Roe, and other similarly

situated employees who were eligible for retirement,

[who] were unlawfully denied severance pay when termi-

nated due to the closing of defendants Belleville, New

Jersey facilities on or about April 1, 1977.

(App. at 5) (emphasis added).

In the view of the district court, the EEOC’s references to

“Jane Doe, Richard Roe and other similarly situated employ-

ees” were insufficient to toll application of the statute of

limitations as to those unnamed employees who constituted the

class of “similaly situated employees.”

Despite the fact that paragraph eight of the original com-

plaint had been amended on February 28, 1981 to note with

specificity the names of these other similarly situated employ-

ees,° the district court held that the statute of limitations was

6 The docket entries note that the amended complaint was filed on

March 3, 1981. (App. at 2). The district court in its memorandum opinion

states that the amended complaint was filed on February 28, 1981 (App. at

98). Paragraph eight of the original complaint was amended to allege as

follows:

8. As a result of the disciplinary practices alleged above, E. Adams,

G. Badan, L.F. Belinc, J.W. Bremmer, A.W. Cafone, A. Caruso, P.

Cosimano, B.J. Decker, J.R. Del Russo, L. Duda, J. Evanocho, RL.

Ferguson, M.J Germek, G. Giangeruso, J. Gil, PJ. Haddick, I.

17a

not tolled as to any employee other than Paul Meola. The

court reasoned that more than three years had elapsed from the

time the other employees were “counseled” about their rights

and the subsequent specific naming of these employees in the

amended complaint.

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 withhold-

ing 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 (Sth 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.

Jenkins, M.E. Klien, S.W. Konkol, V. Korzystko, G. Koski, J.F.

Kozub, PJ. Lyons, J.J. Marx, P. Meola, C. Millard, E. Miller, W.A.

Moskal, C.J. Obruzut, J. Pandolfi, M.M. Pastore, R. Perrone, A.

Pickman, A.F. Pirog, S. Podorski, F.V. Renn, L. Reque, I.T. Reidmil-

ler, G. Sabol, L. Schroeder, J. Smythe, R.O. Sorel, H.R. Stanley, M.

Stecher, F. Stecher, L.M. Stevenson, H. Szorstowski, D. Tyson, E.

VanDuyne, A. VanDuyne, W. Vanderhee, L.M. Vitale, S.F. Vitolo, J.S.

Williams, W. Soloszczak, J. Yuhasz, J. Yurkovich, B. Zietkiewicz, A.

Zigarelli, K. McGinnes, S. Schlatter, E. Smole, L. Schilling, L. Cook,

M. Leeming and other similarly situated employees, who were eligible

for retirement, were unlawfully denied severance pay when terminated

due to the closing of Defendant’s Belleville, New Jersey facilities on or

about April 1, 1977.

(App. at 5).

18a

Consequently, we believe the district court erred in finding

on a summary judgment motion that the present action was

time-barred. Westinghouse has failed to establish that there are

no genuine issues of material facts in dispute. Certainly, the

issue of willfulness is a factual question of critical importance

to deciding the statute of limitations. Additionally, one of

those factual issues is whether adequate notice was given to the

employees at the counseling sessions. Thus, this case should

not have been disposed of by summary judgment unless West-

inghouse’s other defenses are sanctioned by the ADEA.

IV. STATUTORY DEFENSES

We will now consider whether Westinghouse’s actions are

sanctioned under the provisions of the ADEA, even assuming,

as the district court did, that the EEOC is able to make a prima

facie case of age discrimination. As we indicated earlier, if

Westinghouse has a complete defense to the EEOC’s charge of

age discrimination, then a fortiori the issues of timeliness and

willfulness are irrelevant.

The EEOC claims that Westinghouse’s policy on its face

violates Section 4(a) of the ADEA because it subjects older

employees—55 years of age and above—to treatment different

than that afforded younger employees by depriving older

employees of LIB on the basis of age.

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 (1981); Smithers v.

Bailar, 629 F.2d 892, 895 (3d Cir. 1980); Hagelthorn v. Kenne-

cott Corp., 710 F.2d 76, 81 (2d Cir. 1983); EEOC v. Baltimore

and Ohio Railroad Co., 636 F.2d 1107, 1110 (4th Cir. 1980),

cert. denied, 454 U.S. 825 (1981). Westinghouse claims that its

actions are excused under Section 4(f)(1) as based on reason-

able factors other than age. 29 U.S.C. § 623(f)(1). Futhermore,

Westinghouse defends the denial of LIB to those individuals

19a

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).

We must determine whether, viewing the record in the light

most favorable to EEOC, Westinghouse has provided a com-

plete defense to the charge of age discrimination and is,

therefore, entitled to summary judgment as a matter of law.

A.

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:

That event laid off employees of a wide variety of ages,

and with different consequences for employees of the

same age. The differences in consequences are due not to

age but to other factors in the LIB and Pension Plans.

(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 evi-

dence to demonstrate reasonable factors, other than age,

justifying its action. Marshall v. Westinghouse Electric Corp.,

576 F.2d 588, 592 (Sth 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

20a

for our finding that eligibility for early retirement is too closely

related to age to be given credence as a valid justification.’

Because of the close relationship between eligibility for early

retirement and age, the obvious effect of Westinghouse’s prac-

tice 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

statue “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 a case not too dissimilar to the case at bar, the city of

Altoona required the termination of its most senior firemen

who were eligible for pension. Our court, speaking through

Judge Gibbons, said: “The City attempts to justify the instant

involuntary retirements, which plainly are on the basis of age,

because of pension eligibility. It is weil settled, however, that

mere eligibility for a pension is not a defense to a prima facie

case of age discrimination . . . The city’s contention that the

retirements were based on economic considerations is equally

meritless, for such considerations cannot be used to justify age

discrimination.” EEOC vy. City of Altoona, No. 82-5805,

December 13, 1983, typescript at 8-9. In the City of Altoona,

supra, the fire department reduced its staff, while here West-

Fs Examples of the types of justifications deemed excusable under

Section 4(f)(1) include those in the cases of DeLoraine v. MEBA Pension

Trust, 499 F.2d 49 (2d Cir. 1974), cert. denied, 419 U.S. 1009 (1974), and

Bittar v. Air Canada, 512 F.2d 582 (Sth Cir. 1975). In Bittar, which

exemplifies the types of justifications voiced in wrongful discharge cases, the

defendant-employer produced evidence of numerous instances of unsatisfac-

tory job performance. In DeLoraine, 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.

2la

inghouse closed its plant; each employer acted because of

economic considerations, and here, just as in City of Altoona,

such economic “considerations cannot be used to justify age

discrimination.” Jd.

In view of the fact that Westinghouse has articulated no

other factor or justification to serve as a legitimate non-dis-

criminatory 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.

B.

Section 4(f)(2) Defense

Finally, we will consider whether Westinghouse has es-

tablished a defense under Section 4(f)(2). Section 4(f)(2) pro-

vides 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 subter-

fuge to evade the purposes of the ADEA. 29 U.S.C.

§ 623(f)(2).° In establishing a Section 4(f)(2) defense, the bur-

den is on Westinghouse to demonstrate the existence of three

elements: (1) Westinghouse must have been acting in observ-

ance of the terms of (2) a bona fide employee benefit plan (3)

which is not a subterfuge to evade the purposes of the ADEA.

8 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, § 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 employ-

ees 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 Amend-

ments 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 (Sth Cir.

1980); Smart v. Porter Paint Co., 630 F.2d 490, 497 (7th Cir. 1980). We will

do likewise in this instance.

22a

Smart v. Porter Paint Co., 630 F.2d 490, 493 (7th Cir. 1980);

See United Airlines, Inc. v. McMann, 434 U.S. 192 (1977);

Zinger v. Blanchette, 549 F.2d 901 (3d Cir. 1977), cert. denied,

434 U.S. 1008 (1978); Brennan v. Taft Broadcasting, 500 F.2d

212 (Sth 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.”

(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:

It shall not be unlawful for an employer. . . to observe

the terms of . . . any bona fide employee benefit plan

7) 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 (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).

The district court, Westinghouse and the EEOC disagree as to the proper

interpretation of these Plans insofar as the Plans give the eligible employee

the option of rejecting early retirement on a plant closing.

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 iaid 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: 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).

Reale node ap cateateliihe Nettie nth st ome

eaten OAR Stn od we von

23a

such as a retirement, pension, or insurance plan, which is

not a subterfuge to evade the purposes of this Chapter.

29 U.S.C. § 623(f)(2) (emphasis added).

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 insur-

ance” were added in a descriptive sense, not excluding other

kinds of employment benefit plans. Brennan v. Taft Broadcast-

ing 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 thread common to retirement, insurance and pension

plans, but not found in the LIB Plan, is the age-related cost

factor. The district court pointed out quite properly that:

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. Mc-

Mann, 434 U.S. 192 (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, can-

not be achieved without differences that take account of

age. It was in recognition of that basic fact of life and

death that § 623(f)(2) was included in the Act.

(App. at 87) (emphasis added).

In this case, the LIB Plan does not reflect age-related cost

factors. Instead, the LIB Plan simply states that an employee is

eligible for LIB if he has at least two years of service, has been

laid off for a lack of work, and is not entitled to early

retirement benefits under the Pension Plan. (App. at 251). In

24a

order to be eligible for early retirement, an employee must be

at least 55 years of age. Westinghouse thus denied LIB to 65

employees, otherwise eligible for it, because it considered them

entitled to early retirement. Unlike retirement, pension and

insurance benefits which are based upon age-related cost fac-

tors, the benefits derived from this Plan are based solely on an

employee’s length of service—at least twe years—and the

occurrence of a layoff.

We simply can glean no age-related cost factor on the face of

the LIB Plan which justifies Westinghouse’s actions. The

“desirable goals of actuarial soundness and full funding” are

not necessarily advanced by the exclusion of LIB to individuals

qualified for early retirement.

Furthermore, the fact that the LIB Plan is tied to West-

inghouse’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 unre-

lated 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 (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 employ-

ees 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

may not deny an entire class of older employees—those

hired after age fifty—any participation in a fringe benefit

unrelated to a bona fide “retirement, pension, or insur-

ance” plan simply by artificially trying to tie the benefit to

such a plan.

664 F.2d at 1272 n.12 (emphasis added).

In the case at bar, Westinghouse’s Pension Plan is “bona

fide” to the extent that, viewing it alone, it is genuine and

:

-

;

:

.

;

25a

actually pays benefits. United Airlines v. McMann, 434 U.S. 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 interre-

lated in one respect—ineligiblity 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 (9h 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.

V.

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.

For the foregoing reasons, we will reverse the judgment

below and we will remand the case for further proceedings

consistent with this opinion.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

26a

APPENDIX B

Memorandum Opinion of the United States District Court,

dated March 16, 1982

UNITED STATES DISTRICT COURT

Room 411, U.S. Post Office Building

NEWARK, NEW JERSEY 07102

FTS# (8) 341-2517

Vincent P. Biunno (201) 645-2517

Judge (201) 642-2451

MEMORANDUM

Re: EEOC v. Westinghouse Civ 80-853

When the parties last appeared for oral argument, the court

raised the question whether, under a proper interpretation of

the contract, the employees who are the subject of the suit had

an option, at the choice of each, to apply for early retirement

benefits under the provision applicable to a plant closing, or to

take Layoff Income Benefits (LIB), with a lump sum payment

related to length of service.

Such an option would in no way deprive the employee of

vested benefits under the plan, nor could it conceivably

amount to age discrimination since the choice was his to make.

Supplemental briefs on this matter of construction were

requested. They were slow in coming, and a reply has just been

received. The supplemental briefs do not address the question

raised.

On several reviews of the documents involved, none of

which is in dispute, the court is satisfied that their clear and

only construction is that in the circumstances involved, the

subject employees did have that choice, and in no event was

any entitled to early retirement benefits due to a plant closing,

plus a lump sum benefit under the LIB provisions. They could

have one or the other but not both.

-_~-~

eee

etd ett rtktn aie athe

27a

Under these circumstances, the court will grant the motion

by defendant for summary judgment in its favor and deny

plaintiff's motion for partial summary judgment.

If, as may have been the case, the subject employees were

told that they had to take the early retirement and could not

choose the LIB benefits, this was due to an incorrect interpre-

tation of the documents. In that event, nothing can be done in

this case because EEOC, the only plaintiff, has no authority to

sue on behalf of the subject employees for a breach of

contract.

If the employees are represented by a collective bargaining

agent as they seem to be, that representative would need to

take the necessary steps to advance the claim. If not, then each

subject employee could seek his own remedy.

The adjustment would not be difficult to make. The subject

employees need only be given the option now to take the LIB

benefits instead of early retirement. For those who choose not

to exercise it, nothing further would be called for. For any who

choose to exercise it, he would be obliged to repay the install-

ments received under early retirement, in exchange for the LIB

benefit, both to be adjusted for interest at, say, 12% and only

the net amount paid in one direction or the other.

Since considerable time has elapsed since the motions were

argued, the court employs this simplified method to announce

its ruling. A more detailed opinion will be filed as early as time

permits.

Submit order accordingly.

March 16, 1982

s/ Vincent P. Biunno, U.S.D.J.

Original to Clerk

xc: John J. Lokus, Esq.

c/o EEOC, 127 N. Fourth Street, Philadelphia, Pa. 19106

U.S. Attorney

Thomas L. Morrissey, Esq.

28a

APPENDIX C

Opinion of the United States District Court,

dated July 29, 1982

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

Civil 80-853

7

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION,

Plaintiff,

—vsS.—

WESTINGHOUSE ELECTRIC CORPORATION,

Defendant.

Appearances:

Michael J. Connelly, Esq., General Counsel (Washington) by

John J. Lokos, Esq., Trial Attorney (Philadelphia), for

plaintiff.

Carpenter, Bennett & Morrissey, Esq., by Thomas P. Morrissey,

Esq. and Rosemary A. Hall, Esq. (Newark) for defendant.

ae

OPINION

BIUNNO, Senior District Judge.

This is a suit for alleged violation of the Age Discrimination

in Employment Act of 1967 (ADEA), 29 USC § 621, et seq.

ao oceeeesnenenemiietetnenll

a ee

29a

After pretrial discovery, an amended complaint and answer

thereto, and the submission of trial briefs and proposed find-

ings of fact and conclusions of law, EEOC filed a motion for

partial summary judgment (i.e., on the issue of violation) and

Westinghouse responded with a cross-motion for summary

judgment on a number of defenses.

At the initial hearing, the court expressed some reservations

about taking up the issues on the basis of excerpts from

separate but interrelated documents, one being a “Pension and

Insurance Agreement” of 1976, and the other being the West-

inghouse Pension Plan of 1976. It indicated that it would

prefer to study both documents in full, along with the corre-

sponding previous versions of 1966.

It turned out that both documents were interrelated with the

underlying collective bargaining agreement between West-

inghouse and the I.U.E. the exclusive bargaining representa-

tive. The court ended up with two sets of documents, presented

as Joint Exhibits.

Exh. J-1 is the collective bargaining agreement of 1966, and

the Pension and Insurance Agreement negotiated and agreed to

at the same time.

Exh. J-2 is the Westinghouse Pension Plan in full text as of

1966.

Exh. J-3 corresponds to J-1 but is the pair of agreements

negotiated and agreed to in 1976, and was in force when the

alleged violation occurred.

Exh. J-4 corresponds to J-2, but is the full text of the

Westinghouse Pension Plan as it stood as the result of the 1976

negotiations and agreements, and was in force when the

alleged violation occurred.

Both Exh. J-2 and J-4 alsc include a pamphlet summarizing

the main features of the pension plan, but there is no question

in this case that anything other than the full text of the plan is

controlling.

Although the 1976 Pension Plan, in Section 25, reserves to

Westinghouse the right to amend the Plan, to discontinue

contributions or to terminate the Plan (subject to conditions

required to comply with ERISA), this reservation is subordi-

30a

nate to the covenant of Westinghouse, in Art. I, sec. 4(b) of the

collectively bargained Pension and Insurance Agreement, that

it will not discontinue the Pension Plan or make any amend-

ment that would adversely affect the rights thereunder of the

employees, nor suspend or reduce company contributions,

during the term of the Agreement.

Both the original complaint and the amended complaint

allege, in substance, that Westinghouse willfully violated

sec.4(a) of the ADEA, 29 USC § 623(a) by its failure to

provide “severance pay” to terminated employees age 55 and

older who had 10 years service with the Company when it

closed its Belleville, N.J. plant on April 1, 1977 and who were

then eligible for retirement benefits.

The original complaint named a single employee in that

category, and a number of “John Doe” employees similarly

situated. The amended complaint names 65 individual employ-

ees and no “John Does”.

After careful review of the full text of the documents Exh.

J-1 through J-4, the court suggested at a later argument that

the applicable provisions clearly did not allow an employee to

have both Layoff Income and Benefits under Article VI of the

Pension and Insurance Agreement and retirement payments

under the Pension Plan in light of the general layoff due to the

closing of the Belleville plant. It suggested that a correct

reading of the interrelated instruments meant that an employee

over 55, with 10 years service, who was laid off due to the

plant closing, was put to his own choice whether to take early

retirement and begin receiving payments for retirement under

the Pension Plan, or whether to exercise one of the options

under the Layoff Income and Benefit plan, which was to sever

all relationship with the Company, relinquish his recall and

service rights, and take a lump sum payment equal to one

week’s pay for each full year of credited service (less any part

of that total that had been applied to layoff income on some

earlier layoff and not meanwhile repaid or rebuilt).

Aside from the option to sever all relationships and relin-

quish recall and service credits in order to draw a lump sum

3la

payment (which, incidentally is not available for every layoff

but only under specified conditions), the Layoff Income and

Benefit plan is an unemployment benefit plan designed to

supplement unemployment compensation benefits to bring the

combined payment up to 60% of the level of his “week’s pay”

(a defined term), and to continue such payments after unem-

ployment compensation had run out (until the particular em-

ployee’s maximum credit was used up).

The court suggested that if this was the correct reading, there

would be no conceivable ADEA violation because the choice

between one course or the other was the employee’s choice, not

the employer’s. Supplemental briefs were requested based on

that reading.

After the supplemental briefs and responses were in, the

court was of the view that the question it had raised had gone

unanswered, and on March 17, 1982 it filed a brief memoran-

dum to the effect that the suggested reading was the correct

one, that there accordingly could not be an ADEA violation,

and ruled that EEOC’s motion would be denied while the

Westinghouse motion would be granted. It promised a fuller

articulation as soon as the press of other work allowed. No

order was entered at that time.

EEOC then filed a motion to alter or amend the memoran-

dum. This amounted to an application for reconsideration and

reargument, and was timely filed. Further briefs and responses

were submitted by both sides, and further argument heard.

It was evident from that argument that EEOC agreed that

the subject employees could not have both LIB and early

retirement payments at the same time under the facts of this

case. Westinghouse also agreed that an employee could not

have both, but also was of the view that so long as the

employee was eligible to begin receiving payments for early

retirement, he could not exercise the LIB option for a lump

sum payment. It also urged that the court deal with other

defenses pressed to support its motion for summary judgment.

The present opinion is the fuller articulation contemplated

when the earlier brief ruling on one issue was filed. It replaces

32a

that earlier memorandum since some aspects have been made

clearer by the further briefing and argument, and another

review of the file and the exhibits. It also deals with other

defenses raised and argued.

1. Statute of limitations.

The ADEA does not itself spell out the applicable statute of

limitations. Instead, the Congress merely provided, in 29

U.S.C. § 626(e), that “Section[s]6 * * * of the Portal-to-

Portal Act of 1947” 29 U.S.C. § 255 “shall apply to actions

under this Act.”

That embodied statute provides that any action may be

commenced within two years after the cause of action accrued,

and every such action shall be forever barred unless com-

menced within two years after the cause of action accrued,

except that a cause of action arising out of a willful violation

may be commenced within three years after the cause of action

accrued.

This action was commenced when the original complaint was

filed on March 28, 1980 as to the one employee then named.

His situation will be considered first. Since a “willful” viola-

tion is alleged, the 3-year period will be considered first.

The affidavit of John F. Williams, submitted in support of

the Westinghouse motion, shows that Mr. Meola, the only

named employee in the original complaint, was counselled on

February 2, 1977 that he was ineligible for LIB. There is no

affidavit or other fact source to contradict this fact, or to raise

any issue for trial in respect to the date.

That date is more than 3 years before the original complaint

was filed on March 28, 1980, and thus is barred by the longer

statute of limitations set out in 29 USC § 255, so long as it is

the date on which the “cause of action accrued.”

EEOC argues that the cause of action did not accrue until

April 1, 1977 when the Belleville plant closed and Mr. Meola

was laid off and put on early retirement. It says that not until

April 1, 1977 would Mr. Meola have been entitled to be paid

any LIB benefit, and so the complaint was filed within three

years.

es pe tata

33a

There are several difficulties with EEOC’s position. In the

first place, if Mr. Meola were entitled to claim LIB, he would

have had to choose the option for a lump sum payment, in

which case he could not have begun to draw payments on early

retirement, as noted above. In fact, both the complaint and

amended complaint are drawn on the incorrect assumption

that Mr. Meola was entitled both to choose a lump sum

payment and to draw payments for early retirement, which is

not the case. This erroneous assumption began at the start,

when Mr. Meola’s son submitted a charge to the Department

of Labor on April 14, 1977 (this is when administration of

ADEA was in that Department and before reassignment to

EEOC). That charge says, in pertinent part:

“* * * Employees eligible for early retirement apparently

are not receiving severance pay[sic]. * * * On the surface,

this would appear to violate ADEA with regard to

workers who, although receiving pensions, are not paid

severance benefits.” (emphasis added). (Exh. N to EEOC

brief for summary judgment).

Since Mr. Meola was told on February 2, 1977, that he

would be put on early retirement and was ineligible for LIB,

the alleged ADEA violation (if there were one) occurred then

and so the “cause of action” arose then.

The core of the ADEA applicable to this case is the declara-

tion of “unlawful” employer practices, 29 USC § 623(a). This

embraces discrimination “against any individual in respect to

his compensation, terms, conditions, or privileges of employ-

ment” or to “discharge any individual” because of such indi-

vidual’s age.

Thus, what the ADEA forbids is to discriminate because of

age. If there were discrimination here on account of age, it

occurred when Meola was told that he would have early

retirement and was ineligible for LIB. That was on February 2,

1977, more than 3 years before the complaint was filed.

The analysis is the same as that employed by the Supreme

Court in Delaware State College v. Ricks, 449 U.S. 250 (1980),

a case from this Circuit. In that case, which involved a charge

34a

of race discrimination in employment, both under 42 USC

§ 2000e (title VII) and under 42 USC § 1981, Ricks was told on

June 26, 1974 that the college Board of Trustees formally voted

that day to deny him tenure. He remained in employment until

June 30, 1975 when his non-tenured employment ended.

In the case of the Title VII claim, the requirement was that a

complaint be filed within 180 days “after the alleged unlawful

employment practice occurred”. In the case of the § 1981

claim, which was governed by Delaware law, the provision was

that “No action. . . shall be brought after the expiration of 3

years from the accruing of the cause of such action;” 10 Del.C.

§ 8106 (see 605 F.2d at 713).

For both claims, the Supreme Court ruled that the several

periods applicable (180 days and 3 years) ran from the date

Ricks was told of the Board action to deny him tenure, even

though he continued to be employed for more than a year

thereafter as a non-tenured teacher.

There is not, and cannot be, any claim here that Mr. Meola’s

layoff was a discriminatory act or practice in violation of the

ADEA. The plant was closed and all employees were laid off

(except, perhaps a security staff), and they were of all ages.

This is not a case like EEOC v. Baltimore etc. Co., 632 F.2d

1107 (CA 4, 1980). There, two railroads with consolidated

management faced severe financial difficulties as the result of a

nationwide coal strike in 1971. To meet the problem, the

company decided to reduce the size of its work force. First,

they reduced the number of workers subject to collective

bargaining agreements. That step was not challenged in the

case. Next they reduced the number of workers not subject to

collective bargaining agreements, and this was done by selec-

tively terminating 142 employees who were at least 60 years old

with 20 years’ service, or at least 62 years old with 10 years’

service. All of them were qualified for retirement pensions,

and were involuntariJy retired starting in October, 1971. Under

the pension plan, only those who reached 65 were subject to

compulsory retirement. Those eligible to retire earlier were not

compelled to retire so far as the plan was concerned, but it was

35a

shown that such early retirements were compelled as an in-

herent right of management in managing the business, in

managing personnel, a right that the company had “irrespec-

tive of the plans.” Thus, in that case, the company thinned out

its work force by selecting employees according to age.

Nothing of that sort appears in the present case. There is no

dispute that the entire Belleville plant was closed down and all

employees laid off.

Thus, the core of the alleged discriminatory practice is the

denial of LIB, not the layoff. If it violated the Act, that event

occurred, as in Ricks, when Meola was told that he would be

put on early retirement and was not eligible for LIB. If that

was a prohibited practice, the violation occurred and the cause

of action accrued, on that date as it did in Ricks for applica-

tion of the Delaware 3-year statute as well as for the Title VII

claim.

The same result follows for all other employees named in the

Amended Complaint, which was filed March 3, 1981. As the

Williams affidavit shows, and it is in no way controverted,

every one of the named plaintiffs (except two who were not

retired) was told, as Mr. Meola was, that they would be placed

on early retirement, and that they were not eligible for LIB, on

various dates specified, the earliest being January 13, 1977 and

the last ones being on March 16, 1977. All but 3 were so told in

January and February, 1977, and all were so told more than

three years before the original complaint was filed.

Of course, if the 2 year period applies under 29 USC § 255,

the original complaint was more than a year late. However, it is

not necessary to select between the 2 and 3 year periods, which

turns on whether the alleged violation was “willful”, because

the result is the same in either case.

While the complaint alleges willful violations, no evidence in

that regard was submitted on the motions for summary judg-

ment except to the extent that Westinghouse presented proofs

to show there was no unlawful practice at all. If “willful”

violations were to be considered, both for statute of limitations

purposes and for the purpose of claiming liquidated damages,

36a

29 USC § 626(b), such an issue seems to be one for trial rather

than motion. However, the bar of the 3-year statute renders the

issue moot for both purposes.

2. The documents.

A collective bargaining agreement was entered into between

Westinghouse and I.U.E. as of October 1, 1950. It embraces all

matters then negotiated and agreed to between the employer

and the union on a company wide basis for all employees for

whom the Union, or one or another local of the union, is the

certified collective bargaining representatives.

This agreement, which may be regarded as a national agree-

ment for Westinghouse. was evidently worked out by a com-

mittee of 12 on each side. It is retained as the basic, underlying

set of terms and conditions for the entire company, including

such broad matters as strikes, stoppages and lockouts, union

shop provisions (subject to compliance with local laws), dues

checkoff, certain broad aspects of wages (but not wage sched-

ules), hours of work, overtime, holidays and vacations, senior-

ity, leaves of absence, grievance and arbitration, and the like.

Wage schedules are negotiated locally, and other details are

handled by local unions, including the processing of grievances

but arbitration is handled on a national basis by 1.U.E.

The 1950 Agreement is periodically modified by adjustments

negotiated by the committees of 12 on a company wide basis,

and these appear as a “supplement”, such as the 1976 Supple-

ment to the 1950 Agreement, which dealt with certain increases

in rates of pay negotiated for the company as a whole,

including a set of formulas for cost-of-living increases, and the

like.

Changes in provisions of the 1950 Agreement are incorpo-

rated within the body of that document, which is evidently

re-executed at the same time as each Supplement.

The combination of the 1950 Agreement as modified and the

current supplement is followed by an “Appendix” which lists

the location and identity of each local bargaining representa-

tive, and describes the composition of the employees included

37a

in that bargaining unit. For the 1976 documents, there are 41

locals and units listed.

There then follows an Appendix B, listing locations and

representatives at which the “union shop” provisions apply,

and the original effective date of that status (or the date of

certification).

At the time of each national or companywide negotiation

over the 1950 Agreement and its current supplement, there is

negotiated a separate but related document, the “Pension and

Insurance Agreement”, between Westinghouse and I.U.E. The

locals are covered, but this agreement is company-wide with no

provision for local supplements.

The subject deait with embraces employee benefit plans,

both welfare benefit plans and pension benefit plans. These

terms are as defined by the Congress, first in the Welfare and

Pension Plan Disclosure Act of 1958, and then by the Employ-

ment Retirement Security Act of 1974. For the definitions, see

29 USC § 302(1) and (2) (WPPDA) and 29 USC § 1002(1) and

(2) (ERISA). Both definitions include unemployment plans,

such as LIB, under “welfare benefit plans”.

The 1976 Pension and Insurance Agreement by Art. lI,

requires the company to put into effect an “insurance plan”,

Section 2(a) and (b), to make available a “pension plan”,

Section 2 (c) (d) and (e), to make available a “savings plan”,

Section 2(f) and (g), and to put into effect a “personal accident

insurance plan”, a “disability benefit plan”, a “dependent life

insurance plan”, and an “in-hospital indemnity plan”, Section

2(h) through (1). The “insurance plan” evidently includes

coverages for life insurance, accidental death or dismember-

ment, accident and sickness, personal hospital expense, per-

sonal surgical, major medical, hospital expense and the like,

see Art II, Section 3(d).

After provisions dealing with one or another of these plans,

Article VI establishes the Layoff Income and Benefit plan

(LIB) which is the focus of this lawsuit, and which will be

reviewed in some detail later. It is sufficient for the moment to

observe that it is designed as a supplement to unemployment

38a

compensation benefits in the event of layoff for lack of work.

As EEOC insists, it is not a “pension plan’ as that term has

been defined by both WPDA and ERISA, but as EEOC

overlooks, it is clearly a “welfare plan” as defined in both

Statutes.

It is followed by Article VII, dealing with an educational

opportunity program providing tuition and fee benefits for

training courses to maintain or improve skills for the job or for

career development within the company.

There are no doubt other instruments in existence in respect

to the various benefit plans dealt with by the agreement, and a

number ci them are referred to in it. They are not among the

exhibits supplied except for the pension plan as it stood under

the 1966 agreement (Exh. J-2) and as it stood under the 1976

agreement (Exh. J-4).

The pension plan, and the LIB plan expressed in Article VI,

read in the context of all the agreements, contain the provi-

sions mainly to be considered to resolve the issues raised

It should be noted, too, that all these plans and their terms

are the result of collective bargaining. The provisions of the

bargained agreement for the pension plan are especially worth

noting. These are found at Article 1, Section 2 (c) (d) and (e) of

the 1976 Pension Plan and Insurance Agreement.

Paragraph (c) is the agreement of the company to make the

pension plan as negotiated available, but the agreement is

subject to approval of (1) the Board of Directors and (2) the

Commissioner of Internal Revenue.

Paragraph (d) requires that the negotiated pension plan is to

be submitted to the Board within 30 days, and if approved then

to the Commissioner, and if approved it is to take effect.

Paragraph (e) specifies that if the Board fails to approve the

negotiated plan, then under a specified time schedule “the

Company and the Union shall be obligated to meet to negotiate

solely with respect to the subject matter of the Pension Plan

. . .” Alike provision is found in paragraph (g) for the savings

plan, which also is subject to approval by the Board and the

Commissioner. These provisions emphasize the collective bar-

gaining nature of the pension plan.

39a

It should also be observed that there is interplay between the

Pension Plan and other collectively bargained agreements. For

example, Section XII of the 1950 basic collective bargaining

agreement, in dealing with seniority, defines “accumulated

length of service” in terms of the years, months and days

accumulated as “Credited Service under the Westinghouse

Pension Plan”. It also ties in with LIB, by excluding credit for

service “that was relinquished by his election to receive the

Lump Sum Option payment provided under the Layoff In-

come and Benefits Plan”.

Similarly, the LIB plan, in defining an “eligible employee”,

refers to one “who is not entitled to early retirement, as

specified by the Westinghouse Pension Plan”.

Also, the Pension Plan, in Section 2, C-3 and D-2, ties in

with the LIB plan insofar as the making of a Lump-Sum

payment related to length of service solely because of layoff

bars eligibility for early or selected retirement, and ties in with

the basic collective bargaining agreement insofar as the exist-

ence of contractual employment rights at another Company

location, or the offering of employment at another Company

location, bars retirement eligibility.

These, and other interlocking provisions as well as the

recitals at the start of the Pension and Insurance Agreement,

emphasize the fact that the content and terms of the basic

collective bargaining agreement as well as of the Pension and

Insurance Agreement (including the LIB plan) and the various

plans, such as the pension plan, are not unilaterally determined

by the employer but are the consequence of collective bargain-

ing. For that reason, the various interlocking terms are not

only to be read together but are to be afforded the deference

due to such agreements in the interests of labor peace, the

polestar of federal labor law as developed by the federal

courts.

In related contexts the Supreme Court has taken pains to

emphasize the considerable weight to be given to the substan-

tive terms of a collective bargaining agreement. In United Mine

etc. Funds v. Robinson, _. U.S. ____., 71 L Ed 2d 419

40a

(1982), it rejected a challenge to the terms of alterations in

eligibility and benefit levels for health coverage under trusteed

employee benefit plans where those terms were fixed by a

collective bargaining agreement to which the trustees were

obliged to adhere. [Challenge to terms based on alleged viola-

tion of § 302(c) (5) of the Labor Management Relations Act of

1947, 29 U.S.C. § 186(c), which forbids transfers between

employers and employee representatives, with an exception for

payments to a trust fund established by the representative “for

the sole and exclusive benefit of employees”, etc.].

Similarly, in American Tobacco Co. v. Patterson,

US , 71 L Ed 2d 748 (1982), the court rejected a

contention that seniority systems adopted or modified after the

enactment of Title VII of the Civil Rights Act of 1964, 42 USC

§ 2000e, et seq., were not protected by the provisions of § 703

(h) of the Act, 42 USC § 2000e-2(h). It noted that its earlier

rulings in Teamsters v. U.S., 431 U.S. 324 (1977), in Trans

World Airlines v. Hardison, 432 U.S. 63 (1977) and in United

Air Lines v. Evans, 431 U.S. 553 (1977) established that § 703

(h) on its face immunizes all bona fide seniority systems, with

no distinction between those adopted before or after its effec-

tive date. It observed that seniority provisions are universally

included in collective bargaining contracts, and that the collec-

tive bargaining process “lies at the core of our national labor

policy.” It noted that Congress was well aware in 1964 that the

purposes of Title VII inevitably woulc, on occasion, conflict

with the policy favoring minimal supervision by courts and

other governmental agencies over “the substantive terms of

collective bargaining agreements,” and that Congress struck a

balance between those policies in enacting § 703(h). The Court

declined to upset that balance.

3. The pertinent ADEA provisions.

The prohibitory provision of ADEA involved in this case

declares that:

“It shall be unlawful for an employer. . . to discharge

any individual or otherwise discriminate against any indi-

4la

vidual with respect to his compensation, terms, conditions

or privileges of employment, because of such individual’s

age;” 29 USC § 623(a) (1). (1967)

The same section, as part of the definition of forbidden

conduct, also provided that:

“It shall not be unlawful for an employer. . . (1) to take

any action otherwise prohibited . . . where the differen-

tiation is based on reasonable factors other than age; (2)

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 this Act. . .”

29 USC § 623(f) (1967)

It should be observed that at the time (1967), the only

significant federal statute dealing with employee benefit plans

(other than provisions of the Internal Revenue Code dealing

with whether any such plan was “qualified” for income tax

purposes) was The Welfare and Pension Plan Disclosure Act

(1958) (WPPDA), which divided employee benefit plans into

two classes: welfare benefit plans and pension benefit plans.

See 29 USC § 302(1) and (2), repealed. Pension plans were

defined as those providing retirement benefits, including

profit-sharing plans providing benefits at or after retirement.

Welfare plans were defined as those providing medical, surgi-

cal, or hospital care or benefits, or benefits in the event of

sickness, disability, death or unemployment.

WPPDA was merely a reporting and disclosure Act; it did

not purport otherwise to regulate any employee benefit plan.

That change occurred with ERISA, 29 USC § 1001, et seq. PL.

93-406, September 2, 1974. Its definitions are much the same,

see 29 USC § 1002 (1), (2) and (3).

Both the LIB plan and the Westinghouse Pension Plan are

employee benefit plans, the first being a welfare benefit plan

since it provides insurance for unemployment, and the other

being a pension benefit plan. Both are within § 623(f).

The interplay between § 623(a)(1) and § 623(f) was consid-

ered by the Supreme Court of the United States in the first case

42a

involving the Act that came before it, United Air Lines v.

McMann, 434 U.S. 192 (1977).

The majority opinion in that case held that on its face, and

without need to look to legislative history, the Act did not

forbid the involuntary retirement of an employee who reached

his 60th birthday when that requirement was in accordance

with a retirement plan. The plan was regarded as bona fide in

that it actually existed and paid pension benefits, and the court

held it could not be claimed to be a plan adopted as a

“subterfuge” when it had been established in 1941, long before

the 1967 enactment. It rejected any per se rule requiring an

employer to show an economic or business purpose in order to

satisfy the “subterfuge” language of the Act.

Justice Stewart concurred in the judgment on the ground

that since the plan was bona fide, it was not possible for it to

be a subterfuge when adopted long before the 1967 act was

even contemplated, and would address no other questions

discussed in the majority opinion.

Justice White concurred in the judgment and with Justice

Stewart. He differed to the extent that he felt that the question

of “subterfuge” should be examined in terms of the main-

tenance of the plan after the 1968 effective date of the Act. He,

too, found no support for any requirement that the employer

be called upon to show “some economic or business purpose”.

He read the intent to be to exempt all retirement plans—includ-

ing those whose only purpose is to terminate the services of

older workers—as long as the benefits they pay are not so

unreasonably small as to make the “retirements” nothing short

of discharges. He regarded the no-subterfuge requirement as

merely a restatement of the bona fide requirement.

He pointed out that all retirement plans necessarily make

distinctions because of age, and so felt that the subterfuge

language could not have been intended to impose a condition

which almost no retirement plan could meet. He would have

regarded the exception as protecting action taken pursuant to a

retirement plan which is designed to pay substantial benefits,

without regard to its adoption before the Act.

43a

Two members of the Court dissented in an opinion by

Justice Marshall. They regarded the exemption as capable of

supporting two interpretations: one, to allow involuntary re-

tirements (as held by the majority) and two, to allow different

treatment of older employees only with respect to the benefits

paid or available under employee benefit plans, including

pension and retirement plans.

This court, of course, is obliged to follow the law as laid

down by the majority in that case.

4. The LIB and Pension Plans.

The issue in the present case arises out of the fact that

among the various employee benefit plans provided for West-

inghouse employees, there is an insurance plan to supplement

unemployment compensation, and it is interrelated in some

respects with recall rights and service credits (seniority) under

the basic collective bargaining agreement, and with the pension

plan as well.

This insurance plan to supplement unemployment compen-

sation is rather complex and will be reviewed in some detail

later. For present purposes it is sufficient to note that it

establishes a credit, called a “Total Maximum Sum,” for each

employee, equal to one week’s pay (as defined) for each full

year of service with the Company. That credit is made available

for receiving “Layoff Income and Benefits”, according to

which of a number of options is selected by the employee, if he

is “eligible” to receive them.

At the time of the pertinent events here, an “eligible em-

ployee” was defined as an employee

. with two (2) or more full years of such service

. who is not entitled to early retirement, as specified

in the Westinghouse Pension Plan, and

. . . [who] is not on disability or leave of absence

who is laid off through no fault of his own for lack of

work occasioned by reasons associated with the business

(such as

44a

. changed customer ability and willingness to buy as

reflected in adjusted production requirements

. changed manufacturing processes

. product discontinuance or

. plant closing) and

who has not returned to work.

(Art VI, Section 1(a), of the “Pension and Insurance

Agreement” entered into between Westinghouse and the

1.U.E. July 12, 1976, Exh. J-3).

The Westinghouse Pension Plan, which contains both non-

contributory and contributory portions, defines the conditions

of eligibility for retirement and pension at a “normal”, “early”

and “selected” retirement date. References hereafter are to the

Plan, Exh. J-4.

Normal retirement date is the first day of the month follow-

ing the month in which the employee’s 65th birthday occurs.

For example, if the 65th birthday falls on any date in May,

from the Ist to the 31st, the defined normal retirement date is

June Ist. Pension payments begin on that date, and the

employee is considered terminated the day before (May 31st).

Employees so retired receive a pension so long as they were

employed on the day before the retirement date and began

employment before the first day of the month following his

60th birthday. Section 2-A.

The Plan definitions using the first day of a month are

evidently intended to simplify administration and while they

must be used in applying the Plan, they are not pertinent to

any issue here. For easier understanding, the court will merely

refer to specified ages such as age 65 or age 60, with the

understanding that the references to the first day of a month

are being omitted.

Early retirement may occur in several ways.

1. An employee with at least 10 years of credited service may

retire at any time after age 60 and before age 65 on reduced

pension. He must apply for early retirement at least 30 days

4Sa

before the desired date, except that in the event of a layoff, the

30 day requirement is waived. To preserve benefits for a

surviving spouse in the event of death before retirement, a

death after age 50 but before age 65 is treated as an early

retirement at death. Section 2-C-1.

2. If an employee has at least 10 years but less than 30 vears

credited service, and is laid off after age 59 and before age 60,

he is allowed to take early retirement at age 60 on reduced

pension. He must apply before his 60th birthday to have this

option. He is not eligible for this option if (a) he has returned

to regular service before his 60th birthday or (b) he has

received a lump sum payment related to length of service solely

because he was laid off or separated. Section 2-C-2.

3. If an employee has at least 10 years of credited service, and

is laid off as a result of a Location Closedown after age 55 and

before age 60, he is allowed to take early retirement at reduced

pension. He must apply within 60 days after the layoff. He is

not eligible for this option (a) if he has contractual employ-

ment rights at another location or (b) if he is offered employ-

ment at another location or (c) if a lump-sum payment related

to his length of service has been made solely because of the

layoff. An employee who qualifies for early retirement under

2, above, may retire under that provision instead of this one.

Section 2-C-3.

Another form of early retirement is called “Selected Retire-

ment”. There are two versions of this, both limited to employ-

ees having at least 30 years of credited service.

1. An employee with at least 30 years of credited service may

retire anytime after age 58 and before age 65 at a reduced

pension. He must apply for selected retirement at least 30 days

before the desired date, except that in the event of a layoff, the

30 day requirement is waived. To preserve benefits for a

surviving spouse in the event of death before retirement, a

death after 30 years’ service is treated as an early retirement at

death. Section 2-D-1.

46a

2. If an employee has at least 30 years of credited service, and

is laid off as a result of a Location Closedown after age 55 and

before age 60, he is allowed to take selected retirement at a

reduced pension. He must apply for this retirement within 60

days of the layoff. He is not eligible for this option (a) if he has

contractual employment rights at another location, or (b) if he

is offered employment at another location, or (c) if a lump-

sum payment related to his length of service has been solely

because of the layoff see 2-D-2.

There is another provision in the Plan for deferred retire-

ment. This only applies under exceptional circumstances and

alsc depends on a request by the employer to continue in active

service after age 65 and the agreement of the employee to do

so. It is not involved in the present case.

Analyzing the above provisions from another perspective,

they spell out a plan under which:

1. Normal retirement is at age 65, with a pension so long as

employment began not later than age 60.

2. Employees with at least 10 years service may take early

retirement between 60 and 65 at reduced pension. If death

occurs after age 50, benefits for a surviving spouse are pro-

tected.

3. Employees with at least 30 years service may take early

retirement between 58 and 65 at reduced pension. Protection

of benefits for a surviving spouse arises with the 30 years

service even if death is before age 50.

4. Employees with at least 10 years service may take early

retirement at age 60, at reduced pension, but only if laid off

(for any reason) between ages 59 and 60. This option does not

apply if the employee returns to work (after the layoff) before

age 60. It also does not apply if he received a lump sum

payment related to length of service solely because he was laid

off or separated. Notice requirements are waived in case of

layoff.

47a

5. Employees with at least 10 years service who are laid off as

a result of a Location Closedown after age 55 and before age

60 may take retirement at reduced pension. He must apply

within 60 days of the layoff, and the retirement takes effect on

the first day of the month after he applies. Such employees

may not retire under this provision (a) if they have contractual

employment rights at another location; or (b) if they are

offered employment at another location, or (c) if they have

been paid a lump-sum related to length of service solely

because of the layoff.

The issue posed in this case arises out of the bar to early or

selected retirement, otherwise available to an employee be-

tween the ages of 55 and 60, in the event of the payment of a

lump sum related to length of service, solely due to a layoff,

and a corresponding provision in the Pension and Insurance

Agreement controlling eligibility by way of unemployment

insurance supplements. (the LIB plan)

All of the employees on whose behalf EEOC sues were laid

off as the result of a Location Closedown. All are receiving

retirement pension payments, and so all are taken to have been

at least age 55, with at least 10 years’ service at the time and

not to have had contractual employment rights at another

location and not to have been offered employment at another

location.

They did not, however, receive what EEOC calls “severance”

payments or benefits, and it is this item that forms the basis

for the ADEA claim.

In fact, there is no such simple item as “severance” pay-

ments or benefits. Rather, there is a benefit plan to supplement

unemployment insurance, mentioned briefly above, which

must now be examined in some detail. References are to the

Pension and Insurance Agreement, Exh. J-3, mentioned

above.

That agreement is a collectively bargained agreement entered

into by Westinghouse and I.U.E. at the same time as and

collateral to the main collective bargaining agreement that

deals with the usual subjects. It deals with a variety of different

48a

kinds of employee benefits, such as the pension plan (discussed

above), life insurance, accident insurance, hospital insurance, a

savings plan, and the like. Taken together they are all employee

benefit plans, most being welfare benefit plans and one being a

retirement and pension plan, as those terms were defined by

WPPDA, 29 USC § 302 and now by ERISA, 29 USC § 1002.

The plan at issue is a plan for what is called “Layoff Income

and Benefits”, and it is spelled out in Art VI of the Pension

and Insurance Agreement of 1976.

The Layoff Income and Benefit plan applies only when there

is a layoff of an employee

. who has 2 or more full years of service

. who is not entitled to early retirement as specified in

the Westinghouse Pension Plan

. who is not on disability or leave of absence

. who is laid off through no fault of his own for lack

of work, and

. who has not been recalled to work.

An employee who meets these conditions is an “Eligible

Employee” for Layoff Income Benefits (LIB).

He will receive benefits in accordance with stated options,

from a Total Maximum Sum available to him equal to 1 week’s

pay for each full year of his service with the company. The

amount of a “week’s pay” is expressly defined for salaried,

daywork, and hourly paid incentive workers.

The total maximum sum is also affected by prior layoffs and

rehires subject to repayment and rebuilding of the amount

after rehire, but in any event will be no less than 4 weeks’ pay.

In the special case of a layoff which the Company manage-

ment believes will last more than 6 months, an employee

eligible for LIB may elect Option (a) under Section 3. To

exercise that option he must, within 60 days after the layoff,

. permanently sever his relationship with the Com-

pany,

. relinquish recall rights and service rights (except as

may exist under the Pension Plan).

49a

Upon doing so, he will receive the Total Maximum Sum

available to hiin in a Lump Sum Payment (together with

vacation pay and any other sums due him) [Note: It is this

Lump Sum option, if exercised, that EEOC evidently refers to

as “severance pay”.] If he has vested rights under the West-

inghouse Pension Plan, he may elect not to withdraw his

pension contributions, if any.

If the layoff is expected to exceed 6 months and an eligible

employee does not exercise Option (a) within 60 days of the

layoff, or if the layoff is not expected to exceed 6 months, then

the Lump Sum Payment provision in Option (a) is not acti-

vated and is not required to be made. The same is true of

employees laid off who are not eligible employees as defined in

Section l(a), i.e., less than 2 years of Credited Service, or

entitled to early retirement under the Pension Plan.

Where Option (a), if applicable, is not exercised, or where

Option (a) is not applicable, an eligible employee may apply

for weekly benefits under Option (b). Under this option, he is

paid a benefit in an amount sufficient to make up the dif-

ference between what he receives as unemployment compensa-

tion payments and 60% of his week’s pay. If his unemploy-

ment compensation payments run out, then he is paid under

the Plan 60% of his week’s pay, until the Total Maximum Sum

is exhausted, or until {2 months have elapsed since his layoff.

These benefits to supplement unemployment compensation are

subject to various limitations:

. they are not paid for any “waiting week”

. they are not paid for any week in which he is entitled

to payments (a) for accident and sickness benefits,

or (b) for total and permanent disability benefits

(both under the Westinghouse Insurance Plan); or (c)

under any worker’s compensation law; or (d) under

any temporary disability law

. they are not paid for any week in which he is entitled

to weekly retraining allowances under State or fed-

eral law

. they are not paid for any week in which he is not in

fact unemployed

50a

. . they are not paid after age 60 to an employee who

had at least 10 years’ service and was laid off on or

after his 59th birthday.

Under Option (c), if the Company has not offered reemploy-

ment to an eligible employee by the end of | year after layoff,

any balance then remaining from the Total Maximum Sum for

that employee is paid to him provided he was not laid off

within | year of the time he would have become eligible for

early retirement under the Pension Plan.

The number of weeks for which unemployment compensa-

tion is payable has varied from time to time. Assuming that

period as 26 weeks, and assuming the benefits equal 60% of a

week’s pay (so as not to call for any draw on the Total

Maximum Sum during that time), an eligible employee would

need a credit of 15 to 16 week’s pay (representing 15 to 16

years’ service) in order to have the 60% benefit payments last

out the remaining 26 weeks of the year. Of course, if the

unemployment compensation benefits do not reach the 60%

level, some part of the Total Maximum Sum will be applied to

supplemental benefits during those 26 weeks, and something

more than 15 to 16 year’s service, and corresponding weeks’

pay, would be needed to last out the 12 month period.

Reading together the specified terms of the Pension Plan

and of the LIB plan, as they must be because they are

interlocked, the court considers the position of an employee

who is 55 to 59 at layoff to be as follows:

A. If the layoff is expected to last more than 6 months but is

not the result of a Location Closedown, he may exercise

Option (a), sever his relationship, relinquish recall and service

rights, and elect to be paid his Total Maximum Sum as a Lump

Sum Payment.

B. Under the same conditions, he may elect not to sever,

relinquish or draw down a Lump Sum Payment but instead

take Option (b), receiving weekly supplements to unemploy-

ment compensation benefits or extensions after they run out,

until the Total Maximum Sum is used up, and then Option (c).

exercise Option (a). He my exercise Option (b) and, if 12

months go by and he has not reached age 60, may draw any

balance under Option (c).

D. If the layoff is expected to last more than 6 months, and

is the result of a Location Closedown, he will need to decide

within 60 days of the layoff whether to exercise Option (a) by

severing, relinquishing and being paid the Total Maximum

Sum as a Lump Sum Payment, or whether instead to take early

retirement under the Pension Plan, also within the same 60

days.

If he files application for early retirement, then, having been

eligible he becomes entitled to early retirement and by defini-

tion cannot be an “eligible employee” under the LIB plan at

all.

On the other hand, if he files application for the lump sum

Sla

C. If the layoff is not expected to last more than 6 months,

and is not the result of a Location Closedown, he may not

)

)

)

|

payment under Option (a), that fact will disqualify him for

early retirement. The options are mutually exclusive.

The point was raised at argument on several occasions, and

both EEOC and Westinghouse have agreed that the employee

could not receive both the lump sum payment and early

retirement.

This being so, the court fails to see how there can be any

discrimination because of age in violation of ADEA in view of

§ 623(f). Both the LIB plan and the Pension Plan are “em-

ployee benefit plans” as used in that section. The same terms

| were used in WPPDA. also part of Title 29, in 1958 and the

| Congress had to be familiar with them when it enacted ADEA

| in 1967.

| In fact, the filed charge that began the inquiry that led to the

| present suit was filed by the son of an employee over 55, who

was receiving early retirement payments, and complained of

age discrimination on the ground that he did not receive

“severance pay” as well. The charge claimed entitiement to

| both, but there is no entitlement to both. Read as the court has

| read them above, the employee is at best eligible only for one

Dietician canal eeennee

52a

or the other, but not both. The court considers the choice to be

that of the employee, such that by choosing one he cannot

have the other. Since the choice is his to make, no ADEA

charge can be advanced against the employer.

EEOC argues that the reduced monthly pension on early

retirement is a smaller periodic amount than the 60% benefit.

That may be, and it would be unusual if it were not because the

sum available for retirement payments will need to be paid out

over a longer span when early retirement is taken. The ac-

tuarial aspects of annuities, combined with the data in stan-

dard mortality tables, make this inevitable. The same is true of

early retirement at 60 instead of normal retirement at 65, even

if no layoff is involved.

The point that EEOC overlooks is that if the employee

chooses Option (a), which it calls “severance pay”, he can no

longer take early retirement. His interest in the plan is vested,

of course, under ERISA as well as under the Plan, but he

would not be able to draw down retirement payments until age

65. He may not live to 65, and may never draw pension

benefits. Some, if not most, may well feel that it is best to take

the reduced payments for early retirement and be assured of

receiving them for a longer span (whatever that span turns out

to be). Mortality tables reflect the experience of very large

numbers of lives, and provide no assurance that any individual

will in fact live out the experienced span for his age.

Westinghouse concurs in the result, but disagrees with the

court’s construction of the terms of the LIB plan and the

Pension Plan. Its position is that throughout the entire com-

bined history of LIB and the Pension Plan (and both have

existed since well before the enactment of ADEA), they have

been uniformly construed and applied so that an employee

“eligible” for early retirement under the Pension Plan is simply

not an “eligible employee” for LIB. Under this construction

one eligible for early retirement has no choice in case of layofi.

He is put on early retirement, and that fact bars his eligibility

for LIB benefits.

If this be the correct construction, it would need to be on the

basis of other considerations than the language involved, such

53a

as the context and history of the provisions, the practical

construction over the years, the law of the shop, and the like.

It may rest in part on the provisions of Option (c) which do not

allow payout where layoff occurs within | year of when the

employee becomes “eligible” for early retirement.

It is not necessary for the court to say that one or another

construction is the correct one. The 1.U.E., which is the

exclusive bargaining agent for the employees it represents is

not a party, and besides that a disagreement over construction

in this sense is probably a subject for grievance and arbitra-

tion, not for judicial determination under the principles of

federal labor law.

The fact remains, however, that even if the Westinghouse

construction be assumed, there is no ADEA violation under the

facts of this case. The reason is that the layoff was the result of

closing a plant. That event laid off employees of a wide variety

of ages, and with different consequences for employees of the

same age. The differences in consequences are due not to age

but to other factors in the LIB and Pension plans.

An employee aged 56 who was laid off but did not have 10

years service credits was eligible for LIB benefits, including

Option (a), but could not have early retirement. Another of the

same age with at least 10 years service credit received early

retirement under the Westinghouse construction and was there-

fore not eligible for LIB benefits, the latter being a point on

which all parties agree.

A third employee of the same age, with more than 10 years

service, would not be eligible for early retirement if he had

contractual employment rights at another location or if he was

offered employment at another location. In that case, if he

were laid off for a period of time he would evidently be cligibie

for LIB benefits during unemployment under Option (b), and

if his layoff was expected to last more than 6 months, could

have exercised Option (a) for a lump sum benefit, but, in that

event would have severed himself from the company, relin-

quished his recall and service rights and doubly barred his

eligibility for early retirement.

54a

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, supra, when he ob-

served that all retirement plans necessarily make distinctions

based on age. The desirable goals of actuarial soundness and

full funding, to help achieve which EP.ISA 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

§ 623 (f)(2) was included in the Act.

As the second analysis based on the Westinghouse construc-

tion shows, there are different consequences to employees of

the same age, due to conditions in these two inter-related

benefit plans that reflect factors other than age.

It also cannot be overlooked that both plans are negotiated

plans hammered out at the bargaining table. Under the plan as

it stood in 1966, and under the LIB plan of that date, Exh. J-1

and 2, there was no provision for early retirement at age 55.

Normal retirement was at 65, Section 2-A. Early retirement

was allowed in two forms, both requiring 10 years’ service: (1)

an optional retirement at any time after age 60 and before 65;

and (2) a mandatory retirement at age 60 for those laid off

after age 59 and before age 60, provided he was not returned to

regular service before age 60 and provided he had not received

a lump sum payment related to length of service solely because

he was laid off or separated. Selected retirement, another form

of early retirement, was allowed at any time after age 62 and

before age 65 for those with at least 30 years service.

These terms were obviously liberalized in 1976 as the result

of collective bargaining and as liberalized now provide for

early retirement as low as age 58 (instead of 62) for those with

30 years service, and as low as age 55 if laid off by a Location

Closedown with at least 10 years of service.

The considerable reliance placed on the collective bargaining

process aS an important instrument for industrial peace is now

firmly embedded ia federal labor law as fashioned by the

Supreme Court. The liberalization of benefit plans of one kind

or another by means of that process is hardly to be disturbed

through the judicial process by the strained interpretation of a

55a

statute, like ADEA, which expressly exempts conduct in com-

pliance with bona fide benefit systems of the kind involved

here.

5. The alternate constructions.

As noted above, the court reads the terms of the LIB plan

and the Pension Plan differently than does the employer.

The court’s construction sees options in employees who are

laid off due to a plant closing (Location Closedown) and who

are then at least age 55 and have at least 10 years’ credited

service, but who do not have contractual employment rights at

another location and are not offered employment at another

location.

That construction rests on the fact that an otherwise eligible

employee for LIB benefits is barred from eligibility if he is

“entitled” to early retirement under the Pension Plan. The

Pension Plan says that the employee laid off under the above

conditions “may apply” for retirement within 60 days of the

Location Closedown layoff, provided a lump sum payment

related to length of service has not been made solely because of

the Employee being laid off.

Option (a), which is the Lump Sum provision of the LIB

plan, also requires exercise within 60 days of a layoff expected

to last more than 6 mouths.

Thus, as the court sees it, an employee under the above

conditions could do one of three things (1) he could elect

Option (a) under the LIB plan for a lump sum, but in doing so

he would sever his relationship and surrender his recall and

seniority rights. He would no longer be an employee in active

service and, although he might have vested pension rights he

could no longer select early retirement; (2) he could elect to

take early retirement instead of the lump sum, in which case he

would become “entitled” to early retirement and so could not

be eligible for LIB benefits; (3) he could exercise Option (b)

and draw supplemental unemployment benefits from the LIB

plan for up to 12 months, but could not receive any balance

under Option (c) because he would have been laid off within |

year of the date he became “eligible” for early retirement.

56a

Unless reemployed by the company in accordance with his

recall rights and seniority, he would not be able to draw early,

retirement payments because he would no longer be in active

service.

The employer’s construction is based on the proposition that

the conditions for eligibility for LIB benefits should be read as

though coverage under the LIB plan were barred if the em-

ployee were “eligible” for early retirement under the pension

plan rather than “entitled” (as the provision reads).

From the standpoint of the EEOC charge under ADEA, it

makes no difference which construction is correct. If the

court’s construction is correct, there is no ADEA violation

because the choice of a lump sum payment under LIB or of

early retirement pension payments was a choice of the em-

ployee and so cannot be an unlawful act of the employer under

29 USC § 623(a), in and of itself. If the employer’s construc-

tion is correct, then there is no ADEA violation because the

employer’s action was based on reasonable factors other than

age, 28 USC § 623(f)(1), or was in observance of the terms of a

bona fide seniority system and two bona fide employee benefit

plans (one welfare and the other pension), none of which can

be a subterfuge to evade the purpose of the Act, 29 USC § 623

(f)(2).

In its earlier brief memo ruling, which EEOC asked to have

reconsidered, the court suggested that if the company had

mistakenly construed the various provisions, the error could be

cured by an exchange of benefits with suitable interest adjust-

ments, for those employees not aware that they had a choice, if

they had one. This would be a classic instance of mutual

mistake.

While the element of mutual mistake is still a potential

circumstance, the comments made then as to a method for

adjusting benefits were probably not correct. If the court’s

construction is correct in the sense of supporting the conclu-

sion that no ADEA violation could exist under that assump-

tion, the court now considers it prudent to refrain from any

comment on modes for adjusting the assumed error, since it

cannot undertake the task on the EEOC complaint and the

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outcome may well vary from one to another employee. There

are simply too many variables involved to warrant any general

formula for adjustment. If called for, they would be in a

proceeding other than this one, and may well call for individ-

ual analysis.

For instance, in reviewing the tabulated information sup-

plied by the employer to EEOC in response to Interrogatory 2

of the second set of interrogatories, a number of specific

variations appear. A few of these are noted.

. one employee aged 56 received LIB benefits of

$12.16 and was not put on early retirement. He had

been hired 1/11/68 and so was within one year of

eligibility for early retirement on 4/1/77, but since

he had less than 10 years’ credited service, did not

have the option for early retirement. He obviously

did not choose Option (A) for a lump sum benefit.

He applied for employment at the Bloomfield loca-

tion and was rehired there. [L. Dennis, p. 2, line 7);

. an employee aged 54 received neither LIB nor early

retirement. He had been hired 2/8/76 and had less

than two years’ credited service [A. Celico, p.1, line

19);

. an employee aged 47, hired 8/7/50, obviously chose

Option (A) of the LIB plan and was paid $5,985.20

[M.F. Chuckran, p.1, line 20]; but

. . another employee aged 46, hired 2/9/51, evidently

chose Option (B) of LIB, was paid $332.16 until

rehired at Bloomfield where he evidently had con-

tractual employment rights (R.B. Climes, p. 1, 1.

21);

. . An employee aged 58, hired 4/19/71, evidently

chose Option (A) of LIB and was paid $1,328.

Presumably he could not have taken early retire-

ment as he had less than 10 years credited service

{H.H. Piersall, p. 4, line 19];

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/

. . Another employee, aged 58, hired 8/30/68 and so

had less than 10 years’ credited service, was paid

what seems to be a lump sum of $1,676.24 under

LIB [A.Symonies, p. 8, line 5];

. An employee age 59, hired 9/26/68 and so had less

than 10 years’ service, was transferred to the Fair-

mont Plant and received neither LIB nor early

retirement [J. Hanek, p. 8, line 9];

. An employee aged 63, hired 2/15/72 (when he was

about 58) had less than 10 years’ service, could not

take early retirement and was paid $1,031.72 of LIB

benefits [C. Roche, p. 8, line 12).

From a review of the tabulations in light of the contract

provisions for LIB or for pension, coupled with seniority rights

which would affect the existence of contractual employment

rights at other locations, or with rehirings, it is plain that no

ADEA violation could have been involved.

6. The 1978 Amendment to ADEA.

In 1978 the Congress amended 29 USC § 623 (f)(2) by

adding, at the end, the qualification that:

“no such seniority system or employment benefit plan

shall require or permit the involuntary retirement of any

individual specified by [29 USC § 631(a)] because of the

age of the individual.”

EEOC has argued that this amendment was intended to

reflect the original intent of Congress when ADEA was orig-

inally enacted in 1967.

The argument is irrelevant or ineffective for several reasons.

In the first place, as noted at the start, the complaint nowhere

charges a violation of ADEA grounded on involuntary retire-

ment because of age. The undisputed facts are that the em-

ployer closed down a plant location, and everyone working

there was laid off without regard to age. The tabulation shows

employees in their 20’s, 30’s, 40’s, = and 60’s. The only

4

59a

claim made was that those who were 55 and over and who

receive early retirement did not also received “severance pay”,

which has turned out to be a misnomer for Option (A) of the

LIB plan, and which, had they received it, would have barred

early retirement payments.

In the second place, the Supreme Court was aware of the

pending amendment when it decided United Air Lines v

McNann, supra. Justice Marshall in the dissent for himself and

Justice Brennan, relies on it in part for his argument. See 434

U.S. at 218, noting that the amendment had passed both

Houses before the decision came down, and footnote 11,

suggesting that the amendment was intended as a clarification

to take effect immediately.

That view, however, was the view of only 2 members of the

Supreme Court. The others were aware of the pending change,

and reached their decision, binding here, without regard to it.

The events involved in this case took place as far back as

January, 1977, some 11 months before the ruling was handed

down, and must be controlled by that decision no matter what

the prospective effect of the 1978 amendment.

7. The Statute of Limitations Revisited.

After full exploration of the ADEA significance of the

court’s construction ve

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