Petition for Writ of Certiorari — Continental Can Co. v. Gavalik

Supreme Court brief1987

Ask Donna

What actually matters in this document.

Text

IN THE JOSEPH F. SPANIOL, JR,

CLERK

Supreme Court of the Gni

OCTOBER TERM, 1986

CONTINENTAL CAN COMPANY,

Petitioner,

ROBERT GAVALIK, et al.,

Respondents,

-and-

CONTINENTAL CAN COMPANY,

a member of The Continental Group, Inc.,

Petitioner,

ALBERT JAKUB, et al.,

on behalf of themselves and others similarly situated,

Respondents.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

JAMES D. MORTON

SAMUEL W. BRAVER

BUCHANAN INGERSOL, P.C.

600 Grant Street

Pittsburgh, Pa. 15219

(412) 562-8800

Of Counsel:

DANIEL M. CARSON

Associate General Counsel

Continental Can Company

800 Connecticut Ave.

P.O. Box 5410

Norwalk, Conn. 06856

EUGENE L. STEWART

Counsel of Record

TERENCE P. STEWART

GEERT DE PREST

WILLIAM A. FENNELL

VINCENT J. BRANSON

STEWART & STEWART

1001 Connecticut Avenue, N.W.

Washington, D.C. 20036

(202) 785-4185

Attorneys For Petitioner

6S etree RR RAR I NEI TERRE A RENE EN ATI AN ER AARNE

PRESS OF BYRON S. ADAMS, WASHINGTON, D.C. (202) 347-8203

QUESTIONS PRESENTED

1. In enacting section 510 of the Employee Re-

tirement Income Security Act of 1974 (““ERISA’’), 29

U.S.C. § 1140, did Congress intend to prevent an

employer from enforcing a provision in a collective

bargaining agreement to arbitrate any pension-related

differences?

2. When ERISA, 29 U.S.C. §§ 1001 et seqg., both

preempts state regulation of pensions, 29 U.S.C. §

1144, and sets no statute of limitations for section

510 claims, 29 U.S.C. § 1140, should the Court:

a) set a uniform federal period of limitations as

in DelCostello v. Teamsters, 462 U.S. 151

(1983), or

b) select: a uniform federal characterization for

the most analogous state period of limitations

as in Wilson v. Garcia, 471 U.S. 271 (1985),

c) apply Pennsylvania State law?

3. In a mixed-motive discrimination case:

a) Does the Third Circuit’s ‘‘a determinative fac-

tor’’ test for causation conflict with this

Court’s “same decision” test in Mt. Healthy

Board of Education v. Doyle, 429 U.S. 274

(1977)?

b) Can a defendant employer be denied its en-

titlement to defeat liability in the class phase

of a discrimination case by proving that the

same decisions would have been made as to

all members of the plaintiff class absent the

proscribed factor?

c) When the plaintiffs at trial limited their claim

to layoffs and the district court found that the

same employment actions would have occurred

in any event due to permissible reasons, did

a Third Circuit Panel err when it found that

pension avoidance was ‘‘a determinative fac-

tor”, held that a ‘“‘plan” constituted a per se

violation of section 510 of ERISA, 29 U.S.C.

§ 1146, and found that recalls were included

within the suit?

iil

THE PARTIES

This statement is submitted pursuant to Rule

28.1 of this Court.

Robert Gavalik, Frank Grelo, Joseph Urban, An-

thony Ulyan, Donald A. Berger, Ronald Clarke,

Henry Foster, George Patterson, Joseph Keller-

man, Robert Pavlik, Phillip Farley, Thomas Riley,

Thomas Warren, Francis Humenik, Albert J.

Jakub, Fred Cipriana, Jr., Anthony J. Bernardo,

Thomas A. Mulligan, William T. Tarr, Donald W.

Roberts, Ernest Wirbecki, George W. Stepanic,

Alfred Berrelli, Jr., Michael Di lorio, Anthony

Folino, Thomas E. Johston, Robert Kapolka, John

C. Kincel, Peter A. Rumain, Harry H. Smith,

Melvin J. Smith, Jack A. Stull and Ernest B.

Taddeo -

Continental Can Company, U.S.A., a member of

The Continental Group, Inc.!

‘The Continental Group, Inc. has been merged into Kiewit

Continental Inc. whose parent companies are: Kiewit Holdings

Group, Inc., Kiewit U.S. Co., Peter Kiewit Sons’ Inc. Subsidi-

aries (except wholly-owned subsidiaries) and affiliates of KMI

Continental are: Altradec AG; Anlage und Handlesgesellschaft

mbH; B.V. Handeis-Maatschappij v/h Kortman; B.V. Leeuwen-

brug; B.V. Metallwarenfabriek Drenthina; B.V. de Vereenigde

Blik Fabrieken; bebo Plastik Verwaltungsgesellschaft mbH; bebo-

Plastik GmbH & Co. KG; Beleggings-Maatschappij Zaandijk B.V.;

Brasflor Commercio E Industria de Subprodutos de Maderia,

S.A.; Braskraft S.A. Florestal E Industrial; CCL Industries, Inc.;

CWC Leasing, Inc.; Cobelplast (U.K.) Ltd.; N.V. Cobelplast S.A.;

N.V. Cobelplast Trading, S.A.; Continental Can Canada, Inc.;

Continental Can Company of Europe B.V.; Continental Can Eu-

ropean Industries, N.V.; Continental Can Hong Kong, Limited;

Continental Can Leasing Company, Inc.; Continental Can Ni-

geria, Limited; Continental Can Saudi Arabia, Ltd.; Convertidora

(footnote continued)

Venezolana de Papel, S.A.; De Clerck N.V.; Desmacon Holding

B.V.; Dominguez & Cia. Caracas S.A.; Dominguez Continental,

S.A.; Doosan Continental Can Manufacturing Co., Ltd.; N.V.

Schuybroek; Elbatainer France; Elbatainer (U.K.) Ltd.; Elbatai-

ner Kunststoff und Verpackungsgesellschaft GmbH; Europem-

ballage B.V.; Europemballage GmbH; Extruplast AG; Fabrica

Boliviana de Envases, S.A.; Industrias Del Norte, S.A.; Jeddah

Beverage Can Making Co., Ltd.; La Societe Francaise de De-

veloppement de la Boite-Boissons‘SOFRED S.A.; Lubeca Mas-

chinen und Anlagen GmbH; MPB Foliengesellschaft mbH;

Maatschappij tot. vervaardiging Van “DUCATT” Verwarmings

En Kookapparaten B.V.; Machinenverwertungesellschaft mbH;

Metaalwarenfabriek Pielkenrood B.V.; Metalurgica Matarazzo,

S.A.; P.T. United Can Company Limited; Qualiplus USA, Inc.;

RFG Recycling-Fordergesellschaft fur Getrankedosen mbH; SIA

Handelsgesellschaft mbH; SLW-Versicherungsdienst GmbH;

Schmalbach-Lubeca AG; Schmalbach-Lubeca Austria GmbH;

Shellmar Comercio E Participacoes Ltda.; Schellmar Embalagem

Moderna, S.A.; N.V. Sobemi; Tedeco B.V.; Tedeco GmbH; Te-

deco S.a.r.l.; Tedeco U.K.; The Continental Group (Germany)

GmbH; The Vinoxen Company, Inc.; Thomassen & Drijver Ver-

blifa N.V.; Unicon Producing Company; Unterstutzungseinri-

chtung Schmalbach Lubeca-Werke GmbH; Verblifa N.V.; Weduwe

J. Bekkers B.V.; YRSU B.V. Excluded from this list are cor-

porations in which Kiewit Continental Inc. or its subsidiaries or

affiliates have less than 10% ownership.

TABLE OF CONTENTS

OTIEE FNEINTEDD sincere sissdiiavesinedensinnsesnviasetnsies

I io ort el adeemnaeenaanenies

ee fe Se os da easeuseesaendaen

ee ee eS acon enepnnneneanen

I I ig isa inttaneline ad pe eae

JURISDICTION

CORO R EERE EEE EEE EEE EEE EEE EEE EEE EEE HEHEHE HEHEHE EEE EEE ED

pe EL ae een Meme me

a i I A iii es lisideceendeasewsubions

REASONS FOR GRANTING THE WRIT ..............cceceeees

I. The Third Circuit’s Determination on the Ar-

bitrability of ERISA-based Claims is in Con-

flict with the Decisions of Other Circuits and

le Ca oe ak oe Ca a aco nabceuubaceons

A. This Court Should Grant Certiorari to

Resolve the Conflict among the

CII \cscducpantecccnccnreeeiciae eres

wa |

Arbitration is a Favored Remedy in

Disputes Between Management and

RAE Cs cic ccanetcninaaaenaweninein

. The Third and Ninth Circuits Misin-

terpreted the Legislative History of

ERISA; the D.C. Circuit Did Not Con-

EN ee ee re er

. The Seventh, Eleventh, and Second

Circuits Rely on a Consistent Reading

OE I wckcts csvouricactiaaionnapeniveins

. The Third, Ninth and D.C. Circuits are

in Conflict with an Accurate Reading

of Legislative History and the Deci-

CE S-Se dctcieeiininsinees

. The Conflict Can Only be Resolved by

i Tenet i a

i A |

II.

Ill.

vil

B. Conflict and Confusion Among Lower

Courts Calls for Speedy Resolution in Or-

der to Avoid Increased Caseload and

Chaos in the Labor-Management Arena

The Third Circuit’s Application of a Six Year

Statute of Limitations is in Conflict with the

Basic Tenets of Federal Labor Policy and

Several Prior Decisions of this Court .........

A. The Gavalik Opinion is Violative of the

Principles Espoused by this Court in

DelCostello and Mitchell ...................20002.

1. The Family Resemblance Between Ac-

tions Under Section 510 and a Charge

of an Unfair Labor Practice .............

2. The Need for Rapid Final Resolution

of Disputes Where the Collective Bar-

gaining Agreement and Private Set-

tlement of Disputes are Implicated ..

3. The Need for Uniformity Where the

Formation of the Collective Bargain-

ing Agreement and the Private Set-

tlement of Disputes Under It are

PIII sieUsiitidepdsessmanbaicoteiruneaemciions

B. Application of Wilson ..............:ccceeeeeeeees

1. The Analogy to Federal Discrimination

Actions is Compelling ...................000+5

2. The Federal Interest in Uniformity ..

3. The Need for Short Limitations

i ede,

tor’ Test for Causation in Mixed-Motive Dis-

crimination Cases Conflicts with this Court’s

ck NEN

A. Application of the Third Circuit’s ‘‘a De-

terminative Factor’ Test in Gavalik Con-

flicts with Decisions of this Court .........

B. The Third Circuit Panel Incorrectly Ap-

plied the Same Decision Test at the

Wrong Stage of the Case .............:.::006+ 27

A oe ae as aadaapateieuaoeavaniis 29

Appendix:

The Third Circuit opinion in Gavalik v. Continental

Can Co., 812 F.2d 834, (8d Cir. 1987) ..............4. la

2. The district court olpinion in Gavalik v. Conti-

nental Can Co., Nos. 81-1519 and 82-1995 (W.D.

Pa. Sept. 9, 1985) ............ccoccsvcesrsrcsseserrecesessnsveeeses 67a

Employee Retirement .Income Security Act of 1974,

as amended:

Section 413 (29 U.S.C. § 1113] .......... ee 94a

Section 502 (29 U.S.C. § 1132] ..................0 94a

Section 503 (29 U.S.C. § 1133] ........ etigahekinaealiie 100a

Section 510:(29 U.S.C. § 1140] ......... cee 100a

Section 514 [29 U.S.C. § 1144] ........... 10la

4. Provisions of the governing Master Agree-

TE ccevkcsntioesecsacvacscwtiuninvercnssbracdanceusesepnseiantonéeeeisess 105a

WE >i) 2 ee as Los badaisebaaeuvealeuenanaenne’ 118a

6. 1986 Cases involving ERISA and Exhaustion/

Arbitration 13la

Vill

TABLE OF AUTHORITIES

CASES: Page

Adams v. Gould, 739 F.2d 858 (3d Cir. 1984), cert.

denied, 469 U.S. 1122 (1985) _ ....................... 20

Air Line Pilots Association v. Northwest Airlines,

Inc., 627 F.2d 272 (D.C.Cir. 1980) .............. 6,11,13

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

TERRE SES iy RE a co 16

Alexander v. Gardner-Denver Co., 415 U.S. 36

he ES Bae Fp eS ERR EAT RT 8,11

Alfarone v. Bernie Wolff Const. Corp., 788 F.2d 76

(2d Cir.), cert. denied, 107 S. Ct. 316

EMER. “stchsed pichutudler cchesedicudagadbuisutwcaksnseucniictensss: 6,12

Amaro v. Continental Can Co., 724 F.2d 747 (9th

Ee VENI ss sises.d cAsacsewen coeeuwueebeuounelecciedsers 6 et passim

Amato v. Bernard, 618 F.2d 559 (9th Cir.

UE ait seldiipassnsstnuiphaamecacaaibiaibaveeladiescttiniaieuvccasecsee 1]

Arlington Heights v. Metro. Housing Corp., 429 U.S.

I aa sist thei tiliiasd olde addadehadaakececeusueigesversbies 24,27

AT&T Technologies v. Communications Workers,

BU We ig I OD» cesivnsesevsnesinssareccececeiese 9

Barrentine v. Arkansas-Best Freight Systems, Inc.,

I i I ihc it caters ceseks 8

Bell v. Birmingham Linen Service, 715 F.2d 1552

(llth Cir. 1983), cert. denied, 467 U.S. 1204

SUNN orieciciadspaiaidcnneseanis cavenasdiceendinhansaassdteledasaces 28

Bellisimo v. Westinghouse Electric Corp., 764 F.2d

175 (3d Cir. 1985), cert. denied, 106 S. Ct. 1244

SEITE C ‘auteuinediousdeckabseaseubuabesmuniensenenDiiiecdeeiedanect 25

Bender v. Mcllhatten, 520 A.2d 37 (Pa. Super. Ct

SEE .:sidedhcnaiodiciee hati mi dea baatadentetniceseese 24

Chardon v. Fumero Soto, 462 U.S. 650 (1983)... 15

Chevron Oil Co. v. Huson, 404 U.S. 97 (1971)... 22

Cooper v. Federal Reserve Bank of Richmond, 467

SPA AT MEET" hiss dpuldceekctitussesunsadansvcensuncevvdsanns 27

Table of Authorities Continued

Page

Corkery v. SuperX Drugs Corp., 602 F. Supp. 42

Seca echcannounnionenne 17

Cowden v. Montgomery County Society for Cancer

Control, 591 F. Supp. 740 (S.D. Ohio 1984) 17

Crouch v. Mo-Kan Iron Workers Welfare Fund, 740

Fe ee Ce GE TNE |. vidneecivevnctavesconscceses 22

Dale v. Chicago Tribune Co., 797 F.2d 458 (7th Cir.

1986), cert. denied, 107 S. Ct. 954 (1987) 5

Davis v. UAW, 765 F.2d 1510 (11th Cir. 1985), cert.

denied, 106 S. Ct. 1284 (1986) ...................... 20

Davis v. United States Steel Supply, 581 F.2d 335

asa ealaeadasueanlibonnes 23

DelCostello v. Teamsters, 462 U.S. 151

PO ce cs cadsuainanvenbiase 15 et passim

Delisi v. United Parcel Service, Inc., 580 F. Supp.

SE Re, IEE sxacanwnvectsscorsneciedetenceons 17

Dillon v. Coles, 746 F.2d 998 (3d Cir. 1984) ...... 25,28

Dothard v. Rawlinson, 433 U.S. 321 (1977) _ ........ 27

Duffy v. Wheeling Pittsburgh Steel Corp., 738 F.2d

1393 (3d Cir.), cert. denied, 469 U.S. 1087

RI ial ani dso ctl onctatnineniveanaoiaananediinneh 25

East Texas Motor Freight System v. Rodriguez, 431

ne EE IIT. ianhisdvanpcudindsaneincinntennuneiensanenens 24,27

Edwards v. Wilkes-Barre Pub. Co. Pension Trust,

757 F.2d 52 (3d Cir.), cert. denied, 106 S. Ct.

I an arepsananrneonets 17

Fitzgerald v. Larson, 741 F.2d 32 , (3d Cir. 1984),

vacated, 472 U.S. 1051 (1985). ............... 23

Gavalik v. Continental Can Co. Nos. 81-1519 and

82-1995 (W.D. Pa. Sept. 9, 1985), rev'd, 812

F.2d 834 (Sd Cir. 1987) ..............ccccceeee. 1 et passim

Hazelwood School District v. United States, 433 U.S

a acahaiianewenintd 26

Table of Authorities Continued

Page

Holmberg v. Armbrecht, 327 U.S. 392 (1946) ...... 18

Home for Crippled Children v. Erie Insurance Ex-

change, 130 P.L.J. 480 (Allegheny County

Court of Common Pleas 1982), aff'd mem., 329

Pa. Super. 610, 478 A.2d 84 (1984) oe... 24

Hormel v. Helvering, 312 U.S. 552 (1941) ow... 29

Teamsters v. United States, 431 U.S. 324 (1977) 27

Jacobson v. Merrill Lynch, Pierce, Fenner & Smith,

Inc., 797 F.2d 1197 (8d Cir. 1986) _............... 12

Knoll v. Springfield Township School Dist., 699 F.2d

137 (3d Cir. 1983), vacated, 471 U.S. 288 (1985),

on remand, 762 ¥ 2d 584 (1985) oo... w.. epee 21,23

Kross v. Western Electric Co., 701 F.2d 1238 (7th

CARS BIE sedessincssschecticcotectsantiimsbiavie 6 et passim

Kuntz v. Reese, 760 F.2d 926 (9th Cir. 1985), op.

withdrawn & decision vacated, 785 F.2d 1410

SIGE. sehispinavinitibuacasuioubisdstadinens eens maiadenprens 17

Lee v. Russell County Board of Education, 684 F.2d

PE ee ee soins catdedcaneieciisveovenasecoss 28

Lewis v. University of Pitisburgh, 725 F.2d 910 (3 3d

Cir. 1983), cert. denied, 469 U.S. 892

RINE cuserciocacncccmenosiuntatietanesed eects uaaaies 26,28,29

Machinists v. NLRB, 362 U.S. 411 (1960) .......... 19

Malley-Duff & Associates v. Crown Life Ins. Co.,

792 F.2d 341 (3d Cir.), cert. granted, 107 S.

See Se CE. biidewsicikccadnaseiepacceraeecnnvacaawaicies 23

Mason v. Continental Group, Inc., 569 F.Supp. 1241,

763 F.2d 1219 (11th Cir. 1985), cert. denied,

Se ee, ee Eirini 6,7,11

Mazfield v. Sinclair Int'l, 766 F.2d 788 (3d Cir.

1985), cert. denied, 106 S. Ct. 796 (1986)... 25

Mazzanti v. Merck, 770 F.2d 34 (8d Cir. 1985) .. 23,24

McDonald v. City of West Branch, 466 U.S. 284

NE. cupcicaubansteisniacsdee peace tesansentectbenmaasaieubiance 8

Table of Authorities Continued

Page

McKinney v. Missouri-Kansas-Texas Railroad Co.,

ek Se | eeeeererenersen enerererre 8

McLendon v. Continental Group, Inc., 602 F. Supp.

BE CERES dan edevesenccecasnntesirinitenneeonenns 7,17

Metropolitan Life Insurance Co. v. General Motors

Corp., 55 U.S.L.W. 4468 (U.S. April 6,

RUE aicaksdecenedobennevsenisnisbenninsuveisionbssaanuinesn ities 13,14,16

Meyers v. Pennypack Woods Home Ownership Ass'n,

“Ges 8 8 oh Ae! cy) Beer ere ee 23,24

Mitsubishi Motors v. Soler Chrysler-Plymouth, 105

Be, is i MID dascedensaicdaciascnsocarsenrntias 6 et passim

Mt. Healthy School District Board of Education v.

Doyle, 439 US. B44 (ISTE) .....00i...0000500 24,25,26,29

NLRB v. Transportation Management Corp., 464

SE ee EE 1c iscsideuiaasitecih Tovesipteneincinminvensinee 27

Pace v. Southern Ry. System, 701 F.2d 1383 (11th

Cir.), cert. denied, 464 U.S. 1018

CI racial ebkcicadnaldeasisisdusdibanippdortaniavsiiaturenieines 27

Perri v. Aytch 724 F.2d 362 (3d Cir. 1983) _...... 22

Regents of the University of California v. Bakke,

a SE CREED pencensscnsnietesbectorsnnkinereroins 27

Schneider Moving & Storage Co. v. Robbins, 466

SEs A IED ekeantvevevicimuatitssdecomtesonnnbercinaiee 8

Singleton v. Wulff, 428 U.S. 106 (1976) ..........0. 29

Skehan v. Bloomsburg State College, 503 A.2d 1000

Pe, CG, TE. TUN sivas ecenceasennnnpspensioncns 23

Skehan v. Board of Trustees, 590 F.2d 470 (3d Cir.

FITTED. swicisinvsinnasatcebemeuctncnaioenatenimipieaniaapadeniinng: 23

Smith v. City of Pittsburgh, 764 F.2d 188 (3d Cir.

I isessccccbinncdsrincsvestienaticidciateesinsmaneaieneeais 22

Smithers v. Bailar, 629 F.2d 892 (3d Cir.

DE sansntacnniplarechapnecbeanescanckctipicceupatecssiqsanmabnnss 26

Table of Authorities Continued

Page

Texas Department of Community Affairs v. Bur-

Geb, SOO Ue. BEB (IGG) cvcerecececccevesssesersees 27

UAW v. Hoosier Cardinal Corp., 363 U.S.

696 NEE, SRG ERS SO We nants a 15,19

United Parcel Service, Inc. v. Mitchell, 451 U.S. 56

(ae URES Se a Oa en 15 et passim

U.S. Bulk Carriers, Inc. v. Arguelles, 400 U.S. 351

ate eh eines aaa ais hc ectitsncpeousnaisaventve 8

Steelworkers v. American Manufacturing Co., 363

ON dso Covudcnmnnegnsnnnicisone 8,13

Steelworkers v. Enterprise Wheel, 363 U.S. 593

a a sa eed achaasagtarennenes 12

Steelworkers v. Warrior Gulf and Wisiiadinn € Uo.,

By Ps Se oii cas peesseressursiesuvinennes 8 ,9,10,13

Vaca v. Sipes, 386 U.S. 171 (1967) .............00eceeee 20

West v. Butler, 621 F.2d 240 (6th Cir. 1980) ..... 18

Wilson v. Garcia, 471 U.S. 271 (1985) ..... 15 et passim

Wright Line, 251 NLRB 150 (1980), enforced, 662

P 2d 899 (9th Cir. 1981), cert. denied, 455 U.S.

I eee hccataencrce tea nds sacsnammeonentioeiextes 27

Zipf v. American Tel. & Tel. Co., 799 F.2d 889 (3d

RRR AS AE ARS Rr NT PS ke eee ID 10

STATUTES:

United States Arbitration Act

IO as cule abonee )

I ea ccc eiacvssnmesandeaivakebnaces 1

Labor Management Relations Act

a Be a. csc bhtvbucdckpucavnccbes 27

Section Gla), SO U.B.C. § 1GBla) . ......scaccceseccseces.s.s 18

section 10(b), 29 U.S.C. § 160%) ................;......... 18

Section 203(d), 29 U.S.C. § ITB) — .....cccecocccscceses. 9

xiii

Table of Authorities Continued

Page

Rection DRL, BE UBL. 9 WD ccsrccerssccciicetvicninn 13

Fair Labor Standards Act

Sections 1-19, 29 U.S.C. §§ 201-219 ....... ee. 8

Age Discrimination in Employment Act

ee ee ee Oe — ecisshiadtirciicieritenss 27

Employee Retirement Income Security Act of 1974,

as amended

fis i ee Bg Bh ere arene neon 1

Sections 401-414 [29 U.S.C. §§ 1101-1114] _ ......... 17

Becta SIS TEP UT. GF TDI G) vacsecevossesiccsvisesesess 2,17

Section 502 [29 U.S.C. § 1132] ............... sasienaaalle 2,17,30

Section GOS 179 U.S.C. § L1GS) . .....00cecsevecsecesesses. 2

Section 510 [29 U.S.C. § 1140] ................... 1 et passim

Sectea SIG TEP UBL. 8 LIKE) <0 c0cceccccccvssccssscsess 2,12,16

od radcddsdacenhtckaeevervianeeerenens 27

I os culaibennnnnbnesen vane 21,238.20

Civil Rights Act of 1964

I Oe ON vovssvcsesndsinevdpsaevenscnsopiatones 8,27

Fair Hous: g Act

ee I I vavencceccsceicisesigsnrcsnveceserenes 27

Pennsylvania State Code

Equal Pay Law Act of December 17, 1959, P.L.

1913, as amended, Pa. Stat. Ann. tit. 43, §

336.5 (Purdon 1986 Supp.) — ..............csccccseveees 24

Pennsylvania Human Relations Act of October 27,

1955, P.L. 744, as amended, Pa. Stat. Ann.

tit. 43, § 95%g) (Purdon 1986 Supp.) .......... 24

Public Employee Relations Act of July 23, 1970,

P.L. 563, as amended, Pa. Stat. Ann. tit. 43,

§ 1101.1505 (Purdon 1986 Supp.) ................. 24

xlV

Table of Authorities Continued

Page

OTHER AUTHORITY:

Am. Jur. 2d Desk Book, itern # 66 (July 1986 sup-

ERENT RSV ee US ee ee en 5

Collective Bargaining Agreement:

Master Agreement: Articles 13.2 and 23 _........ 9

Pension Agreement: Title, Introduction, Appeals

IID 11 i Scsatatidencienceinusdehed dixaumnecieveabeaudenin 9

LEGISLATIVE HISTORY:

Senate Comm. on Labor and Public Welfare, Sub-

comm. on Labor, 94th Cong., 2d Sess., Leg-

islative History of the Employee Retirement

Income Security Act of 1974 (Comm. Print

EE sradineaprndcbertistrvnesdausiguiisesi nae 10 et passim

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

Petitioner, Continental Can Company, U.S.A., a member

of the Continental Group, Inc., respectfully petitions for

a writ of certiorari to review the judgment of the United

States Court of Appeals for the Third Circuit entered in

this case on January 15, 1987, and corrected on February

19, 1987.

OPINIONS BELOW

The corrected opinion of the Court of Appeals is re-

ported in Gavalik v. Continental Can Co., 812 F.2d 834

(3d Cir. 1987); the finding of facts, conclusions of law, and

the judgment order of the district court dated September

24, 1985, were unpublished. Both opinions appear in

petitioner’s appendix.

JURISDICTION

This Court has jurisdiction to review the judgment of

the court below by writ of certiorari pursuant to 28 U.S.C.

§ 1254(1). The judgment of the Court of Appeals was

entered on January 15, 1987, and corrected on February

19, 1987. Petitioner filed a petition for rehearing with a

suggestion for rehearing en banc. That petition was denied

on February 19, 1987. This petition is being filed within

90 days of the denial of the petition for rehearing.

APPLICABLE STATUTES

The Employee Retirement Income Security Act of 1974,

29 U.S.C. §§ 1001 et seg. (““ERISA’’); in particular § 510

of ERISA, 29 U.S.C. § 1140. The text of 29 U.S.C. §§

1113, 1132, 1138, 1140, and 1144 are included in the ap-

pendix along with the text of selected portions of the

legislative history.

STATEMENT OF THE CASE

This petition arises from the Third Circuit reversal of a

district court decision. The plaintiffs, former employees of

defendant’s can manufacturing plant in Pennsylvania, alleged

that Continental had violated section 510 of ERISA by laying

them off before they attained eligibility for so-called Rule of

65 or 70/75 pension benefits.! The basis for jurisdiction was

section 502 of ERISA, 29 U.S.C. § 1132. The district court

held in favor of the defendant and present petitioner, Con-

tinental Can Company, U S.A. (‘Continental’).

Continental is a corporation engaged throughout the

United States in the business, inter alia, of manufacturing

cans. The certified union representative of the respondents

is the United Steelworkers of America, AFL-CIO, Local

4337 (hereinafter referred to as “USW’’).

Beginning in the early 1970’s, the can producing indus-

try as a whole experienced a steady decline in business

due principally to competition from new technology in alu-

minum cans, plastic and paper products, and self-manv-

facturing in the beverage industry.

As part of the company’s management of its business

in 1976, Continental developed and began to use a com-

puterized data base, Bell I, that contained employee per-

sonnel information, including seniority date, job

classification, and age. The company used a computer pro-

gram called Bell II to measure the labor costs of its op-

erations.

Continental laid employees off at its plant site in West

Mifflin, Pennsylvania, in 1977 and 1978, shut down op-

‘The pensions at issue were provided by Continental in addition to

regular retirement pensions for former employees in layoff situations.

See Gavalik at 5-7 (App. at 8a-10a) for a further explanation of these

layoff pension benefits.

eration of the “‘pail line’”’ in the plant in 1978, and closed

the plant in 1981. After being laid off, four of the named

plaintiffs filed grievances, but the grievances were not

appealed to arbitration.

Laid off employees filed two separate actions in the

district court: Gavalik v. Continental Cm Co., No. 81-1519

(W.D. Penn. Sept. 8, 1981); and Jakub v. Continental Can

Co., No. 82-1995 (W.D. Penn. Sept. 27, 1982). The principal

relief sought in these cases was the same as that sought

in the above-referenced grievances. The cases were con-

solidated and a single class action was certified on January

17, 1984.

As one of its affirmative defenses, Continental asserted

that as the complaint alleged discriminatory layoffs begin-

ning in 1976, and continuing until the relocation of the

pail line in the winter of 1977-78, the plaintiffs’ complaint,

first brought in September of 1981, was time-barred. As

another affirmative defense, Continental asserted that the

court lacked jurisdiction because the plaintiffs had failed

to exhaust their administrative remedies.

After a non-jury trial, the district court held that em-

ployees did not need to exhaust the grievance or arbitra-

tion procedures (Conclusion of Law # 3; App. at 91a) and

entered judgment for Continental finding that Continental

had legitimate business reasons for the layoffs and the

plant closings. (Findings of Fact i07 and 142; App. at 86a,

90a). The district court also held in its interlocutory opin-

ion of December 15, 1983, that plaintiffs’ claims were sub-

ject to Pennsylvania’s six-year residuary statute of

limitations (‘“‘SOL’’).

The employees appealed. Continental cross-appealed, re-

newing its claims that the employees’ suit was barred by

the applicable SOL armi/or the employees’ failure to ex-

haust their grievance-arbitration remedies.

A two-judge panel of the Third Circuit denied the cross-

appeal and reversed the district court stating that the

burdens of proof had been misallocated; affirmed the dis-

trict court’s finding that a six-year SOL governed; and

affirmed the trial court’s conclusions that arbitration was

not needed. Gavalik v. Continental Can Company, Nos. 85-

3597 and 85-3615 (3d Cir. February 19, 1987).

The circuit did not remand the case to the trial court

for further proceedings consistent with the changed bur-

dens of proof. Rather, the Third Circuit held for the

plaintiffs despite the district court’s express findings that

the closing of the pail line and the layoffs would have

occurred in any event. Gavalik v. Continental Can Co.,

Nos. 81-1519 and 82-1995 (W.D. Pa., September 24, 1985),

Slip. Op. (Findings of Fact 107 and 142; App. at 86a, 90a).

Under the remand order,” each individual plaintiff carries

a presumption of liability in his favor. Continental can only

limit damages by proving that the employees would have

been laid off absent the proscribed motive.

REASONS FOR GRANTING THE WRIT

The petition asks this Court to address issues that affect

literally millions of workers and thousands of employers

in the United States.

First, the circuit courts have divided on whether em-

ployers can enforce collective bargaining agreement

(‘“‘CBA’’) provisions to arbitrate pension disputes when vi-

olations of ERISA are alleged. Employers with multiple

plant locations can thus face different treatment of iden-

tical employee claims based solely upon each plant’s geo-

graphical location even when all employees are represented

under the same CBA—exactly the situation the petitioner

has faced.

* By order dated March 20, 1987, the Third Circuit recalled the man-

date of remand for 30 days and, once the petition is docketed, until

disposition of the case before this Court.

Moreover, despite the federal labor policy favoring

prompt resolution of disputes, the Third Circuit has adopted

a SOL that can result in employers, such as the petitioner

in this case, facing claims for damages many years after

the events in question and many years after the grievance

procedure was abandoned or completed and not appealed

by individual workers. Such results can only have a chilling

effect on U.S. companies considering whether to provide,

continue or expand pension benefits.

Finally, the petition presents the important question of

whether an employer can be denied the right, in the lia-

bility phase of a mixed-motive discrimination case, to prove

through the preponderance of the evidence that the chal-

lenged decisions would have occurred absent the proscribed

motive. The Third Circuit’s denial of such a right to the

petitioner not only conflicts with Supreme Court precedent

and the precedent of other circuits, but also raises the

spectre, if not reversed, of the Third Circuit denying basic

due process rights to defendants in the full range of dis-

crimination cases filed in the federal district courts of that

circuit. For example, during 1985, 549 civil rights em-

ployment cases alone were filed in the U.S. district courts

in the Third Circuit. Am. Jur. 2d Desk Book, Item No.

66 (July 1986 Supplement). Exercise of the Supreme

Court’s supervisory function to assure conformance of the

circuits to teachings of this Court and the basic tenets of

the Constitution are particularly appropriate in such a sit-

uation.

I. THE THIRD CIRCUIT’S DETERMINATION ON

THE ARBITRABILITY OF ERISA-BASED CLAIMS

IS IN CONFLICT WITH THE DECISIONS OF

OTHER CIRCUITS AND THIS COURT.

The Third Circuit’s Gavalik decision that statutory claims

under ERISA are not arbitrable is in direct conflict with

the decisions of the Seventh Circuit Court of Appeals in

Dale v. Chicago Tribune Co., 797 F.2d. 458, 466-67 (7th

Cir. 1986), cert. denied, 107 S. Ct. 954 (1987) and Kross

v. Western Electric Co., Inc., 701 F.2d 1238, 1244-45 (7th

Cir. 1983), with the decision of the 11th Circuit in Mason

v. Continental Group, Inc., 763 F.2d 1219, 1222-1225 (11th

Cir. 1985), cert. denied, 106 S. Ct. 863 (1986), and with

the decision of the 2nd Circuit in Alfarone v. Bernie Wolff

Construction, 788 F.2d 76, 79 (2d Cir.), cert. denied, 107

S. Ct. 316 (1986). However, it is consistent with the Ninth

Circuit’s decision in Amaro v. Continental Can Co., 724

F.2d 747, 750-52 (1984)* and the District of Columbia Cir-

cuit’s decision in Air Line Pilots Association v. Northwest

Airlines, Inc., 627 F.2d 272, 278 (D.C. Cir. 1980). (Alfa-

rone and Air Line Pilots Association, ERISA cases, do

not involve section 510.)

In a disserit to this Court's denial of certiorari in Mason,

Justice White (joined by Justice Brennan) discussed the

need to grant certiorari on the issue of exhaustion in

ERISA cases:

I believe that the Court should grant certiorari

in this case in order to resolve the uncertainty

over the existence of an exhaustion requirement

in cases of this kind. The increasing significance

of ERISA litigation is apparent from the growing

number of such cases that appear on our docket;

in a field so productive of federal litigation, the

need for clear procedural rules governing access

to the federal courts is imperative. Moreover, be-

cause the coverage of particular ERISA plans

frequently extends to beneficiaries in more than

* The issue of exhaustion has been raised again in the district court

based on the Supreme Court’s decision in Mitsubishi Motors Corp. v.

Soler Chrysler-Plymouth, Inc., 105 S. Ct. 3346 (1985), decided subse-

quent to the 9th Circuit decision. The circuit remanded the action to

the district court for further adjudication. The district court denied the

defendant’s exhaustion argument implicitly and then denied its § 1292(b)

motion to have the issue of exhaustion certified. Hence, appeal of the

exhaustion claim in the 9th Circuit awaits completion of the trial.

one state—and, no doubt, in more than one ju-

dicial circuit—differences in the rules governing

access to federal court for the purpose of press-

ing a claim under ERISA may have the troubling

effect of encouraging forum-shopping by

plaintiffs.

Mason, 106 S. Ct. at 863.

The problems highlighted by Justice White have wors-

ened since his dissent. Those seeking to avoid the need

to pursue arbitration provisions of collective bargaining

agreements can attempt to file in the Third or Ninth Cir-

cuit even when their actions may have arisen primarily in

other circuits (e.g., Seventh and Eleventh). Petitioner is a

prime example of such disparity. When it was sued in the

Eleventh Circuit, the suit was dismissed for failure to ex-

haust. Mason. Yet, when the same causes were asserted

in the Third and Ninth Circuits, a contrary ruling on ex-

haustion was made. Gavalik, Amaro. Now Continental is

confronted with a nationwide class action in the Third

Circuit. See McLendon v. Continental Group, Inc., 602 F.

Supp. 1492 (D.N.J. 1985). If this action had been filed in

the Seventh or Eleventh circuits, exhaustion would be a

bar.

The Third Circuit’s Gavalik decision also conflicts with

a recent decision of this Court and with the statutory

intent of Congress in passing the ERISA statute. The

Third Circuit has allowed its distrust of arbitration to ov-

erride the language of the statute, congressional intent,

and the principles of federal common labor law.

Until this issue is resolved, an air of uncertainty will

surround collective bargaining agreements and the CBA

negotiation process. The policy of our federal labor laws,

which is “to promote industrial stabilization through the

collective bargaining agreement” (United Steelworkers v.

Warrior & Gulf Navigation Co., 363 U.S. 574 at 578

(1960)), will be at risk.

A. This Court Should Grant Certiorari to Resolve the Con-

flict among the Circuits.

1. Arbitration Is a Favored Remedy in Disputes Between

Management and Labor.

In its “role of developing a meaningful body of law to

govern the interpretation and enforcement of collective

bargaining agreements” (Steelworkers v. American Man-

ufacturing Co., 363 U.S. 564 at 567 (1960)), this Court has

consistently affirmed a basic tenet of federal common labor

law: the use of arbitration for the resolution of disputes.

As noted in Steelworkers v. Warrior & Gulf Navigation

Co., supra, 363 U.S. at 580, “‘{a] collective bargaining

agreement is an effort to erect a system of industrial self-

government.” ‘“[T]he grievance machinery under a collec-

tive bargaining agreement is at the very heart of industrial

self-government.” Jd. at 581.

One of the controversies that has surrounded arbitration

arises from the intersection of the right to arbitrate con-

tract-based claims and the right to judicial enforcement of

statutorily-created rights. This Court has held that access

to judicial remedies for some rights created by statutes

may not be deferred to arbitration.‘ More recently, how-

‘McKinney v. Missouri-Kansas-Teras R.R. Co., 357 U.S. 265, 268-

270 (1958) (Universal Military Training Service Act, 50 U.S.C. app. §

459(d); U.S. Bulk Carriers, Inc. v. Arquelles, 400 U.S. 351, 354 (1971)

(Seaman's Wage Act, 46 U.S.C. § 596, 597); Alexander v. Gardner-

Denver Co., 415 U.S. 36, 44-49 (1974) (Title VII of the Civil Rights

Act of 1964, 42 U.S.C. § 2000(e)); Barrentine v. Arkansas-Best Freight

Sys., Inc., 450 U.S. 728, 737 (1981) (Fair Labor Standards Act of 1938),

29 U.S.C. §§ 201-219; McDonald v. City of West Branch, 466 U.S. 284

(1984) (Civil Rights Act of 1871, 42 U.S.C. § 1983). These cases are

distinguishable from cases involving statutory causes of action to en-

force contract-based rights such as those to pensions created under

CBAs. It appears that misinterpretation of these cases by failure to

note that distinguishing factor has given rise to controversy between

the circuits. See discussion infra. See also Schneider Moving & Storage

Co. v. Robbins, 466 U.S. 364, 370-72 and n.14 (1984) (Court did not

ever, in Mitsubishi this Court has reaffirmed that the fed-

eral policy favoring arbitration, as embodied in the United

States Arbitration Act, 9 U.S.C. §§ 1 et seqg., is entitled

to as much deference as the policies espoused in other

federal statutes. The Court articulated a two-step analysis

to determine whether statutory rights may be deferred to

arbitration. The first step requires the anziyzing court to

interpret the governing contract to determine whether the

parties intended the dispute at issue to be resolved by the

arbitration procedures of the agreement. In this step, there

is a strong presumption of arbitrability unless the CBA

expressly excludes the particular type of dispute at issue

from the grievance procedures. AT&T Technologies v. Com-

munications Workers, 106 S. Ct. 1415. 1419 (1986); Steel-

workers v. Warrior & Gulf Wavigation Co., 363 U.S. 574,

584-85 (1960).5 The second step requires the court to ex-

amine the statute giving rise to the claims at issue and

to review its legislative history. The purpose is to deter-

mine whether there is an indication that the legislature

intended to prevent employers from enforcing CBA pro-

visions for arbitration of pension-related disputes.

By implication, since the policy favoring arbitration un-

der the federal labor statutes (including section 208(d) of

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

173(d)) is as strong as that of the Arbitration Act, the

guidance of this Court in Mitsubishi should be applied in

reach issue of whether a CBA requirement for arbitration of ERISA

claims would be lawful because it held that trustees of employee-benefit

funds are not parties to the CBA.)

*The trial court found that the claims of the plaintiffs were not

covered by their collective bargaining agreement. Although the finding

was cross-appealed, the circuit court did not discuss the issue in its

opinion. The arbitration sections of the master agreement appear in

the appendix as pages 105a-118a; and those from the pension agreement

at 119a-130a. Because no grievance is excluded from the arbitration

provisions of the CBA in issue, the trial court’s finding is plainly er-

roneous. AT&T, Warrior & Gulf Navigation Co., supra.

the collective bargaining arena. The attempt to discern

the intent of the legislature that created ERISA is the

source of controversy among the circuits.

2. The Third and Ninth Circuits Misinterpreted the Leg-

islative History of ERISA; the D.C. Circuit Did Not

Consider It.

The Third Circuit in Gavalik considered itself bound by

Zipf v. Amerian Telephone and Telegraph Co., 799 F.2d

889 (3d Cir. 1986). Although it did not specifically apply

the Mitsubishi test to discern a legislative intent against

arbitrability in Zipf, the court, in Gavalik, found that “‘[iJn

Zipf the approach approved in Mitsubishi was not con-

travened.”” Gavalik at 32.’

*The apparent application of Mitsubishi to collective bargaining

agreements is indicated in the opinion itself when this Court cites a

case from the Steelworkers Trilogy, Steelworkers v. Warrior & Gulf

Navigation Co. as an example of an instance when the Court has

favored arbitration under the criteria established by the decision. Mit-

subishi, 105 S.Ct. at 3354.

* The court indicated its basis for this observation:

The Zipf Court did not resort to a presumption of unar-

bitrability, but rather sought to ascertain congressional in-

tent on the question of arbitrability of substantive

discrimination claims under § 510 of ERISA. Its examination

of the legislative intent of § 510 revealed an express desire

that claims brought thereunder be submitted to the courts.

‘Indeed, an amendment that would have created an ad-

ministrative remedy for section 510 claims, to be established

by the Department of Labor, was defeated.”’ Zipf, 799 F.2d

at 892.

Gavalik at 32 (emphasis added). Review of the legislative history dem-

onstrates that the defeated amendment was intended to cover those

employees who were not protected already by a collective bargaining

agreement providing administrative remedies. The amendment was de-

feated based on its cost, not from any antipathy to administrative and

arbitral remedies. 119 Cong. Rec. 30,374-75, 30,399-401 (1973), re-

printed in Senate Comm. on Labor and Public Welfare, Subcomm. on

Labor, 94th Cong., 2d Sess., Legislative History of the Employee Re-

In its decision in Amaro, the Ninth Circuit distinguished

its previous finding of an exhaustion requirement for ER-

ISA-based claims, Amato v. Bernard, 618 F.2d 559, 567

(9th Cir. 1980), on the grounds that the latter case involved

a request for declaration of the parties’ rights under a

pension plan, whereas in the case before it, the claim did

not specifically arise from breach of contract.

The D.C. Circuit in Air Line Pilots Association did not

review ERISA’s legislative history; the court relied on

Alexander for its finding that the plaintiffs did not need

to arbitrate their statutory claims.

3. The Seventh, Eleventh, and Second Circuits Rely on

a Consistent Reading of the Statute.

In Kross the Seventh Circuit found itself in agreement

with the Ninth Circuit’s decision in Amato. In that case

the court found from its review of the statute that the

exhaustion of administrative remedies was a necessary step

before action could be taken in federal court.’

In Mason, the Eleventh Circuit reviewed the pertinent

eases from the Ninth Circuit (Amaro and Amato) and

agreed with Amato and with the Seventh Circuit (in Kross).

It commented: “‘[iJn addition, imposing an exhaustion re-

quirement in the ERISA context appears to be consistent

with the intent of Congress that pension plans provide

intrafund review procedures.’’ Mason, 763 F.2d at 1227.

tirement Income Security Act of 1974 (Comm. Print 1976) [hereinafter

cited as Leg. Hist.] Vol. 2, at 1774-76, 1834-37.

It would certainly be anomalous if the same good reasons

that presumably led Congress and the Secretary [of Labor]

to require covered plans to provide administrative remedies

for aggrieved claimants did not lead the courts to see that

those remedies are regularly used.

Kross, 701 F.2d at 1245, quoting from Amato, 618 F.2d at 567.

In Alfarone, the Second Circuit relied on the ‘firmly

established federal policy favoring exhaustion of adminis-

trative remedies in ERISA cases’ (788 F.2d at 79) and

cited Kross.

The question is clear: did Congress in enacting section

510 of ERISA intend to prevent an employer from en-

forcing a CBA provision for arbitration of pension dis-

putes? The answers of the circuits are in conflict: the Third

Circuit, Ninth Circuit and D.C. Circuit have found that

Congress did intend to prevent arbitration of ERISA

rights; the Seventh, Eleventh, and Second Circuits have

found that Congress intended for ERISA disputes to be

handled by arbitral forums.

4. The Third, Ninth and D.C. Circuits Are in Conflict

with an Accurate Reading of Legislative History and

the Decisions of this Court.

The ERISA statute provides access to federal courts

under section 502. It makes no reference to arbitration of

the claims (including section 510 claims) that may be

brought under section 502. There are no anti-waiver pro-

visions in the statute; thus it does not foreclose arbitration

in the manner of the Securities Act of 1934 as has been

found in Jacobson v. Merrill Lynch, Pierce, Fenner &

Smith, Inc., 797 F.2d 1197, 1201 (3d Cir. 1986). The pro-

vision is similar to those in the Clayton Act and RICO

under which courts (in Mitsubishi and Jacobson, respec-

tively) have found statutory claims to be arbitrable.

Indeed, it contains a provision, section 514(d), that in-

dicates that the statute was not meant to overrule any

existing U.S. laws:

Nothing in this subchapter [which includes sec-

tions 502 and 510 of ERISA] shall be construed

to alter, amend, modify, invalidate, impair, or

supersede any law of the United States .

29 U.S.C. § 1144(d).

ERISA became law in 1974, long after the Steelworkers

Trilogy? nad established deference to arbitration as part

of the federal common labor law. Thus, it cannot be con-

strued to override the well-established deference to arbi-

tration as a method of dispute resolution under federal

labor law. See Air Line Pilots Association, 627 F.2d at

276.

Review of ERISA’s history makes it clear that the draf-

ters believed that employees operating under a CBA had

an efficient dispute resolution mechanism whereas it was

employees without such a mechanism that needed the pro-

posed administrative procedures (see 119 Cong. Rec.

30,374-75, 30,399-401 (1973), reprinted in Leg. Hist., su-

pra, at 1774-76, 1834-1837). This perception is typified by

Senator Hartke’s comment:

Senator Hartke: Most collective bargaining agree-

ments protect employees against discharge with-

out cause and provide effective enforcement

machinery in arbitration proceedings whose re-

sults are enforceable under section 301 of the

Labor-Management Relations Act.

Leg. Hist., supra, at 1774.

The legislative record demonstrates a bias in favor of

arbitration rather than against it and contains a strong

indication that the legislators presumed that arbitration

procedures under CBAs would be available for the en-

forcement of rights under ERISA including section 510

rights. Indeed, civil actions are to be regarded as arising

‘“ “in stmilar fashion to those brought under § 301 of the

Labor Management Relations Act of 1947.’ H. R. Conf. Rep.

No. 93-1280, p. 327 (1974) (emphasis added).”’ Metr»politan

* Steelworkers v. American Mfg. Co., 363 U.S. 564 (1960); Steelworkers

v. Warrior & Gulf Navigation Co., 363 U.S. 574 (1960); Steelworkers

v. Enterprise Wheel & Car Corp., 363 U.S. 593 (1960).

Lye Insurance Co. v. General Motors Corp., 55 U.S.L.W.

4468, 4470 (U.S. April 6, 1987)

Relying on a narrow and incorrect reading of the !eg-

islative history of ERISA, the Third Circuit has foreclosed

the use of arbitration in one of the areas under federal

common labor law where it has traditionally been used to

resolve problems, 1.e., in the area of pension rights. Such

a reading places the circuit in conflict with this Court’s

decision in Mitsubishi.

5. The Conflict Can Only Be Resolved By this Court.

The Eleventh Circuit, finding that the intent of the leg-

islature in ERISA allowed for arbitral resolution of dis-

putes under the statute, did so in the full knowledge of

differences between the Seventh Circuit in Kross and the

Ninth Circuit in Amaro. The Third Circuit, in finding in

Gavalik that the intent of the legislature was to prevent

deferral of disputes to arbitration, did so with the full

knowledge that the Seventh Circuit and the Eleventh Cir-

cuit had found otherwise.'’® Thus, the circuits are in dis-

agreement with each other, a disagreement which will

cause increasing damage to labor-management relations in

the workplace. This Court is the only judicial body that

can resolve the dispute.

B. Conflict and Confusion Among Lower Courts Calls for

Speedy Resolution in Order to Avoid Increased Case-

load and Chaos in the Labor-Management Arena.

In 1986, thirty-eight cases involving disputes over ER-

ISA and exhaustion were decided in federal courts. See

App. at 13la-134a. With the present controversy between

circuits, that number threatens to burgeon. Because of the

controversy, those participating in ongoing labor-manage-

‘Although the Kross and Mason cases are not specifically mentioned

in the Third Circuit’s opinion in Gavalik, the cases were called to the

court’s attention in Continental's Brief of Appellee-Cross Appellant filed

with the court on Feb. 14, 1986.

ment negotiations cannot bargain confidently for the res-

olution of pension-related disputes by arbitration. Thus,

controversy over pension rights/liabilities and the proper

method for resolving disputes vitiates the essence of con-

tract-bargained industrial peace. The plain need for reso-

lution of the conflict between the circuits and the

importance of a prompt resolution to industrial peace jus-

tify granting certiorari in this case.

II. THE THIRD CIRCUIT’S APPLICATION OF A SIX-

YEAR STATUTE OF LIMITATIONS IS IN CON-

FLICT WITH THE BASIC TENETS OF FEDERAL

LABOR POLICY AND SEVERAL PRIOR DECI-

SIONS OF THIS COURT.

Few areas of the law stand in greater need of

firmly defined, easily applied rules than does the

subject of periods of limitations.

Chardon v. Fumero Soto, 462 U.S. 650, 667 (1983) (Rehn-

quist, J., dissenting).

As emphasized by this Court in United Parcel Service

v. Mitchell, 451 U.S. 56 (1981), and subsequently in

DelCostello v. Teamsters, 462 U.S. 151, 161 (1983), Justice

Rehnquist’s observation is nowhere more true than in the

context of ‘‘those consensual processes that labor law is

chiefly designed to promote—the formation of the collec-

tive [bargaining] agreement and the private settlement of

disputes under it.’’ DelCostello, 462 U.S. at 163 (explaining

the need for national uniformity in the federal labor law

context) (quoting UAW v. Hoosier Cardinal Corp., 383

U.S. 696, 703 (1966)).

The importance of SOL uniformity has been emphasized

again in a case concerning racial discrimination claims.

Wilson v. Garcia, 471 U.S. 271 (19885).

Disputes in the labor arena must also be resolved quickly:

‘“{O}ne of the leading federal policies in this area is the

‘relatively rapid resolution of labor disputes.’ ”’ Mitchell,

451 U.S. 63 (quoting Hoosier, 383 U.S. at 707). Thus, this

Court rejected such state SOL periods as that for legal

malpractice (three to ten years) and that for contracts

disputes (six years):

This system, with its heavy emphasis on griev-

ance, arbitration, and the ‘law of the shop,’ could

easily become unworkable if a decision which has

given ‘meaning and content’ to the terms of an

agreement, and even affected subsequent modi-

fications of the agreement, could suddenly be

called into question as much as six years later.

Mitéhell, 451 U.S. at 64.

When it enacted ERISA, Congress preempted state pen-

sion laws, 29 U.S.C. § 1144(a). This indicates a congres-

sional intent that there be uniform federal remedies for

the enforcement of pension rights. ‘‘This provision dem-

onstrates that Congress ... meant to establish pension

plan regulation as exclusively a federal concern.” Alessi

v. Raybestos-Manhattan Inc., 451 U.S. 504, 523 (1981). See

also Metropolitan Life Insurance Co. v. Genera! Motors

Corp. 55 U.S.L.W. 4468 (U.S. April 6, 1987).

The Third Circuit’s decision threatens to permit the very

chaos warned of in Mitchell. Indeed, subsequent to the

denial of their grievances, and without proceeding to ar-

bitration, the petitioner’s employees brought suit in federal

court, based on section 510 of ERISA, 29 U.S.C. § 1140.

As in DelCostello and Mitchell, they alleged that their em-

ployment was wrongfully terminated. As in those two cases

the employees sought to avoid the impact of unsuccessful

grievances. As in Wilson, the claims were based on dis-

crimination.

Because Congress has not expressly provided for limi-

tations periods applicable to enforcement actions in federal

court under section 502, the district court and the Third

eee

Circuit decided to apply Pennsylvania’s residuary six-year

statute to the employees’ claims. Thus, an employer’s per-

sonnel decisions are subject to federal court review as

much as six years after the fact. This result is not only

irreconcilable with federal labor policy, it is also in direct

conflict with the decisions of this Court in DelCostello,

Mitchell, and Wilson.

Correction of the circuit’s error is all the more impor-

tant because it implicates a very fast growing area of labor

law. As reported by the Pension Benefit Guaranty Cor-

poration (PBGC) in its 1985 Annual Report to Congress,

at 1, about 38 million American workers now participate

in some 112,000 insured benefit plans under ERISA. Con-

current with ERISA’s key role in the labor market, the

number of ERISA cases has grown dramatically in the

various courts. A substantial number of those cases have

involved statute of limitations questions.'! The lack of di-

rect guidance on a limitations period for ERISA-based

"25 U.S.C. § 1113 provides that a three- or six-year limitations

period applies to actions for violations of §§ 1101-1114 (enacting rules

of fiduciary responsibility). ERISA provides no statute of limitations

for actions brought pursuant to section 502 of ERISA, 29 U.S.C. §

1132, to remedy violations of other parts of ERISA. Kuntz v. Reese,

760 F.2d 926, 936 (9th Cir. 1985), op. withdrawn & decision vacated,

785 F.2d 1410 (1986).

In actions under 29 U.S.C. § 1140, the following state statutes of

limitations have been applied: state action for termination of employ-

ment-2 years, Corkery v. SuperX Drugs Corp., 602 F. Supp. 42 (M.D.

Fla. 1985); state contract action-6 years, Delisi v. United Parcel Serv.

Inc., 580 F. Supp. 1572 (W.D. Pa. 1984), state period for statutory

actions-6 years, Cowden v. Montgomery County Soc’y for Cancer Control,

591 F. Supp. 740 (S.D. Ohio 1984); state residuary statute of limitations-

6 years, McLendon, supra.

Some courts, however, have applied ERISA’s built-in limitations stat-

ute, 29 U.S.C § 1113, outside the context of a §§ 1101-1114 violation.

See, e.g., Edwards v. Wilkes-Barre Pub. Co. Pension Trust, 757 F.2d

52 (8d Cir.) (action to compel recalculation of benef ts), cert. denied,

106 S. Ct. 130 (1985).

claims has resulted in confusion among the courts, con-

siderable opportunity for forum shopping and great un-

certainty for private litigants.

Finally, even if the Third Circuit need not follow this

Court’s teachings in DelCostello, Mitchell, and Wilson, its

decision to apply a six-year statute misapplies this Court’s

traditional instructions (see, e.g., Holmberg v. Armbrecht,

327 U.S. 392, 395 (1946)) for selection of a state statute

of limitations. Specifically, under current Pennsylvania law

no limitations period longer than two years could be ap-

plied. Indeed, Gavalik is in direct conflict with the Third

Circuit’s own precedent explicitly recognizing the changes

in the Pennsylvania statute of limitations.

A. The Gavalik Opinion is Violative of the Principles Es-

poused by this Court in DelCostello and Mitchell.

The Gavalik Panel correctly identified the criteria for

application of the six-month statute of limitations of sec-

tion 10(b) of the Labor Management Relations Act (LMRA),

29 U.S.C. 160(b) under DelCostello, supra. In attempting

to apply these criteria, however, the Third Circuit panel

erroneously found that: a) section 510 actions do not re-

semble claims charging unfair labor practices, Slip op. at

26 (App. at 26a); b) the instant dispute does not threaten

the bargaining relationship, id. at 27 (App. at 27a); and

c) the desire for uniformity is not a factor because the

claims are not asserted under a collective bargaining

agreement. /d.

1. The Family Resemblance between Actions under Sec-

tion 510 and a Charge of an Unfair Labor Practice

As stated by Senator Hartke in the debate on ERISA,

the language of section 510 “parallels § 8(aX3) of the

NLRA.” 119 Cong. Rec. 30,374 (1973), reprinted in Leg.

His., supra, at 1775. See also West v. Butler, 621 F.2d

240, 245 nn.4-5 (6th Cir. 1980). Thus, the Third Circuit’s

finding that there was no family resemblance between sec-

tion 510 actions and charges of unfair labor practices is

facially incorrect.

2. The Need for Rapid Final Resolution of Disputes

where the Collective Bargaining Agreement and Pri-

vate Settlement of Disputes are Implicated

As in DelCostello and Mitchell, the former employees in

the present case have a grievance/arbitration procedure to

handle disputes pertaining to, inter alia, pension rights.

Avoiding arbitration constitutes ‘‘a direct challenge to ‘the

private settlement of disputes under the [collective-bar-

gaining agreement].’”’ Mitchell at 66 (quoting UAW v.

Hoosier Cardinal Corp., 383 U.S. at 702). Application of

the six-month period of § 10(b) would strike a balance

between the interests of employees in redressing griev-

ances and the federal interest in industrial peace:

The 6-month bar of § 10(b) is designed to

strengthen and defend the ‘“‘stability of bargain-

ing relationships.’ Machinists v. NLRB, 362 U.S.

411, 425. The time limitation reflects the balance

drawn by Congress, ‘‘the expositor of the na-

tional interest,’’ id., at 429, between the interest

of employees in redressing grievances and ‘“‘vin-

dicati[ng] [their] statutory rights,’’ ibid., and the

“interest in ‘industrial peace which it is the over-

all purpose of the Act to secure.’ ”’

Mitchell, 451 U.S. 68-69 (Stewart, J., concurring) (footnote

omitted).

Since pension rights are a negotiated item in many

CBAs, all parties benefit from a prompt resolution of dis-

putes over entitlement to pensions and actions alleging

discriminatory deprivation of pension benefits.

3. The Need for Uniformity where the Formation of the

Collective Bargaining Agreement and the Private Set-

tlement of Disputes under it are Implicated

As this Court stated in DelCostello, there is a special

need for uniformity where the case involves ‘those con-

sensual processes that federal labor law is chiefly designed

to promote—the formation of the ... agreement and the

private settlement of disputes under it.’’ DelCostello at 162-

163.2 As in DelCostello, plaintiffs are attempting to avoid

the applicaticy »f the grievance procedures established by

the CBA. Supra, Introduction. See also 119 Cong. Rec.

30,374 (1973), reprinted in Leg. Hist., supra, at 1774

(CBAs provide enforcement through arbitration against

discharge without cause) and 119 Cong. Rec. 30,400-401

(1973), reprinted in Leg. Hist., supra, at 1836-37 (union

employees’ disputes on discharges handled through arbi-

tration).

Thus, al] the factors that led this Court to choose the

six-month limitation period in DelCostello are present in

the instant case. There is a recognized strong family re-

semblance between the action at issue and unfair labor

practice charges. In addition, the instant claim, as did the

one in DelCostello, strongly implicates collective bargaining

and private dispute settlement, thus raising important is-

sues of uniformity and the need for rapid conflict reso-

lution. If state law is applied, similar claims by employees

in different states will be subject to drastically different

limitations periods. As was the case in DelCostello, appli-

cation of the six-month period would reflect the appro-

priate balance as perceived by Congress between rapid

‘ Although the circuits have not mechanically limited DelCostelio to

its strict Vaca-Sipes context, there is disagreement among the courts

as to the reach of DelCostello as this Court has recognized in its denial

of certiorari in Davis v. UAW, 106 S. Ct. 1284, (1986) (White J.,

dissenting) (conflict among the circuits concerning the application of

six-month period to actions against the union under the Labor-Man-

agement Reporting and Disclosure Act). See also Adams v. Gould Inc.,

739 F.2d 858, 867 (3d Cir. 1984), (DelCostello not applicable in pension

context), cert. denied, 469 U.S. 1122 (1985) (White, J., dissenting, with

Brennan and Powell, JJ., joining) (the rule adopted by Gould “‘departs

from the policy we recently announced in DelCostello of having a single

statute of limitations for fair representation suits.’’).

conflict resolution and the need to offer plaintiffs an ad-

equate remedy.

B. Application of Wilson

The Third Circuit’s refusal to apply a limitations period

similar to that applicable under 42 U.S.C. § 1983 rep-

resents an unduly narrow interpretation of Wilson and

cannot be reconciled with the Third Circuit’s own prec-

edent. The district court cited Knoll v. Springfield Town-

ship School Dist., 699 F.2d 137, 141 (3d Cir. 1983) (‘Knoll

I’’), in an interlocutory order in 1983 and analogized the

employment discrimination claims of the employees to

federal discrimination actions under 42 U.S.C. § 1983,

which were then subject to a 6-year limitations period

in Pennsylvania. Prior to the Third Circuit’s determi-

nation in the present case, Knoll I was vacated, 471 U.S.

288 (1985), and federal actions under 42 U.S.C. § 1983

became subject to Pennsylvania’s two-year limitations

statute. Wilson; Knoll v. Springfield Township School

Dist., 763 F.2d 584 (3d Cir. 1985) (on remand—applying

two-year injury statute instead of six-year residuary pe-

riod).

Although Congress itself analogized section 510 ERISA

claims to discrimination actions, and although resort to the

same limitations period as applied to discrimination actions

based on race would further both the federal interest in

uniformity and the relatively short limitations periods for

labor claims required by DelCostello and Mitchell, supra,

the Third Circuit nevertheless disavowed the analogy that

had been made by the lower court, and, interpreting Wil-

son v. Garcia as relevant only within its strict 42 U.S.C.

§ 1983 context, rejected the analogy to federal discrimi-

nation claims.

1. The Analogy to Federal Discrimination Actions is

Compelling.

Section 510 was characterized by Congress as ‘‘a remedy

for any person fired such as is provided for a person

discriminated against because of sex.’ 119 Cong. Rec.

30,044 (1973), reprinted in Leg. Hist., supra, at 1641.

Thus, Congress intended section 510 to provide an iden-

tical remedy to that existing under § 1983 cases. See also

Crouch v. Mo-Kan Iron Workers Welfare Fund, 740 F.2d

805, 810 (10th Cir. 1984) (section 510 creates ‘‘a claim for

retaliatory action by the employer similar to that under

the civil rights laws’’).

2. The Federal Interest in Uniformity

Wilson's identification of a national interest in uniform-

ity was based on the remedial nature of the statute. An

analogy to federal discrimination claims, whose limitations

period is determined by the state limitations period ap-

plicable to personal injury actions would comport with this

same federal interest, and would resolve the confusion

among the courts as to the period of limitations for § 510

actions. Supra, note 11. In addition, such an analogy would

subject all discrimination actions, whether based upon race

(42 U.S.C. § 1983) or pension (29 U.S.C. § 1140), to the

same limitations period and would comport with Congress’

intent in enacting section 510.

3. The Need for Short Limitations Periods

Analogy to the two-year limitations period of Wilson

also comports with the federal interest in the rapid res-

olution of labor conflicts. Mitchell; DelCostello.’*

'* Wilson, according to the test articulated in Chevron Oil Co. v

Huson, 404 U.S. 97, 106-7 (1971), applies retroactively to the action in

issue. At the time this action was brought there was no precedent upon

which the plaintiffs could reasonably have relied to expect that a court

would apply a six-year limitations period. Moreover, even if plaintiffs

could foresee that the Court would liken their claims to actions under

1983 (which they could not), their action predates the Third Circuit's

decisions in Knoll v. Springfield Township School Dist., 699 F.2d 137

(1983) and Perri v. Aytch, 724 F.2d 362 (1983) establishing a six-year

limitations period to § 1983 actions. See Smith v. City of Pittsburgh,

C. State Limitations Periods

Even if actions under section 510 are not subject to the

statute of limitations provisions identified in DelCostello

and Wilson, the Third Circuit’s decision to apply a six-

year period is violative of the principles imposed by this

court on the selection of limitations periods when no suit-

able federal alternatives are available and is in conflict

with the Third Circuit’s own precedent.

The Third Circuit premised its use of a six-year period

on the assumption that this is the period applicable to

actions for employment discrimination in Pennsylvania.

Gavalik at 16."

There is no specific limitations period in Pennsylvania

for actions for employment discrimination. Thus, for SOL

purposes, Third Circuit precedent has uniformly analogized

discrimination claims to common law actions for tortious

interference. Knoll IJ, 699 F.2d at 141 (‘‘We have anal-

ogized a claim of employment discrimination brought under

the federal Civil Rights Acts, to ‘those torts which involve

the wrongful interference with another’s economic rights

or interests.’ ’’), quoting Skehan v. Board of Trustees, 590

F.2d 470, 477 (3d Cir. 1978), in turn quoting Davis v.

United States Steel Supply, 581 F.2d 335, 339 (8d Cir.

1978).'°

764 F.2d 188, 195 (3d Cir. 1985) (applying Wilson retroactively to 1983

action where action brought prior to Knoll and Perri); Malley-Duff &

Associates v. Crown Life Ins. Co., 792 F.2d 341, 345 n.10 (3d Cir.),

cert. granted, 107 S.Ct. 509 (1986).

‘* The court in Gavalik cites only one state court opinion that supports

its holding: Skehan v. Bloomsburg State College, 503 A.2d 1000 (Pa.

Commw. 1986). The applicable SOL was not a matter of dispute in

that case.

'‘’ See also Mazzanti v. Merck Co., 770 F.2d 34, 35 (3d Cir. 1985),

citing Knoll I (supra) and Fitzgerald v. Larson, 741 F.2d 32, 36 (3d

Cir. 1984), vacated on other grounds, 472 U.S. 1051] (1985) (action

alleging discharge based on political affiliation); Meyers v. Pennypack

Pursuant to the revised Pennsylvania SOL, common law

actions for tortious interference are now subject to a two-

year period. Home for Crippled Children v. Erie Insurance

Exchange, 130 P.L.J. 480 (Allegheny County Court of Com-

mon Pleas 1982), aff'd mem., 329 Pa. Super. 610, 478 A.2d

84 (1984) (discussing at length the effect of the changes

in the Pennsylvania statute of limitations); Bender v.

Mcllhatten, 520 A.2d 37 (Pa. Super. Ct. 1987). This state

court interpretation of the applicable SOL has been spe-

cifically adopted by the Third Circuit. Mazzanti, 770 F.2d

at 34. Thus, the Third Circuit’s analogy in Gavalik to a

6-year residual period is erroneous on its face.

Ill. THE THIRD CIRCUIT’S “A DETERMINATIVE

FACTOR”? TEST FOR CAUSATION IN MIXED-

MOTIVE DISCRIMINATION CASES CONFLICTS

WITH THIS COURT’S “SAME DECISION” TEST.

In mixed-motive discrimination cases, this Court has ap-

plied a ‘‘same decision’’ test to determine causation. Mt.

Healthy City School District Board of Education v. Doyle,

429 U.S. 274 (1977); Arlington Heights v. Metro Housing

Corp., 429 U.S. 252 (1977); East Texas Motor Freight Sys-

tem, Inc. v. Rodriguez, 431 U.S. 395 (1977).

The test is:

1. The employee must first show that the pros-

cribed factor is a ‘‘motivating’’ or ‘‘substantial”’

factor in the employer’s personnel action.

Woods Home Ownership Ass'n, 559 F.2d 894, 904 (3d Cir. 1977).

Statutory discrimination claims in Pennsylvania, another possible

analogy, are subject to limitations periods of two years or less. See,

e.g., Pa. Stat. Ann. tit. 43, § 336.5 (Purdon 1986 Supp.) (two years

for wage discrimination on the basis of sex); Pa. Stat. Ann. tit. 43, §

959(g) (Purdon 1986 Supp.) (complaints alleging discrimination in an

employment context must be filed with the Pennsylvania Human Re-

lations Commission within 90 days after the act); Pa. Stat. Ann. tit.

43, § 1101.1505 (Purdon 1986 Supp.) (four-month period for filing of

unfair labor practice charge).

2. If the employee carries this burden, the em-

ployer may defeat liability by proving by a pre-

ponderance of the evidence that it would have

reached the same decision even in the absence

of the proscribed factor.

As described in Mt. Healthy at 287.

In Gavalik, after an extensive trial, the district court

found permissible and non-permissible motives, but con-

cluded that the same results would have occurred in any

event. Gavalik, Findings of Fact and Conclusions of Law,

FF 106, 107, 141, 142 (Sept. 24, 1985) (App. at 86a, 90a).

The appellate court reversed, believing that the trial

court had misapplied the burdens of proof. Slip op. at 53-

56 (App. at 52a-54a.) However, rather than remand the

case to the district court for reconsideration of the evi-

dence in light of the corrected standard and permitting

such supplemental proceedings as might have been war-

ranted, the Third Circuit held that liability had been es-

tablished. Slip op. at 63 (App. at 60a-61a.)

In so doing, the Third Circuit effectively eliminated

petitioner’s opportunity to present any defense against the

alleged liability. The Third Circuit ignored the findings of

fact by the tria! judge, ignored the due process require-

ments of the Constitution, and ignored the Mt. Healthy

standard clearly articulated by this Court.

The Third Circuit’s approach was based on ‘‘a deter-

minative factor’ test for causation’® similar to the ‘‘in

'* Maxfield v. Sinclair Int'l, 766 F.2d 788, 791 (3d Cir. 1985), cert.

denied, 106 S.Ct. 796 (1986) (The plaintiff must prove that age was a

determining factor); Bellissimo v. Westinghouse Elec. Corp., 764 F.2d

175, 179 (3d Cir. 1985), cert. denied, 106 S.Ct. 1244 (1986) (‘‘The ‘but

for’ test does not require a plaintiff to prove that the discriminatory

reason was ‘the’ determinative factor, but only that it was ‘a’ deter-

minative factor.”’); Dillon v. Coles, 746 F.2d 998, 1005 (3d Cir. 1984);

Duffy v. Wheeling Pittsburgh Steel Corp., 738 F.2d 1393, 1395 (3d Cir.

part’”’ test for causation expressly rejected by this Court

in Mt. Healthy.

A. Application of the Third Circuit’s ‘“‘A Determinative

Factor’’ Test in Gavalik Conflicts with Decisions of this

Court.

The Third Circuit explained its standard in Gavalik:

“{slimilarly, § 510 of ERISA requires no more than proof

that the desire to defeat pension liability is a ‘determi-

native factor.’’’ Slip op. at 54 (App. at 52a). Under the

Third Circuit’s test, a plaintiff establishes liability by a

showing that the alleged proscribed motive is ‘‘a deter-

minative” factor even if the defendant proves by a pre-

ponderance of the evidence that the ‘‘same decision’ would

have occurred absent the proscribed motive.

The basic error committed by the Third Circuit in Gav-

alik lies in denying the defendant/employer the entitlement

to defeat liability to the plaintiff class by proving that the

challenged employment actions were caused by legitimate

non-discriminatory reasons.

Notwithstanding the trial court’s holding of no liability

in conformance with this Court’s teachings, the Third Cir-

cuit held that the plaintiff’s evidence ipso facto established

liability. It did not remand the case to the trial court to

afford the defendant its due process right of showing by

a preponderance of the evidence that the challenged em-

ployment actions would have occurred absent the pros-

cribed motive. Hazelwood School District v. United States,

433 U.S. 299 (1977). The Third Circuit apparently recog-

nized that the defendant/employer has a right to prove

that legitimate non-discriminatory reasons caused the chal-

lenged actions but with its remand order is allowing the

defendant/employer only to limit damages to individual

1984), cert. denied, 469 U.S. 1087 (1984); Lewis v. Univ. of Pittsburgh,

725 F.2d 910 (3d Cir. 1983), cert. denied, 469 U.S. 892 (1984); Smithers

v. Bailar, 629 F.2d 892, 898 (3d Cir. 1980).

plaintiffs with such a showing. Slip op. at 68-69 (App. at

65a.) On remand, the plaintiffs are entitled to a presump-

tion of liability.

The Third Circuit’s holding in Gavalik conflicts with

decisions of this Court in which defendants in mixed-mo-

tive discrimination cases can refute liability with proof that

their challenged action was caused by a legitimate motive

or that the same decision would have been made absent

the proscribed factor. This test of causation is pervasive

in labor and discrimination cases of all kinds.'? The mixed-

motive burden of proof procedure that has been applied

by this Court in other types of discrimination cases is

equally applicable to allegations of pension discrimination.

B. The Third Circuit Panel Incorrectly Applied the Same

Decision Test at the Wrong Stage of the Case.

Both the plaintiffs’ and the defendant/employers’ show-

ing as to causation must occur before the trier of fact can

determine liability vel non to the class. See Teamsters, 431

U.S. at 361; Cooper v. Federal Reserve Bank of Richmond,

467 U.S. 867, 875 (1984).

‘* Whether based on: a) race, color, or national origin under civil

rights statutes, 42 U.S.C. §§ 2000 et seg. and 42 U.S.C. §§ 1981 and

1983 (Texas Dept. of Community Affairs v. Burdine, 450 U.S. 248

(1981); Regents of the Univ. of Cal. v. Bakke, 438 U.S. 265 (1978);

Hazelwood School Dist. v. United States, 433 U.S. 299 (1977); Dothard

v. Rawlinson, 433 U.S. 321 (1977); Teamsters v. United States, 431

U.S. 324 (1977); East Texas Motor Freight Sys., Inc.), b) race under

the Fair Housing Act, 42 U.S.C. §§ 3601 et seg., (Arlington Heights v.

Metro Hous. Corp., 429 U.S. 252 (1977)); c) union activity under the

Labor Management Relations Act, 29 U.S.C. §§ 141 et seg. (NLRB v.

Transp. Management Corp., 462 U.S. 393 (1983); Wright Line, 251

NLRB 150 (1980), enforced, 662 F.2d 899 (1st Cir. 1981), cert. denied,

455 U.S. 989 (1982)); d) age uncer the Age Discrimination in Employ-

ment Act, 29 U.S.C. §§ 621 et seg., (Pace v. So. Ry. System, 701 F.2d

1383. 1385-88 (11th Cir. 1983), cert. denied, 464 U.S. 1018 (1983)); or

e) the Equal Protection Clause of the 14th Amendment to the Con-

stitution of the United States (Arlington Heights v. Metro Hous. Corp.,

supra).

The Third Circuit permits application of the “‘same de-

cision” test in Gavalik only after it has found liability to

the class. Gavalik at 62, 64 (App. at 59a-60a, 61a.)

The Third Circuit has erred because under the above-

cited precedents of this Court, the defendant’s burden of

proving that the same result would have occurred absent

the proscribed motive is an integral part of the liability

phase of the case. The Third Circuit itself has previously

recognized that this is true.’

The court’s decision even conflicts with the Eleventh

Circuit cases upon which it relied at 46 and 47 (App. at

45a-46a), because in those cases, the employer was allowed

to refute liability by proving that the same result would

have occurred absent the proscribed factor. Lee v. Russell

County Board of Education, 684 F.2d 769 (11th Cir. 1982);

Bell v. Birmingham Linen Service, 715 F.2d 1552, 1556-

57 (11th Cir. 1983), cert. denied, 467 U.S. 1204 (1984).

The Panel’s error can readily be seen by comparing the

following two quotes, the first from Gavalik and the sec-

ond from Lewis v. University of Pittsburgh:

The district court erred, however, in not recog-

nizing that appellants carried their burden of

proof on causation by establishing that Continen-

tal’s challenged decisions were motivated by both

permissible and impermissible factors.

Slip op. at 68.

In Dillon v. Coles, 746 F.2d 998 (3d Cir. 1984), the court stated:

Included in the defendant’s rebuttal would be evidence that

absent discrimination the plaintiff would not have been hired

or promoted because of lack of qualifications, curtailment

of operations, or similar matters. This burden of production

resting on the employer goes to liability, not relief, and is

governed by Burdine.

Id. at 1004-05.

a a A lll late dene

There may be several determinative factors which

lead to any given decision, all of which can be

“but for’’ causes of the challenged action. The

ultimate ‘“‘but for’’ test, however, subsumes within

its determination all such factors.

Lewis, 725 F.2d at 917 n.8 (3d Cir. 1983).

Under Mt. Healthy the ultimate ‘‘but for’’ test is, would

the ‘“‘same decision” have occurred absent the prescribed

factor? The Third Circuit’s decision in Gavalik holds that

there is class liability based on an impermissible motive

regardless of the existence of other legitimate motives and

regardless of the district court’s findings of fact that the

same results would have occurred in any event.

Motive and causation are essential elements of a section

510 violation under ERISA. Assuming arguendo, that this

Court holds that the Third Circuit’s test for causation is

permissible, the Third Circuit nevertheless misapplied the

test here.

Normally, appellate courts do not consider issues which

have neither been presented at trial nor decided by the

district court. Singleton v. Wulff, 428 U.S. 106, 119 (1976);

Hormel v. Helvering, 312 U.S. 552, 556 (1941). The Third

Circuit has erred in deciding issues concerning a discrim-

inatory ‘“‘plan’”’ and ‘‘recalls’’ which were not addressed by

the district court.

The trial court did not reach a conclusion concerning

an alleged discriminatory ‘‘plan’’. Gavalik, at 40 (App. 40).

Continental argued on appeal that the “‘plan’’ was not

before the district court. Gavalik, at 41 n.34 (App. at 41a).

Nevertheless, the circuit court held that the ‘“‘plan” was

violative of section 510 and corrected its opinion on

plaintiffs’ petition to permit damages for failure to recall.

The panel looked only to the allegations contained in the

complaint (id.) and ignored how the plaintiffs had expressly

waived issued other than layoffs at trial. (record in Gav-

alik, joint appendix at 418, 469, 470, 766).

The Panel’s de novo review of the record and its opinion

concerning issues not decided below was violative of the

appropriate standards of appellate review.

CONCLUSION

For all of the above reasons, this Court should grant a

writ of certiorari in order to resolve conflicts between the

circuits and with the opinions of this Court over 1) the

question of whether Congress in enacting ERISA intended

to prevent an employer from enforcing a provision in a

collective bargaining agreement to arbitrate any pension

related differences, 2) the proper statute of limitations to

be applied to claims based on section 502 of ERISA, 29

U.S.C. § 1132, and 3) the right of a mixed-motive dis-

crimination action defendant to defend itself with a pre-

ponderance of evidence.

As it has demonstrated throughout the petition, these

issues are of great import, affecting the lives of millions

of workers and thousands of companies, and because of

the extent of inter-circuit controversy, inconsistency with

this Court’s opinions, and general confusion, may only be

resolved by this Honorable Court.

The Continental Can Company strongly urges the Mem-

bers of the Court to grant a writ of certiorari in the

present action.

SIRS” eA AEs a 8 eae

JAMES D. MORTON

SAMUEL W. BRAVER

BUCHANAN INGERSOLL, P.C.

600 Grant Street

Pittsburgh, Pa. 15219

(412) 562-8800

Of Counsel:

DANIEL M. CARSON

Associate General Counsel

Continental Can Company

800 Connecticut Avenue

P.O. Box 5410

Norwalk, Conn. 06856

Respectfully submitted,

EUGENE L. STEWART

Counsel of Record

TERENCE P. STEWART

GEERT DE PREST

WILLIAM A. FENNELL

VINCENT J. BRANSON

STEWART & STEWART

1001 Connecticut Avenue, N.W.

Washington, D.C. 20036

(202) 785-4185

APPENDIX

en thay

Seon —=—"

bi es —

’

. ° f

UNITED STATES COURT OF APPEALS

FOR THE THIRD DISTRICT

Nos. 85-3597 and 85-3615

RoBERT GAVALIK, FRANK GRELO, JOSEPH URBAN, ANTHONY

ULYAN, DONALD A. BERGER, RONALD CLARKE, HENRY

FosTER, GEORGE PATTERSON, JOSEPH KELLERMAN, ROBERT

PAVLIK, PHILLIP FARLEY, THOMAS RILEY, THOMAS WARREN

and FRANCIS HUMENIK

Vv.

CONTINENTAL CAN COMPANY

(D.C. Civ. No. 81-1519)

ALBERT J. JAKUB, FRED CIPRIANA, JR., ANTHONY J.

BERNARDO, THOMAS A. MULLIGAN, WILLIAM T. TARR,

DoNALD W. ROBERTS, ERNEST WIRBECKI and GEORGE W.

STEPANIC on behalf of themselves ‘and others similarly sit-

uated ALFRED BORRELLI, JR., MICHAEL D1 IorI0, ANTHONY

FoLino, THOMAS E. JOHSTON, ROBERT KAPOLKA, JOHN C.

KINCEL, PETER A. RUMAIN, HARRY H. SMITH, MELVIN J.

SMITH, JACK A. STULL and ERNEST B. TADDEO, on behalf

of themselves and others similarly situated

Vv.

CONTINENTAL CAN COMPANY, a member of Continental

Group, Inc.

(D.C. Civ. No. 82-1995)

ROBERT GAVALIK, et al. and ALBERT J. JAKUB, et al.,

Appellants in No. 85-3597

CONTINENTAL CAN ComPANy, U.S.A., a member of the

Continental Group, Inc.,

Appellant in No. 85-3615

(D.C. Civ. Nos. 81-1519; 82-1995)

SUR PETITION FOR REHEARING

Present: GIBBONS, Chief Judge, SeITz, ADAMS,* WEIS,

HIGGINBOTHAM, SLOVITER, BECKER, STAPLETON, and

MANSMANN, Circuit Judges.

The petition for rehearing filed by Continental Can Com-

pany in the above-entitled case having been submitted to

the judges who participated in the decision of this Court

and to all the other available circuit judges of the circuit

in regular active service, and no judge who concurred in

the decision having asked for rehearing, and a majority

of the circuit judges of the circuit in regular active service

not having voted for rehearing by the Court in banc, the

petition for rehearing is denied.

BY THE COURT,

/s/ A LEON HIGGINBOTHAM

Circuit Judge

Dated: February 19, 1987

* Honorable Arlin M. Adams, United States Circuit Judge, was pres-

ent when this case was heard, but did not participate in the decision.

mittens Be

att A,

- re

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

Nos. 85-3597 and 85-3615

ROBERT GAVALIK, FRANK GRELO, JOSEPH URBAN, ANTHONY

ULYAN, DONALD A. BERGER, RONALD CLARKE, HENRY

FOSTER, GEORGE PATTERSON, JOSEPH KELLERMAN, ROBERT

PAVLIK, PHILLIP FARLEY, THOMAS RILEY, THOMAS WARREN

and FRANCIS HUMENIK

CONTINENTAL CAN COMPANY

(D.C. Civ. No. 81-1519)

ALBERT J. JAKUB, FRED CIPRIANA, JR., ANTHONY J.

BERNARDO, THOMAS A. MULLIGAN, WILLIAM T. TARR,

DONALD W. ROBERTS, ERNEST WIRBECKI and GEORGE W.

STEPANIC on behalf of themselves and others similarly sit-

uated ALFRED BORRELLI, JR., MICHAEL D1 IoRIO, ANTHONY

FoLino, THOMAS E. JOHSTON, ROBERT KAPOLKA, JOHN C.

KINCEL, PETER A. RUMAIN, HARRY H. SMITH, MELVIN J.

SMITH, JACK A. STULL and ERNEST B. TADDEO, on behalf

of themselves and others similarly situated

. a

CONTINENTAL CAN COMPANY, a member of Continental

Group, Inc.

(D.C. Civ. No. 82-1995)

ROBERT GAVALIK, et al. and ALBERT J. JAKUB, et al.,

Appellants in No. 85-3597

CONTINENTAL CAN ComPANY, U.S.A., a member of the

Continental Group, Inc.,

Appellant in No. 85-3615

(D.C. Civ. Nos. 81-1519; 82-1995)

SUR PETITION FOR PANEL REHEARING

Present: ADAMS,* WEIS and HIGGINBOTHAM, Circuit Judges.

In light of the corrected opinion filed February 19, 1987,

the petition for rehearing filed by Robert Gavalik, in the

above-entitled case and submitted to the judges who par-

ticipated in the decision of this Court is thereby rendered

moot.

BY THE COURT,

/s/ A. LEON HIGGINBOTHAM

Circuit Judge

Dated: February 19, 1987

* Honorable Arlin M. Adams, United States Circuit Judge, was pres

ent when this case was heard, but did not participate in the decision

CORRECTED OPINION

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

Nos. 85-3597 and 85-3615

ROBERT GAVALIK, FRANK GRELO, JOSEPH URBAN, ANTHONY

ULYAN, DONALD A. BERGER, RONALD CLARKE, HENRY

FOSTER, GEORGE PATTERSON, JOSEPH KELLERMAN, ROBERT

PAVLIK, PHILLIP FARLEY, THOMAS RILEY, THOMAS WARREN

and FRANCIS HUMENIK

CONTINENTAL CAN COMPANY

(D.C. Civ. No. 81-1519)

ALBERT J. JAKUB, FRED CIPRIANA, JR., ANTHONY J.

BERNARDO, THOMAS A. MULLIGAN, WILLIAM T. TARR,

DONALD W. ROBERTS, ERNEST WIRBECKI and GEORGE W.

STEPANIC on behalf of themselves and others similarly sit-

uated ALFRED BORRELLI, JR., MICHAEL D1 IorIO, ANTHONY

FOLINO, THOMAS E. JOHSTON, ROBERT KAPOLKA, JOHN C.

KINCEL, PETER A. RUMAIN, HARRY H. SMITH, MELVIN J.

SMITH, JACK A. STULL and ERNEsT B. TADDEO, on behalf

of themselves and others similarly situated

CONTINENTAL CAN COMPANY, a member of Continental

Group, Inc.

(D.C. Civ. No. 82-1995)

ROBERT GAVALIK, et al. and ALBERT J. JAKUB, et al.,

Appellants in No. 85-8597

CONTINENTAL CAN CoMPANY, U.S.A., a member of the

Continental Group, Inc.,

Appellant in No. 85-3615

On Appeal from the United States District Court for

the Western District of Pennsylvania (D.C. Civ. Nos.

81-1519; 82-1995)

Argued: June 6, 1986

Before: ADAMS,* WEISS and HIGGINBOTHAM, Circuit Judges.

(Filed February 19, 1987)

Michael H. Gottesman, Esq. (ARGUED)

BREDHOFF AND KAISER

1000 Connecticut Ave., N.W.

Washington, D.C. 20036

Roslyn M. Litman, Esq.

LITMAN, LITMAN, HARRIS & Brown, P.A.

1701 Grant Building

Pittsburgh, PA 15219

Attorneys for Robert Gavalik, et al. and Albert J. Jakub,

et al.

Samuel W. Braver, Esq.

James D. Morton, Esq. (ARGUED)

BUCHANAN INGERSOLL, PROFESSIONAL CORP.

57th Floor, 600 Grant Street

Pittsburgh, PA 15219

Eugene L. Stewart, Esq. (ARGUED)

STEWART AND STEWART

1001 Connecticut Avenue

Washington, DC 20036

Attorneys for Continental Can

* Honorable Arlin M. Adams, United States Circuit Judge, was pres-

ent when this case was heard, but did not participate in the decision.

OPINION OF THE COURT

A. LEON HIGGINBOTHAM, JR., Circuit Judge.

This litigation originated in two separate class actions,

Gavalik, et al. v. Continental Can Co., C.A. No. 81-1519,

filed September 18, 1981, and Jakw), et al. v. Continental

Can Co., C.A. No. 82-1995, filed September 27, 1982, al-

leging that the institution and implementation of a “‘lia-

bility avoidance’? scheme by Continental Can

(“‘Continental’’) operated to prevent employees from at-

taining eligibility for employee benefits in violation of §

510 of the Employee Retirement Income Security Act of

1974 (ERISA), 29 U.S.C. § 1140 (1982).! The cases were

consolidated on January 17, 1984, and a single class action

was certified. The trial of the consolidated action was bi-

furcated on the issues of liability and damages. The liability

phase of the litigation commenced on July 22, 1985, and

concluded on August 8, 1985. On September 24, 1985, the

district court entered judgment for the defendant, and the

plaintiffs appealed to this Court. Continental has cross-

appealed asserting that plaintiffs’ caims before the district

court were barred by the applicable statute of limitations

and/or plaintiffs’ failure to exhaust their administrative

remedies. We reject the contentions of the cross-appeal,

' — Section 510 provides, in pertinent part:

Interference with protected rights.

It shall be unlawful for any person to discharge, fine, suspend,

expel, discipline, or discriminate against a participant or benefi-

ciary for exercising any right to which he is entitled under the

provisions of an employee benefit plan, ... or for the purpose of

interfering with the attainment of any right to which such par-

ticipant may become entitled under the plan ....

29 U.S.C. § 1140 (1982).

and because we find that the district court misallocated

the burdens of proof, we will reverse and remand for

proceedings consistent with this opinion.?

BACKGROUND FACTS

Continental Can is a corporation principally engaged in

the business of manufacturing cans. Appellants and the

class they represent® are former employees of Continen-

tal’s Pittsburgh plant, which is the focus of this litigation.

During the relevant period, appellants were all members

of Local 4337 of the United Steelworkers of America, AFL-

CIO (‘“‘USW’”’), which was their recognized collective bar-

gaining agent.

In 1977, Continental and the USW negotiated a collec-

tive bargaining agreement under which Continental was

to provide a comprehensive employee benefit plan. As part

of this benefit package, Continental agreed to provide two

pension plans for employees who experience a break in

continuous service of at least two years.‘ Under the ‘‘70/

2 The parties have diligently advanced several positions in support

of their various claims, some of which are not discussed in the text of

this opinion. We have fully considered all arguments raised but have

limited our discussion to those we deem central to our holding in this

case.

* The class certified by the district court consists of:

all Continental employees who did not achieve eligibility for Rule

of 65 or 70/75 pension benefits who were determined by Conti-

nental to be permanently laid off in 1976, 1977 or 1978 because

of Continental’s decision to cap the Pittsburgh plant, including but

not limited to all employees whose names fall below Francis Conti's

on Continental’s seniority roster.

Jt. App. at 175.

‘ Continental's employee benefit plan also provided vision, health,

life and disability insurance benefits, supplemental unemployment ben-

efits, and vacation and wage benefits. See Findings of Fact (‘“‘FF’’) 23-

27.

75 pension,’”’ an employee could qualify for pension benefits

before reaching age sixty-two, if s/he either (a) had at

least fifteen years of continuous service,® was fifty years

of age or older and had combined age and service equal

to or more than seventy years; or (b) had at least fifteen

years of continuous service and combined age and service

equal to or more than seventy-five. The “Rule of 65”

pension’ was paid to employees with at least twenty years

of continuous service on the last day worked, whose com-

bined age and years of service was equal to sixty-five or

more but less than seventy-five. Although the 70/75 pen-

sion plan had been in effect since 1971, the Rule of 65

was first formally proposed by the USW during the 1977

negotiations.* Continental’s obligation to pay 70/75 and

* Regular continuous service commenced on the day an employee

was hired. A break occurred if the employee was absent for more than

two years due to (a) layoff, (b) approved leave of absence, (c) physical

disability, or (d) permanent plant shutdown where the employee did not

elect to receive severance allowance. See FF 19.

* Ordinarily, at age sixty-two an employee who had completed ten

years of credited service could elect to retire and receive a normal

pension. The normal pension consisted of an initial lump sum allowance,

covering the first three months of retirement, with subsequent monthly

payments based on years of service and job classification. See FF 9.

The 70/75 pension was equal to the normal pension plus a monthly

supplement that continued until the employee became eligible for Social

Security.

This benefit was equal to a normal pension, reduced by the amount

of income earned by the employee during layoff. See FF 15.

* Although the Rule of 65 pension plan was first formally proposed

by the USW in October 1977, Continental bargaining officials knew

prior to the commencement of the 1977 negotiations that the USW

would demand the Rule of 65 plan. The steel, aluminum and can in-

dustries engage in ‘‘pattern bargaining,’’ whereby the same terms, ben-

efits and conditions adopted by the USW and any of these industries

is usually requested in the other industries. USW had negotiated a Rule

of 65 pension plan with the steel industry in April of 1977 and the

aluminum industry in May of 1977. Prior to the negotiations with the

can industry, Continental was provided with a copy of the steel in-

10a

Rule of 65 benefits under the agreement arose when em-

ployees, after attaining the requisite eligibility, experienced

at least a two-year break in service as the result of a plant

shutdown, involuntary layoff or absence due to physical

disability. For the purposes of entitlement to these ben-

efits, years of service included the first two years following

a layoff. This method of calculation was known as the

“creep.” Under the creep, recall of a laid off employee

for even one day commenced a new two-year continuous

service period. See FF 20, 38. Under the 70/75 pension

plan, an employee could creep into the necessary age and

service requirement. Under the Rule of 65 plan, an em-

ployee could creep only into the age requirement. See FF

21-22.

In addition to the break-in-service pension benefits, USW

and Continental in 1977 negotiated a change in the sen-

iority system. Prior to the negotiations, the Pittsburgh

plant had operated under a departmental seniority system.°

In April of 1977, Continental officials had initiated meet-

ings with USW officials to discuss the possibility of im-

plementing plant-wide seniority’? at the Pittsburgh plant.

That summer, local union representatives at the Pittsburgh

plant met with Continental officials to negotiate the plant-

dustry’s agreement from the USW. Although many of the details of

the Rule of 65 plan were unavailable, Continental was aware that it

involved a twenty-year service requirement and that payments there-

under would be triggered in the event of a plant shutdown or extended

involuntary layoff. See FF 80-83.

* Under departmental seniority, each department constitutes a sep-

arate unit within a plant. An employee’s length of service in one de-

partment under this system has no bearing on his or her competitive

seniority in another department. As a result, under departmental sen

iority employees with greater seniority could be laid off in one de-

partment while employees with fewer years of service were retained

in another. See FF 71.

has work priority over any employee throughout the plant who has less

seniority. See FF 72.

| lla

wide seniority system. USW favored the change over to

plant-wide seniority for two reasons: the departmental sen-

iority system had elicited charges of discrimination by the

Equal Employment Opportunity Commission (EEOC), and

the plant-wide seniority system would provide maximum

job security for its most senior employees. See FF 73.

Continental favored plant-wide seniority because it would

enable the company (1) to retain its most senior and skilled

employees; (2) to retain employees with vested 70/75 and

Rule of 65 pension benefits; and (3) to lay off junior em-

ployees whose benefits had not yet vested. See FF 74.

Ultimately, on October 28, 1977, Continental and the local

union formally agreed to institute a plant-wide seniority

system at the Pittsburgh plant effective November 1, 1977.

See FF 112-13, 118, 122.

A. The “Liability Avoidance’’ Program

In the mid-1970s, Continental began experiencing a

steady decline in business. This decline was principally a

result of new manufacturing processes that required fewer

| plants, the increasing use by the can industry of composite

materials and aluminum instead of steel to produce cans,

| and a growing trend among Continental’s customers to

begin to manufacture their own cans. See FF 31-32. Con-

tinental, as part of an effort to control and reduce its

| anticipated costs in light of its declining business," in 1976

devised a “‘liability avoidance’”’ program.’* In order to im-

11 In 1972 and again in 1976, Continental created reserve funds

to cover its anticipated costs (including employee benefits such as con-

tinued insurance coverage, supplemental unemployment benefits and 70/

75 pensions) in the event, inter alia, of a plant shutdown. The 1972

reserve—the Extra Charge Authorization (‘“‘ECA’’)—consisted of $231

million at the time of creation. By 1976, however, the ECA had been

substantially consumed. The 1976 reserve—the Plant Utilization Pro-

gram (‘“‘PUP’’)—was established in an amount in excess of $100 million.

See FF 43-45.

2 Continental so labeled the program in its internal memoranda.

See FF 68.

12a

plement effectively this program, Continental developed an

intricate system called the Bell System. The concept com-

ponent of the Bell System, Bell I, had two complementary

objectives: to identify Continental’s unfunded pension lia-

bilities so as to avoid triggering future vesting by placing

employees who had not yet become eligible for break-in-

service on layoff, and to retain those employees whose

benefits had already vested. See FF 53, 59, 68.

Under Bell I, Continental developed a ‘“‘cap and shrink”’

program. It defined a ‘‘cap’’ as a workforce reduction de-

signed to reduce unfunded liabilities; a ‘‘shrink’’ was a

workforce reduction resulting from market or manufac-

turing conditions. See FF 54. The decision whether to cap

a particular plant was made on the basis of a variety of

economic factors at the plant, including its potential em-

ployee benefits costs. The determination of an actual cap

level was based on Continental’s assessment of the needed

level of production to meet projected sales.'* The cap-line

limited employment to a specific name on the seniority

roster'* and was effective for five years. Employees below

the cap-line, whether then at work or on temporary layoff,

were designated as ‘‘permanently laid off,’’ and could not

be recalled for five years'® except under extreme circum-

stances, and then only with prior approval from the high-

‘8 Prior to the institution of the cap program, the employment

level was based on projections of the required manpower needed to

produce anticipated volumes of Continental products. After the cap

program was adopted, the volume of business was tailored to meet the

predetermined desired level of employment. See FF 60-61.

‘* The cap-line did not determine the actual number of employees

working at a given point in time. As employees within the capped

workforce died, quit or retired, the number of employees actually on

the job decreased. Thus, the cap-line merely divided those employees

eligible for work under the liability avoidance program from those des-

ignated as permanently laid off. See FF 66; Jt. App. 1074; 340-41.

‘8 Under the USW contract, employees lost all rights to recall after

five years.

13a

est level of Continental’s management. See FF 54-57. These

employees were not informed by Continental that they

would not be recalled.

To further effectuate the goals of the Bell System, Bell

II instructed plant managers to adjust their business vol-

ume to the desired level of employment. In accordance

with this plan, plant managers were authorized to shift

business to plants that either had low unfunded pension

liability or plants that needed the work in order to retain

employees with vested 70/75 benefits. See FF 61, 63; Jt.

App. at 1367. In addition, Bell II produced and employed

scattergraphs—computerized charts that listed the age and

service of Continental employees at a given time—to iden-

tify the unfunded 70/75 and Rule of 65 liabilities and to

ascertain when payments under those plans would be trig-

gered. By looking at a scattergraph, a plant manager could

determine the number of USW employees whose rights for

70/75 and Rule of 65 benefits had already vested and those

whose rights had not yet vested.'® See FF 64.

Finally, in April of 1977, a “‘liability avoidance tracking

system’’—the ‘“‘Red Flag’’ System—was instituted in order

to prevent inadvertent recalls of employees designated as

permanently laid off. Red Flag was tied to Continental's

payroll system and was designed to generate automatically

a red flag report to alert top Continental officials when-

ever a permanently laid off employee received a pay check

either for actual hours worked or vacation. See FF 69-70.

‘© The Inter Plan Job Opportunities (‘‘IPJP’’) potentially compli-

cated the plant managers’ determination of which employees were in

the vested or non-vested categories. Under the collective bargaining

agreement, USW employees laid off from one plant could transfer to

another plant where they had preferential hiring rights. Thus, an em-

ployee on permanent layoff status at one plant could in fact continue

working in another plant. The requirement that an employee perma-

nently laid off not be recalled for five years, however, directly coincided

with the five-year limitation on an employee's preferential recall rights

under the collective bargaining agreement. See FF 67.

l4a

B. The Pittsburgh Plant and the Closing of the Pail

Line

Like Continental’s overall situation, the Pittsburgh plant

experienced a significant decline in business in the mid-

1970s. As a result, a number of the plant’s production

lines were closed, and, in 1975, the Pittsburgh plant be-

came a service center, producing parts for other plants,

instead of a factory that made and assembled the entire

can. Pittsburgh’s pail line, which manufactured large gal-

lon steel containers, however, remained in operation. In

1975, the pail line was designated as a separate plant in

order to determine its profitability. Despite the separate

designation, the Pittsburgh plant and the pail line contin-

ued to share a seniority roster. See FF 91-93.

Sometime in 1976, the Pittsburgh plant was selected, in

part because of its potentially high unfunded liability costs,

as a “concept development”’ plant for implementing Con-

tinental’s liability avoidance program. See FF 62; Jt. App.

1385. In June of 1976, Continental’s Executive Vice Pres-

ident and General Manager of Continental Can Company,

USA, Donald Bainton, approved a cap for the Pittsburgh

plant of 574 USW employees, to be achieved by the end

of 1976, and a second cap of 417 USW employees, to be

achieved by the end of 1977. Subsequently, in January of

1977, a Continental official indicated that the ‘‘ideal cap

level” for the Pittsburgh plant, “disregarding volume as-

sumptions and other factors except long range people li-

ability costs,” i.e., unfunded pension liabilities, was 392

USW employees as opposed to the previous recommen-

dation of 417 USW employees. See Jt. App. 1250. A cap

was not set for employees represented by the other two

unions at the Pittsburgh plant.

In early 1977, the manager of the pai! line recommended

moving the operation to a new location in order to increase

its profitability. By the summer of 1977, Continental of-

ficials had decided to close the pail line. See FF 105. This

15a

decision was based in part on Continental’s desire to pre-

vent employees from attaining eligibility for 70/75 and Rule

of 65 benefits. Continental also considered the pail line’s

unprofitability at the Pittsburgh location in determining

that it should be closed. See FF 101-02, 105-07.

In the summer of 1977, Continental informed the USW

and the Pittsburgh local union representatives of its de-

cision to close the pail line. During this time Continental

was also pursuing an agreement to implement a plant-wide

seniority system at the Pittsburgh plant. In exchange for

Continental’s promise to use its best efforts to retain em-

ployees with twenty years or more of service, the local

union agreed to plant-wide seniority. Thereafter, a twenty-

year cap-line was drawn under the name of Francis Conti.

The 417 USW employee cap for 1978 was increased to

472, which included 436 USW employees above Conti or

the twenty-year cap-line, and 36 skilled employees below

the cap-line. See FF 117-122. The pail line was closed after

Continental and the union formally agreed to implement

plant-wide seniority, resulting in the elimination of one-

hundred and eleven jobs. See FF 132-133.

Il.

PROCEDURAL HISTORY

In the proceedings before the district court, the

appellants, all of whom were permanently laid off from

the Pittsburgh plant between January 1976 and May 1978,"

"As to the lead plaintiffs in the consolidated actions, the district

court found that Robert Gavalik was laid off on January 1, 1978, at

which time he was forty years old and had nineteen years and seven

months of service; Albert Jakub was laid off on December 22, 1977,

at which time he was forty-four years old and had nineteen years and

seven months of service with Continental. In addition, the district court

found age and service at the time of layoff for the following plaintiffs:

Francis Humenik, age forty-one, two weeks short of attaining twenty-

year service; Thomas Riley, age thirty-nine and sixteen days short of

attaining twenty-year service; and Anthony Folino, age forty-four,

eighteen years and eight months of service. See FF 136-140.

l6a

challenged both Continental’s adoption and implementation

of its liability avoidance program at the Pittsburgh plant

and its closure of the pail line at the Pittsburgh plant.

The Gavalik action alleged, inter alia, that the closure of

the pail line was designed to prevent class members from

achieving eligibility for 70/75 and Rule of 65 pension ben-

efits in violation of § 510 of ERISA. Discovery in Gavalik

brought to light the liability avoidance program, and the

subsequent Jakub complaint challenged the adoption and

implementation of the overall liability avoidance program

as a deliberate effort to manipulate plaintiffs’ length of

employment in order to deprive them of 70/75 and Rule

of 65 pension benefits, all in violation of § 510.

After a bench trial, the district court entered an order

granting judgment for Continental. In its accompanying,

extensive findings of facts, the court found that Conti-

nental’s liability avoidance program was adopted and im-

plemented in order to avoid future vesting of break-in-

service pension benefits. See FF 53, 68. The court further

found that the subsequent decision by Continental to cap

the Pittsburgh plant, which resulted in the layoff of in-

dividual and class plaintiffs, and its decision to close the

pail line, were motivated in part by the desire to prevent

employees from attaining eligibility for 70/75 and Rule of

65 benefits and in part by the declining business conditions

at the Pittsburgh plant. See FF 106-07, 141-42. The district

court concluded, without explanation, that Continental's

actions did not violate § 510 of ERISA. See Conclusions

of Law (“CL”) 4-5.

On appeal, appellants allege that the district court erred

in concluding that its own findings of fact did not establish

a classwide violation of § 510 of ERISA; that the court

erroneously remitted the determination of whether indi-

vidual class members’ layoffs were caused by the liability

avoidance program to the liability phase of the bifurcated

trial; that, in any event, having found that appellants’

layoffs were the consequence of mixed motives, the court

17a

erred in its allocation of the “but for’’ burden of proof;

and that the critical findings of the district court were

clearly erroneous. Continental has cross-appealed alleging

that appellants’ action before the district court was barred

(1) by a two-year statute of limitations or, alternatively,

a six-month limitations period, and (2) for failure to ex-

haust grievance and arbitration procedures. We shal! ad-

dress the cross-appeal first.

Ill.

THE CROSS-APPEAL

A. Statute of Limitations

Continental advances several arguments that, it main-

tains, require application of a shorter period of limitations

than applied by the district court. First, Continental argues

that subsequent judicial developments require that a two-

year statute of limitations be applied to appellants’ claims

Alternatively, Continental urges the application of a six-

month limitation period pursuant to the Supreme Court's

decision in DelCostello v. International Bhd. of Teamsters,

462 U.S. 151 (1983).

Section 510 of ERISA, 29 U.S.C. § 1140 (1982), and

the applicable enforcement provision, 29 U.S.C. § 1132

(1982), do not provide a specific statute of limitations for

actions alleging violations of § 510. Under such circum-

stances, the appropriate period is determined by reference

to the state statute of limitations governing cases most

analogous to the cause of action asserted by the plaintiffs.

See Wilson v. Garcia, 471 U.S. 261, 266-67 & n.12 (1985).

The district court determined that appellants’ allegation of

a § 510 violation was most analogous to a claim of em-

ployment discrimination or breach of fiduciary duty, and

that on either theory the six-year residuary period of lim-

itations set forth in 42 Pa. Cons. Stat Ann. § 5527(6)

18a

(Purdon 1982) was applicable. Continental does not chal-

lenge on appeal the district court’s determination that

appellants’ § 510 action is analogous to an employment

discrimination action.'® Instead, Continental, accepting the

district court’s determination is correct, argues that the

applicable limitation period is nonetheless two years. We

reject Continental’s contention.

Continental seeks to discredit the district court’s deter-

mination that a six-year statute of limitations applies to

the instant action because it specifically relied on this

Court’s decision in Knoll v. Springfield Township School

District, 699 F.2d 187 (8d Cir. 1983), cert. granted, 468

U.S. 1204 (1984) (‘‘Knoll I’), which was subsequently va-

cated by the Supreme Court in light of its decision in

Wilson v. Garcia, 471 U.S. 261 (1985), see Springfield

Township School District v. Knoll, 471 U.S. 288 (1985)

(per curiam), and modified by this Court. See Knoll v.

Springfield Township School District, 763 F.2d 584 (3d

Cir. 1985) (‘Knoll IP’). This Court’s modification in Knoll

II, however, did not effect a change in Pennsylvania law,

under which state law claims analogous to employment

discrimination and wrongful discharge claims are governed

by a six-year limitation period. See, e.g, Skehan v. Blooms-

burg State College, 503 A.2d 1000 (Pa. Commw. 1986) (ap-

plying six-year statute of limitations to plaintiff’s

employment discrimination claim); see also Ulloa v. City of

Philadelphia, 95 F.R.D. 109, 114 (E.D. Pa. 1982) (collect-

ing cases).

In Wilson v. Garcia, the Supreme Court considered the

question ‘whether all § 1983 claims should be character-

ized in the same way for limitations purposes.”’ 471 U.S.

‘s Continental did argue before the district court that appellants’

action was more analogous to an action for intentional interference

with contractual relations and therefore was subject to a two-year lim-

itation period. This claim was rejected by the district court. See Jt.

App. at 171.

19a

at 271. Upon analysis of the legislative history and sta-

tutory goals of § 1983, the Court concluded that a uniform

time limit for all § 1983 actions—regardless of the nature

of the precise claim—must be applied in each state. Id. at

275. The Court further concluded that § 1983 actions are

best characterized as personal injury actions for limitations

purposes. Jd. at 276.

Notwithstanding the Garcia Court’s repeated references

to the particular purposes of § 1983, Continental argues

that, in effect, the holding in Garcia established that all

claims analogous to a charge of employment discrimination

must be governed by the state’s statute of limitations pe-

riod for personal injury. We disagree. Indeed, the facts of

Garcia itself simply belie Continental’s contention. In the

underlying action in Garcia, respondent sought damages

for an alleged unlawful arrest and brutality of the ar-

resting officer. In reaching its conclusion that § 1983 ac-

tions should be governed by state personal injury

limitations periods, the court made no determination that

the individual claims themselves were always most closely

analogous to personal injury claims. Indeed, the court rec-

ognized that “the § 1983 remedy encompasses a broad

range of potential tort analogies, from injuries to property

to infringements of individual liberty,” but concluded that

[t]he unifying theme of the Civil Rights Act of 1871

is reflected in the language of the Fourteenth Amend-

ment that unequivocally recognizes the equal status

of every ‘‘person’’ subject to the jurisdiction of any

of the several States. The Constitution’s command is

that all ‘‘persons’”’ shall be accorded the full privileges

of citizenship; no ‘‘person’’ shall be deprived of life,

liberty, or property without due process of law or be

denied the equal protection of the laws. A violation

of that command is an injury to the individual rights

of the person.

20a

Garcia, 471 U.S. at 277 (emphasis in original).'®

On remand and in accordance with Garcia, we followed

the Supreme Court’s “‘bright-line approach to the problem

of determining what statute of limitations should be ap-

plied in § 1983 actions,” Knoll IJ, 763 F.2d at 585, and

held that in Pennsylvania the two-year statute of limita-

tions for personal injury actions must govern all § 1983

actions despite the topical nature of the claim. Jd. Neither

Garcia nor this Court’s decision in Knoll IJ render the

district court’s determination that appellant’s § 510 action

most closely resembles an employment discrimination claim

erroneous. Nor do they affect this Court’s consistent rul-

ings that employment discrimination or wrongful discharge

claims brought under federal law are governed by Penn-

sylvania’s six-year residuary clause. See Fitzgerald v. Lar-

son, 741 F.2d 32, 35 (8d Cir. 1984), vacated, __ U.S. __.,

105 S. Ct. 2108 (1985); Perri v. Aytch, 724 F.2d 362, 368

(3d Cir. 1983); Knoll I, 699 F.2d at 145.7 Cf. Al-Khazraji

'* Moreover, in vacating this Court’s decision in Knoll I, the

Supreme Court remanded the appeal to us in light of its holding in

Garcia that “all § 1983 claims should be characterized for statute of

limitations purposes as actions to recover damages for injuries to the

person.”’ Springfield Township School Dist. v. Knoll, 471 U.S. 288 (1985)

(emphasis added).

* We recognize that the cases cited for the proposition that federal

actions brought in Pennsylvania alleging employment discrimination or

wrongful discharge are governed by a six-year limitation period predate

the Supreme Court’s decision in Garcia. We emphasize, however, that

Garcia did not affect the underlying characterization of ‘‘the essential

nature of the federal claim within the scheme created by the various

state statutes of limitation.’’ Davis v. United States Steel Supply, 581

F.2d 335, 337 (3d Cir. 1978), resubmitted, 688 F.2d 166 (3d Cir. 1982),

cert. denied, 460 U.S. 1014 (1983). Rather, Garcia held that, regardless

of that characterization, for purposes of § 1983, the state limitations

period for personal injury claims would govern. See also Knoll II, 763

F.2d at 585 (‘In Wilson v. Garcia, the Court held that even though

constitutional claims alleged under § 1983 encompass numerous and

diverse topics and subtopics, the state statute of limitations governing

2la

v. Saint Francis College, 784 F.2d 505, 513 (3d Cir.), cert.

granted in part, 107 S. Ct. 62 (1986) (‘‘Davis v. United

States Steel Supply, 581 F.2d 335 (3d Cir. 1978), made it

absolutely clear that the six-year limitations period for con-

tract actions applied to Section 1981 actions brought to

redress employment discrimination.’’) In sum, Garcia and

Knoll II apply only to discrimination claims under § 1983.”

Continental argues that even if Garcia is not applicable

to appellants’ claim, this Court’s decision in Mazzanti v.

Merck Co., 770 F.2d 34 (3d Cir. 1985) (per curiam) man-

dates application of a two-year statute of limitations. We

find Continental’s reasoning flawed and unpersuasive. Maz-

zanti involved a common law diversity action for tortious

interference with an employment contract. As is typical

tort actions for the recovery of damages for personal injuries provides

the appropriate limitation period.”) In effect, Garcia renders the initial

characterization of a claim under § 1983 unnecessary. Garcia cannot

be read, however, to eliminate the “‘settled practice,” to which the

Supreme Court refers in the course of its opinion, of adopting a local

time limitation which governs state actions most analogous to the fed-

eral claim when Congress has failed to provide a specific time limitation.

Garcia, 471 U.S. at 266; ef. DelCostello v. International Bhd. of Teams-

ters, 462 U.S. 151, 171 (1983) (‘We stress that our holding today should

not be taken as a departure from prior practice in borrowing limitations

periods for federal causes of action, [even where] ... state law fails

to provide a perfect analogy.”’)

2 This court’s decision in Goodman v. Lukens Steel Co., 777 F.2d

113 (3d Cir. 1985), cert. granted, 55 U.S.L.W. 3391 (U.S. Dec. 2, 1986),

highlights the limitation of Garcia. In Goodman we held that § 1981

actions alleging employment discrimination must, like § 1983 actions

making the same type of claim, apply the same period of limitations,

viz., the two-year personal injury statute. In other words, Goodman,

like Garcia, focused not on the nature of the particular claim, but

rather on the historical basis unifying all § 1981 actions. 777 F.2d at

119-120. Moreover, noting the “‘substantial overlap” in claims brought

under §§ 1981 and 1983, the Goodman Court concluded that, given the

Supreme Court’s decision in Garcia, application of different limitations

periods ‘“‘where the same claim is brought under § 1981 would lead to

a bizarre result.”’ Jd. at 120.

22a

in tortious interference case, the plaintiff in Mazzanti had

filed a complaint against Merck & Company, a third party,

alleging tortious interference with her employment con-

tract with PHP Graphic Arts Corporation, which resulted

in her termination by Graphic.” Jd. In considering whether

to apply Pennsylvania’s two-year statute of limitations or

its residual six-year statute to Mazzanti’s claim, this Court,

relying principally on a Pennsylvania Court of Common

Pleas decision, Home for Crippled Children v. Erie Insur-

ance Exchange, 130 P.L.J. 480 (Allegheny Cty., 1982), affd

mem., 329 Pa. Super. 610, 478 A.2d 84 (1984), predicted

that the Supreme Court of Pennsylvania wouid apply the

two-year statute. See Mazzanti, 770 F.2d at 36. Home for

Crippled Children, in turn, based its judgment primarily

on its determination that the plain language of 42 Pa.

Cons. Stat. Ann. § 5524(3) (Purdon 1982) which prescribes

a two-year limitation period for “taking, detaining or in-

juring personal property,’’ encompassed tortious interfer-

ence, since contract rights—even if intangible—are personal

property under Pennsylvania law.

In the course of examining appellant’s claim, the Maz-

zanti Court made reference to our prior decision in Knoll

I and Fitzgerald, which applied Pennsylvania’s six-year

limitations period to plaintiffs’ claims of employment dis-

crimination. Noting the effect of Wilson v. Garcia, supra,

on those decisions, the Mazzanti Court summarily noted

“that Garcia, Knoll [I] and Fitzgerald all confronted the

state limitations problem in the context of federal actions

with unique federal policy concerns,’”’ and concluded that

“those cases [are not] controlling in a diversity context.”

770 F.2d at 36. Contrary to Continental’s contention, we

# A tortious interference with contract claim may only lie against

a third party. See Wells v. Thomas, 569 F. Supp. 426, 435 (E.D. Pa.

1983) (‘Pennsylvania law does not permit a terminated employee to

assert against his or her employer a claim for intentional interference

with his [or her] employment relationship; it is not a claim which can

be made by the parties to a ‘contract’ against each other.’’).

23a

see nothing in Mazzanti to suggest that all federal actions

for discrimination are now subject to a two-year statute

of limitations under Pennsylvania law. Mazzanti considered

our prior decisions inapposite and therefore inapplicable to

its facts not because of the substantive analysis employed

to resolve the Pennsylvania limitations issue, but rather

because of the unique federal context in which the analyses

were made.” Thus, Mazzanti simply does not mandate a

two-year limitations period for appellants’ claims.

Appellants note that “most of the cases discussed and

relied upon by both parties on the merits are employment

discrimination cases under Title VII.’’ Second Brief for

Appellants Cross-Appellees at 41. In the course of various

rulings, the district court repeatedly likened appellants’

claims to an action alleging employment discrimination.”

The gravamen of appellants’ complaint, to paraphrase the

district court, is that they were singled out for adverse

treatment on the basis of their unvested pension eligibility.

We do not deem the district court’s determination to be

in error. Accordingly, we find that the six-year limitation

period was properly applied in this case.

In DelCostello v. International Bhd. of Teamsters, 462

U.S. 151 (1983), the Supreme Court considered what stat-

*s The Mazzanti court recognized that the implementation of the

federal policy concerns that were at issue in Knoll I and Fitzgerald

‘“*has now been resolved by the United States Supreme Court [in Garcia]

on a premise different from that which we employed in [those cases.]’’

770 F.2d at 36. That premise, rejected in Garcia, see 471 U.S. at 273-

75, was to treat “the particular [§ 1983] claim in suit on an ad hoc

basis, focusing on ‘the relief sought and the type of injury alleged.’”’

Fitzgerald, 741 F.2d at 35 (quoting Aitchison v. Raffiani, 708 F.2d 96,

101 (3d Cir. 1983)).

* Indeed, the characterization of the nature of appellants’ claim

is a key element underlying most of the issues in the instant cross-

appeal.

24a

ute of limitations should apply to suits alleging that the

employer breached a provision of a collective bargaining

agreement and that the union breached its duty of fair

representation by mishandling the ensuing grievance or

arbitration proceedings. The Court concluded that the six-

month limitations period of § 10(b) of the National Labor

Relations Act, 29 U.S.C. § 160(b) (1982), should govern

the suit. In choosing § 10(b), the Court noted:

In some circumstances . . . state statutes of limitations

can be unsatisfactory vehicles for the enforcement of

federal law. In those instances, it may be inappro-

*s In the proceedings before the district court, Continental moved

for dismissal urging application of the DelCostello six-month limitation

period. The district court deniec nme motion, noting that because the

DelCostello limitation ‘‘applied [only] to actions filed after binding ar-

bitration, it is wholly inappropriate to this case.”’ Jt. App. at 171. Our

review of the case law in this Circuit, however, reveals no such limi-

tation. See, e.g, Martin v. Pullman Standard, 726 F.2d 101 (3d Cir.

1984) (holding that DelCostello was applicable but remanding for de-

termination whether statute of limitations was tolled until plaintiff was

informed by union that his grievance had been withdrawn); Scott v.

Local 863, Int’l Bhd. of Teamsters, 725 F.2d 226 (3d Cir. 1984) (applying

DelCostello where union refused to proceed to arbitration); Perez v.

Dana Corp., 718 F.2d 581 (3d Cir. 1983) (applying DelCostello to claim

that union breached its duty of fair representation by failing to carry

his grievance to arbitration).

Indeed, in holding that the six-month limitations period of § 10(b),

as opposed to state limitations periods for vacating an arbitration award,

was applicable to DelCostello’s claims, the Supreme Court observed

that

{a}pplication of an arbitration statute seems straightforward enough

when a grievance has run its full course, culminating in a formal

award by a neutral arbitrator. But the union’s breach of duty may

consist of a wrongful failure to pursue a grievance to arbitration

.. or a refusal to pursue it through even preliminary stages.

462 U.S. at 166 n.16. Thus, application of the six-month limitations

period to situations in which no binding arbitration had occurred was

specifically contemplated by the Court. DelCostello is nonetheless in-

applicable to the instant action. See discussion infra.

Seed Oe a On aaa nde ls A

25a

priate to conclude that Congress would choose to

adopt state rules at odds with the purpose or oper-

ation of federal substantive law.

462 U.S. at 161. Rather, resort to federal law may be

appropriate “‘when a rule from elsewhere in federal law

clearly provides a closer analogy than available state stat-

utes, and when the federal policies at stake and the prac-

ticalities of litigation make that rule a significantly more

appropriate vehicle for interstitial lawmaking ...’’ Id. at

172.

Three factors were essential to the DelCostello Court’s

determination that the six-month limitations period of §

10(b) of the NLRA should apply to a hybrid § 301/fair

representation claim.” First, the Court noted that the hy-

brid § 301/fair representation claim ‘‘ha[d] no close analogy

in ordinary state law,’’ 462 U.S. at 165, but rather bore

a ‘‘family resemblance”’ to charges of unfair labor practice

under the NLRB. Jd. at 170. Second, the Court considered

the “rapid final resolution of labor disputes,’ id. at 168,

essential to the maintenance of industrial peace. Finally,

the Court recognized “‘ ‘[t]he need for uniformity’ ’’ where

““*those consensual processes that federal labor law is

chiefly designed to promote—the formation of the ...

agreement and the private settlement of disputes under it

[-are implicated].’’’ DelCostello, 462 U.S. at 171 (quoting

United Parcel Serv. v. Mitchell, 451 U.S. 56, 70 (1981)

(Stewart, J. concurring in judgment)).

We do not think the policy considerations that animated

the Court’s adoption of the six-month limitations period in

* Section 301 of the Labor Management Relations Act, 29 U.S.C.

§ 185 (1982), authorizes actions ‘“‘for violation of contracts between an

employer and a labor organization representing employees in an in-

dustry affecting commerce.’’ 29 U.S.C. § 185(a). The Supreme Court’s

decisions in Vaca v. Sipes, 386 U.S. 171 (1967), and Hines v. Anchor

Motor Freight, 424 U.S. 554 (1976), gave recognition to a joint cause

of action against the employer for breach of contract and the union

for breach of duty of fair representation under section 301.

26a

DelCostello are present here. Unlike DelCostello, we have

held supra that the district court’s determination that

appellants’ claims most closely resemble an employment

discrimination claim was not in error. In another context,

yet on facts similar to those in the instant appeal, Judge

Sarokin noted the similarity between § 510 ERISA actions

and employment discrimination claims under Title VII:

Just as Title VII does not guarantee employment,

section 510 of ERISA does not guarantee pension

benefits; similarly, as Title VIJ prohibits discrimina-

tion on the basis of race with respect to such em-

ployment, so does section 510 prohibit discrimination

with respect to pension benefits on the basis of one’s

proximity to such benefits.

McLendon v. Continental Group, Inc., 602 F. Supp. 1492,

1503-04 (D.N.J. 1985).27 We think the analogy is appro-

priate.

Moveover, the DelCostello Court emphasized that ‘‘fed-

eral courts should [not] eschew use of state limitations

periods anytime state law fails to provide a perfect anal-

ogy.” 462 U.S. at 171 (emphasis added). The Court rec-

ognized that ‘‘there is not always an obvious state-law

choice for application to a given federal cause of action.”

id. Nevertheless, the Court concluded that ‘‘resort to state

law remains the norm for borrowing of limitations pe-

riods.’’ Id. Thus, only if ‘‘a rule from elsewhere in federal

law clearly provides a closer analogy,’’ id. at 172 (emphasis

added), may we “‘turn away from state law.” Jd.

Continental suggests that § 10(b) of NLRA provides such

an analogy. Examination of the remaining two factors con-

* The McLendon plaintiffs assert claims virtually identical to

appellants’ claims in the instant action. Namely, they challenge both

the Continental Group's ‘capping program’ and its failure to recall laid

off employees as an effort to abort their eligibility for Rule of 65 and

70/75 pension benefits as violative of § 510 of ERISA. See McLendon,

602 F. Supp. at 1497.

a ial

27a

sidered by the DelCostello Court, however, counsels oth-

erwise. There can be no doubt that the “rapid final

resolution of labor disputes [is] favored by federal law.”’

462 U.S. at 168. This Court has recently observed, how-

ever, that such speed and finality are most relevant where

the disputed issue “‘is intertwined with the day-to-day re-

lationship between management and labor.’’ Adams v.

Gould Inc., 739 F.2d 858, 867 (3d Cir. 1984), cert. denied,

469 U.S. 1122 (1985). Adams involved in ERISA breach

of fiduciary duty claim against trustees of a pension plan.

There, we found that the day-to-day working environment

was unaffected where the dispute involved pension con-

tributions, and thus the implication of delay in resolving

such disputes did not justify application of the shorter

limitations period. Similarly, in the instant action, the na-

ture of appellants’ claims, albeit serious, is not such that

a delay in resolution threatens labor peace. Indeed, al-

though appellants’ claims are markedly different from the

claim alleged in Adams, see infra, involving as they do

pension plans and eligibility, here, as in Adams, “‘it [is]

far more iikely that employees will not be aware of their

grievance immediately.’’ Jd. at 867.

Finally, DelCostello’s concern with uniformity was in-

formed both by the “similarity of the rights asserted’’ and

the ‘‘similarity of the considerations relevant to the choice

of a limitations period.’’ DelCostello, 462 U.S. at 170-71.

Continental argues, based on the language of § 8(aX3) of

the NLRA, 29 U.S.C. § 158(aX3),% that appellants’ ERISA

claims bear a ‘‘family resemblance”’ to unfair labor practice

* Section 8(aX3) provides:

(a) It shall be an unfair labor practice for an employer—

(3) by discrimination in regard to hire or tenure of employment

or any term or condition of employment to encourage or discourage

membership in any labor organization.

29 U.S.C. § 158(aX3) (1982).

28a

claims alleging discrimination on the basis of union mem-

bership. Continental has provided this Court with no case

law to assist in determining whether there exists a simi-

larity in the rights asserted in § 8(aX3) NLRB actions and

§ 510 ERISA actions. Assuming arguendo, however, that

such similarity exists, we would nevertheless hold Del-

Costello's six-month limitations period inapplicable to this

action because satisfaction of the second prong of the uni-

formity concern—similarity in the policy considerations rel-

evant to the choice of a limitations period—is lacking.

In that regard, DelCostello held application of § 10(b)

appropriate on its facts, finding that both hybrid § 301/

fair representation actions and unfair labor practice claims

must be considered in light of “ ‘the proper balance be-

tween the national interests in stable bargaining relation-

ships and finality of private settlements, and an employee's

interest in setting aside what he views as an unjust set-

tlement under the collective bargaining system.’’’ Jd. at

171 (quoting Mitchell, 451 U.S. at 71 (Stewart, J., con-

curring in judgment)). As we noted above, the instant dis-

pute, unlike that contemplated in DelCostello, does not

threaten to destabilize the bargaining relationship in the

manner contemplated by DelCostello because here the day-

to-day relationship between labor and management is not

affected. See supra. Moreover, and more important, the

desirability of a uniform national limitations period exists

where the claims asserted arise under a collective bar-

gaining agreement. Under these circumstances, uniformity

operates to preserve “ ‘the grievance machinery under a

collective bargaining agreement [that] is at the very heart

of the system of industrial self-government.’ ’’ 462 U.S.

at 168 (quoting Mitchell, 451 U.S. at 63).

In the instant action, Section 7.l(a) of the Pension

Agreement between the USW and Continental provides:

If, during the term of this Agreement, any differences

shall arise between the Company and any Employee

29a

who shall be an applicant for a lump sum retirement

allowance, pension or deferred benefit as provided in

this Agreement, as to whether or not such Employee

is entitled to or as to the amount of such lump sum

retirement allowance, pension or deferred benefit, such

differences ... may be taken up as a grievance ...

Jt. App. at 1930. In ruling on Continental’s motion to

dismiss for failure to exhaust grievance procedures, the

district court had occasion to consider the nature of

appellants’ claim and whether that claim was covered un-

der the Pension Agreement. The court stated: “{W]e do

not believe that the plaintiffs’ claim falls within the terms

of the [Pension Agreement] . .. since they are ... neither

applicants for a pension nor in dispute with the defendant

as to whether or not they are entitled to a pension. The

plaintiffs’ claim is not that they have been denied their

pensions, but that they have been denied the opportunity

to eventually become entitled to a pension.” Jt. App. at

165. We agree with the district court’s characterization of

appellants’ claims and its conclusion that such claims are

not encompassed under the terms of the Pension Agree-

ment. Cf. Amaro v. Continental Can Co., 724 F.2d 747,

749 (9th Cir. 1984) (‘This statutory claim [under § 510 of

ERISA] is not for benefits under a collective bargaining

agreement. The employees, in fact, are not yet eligible for

those benefits.’’) Thus, appellants’ § 510 discrimination

claim does not implicate the concerns that persuaded the

DelCostello Court to apply § 10(b) to hybrid § 301/fair

representation claims.

In sum, DelCostello does not mandate application of the

six-month limitation period of § 10(b) of the NLRB in this

case where (1) an adequate state analogy exists and affords

a limitations period that does not frustrate national policy,

(2) the policies underlying adoption of the six-month lim-

itations period are not present, and (3) no alternative fed-

eral limitations period has been suggested to this Court.

30a

Accordingly, DelCostello is inapplicable and Pennsylvania

law governs.

B. Exhaustion of Remedies

Subsequent to oral argument in this case, another panel

of this Court held that ‘‘an employee with a claim under

Section 510 of ERISA need not submit that claim to the

plan before seeking relief in a federal district court.” Zipf

v. American Telephone and Telegraph Co., (“‘AT&T’ ), 799

F.2d 889, 893 (38d Cir. 1986). Zipf clearly controls the

resolution of Continental’s exhaustion claim.

In Zipf, appellant suffered from rheumatoid arthritis

which caused her to take a disability leave of absence from

her employment. After Zipf returned to full-time status,

she continued occasionally to miss work due to her illness.

Eventually, her condition worsened and she began another

period of disability leave. On the seventh day of absence

Zipf was informed by her supervisor of the company’s

decision to terminate her because of her “‘ ‘excessive ab-

senteeism.’ "’ Zipf, 799 F.2d at 890. Zipf filed suit alleging

that the decision to terminate was made in violation of-§

510 of ERISA to prevent her from potentially qualifying

for substantial benefits for which she would have become

eligible on her *ighth day of absence from work. Summary

judgment was entered for AT&T and Zipf’s suit was dis-

missed for failure to exhaust internal administrative rem-

edies.

Upon review, this Court identified two distinct exhaus-

tion issues: (1) whether before seeking judicial relief on a

§ 510 claim, a claimant is required to submit that claim

to the plan and (2) “whether [a § 510 claimant], before

seeking judicial relief ..., must submit to the plan the

question of whether [s/he] would have been eligible for

benefits had [s/he] not been discharged.’’ 799 F.2d at 891.

Proceeding to examine the law of this Circuit, the Zipf

Court found our prior decision in Wolf v. National Shop-

men, 728 F.2d 182 (3d Cir. 1984), inapplicable to actions

3la

“brought not to enforce the terms of a plan, but to assert

rights granted by the federal statute.’’ Zipf, 799 F.2d at

891. This Court then rejected the argument, also advanced

in the instant appeal, see Reply Brief of Cross-Appellant

at 21-24,” that ERISA contains an implied exhaustion re-

quirement even as to substantive rights conferred under

the statute. Examining the legislative history of the Act,

we concluded that “‘the remedy for Section 510 discrimi-

nation was intended to be provided by the courts.” Zipf,

792 F.2d at 892. Finally, Zipf recognized the strong na-

tional policy favoring arbitration and the traditional prac-

tice of the courts to defer to administrative expertise.

Relying on this Court’s decision in Barrowelough v. Kidder,

Peabody & Co., Inc., 752 F.2d 923 (3d Cir. 1985), the Zipf

Court concluded that these considerations supported the

balance struck in Barrowclough, to wit:

the most reasonable accommodation is to hold that

claims to establish or enforce rights to benefits under

29 U.S.C. § 1132(a) that are independent of claims

based on violations of the substantive provisions of

ERISA are subject to arbitration, ... while claims of

statutory violations can be brought in a federal court

notwithstanding an agreement to arbitrate.

Zipf, 799 F.2d at 892 (quoting Barrowclough) (citations

omitted).

Standing alone, Zipf ineluctably leads to the conclusion

that appellants were not required to exhaust arbitral rem-

2% Indeed, Continental’s argument goes further. Continental main-

tains that “ERISA requires that there be internal review procedures

to handle claims under the pension plan.’’ Reply Brief of Cross-Ap-

pellant at 21 (emphasis in original). Continental fails to distinguish

between contractual rights protected under the Act and substantive

rights conferred by the Act. See DelGrosso v. Spang & Co., 769 F.2d

928 (3d Cir. 1985), cert. denied, USS. . 106 S. Ct. 2246 (1986)

(interpreting Barrowclough v. Kidder, Peabody & Co., Inc., 752 F.2d

923 (3d Cir. 1985)).

32a

edies. Continental argues, however, that Zipf must be read

in light of our prior decision in Jacobson v. Merrill Lynch,

Pierce, Fenner & Smith, Inc., 797 F.2d 1197 (8d Cir. 1986).

Indeed, Continental contends that ‘‘attempted application

of the principles articulated in Zipf,’’ would put this Court

at odds with recent Supreme Court precedent and create

a direct conflict with Jacobson. Letter of Eugene L. Stew-

art, Attorney for Continental Can at 3 (Sept. 10, 1986).

Rather than apply, Zipf, Continental urges that ‘‘[tJhe cor-

rect approach to the exhaustion issue has been articulated

by the ... Supreme Court in Mitsubishi [Motors Corp. v.

Soler Chrysler-Plymouth, Inc., —_U.S. —_, 105 S. Ct.

3346 (1985),] and followed by this court in Jacobson.”’ Id.

at 5. Continental’s argument does not alter the result.*°

In Mitsubishi, the Supreme Court rejected the claim that

an “‘arbitration clause must specifically mention the statute

giving rise to the claims that a party to the clause seeks

to arbitrate.” 105 S. Ct. at 3353. Thus, no presumption

against arbitrability arises when the right involved is sta-

tutory as opposed to contractual. The proper approach in

considering issues of arbitrability, the Court instructed, is

two-fold: First, the court must determine whether the par-

ties’ agreement to arbitrate encompasses the statutory is-

sues, and second, if so, ‘‘whether legal constraints external

to the parties’ agreement foreclose[] the arbitration of

those claims.”’ Id. at 3355.

* Continental points to Judge Adam’s separate opinion in Jacobson

for the proposition that Zipf’s reliance on Barrowclough, in light of

Mitsubishi, cannot be sustained. See Letter of Eugene Stewart at 2-4

(Sept. 10, 1986). In Jacobson, Judge Adams stated: ‘‘Mitsubishi spurned

the basis proffered for this Court’s decision in Barrowclough, stating

that ‘we find no warrant in the Arbitration Act for implying in every

contract within its ken a presumption against arbitration of statutory

claims.’ '’ Jacobson, 797 F.2d at 1209 (Adams, J. concurring in part,

dissenting in part) (citations omitted). The issue of Barrowclough’s con-

tinued vitality, of course,is not before this Court. Mitsubishi’s rejection

of a rule of nonarbitrability of statutory claims, however, does not

undercut the independent interpretation of Section 510 in Zipf.

33a

In Zipf the approach approved in Mitsubishi was not

contravened. The Zipf Court did not resort to a presump-

tion of unarbitrability, but rather sought to ascertain

Congressional intent on the question of the arbitrability of

substantive discrimination claims under § 510 of ERISA.

Its examination of the legislative intent of § 510 revealed

an express desire that claims brought thereunder be sub-

mitted to the courts. ‘Indeed, an amendment that would

have created an administrative remedy for Section 510

claims, to be established by the Department of Labor, was

defeated.” Zipf, 799 F.2d at 892. Jacobson, which held

that determining arbitrability of federal statutory claims

is, after Mitsubishi, ‘‘a matter of statutory interpretation’’

and may not be determined “‘on the basis of some judicially

recognized public policy,” Jacobson, 797 F.2d at 1202, is

thus fully consistent with the reasoning and holding in

Zipf.

eV.

THE APPEAL

We now proceed to the merits of appellants’ claims. Our

standard of review of issues involving the interpretation

and application of legal precepts is plenary. United States

v. Adams, 759 F.2d 1099, 1106 (3d Cir.), cert.denied, _—

U.S. —_, 106 S. Ct. 275, 336 (1985). The trial court’s

findings of fact are governed by the clearly erroneous

standard of review, Anderson v. City of Bessemer City,

470 U.S. 564, 573 (1985), ‘‘but as to the legal component

of its conclusion, this court has plenary review.”’ United

States v. Felton, 753 F.2d 276, 278 (3d Cir. 1985).

Appellants’ contentions may be summarized as follows:

(1) the district court erred in its conclusion that a classwide

violation of ERISA had not been established; (2) the dis-

trict court erred in requiring appellants t» prove during

the liability proceedings that their layoffs were caused by

Continental’s liability avoidance program, and by depriving

appellants of a rebuttable presumption on causation; (3)

34a

assuming arguendo that causation was properly at issue

during the liability phase and that the burden of proof on

that issue lay with appellants, they carried their burden

by establishing that Continental’s critical decisions were

motivated both by permissible and impermissible factors,

and the district court erred thereafter in placing the ad-

ditional burden on the appellants to prove that, “but for”

Continental’s consideration of impermissible factors, they

would have retained their jobs; and (4) finally, appellants

independently argue the the critical factual findings of the

district court were clearly erroneous.

These claims require us to consider complex questions

concerning both the elements of proof of a § 510 ERISA

discrimination claim and the allocation of the burdens of

proof on trial of such claim. Any analysis of these issues

must begin with an understanding of the nature of the

claims asserted by the appellant class and the purposes of

the statute under which these claims are brought.

Section 510 of ERISA prohibits employer conduct taken

against an employee who participates in a pension benefit

plan for ‘‘the purpose of interfering with the attainment

of any right to which such participant may become entitled

under the plan.” 29 U.S.C. § 1140 (1982). Congress en-

acted § 510 primarily to prevent ‘‘unscrupulous employers

from discharging or harassing their employees in order to

keep them from obtaining vested pension rights.’’*! West

| Section 510 represents but one provision designed to ensure

pension security for the working class. Referring to the overall goals

of the ERISA legislation, Senator Javits noted:

Mr. President, a pension-reform law is now a reality because of

the hardship, deprivation and inequity suffered by American work-

ing people. It is their collective anger and disgust that put tre-

mendous congressional majorities behind [this legislation], and if

we who espoused their cause in this body have sometimes not

35a

v. Butler, 621 F.2d 240, 245 (6th Cir. 1980); see also Zipf

v. American Telephone & Telegraph Co., 799 F.2d at 889,

891 (1986) (citing Butler); Donahue v. Custom Management

Corp., 634 F. Supp. 1190, 1197 (W.D. Pa. 1986) (quoting

Butler). To recover under § 510, a plaintiff need not prove

that ‘‘the sole reason for his [or her] termination was to

interfere with pension rights.” Titsch v. Reliance Group,

Inc., 548 F. Supp. 983, 985 (S.D.N.Y. 1982), affd, 742

F.2d 1441 (2d Cir. 1983) (emphasis in original). A plaintiff

must, however, demonstrate that the defendant had the

‘specific intent’ to violate ERISA.” Watkinson v. Great

Atlantic & Pacific Tea Co., Inc., 585 F. Supp. 879, 883

(E.D.Pa. 1984) (quoting Titsch, supra). Proof of incidental

loss of benefits as a result of a termination will not con-

stitute a violation of § 510. See Titsch, 548 F. Supp. at

985 (“‘No ERISA cause of action [under § 510] lies where

the loss of ... benefits [i]s a mere consequence of, but

not a motivating factor behind, a termination of employ-

ment.’’).

Under the prevailing case law, and in accordance with

the statutory language, the essential element of proof un-

der § 510 is specific intent to engage in proscribed activity.

Proof of specific intent to interfere with the attainment

of pension eligibility, then, “regardless of whether the in-

. terference is successful and regardless of whether the par-

behaved in as gentlemanly a manner as is customary—and I hope

those aberrations of conduct have been rare—it is because we too

shared their sense of indignation and frustration over what often

seemed to be a cynical disregard of fundamental American con-

cepts of fairness and decency by some of those who managed the

private pension funds.

The agony of years of frustrated and disappointed beneficiaries

has now come to an end. The discipline of law will enable this

and succeeding generations of workers to face their retirement

period with greater confidence and greater security... .

3 Legislative History of the Employee Retirement Income and Security

Act of 1974, at 4751 (1976) (remarks of Senator Javits).

36a

ticipant would actually have received the benefits absent

the interference,”’ Zipf, 799 F.2d at 898, will ordinarily

constitute a violation of § 510 of ERISA.*? In most cases,

however, specific intent to discriminate will not be dem-

onstrated by “‘smoking gun’”’ evidence. As a result, the

evidentiary burden in discrimination cases may also be

satisfied by the introduction of circumstantial evidence. See

Mazfield v. Sinclair Int’l, 766 F.2d 788, 791 (3d Cir. 1985)

cert. denied, ___ U.S. __, 106 S. Ct. 796 (1986) (age dis-

crimination). In the latter circumstance courts have de-

veloped “‘formula{s] ... that enable[] the trial judge to sift

through the evidence in an orderly fashion to determine

the ultimate question in the case—did the defendant in-

tentionally discriminate against the plaintiffls].’’ Dillon v.

Coles, 746 F.2d 998, 1003 (3d Cir. 1984).

As in the context of employment discrimination claims

under Title VII, employees alleging discrimination under

ERISA bear the burden of making out a prima facie case

of discrimination. See McDonnell Douglas Corp. v. Green,

* Zipfs construction of § 510 is supported by the legislative history

which envisions preventive, as well as corrective, purposes of the pro-

vision. See S. Rep. No. 127, 98rd Cong., 1st Sess. 35 (1973), reprinted

in 1 Legislative History of the Employee Retirement Income and Se-

curity Act of 1974, at 621 (1976) (‘‘The enforcement provisions have

been designed specifically to provide ... participants and beneficiaries

with broad remedies for redressing or preventing violations [of ER-

ISA]’’); id. at 622 (‘‘the committee has concluded that safeguards are

required to preclude this type of abuse from being carried out’’); see

also 3 Legislative History of the Employee Retirement Income and Se-

curity Act of 1974, at 4745 (1976) (‘‘a further protection for employees

is the prohibition against discharge, or other discriminatory conduct

toward participants and beneficiaries which is designed to interfere with

attainment of vested benefits’) (Senate floor debate on conference re-

port on H. R. 2). Continental does not contest this construction; rather

it maintains that “the district court’s holding is in accordance with

Zipf.’’ Letter of James D. Morton at 2 (Sept. 11, 1986).

37a

411 U.S. 792, 802 (1973); see also Texas Dep’t of Com-

munity Affairs v. Burdine, 450 U.S. 248, 253-54 (1981)

(refining McDonnell Douglas). To establish a prima facie

case under ERISA § 510, an employee must demonstrate

(1) prohibited employer conduct (2) taken for the purpose

of interfering (3) with the attainment of any right to which

the employee may become entitled. 29 U.S.C. § 1140 (1982).

In a class action context, it is not enough for the class

representative to prove the validity only of his or her own

claim. See General Tel. Co. of Southwest v. Falcon, 457

U.S. 147, 158 (1982). Rather, the class representative

“must establish that discrimination was the employer’s

standard practice.” Dillon, 746 F.2d at 1004; see also

Cooper v. Federal Reserve Bank of Richmond, 467 U.S.

867, 876 (1984) (class representative must establish that

(discrimination was the company’s standard operating pro-

cedure’) (quoting International Bhd. of Teamsters v. United

States, 431 U.S. 324, 336 (1977)). The burden of persuasion

on the ultimate issue of intentional discrimination ‘‘remains

at all times with the plaintiff.”” Burdine, 450 U.S. at 253.°

At least two circuits have held that the Burdine allocation of

proof by which the ultimate burden of persuasion remains at al] times

with the plaintiff is inapplicable in a class action context. See Taylor

v. Teletype Corp., 648 F.2d 1129, 1137 n.18 (8th Cir.), cert. denied, 454

U.S. 969 (1981) (Burdine does not affect a case of classwide discrim-

ination where the evidence exposes the employer as ‘‘a proven wrong-

doer” and creates a presumption—‘“‘unless the employer proves

otherwise—that any class member was a victim of that policy’); Vuy-

anich v. Republic Nat’l Bank, 521 F. Supp. 656, 661 (N.D. Tex. 1981)

(‘‘Burdine is limited by the factual context in which it was decided.”’)

vacated on other grounds, 723 F.2d 1195 (5th Cir. 1984); cf Johnson

v. Uncle Ben’s, 657 F.2d 750 (5th Cir. 1981), cert. denied, 459 U.S.

967 (1982) (Burdine allocation of proof inapplicable in Title VII dis-

parate impact cases). In each of these cases, the plaintiffs had raised

challenges to employment practices based on their discriminatory im-

pact. In deciding that Burdine, which was an individual disparate treat-

ment case, did not apply to the claims before them, those courts found

significant the absence of an intent requirement in impact cases. The

instant action is distinguishable in that proof of specific intent to dis-

38a

If the class establishes a prima facie case by a prepon-

derance of the evidence, the burden of production shifts

to the employer to introduce admissible evidence of a le-

gitimate, nondiscriminatory reason for its challenged ac-

tions. See Burdine, 450 U.S. at 254; International Bhd. of

Teamsters v. United States, 431 U.S. 324, 360 & n.46

(1977); Dillon, 746 F.2d at 1004. If the employer fails to

rebut the presumption of discrimination that arises from

the class’s prima facie case, the district court must enter

judgment for the class. See Teamsters, 431 U.S. at 361.

If, however, the employer carries its burden of production,

the presumption drops from the case and the class rep-

resentative is afforded the opportunity to demonstrate that

the employer’s articulated reason is pretextual “either di-

rectly by persuading the court that a discrimmatory reason

more likely motivated the employer or indirectly by show-

ing that the employer’s proffered explanation is unworthy

of credence.”’ Burdine, 450 U.S. at 256; Bellissimo v. West-

inghouse Elec. Corp., 764 F.2d 175, 179-80 (3d Cir. 1985),

cert. denied, ___ U.S. __, 106 S. Ct. 1244 (1986); Dillon,

746 F.2d at 1003-04; see also Ursic v. Bethlehem Mines,

556 F. Supp. 571 (W.D. Pa.), affd in part, 719 F.2d 670

(3d Cir. 1983) (employing a Burdine-like analysis to an

ERISA § 510 claim).

Where the plaintiffs’ case does consist of direct ‘“‘smok-

ing gun’’ evidence that the employer acted with discrim-

inatory motivation, however, the Supreme Court has

indicated that the McDonnell Douglas-Burdine shifting bur-

dens mechanism is inapplicable. Trans World Airlines, Inc.

v. Thurston, 469 U.S. 111, 121 (1985); see also Goodman

v. Lukens Steel Co., 777 F.2d 118, 180 (3d Cir. 1985) (‘‘The

presumptions and shifting burdens are merely an aid—not

ends in themselves. When direct evidence is available,

criminate is required. Moreover, this Court, in a nonclass action context,

has rejected the intent/impact distinction as requiring different burdens.

See NAACP v. Medical Center, Inc., 657 F.2d 1322, 1333-34 (3d Cir.

1981).

39a

problems of proof are no different than in other civil

cases.’’) (citing Trans World Airlines, supra; United States

Postal Serv. Bd. of Governors v. Aikens, 460 U.S. 711

(1983); Furnco Constr. Corp. v. Waters, 438 U.S. 567, 577

(1978)), cert. granted, 55 U.S.L.W. 3391 (U.S. Dec. 2, 1986)

(No. 85-1625); Dillon, 746 F.2d at 1005 (‘Once the plaintiff

establishes liability the sine qua non for the [McDonnell

Douglas} formula no longer exists.’’); Bell v. Birmingham

Linen Serv., 715 F.2d 1552, 1556 (11th Cir. 1983), cert.

denied, 467 U.S. 1204 (1984) (‘““McDonnell Douglas . . . per-

tains primarily ... to situations where direct evidence of

discrimination is lacking’’); cf Los Angeles Dept. of Water

& Power v. Manhart, 435 U.S. 702 (1978) (policy requiring

larger contribution to pension fund from women than from

men was discriminatory on its face); EEOC v. Wyoming

Retirement System, 771 F.2d 1425, 1430 (10th Cir. 1985)

(direct evidence of discrimination codified in retirement

statute). Guided by these general principles, we turn to

appellants’ class claims of discrimination under ERISA.

In the proceedings before the district court, ‘‘[p]laintiffs

. assert[ed] that ... [Continental] deliberately followed

a plan for avoiding pension liability as a means of increas-

ing its profits, not that it deliberately increased plant prof-

itability by a means that happened to effect [sic] employees’

eligibility for pension benefits.” Jt. App. 170. The

appellants thus raised a cognizable claim under § 510 which

requires that loss of benefits be more than a ‘‘mere con-

sequence” of employer conduct. Titsh, 548 F.Supp. at 985.

Appellants maintained that Continental, in accordance with

the alleged discriminatory plan, improperly (1) ‘‘capped”’

the Pittsburgh plant, (2) closed the pail line and (3) laid

off members of the employee class, all in violation of §

510 of ERISA. See Jt. App. at 31-36. The district court

found that the liability avoidance plan was designed to

“avoid triggering future vestiu, ’ FF 58. Moreover, the

court found that all three actions allegedly taken pursuant

40a

to that plan were motivated in part by Continental’s desire

to prevent appellants from attaining pension eligibility.

Nevertheless, the court concluded that none of the chal-

lenged actions established a classwide violation of § 510

and, accordingly, entered judgment for Continental. See

CL 4-5.

Appellants argue that both the evidence adduced at trial

and the findings of the district court establish that Con-

tinental violated § 510 by engaging in the challenged con-

duct for the purpose of interfering with appellants’

attainment of pension eligibility for 70/75 and Rule of 65

benefits. Each of the acts that appellants claim was un-

dertaken for proscribed purposes may independently make

out a claim of discrimination under § 510. We shall first

consider the liability avoidance program. Because the ques-

tion whether the individually challenged actions of Conti-

nental—the layoffs, the capping of the Pittsburgh plant,

and the closure of the pail line—constitute violations of

the ERISA present similar procedural issues, those claims

will be considered together in a separate section, infra.

1. Liability Avoidance Program

Appellants first maintain that the overall adoption and

implementation of the ‘Bell System’’ in itself establishes

a classwide violation of § 510 of ERISA. Although the

district court made extensive findings of fact with regard

to the elements of and the intent underlying the liability

avoidance plan, it did not reach a conclusion as to whether

these findings constituted a violation of ERISA. Our re-

view of appellants’ claim requires us to consider the proof

requireinents under the Act and to determine whether the

evidence adduced at trial satisfies the elements of a § 510

claim.

The central features of Continental’s Bell System, as

established by the district court’s findings, are as follows:

(1) to identify Continental’s ‘“‘unfunded pension liabilities,”’

i.e. employees who have not yet attained the required age

tome

4la

and service to qualify for 70/75 and Rule of 65 benefits,

see FF 58, 64; (2) to designate those employees as “‘per-

manently laid off,’’ ineligible for recall absent exigent cir-

cumstances, and then only with prior approval of top

Continental management, see FF 54-57; (3) to alert Con-

tinental management through a computerized “red flag’”’

system whenever an employee designated as “permanently

laid off’’ receives a pay check, FF 69-70; and (4) to adjust

the level of production to a predetermined level of em-

ployment. See FF 61, 63. In addition, the district court

found that “Continental often referred to the goals out-

lined in the Bell System as ‘liability avoidance.’ It had two

aspects: (a) sheltering or keeping employed 70/75 qualified

employees so that their employment was assured through-

out their normal careers; and (b) preventing further em-

ployees from qualifying for 70/75 pensions.’’ See FF 68.

At the outset, Continental disputes that the liability

avoidance plan was implemented at the Pittsburgh plant,

and it argues that adoption of the plan, without more,

cannot support a finding of liability.** See Brief of Appel-

* Continental also argues that the question whether the liability

avoidance plan in itself violated ERISA was not before the district

court. See Brief of Appellee-Cross Appellant at 15. The evidence proves

otherwise. First, in Count III of the Jakub complaint, appellants’ main-

tained at item 38 that ‘“‘the Company secretly devised and implemented

a ‘liability avoidance’ or ‘cap program.’ The goal of this program was

to prevent employees at the West Mifflin plant from attaining eligibility

for these break-in-service pensions by capping the work force.”’ Jt. App.

at 34. Item 45 of Count III asserted that “‘[bly the conduct alleged

above, the Compa

This text is long and has been trimmed here. Open the source document for the complete record.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.