Petition for Writ of Certiorari — Avtex Fibers, Inc. v. McDowell
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84-578)
| Ottice-Supreme Court, U.S,
! s FILED
No.
| ALEBANOLR IL SIEWAS,
} CL. 2%
IN THE
Supreme Court of the United States
October Term, 1984
AVTEX FIBERS, INC.,
Petitioner
Vv.
ROBERT L. MCDOWELL,
Respondent
PETITION FOR A WRIT OF CERTIORARI TO
THE UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Thomas A. Allen
1234 Market Street
17th Floor
Philadelphia, Pa. 19107
(215) 854-7064
Counsel of Record for
Petitioner Avtex Fibers, Inc.
LeRoy E. Perper
Brent S. Gorey
Peter J. Mooney
WHITE AND WILLIAMS
Of Counsel
PACKARD PRESS / LEGAL DIVISION, 10th & SPRING GARDEN STREETS, PHILA., PA. 19123 (215) 236-2000
QUESTIONS PRESENTED
1. Whether a “willful” violation of the Age Discrim-
ination in Employment Act, and thus an entitlement to
liquidated damages, may be established pursuant to a
legal standard which requires no evidence that the de-
fendant intentionally or recklessly violated the Act?!
2. Whether the Court of Appeals erred in holding
that pension benefits paid to the plaintiff after termina-
tion of employment may not, as a matter of law, be de-
ducted irom an award of back pay under the Age Dis-
crimination in Employment Act?
3. Whether the Court of Appeals erred in holding
that unemployment compensation benefits paid to the
plaintiff after termination of employment may not, as a
matter of law, be deducted from an award of back pay
under the Age Discrimination in Employment Act?
1. In February 1984, this Court granted certiorari on the issue
whether specific intent to discriminate is necessary to establish “will-
fullness” (and thereby entitle plaintiff to an award of liquidated
damages) under the ADEA. Trans World Airlines, Inc. v. Thurston,
No. 83-997, cert. granted, ____ U.S. , 104 S. Ct. 1412 (1984).
That case has been consolidated with Air Line Pilots Association,
International v. Thurston, No. 83-1325, cert. granted, U.S.
, 104 S.Ct. 1706 (1984). Oral argument is scheduled for Octo-
ber 9, 1984.
TABLE OF CONTENTS
Page
QUESTIONS PRESENTED ...........05..s0-s- i
TABLE OF AUTRILRRIUSES «oo - cnc ceciewsadas iv
CPTI ITTe BAI so rec od bok vues ae Rese 2
FRSA BOE 6 6.5 ene ee ee ee 2
SEATUEES IOV Vee 6b sik ccna hee meee ess 2
STATEMENT OF THE CASE .................. 4
EE ern ee 4
P acta DRC: osc 6 cas eee 5
The Trial Court’s Damage Calculation ....... 7
The Third Circuit’s Decision................ 9
ARGUMENT
I. THIS COURT SHOULD RESOLVE THE
CONFLICT IN THE COURTS OF AP-
PEALS AS TO WHAT CONSTITUTES
A “WILLFUL VIOLATION” OF THE
ABMIGA, 6 <0 0556 ee eee 10
er te bt ale 10
The Statutory Language.................... 10
Standards for Willfulness in the Circuits ..... 12
The Legislative History..................... 15
Il. THIS COURT SHOULD RESOLVE THE
CONFLICT IN THE CIRCUITS CON-
CERNING THE POWER OF THE DIS-
TRICT COURTS TO DEDUCT PENSION
AND UNEMPLOYMENT COMPENSA-
TION BENEFITS FROM BACK PAY
AWARDS IN APPROPRIATE CASES.... 18
TABLE OF CONTENTS—(Continued )
Page
A. THE RULE THAT THE _ DISTRICT
COURT HAS NO DISCRETION TO DE-
DUCT PENSION PAYMENTS FROM AN
AWARD OF BACK PAY UNDER THE
ADEA OFFENDS THE ADEA MAKE-
3 | ALS | |) Od 6) 20
B. THE DECISION WHETHER TO DE-
DUCT UNEMPLOYMENT COMPENSA-
TION BENEFITS FROM ADEA BACK
PAY AWARDS SHOULD BE LEFT TO
THE DISCRETION OF THE TRIAL
SES ae a 25
Ee 30
APPENDICES
Appendix “A”—Opinion of Magistrate William F.
fam, Jr. Gated May 20, 1963 ................ A-1
Appendix “B”—Opinion of the United States Court
of Appeals for the Third Circuit............. A-12
TABLE OF AUTHORITIES
Cases: Page
Air Line Pilots Association, International v.
Trans World Airlines, Inc., 713 F.2d 940 (2d
Cir. 1983), cert. granted sub nom., Trans World
Airlines, Inc. v. Thurston, _ U.S. __, 104
is Se ES Sr or eee Pa wee. 13
Air Line Pilots Association, International v.
Thurston, No. 83-1325, cert. granted, U.S.
5 Re CR, Ee CRO) cisions vee i, 10
Albemarle Paper Co. v. Moody,
ee Wee OP CRO TO) . ots esc Va ands 19, 29
Barcelona v. Tiffany English Pub, Inc.,597 F.2d 464
Se a ais ko Poe ce Oe ee 1]
Bishop v. Jelleff Associates, 398 F. Supp. 579
Ce BU en ies cha ne sees Battne eas 26
Blackwell v. Sun Electric Corp., 696 F.2d 1176 (6th
Re) CME 6 notes pire cuts eee acs aes 2,47
Boich v. Federal Mine Safety & Health Review Com-
mission, 704 F.2d 275 (6th Cir. 1983)........ 25
Bowe v. Colgate-Palmolive Co., 416 F.2d 711 (7th
Cir. 1969), aff'd in part, rev'd in part, 489 F.2d
en RE Be ohare pen eaiewdakeae es 28
Brown v. A.J. Gerrard Manufacturing Co., 715 F.2d
1549 (11th Cir. 1983) (en banc) (per curiam). 27
Buchholz v. Symons Mfg. Co., 445 F. Supp. 706 (E.D.
I IE tay cS si can on eand beeen 26
Chernoff v. Pandick Press, Inc., 440 F. Supp. 822
oy AL. sp Se ee neon sat es. Omees 26
Cline v. Roadway Express, Inc., 689 F.2d 481 (4th
By NE os Occ oe 6 whoa ce ae eG 19
lv
TABLE OF AUTHORITIES—(Continued )
Cases: Page
Coates v. National Cash Register Co., 423 F. Supp.
O65 (WD. Vs. 8860) se cccike see 26
Craig v. Y & Y Snacks, Inc., 721 F.2d 77 (3d Cir.
PO ek kk cekt io vik 27, 28
Crosland v. Charlotte Eye, Ear & Throat Hospital,
G6 F.3d 206 (4th Cir. 1962) .. «2... 2-0 4, 33
Davis v. Combustion Engineering, Inc., F.2d
_ 35 Fair Empl. Prac. Cas. (BNA) 975 (2d
Ce 106) oi ee eae eee 29
Dean v. American Security Insurance Co., 559 F.2d
1036 (5th Cir. 1977), cert. denied, 434 U.S. 1066
(WTR) 65.5 50 SAO ae eee eee 16
EEOC v. Enterprise Association Steamfitters Local
No. 638, 542 F.2d 579 (2d Cir. 1976), cert.
denied, 430 U.S. 911 (GBITR 2. ew nce e ec enns 27
EEOC v. Ford Motor Co., 645 F.2d 183 (4th Cir.
1981), rev’d on other grounds, 458 U.S. 219, ad-
hered to original position on remand, 688 F.2d
951 (4th Cir. 1982) (per curiam)............. 27
EEOC v. Prudential Federal Savings and Loan As-
sociation, F.2d , 35 Fair Empl. Prac.
Cas. (BNA) 783 (10th Cir. 1984) ............ 13
EEOC v. Sandia Corp.,
639 F.24 600 (T0tls Cir. 1980)... ......6.005. 22
Fariss v. Lynchburg Foundry, F. Supp.
35 Fair Empl. Prac. Cas. (BNA) 852 (W.D. Va.
Assent 3, TGS). oo os cn acu enki iaeeereree 21
Gathercole v. Global Associates, 560 F. Supp. 642
(N.D. Cal. 1983), rev’d on other grounds, 727
F.2d 2406 Ct Ce. Bk cece as ve cens ccs, 26
TABLE OF AUTHORITIES—( Continued )
Cases: Page
Gibson v. Mohawk Rubber Co., 695 F.2d 1093 (8th
ee 29
Goodman v. Heublein, Inc., 645 F.2d 127 (2d Cir.
RO inp oak co ae the eben shane ehesnseaees 12
Hagelthorn v. Kennecott Corp., 710 F.2d 76 (2d Cir.
oS | ne ar rr re 21
Hannan v. Chrysler Motors Corp., 443 F. Supp. 802
(E.D. Mich. 1978).......... 0.000 cee eee 21, 22
Hays v. Republic Steel Corp., 531 F.2d 1307 (5th
Cir. FOFG) «on nc cccsvcrenvecsieeeearstentanes 13
Hedrick v. Hercules, Inc., 659 F.2d 1088 (5th Cir.
ROR) none en sb ys ern ey ce Miners evakengeeus 13
Jacebson v. Pitman-Moore, Inc., 582 F. Supp. 169
(D. Minn. 1984) ........ 0... cee es 25
Johnson v. Al Tech Specialties Steel Corp., 731 F.2d
143 (2d Cir. 1984) ...... cece cee ee 24
Kauffman v. Sidereal Corp., 695 F.2d 343 (9th Cir.
1983) (per Curiam)... .....0...0 00. cee eee 27
Kelly v. American Standard, Inc., 640 F.2d 974 (9th
Cir. 1981) 0.0... ce eee ee 12,17
Lake Shore & Mich. S. Ry. Co. v. Prentice, 147 U.S.
101 (1BBB) 2... cece cree cc ese rersceunncaes 16
Laugesen v. Anaconda Corp., 510 F.2d 307 (6th Cir.
ROTO) oo cee sd csk deve nsineecnecestevenweness 22
Loeb v. Textron, Inc..,
600 F.2d 1003 (Ist Cir. 1979) ............ 12,13
Lorillard v. Pons, 434 U.S. 575 (1978) ........ 1. KS
vi
TABLE OF AUTHORITIES—(Continued )
Cases: Page
Malloy v. City of Duquesne, No. 83-2624, F,
Supp. (W.D. Pa. March 9, 1984)........ 21
Marshall v. Goodyear Tire & Rubber Co., 554 F.2d
ye Rt. BS A: ¢ ¢ re ee ere 25
Merriweather v. Hercules, Inc., 631 F.2d 1161 (5th
SE, SES bah 950.4 08 4 90D ARE EEE Res 27
NLRB v. Gullett Gin Co., 340 U.S. 361 (1951).... 28
Naton v. Bank of California, 649 F.2d 691 (9th Cir.
| RE ete Save athe Parent rer eee eg 22, 23, 25
Orzelv. City of Wauwatosa Fire Dept., 697 F.2d 743
(7th Cir. 1983), cert. denied, U.S. , 104
wee gk er ee eee 21
Rasimas v. Michigan Department of Mental Health,
714 F.2d 614 (6th Cir. 1983), cert. denied,
U.S. , 104 S. Ct. 2151 (1984)........ 27
Robb v. Chemetron Corp., 17 Fair Empl. Prac. Cas.
(BNA) 1635 (S.D. Tex. 1978)......6...5.66: 2), 22
Robinson v. Lorillard Corp., 444 F.2d 791 (4th Cir. ),
cert. dismissed, 404 U.S. 1006 (1971)........ 28
Rodriguez v. Taylor, 569 F.2d 1231 (3d Cir. 1977),
cert. denied, 436 U.S. 913 (1978)...... 19, 23, 24
Rogers v. Exxon Research & Engineering Co., 550
F.2d 834 (3d Cir. 1977), cert. denied, 434 U.S.
Spe SO 5a esis SAR SRN ee oe aes 16
Satty v. Nashville Gas Co., 522 F.2d 850 (6th Cir.
1975), affd in part, vacated in part on other
oroumadé, 450'U.S.. T56 CTBT) voc cc cecaeccce 27
Schulner v. Jack Eckerd Corp., 572 F. Supp. 56 (S.D.
EN oes rc uk wae ne Seen eee 22, 25
vii
TABLE OF AUTHORITIES—(Continued )
Cases: Page
Schulz v. Hickok Mfg. Co., 358 F. Supp. 1208 (N.D.
Ci. SR 05S CCL aE ORS eh Cee ees 26
Smith v. University of North Carolina, 632 F.2d 316
Ce Sa Se ee ree 17
Spies v. United States, 317 U.S. 492 (1943)...... 12
Syvock v. Milwaukee Boiler Manufacturing Co., 665
P.26 140 (7m Cir. 1061) .......... 1, 72,17,
Trans World Airlines, Inc. v. Thurston, No. 83-997,
cert. granted, U.S. , $086. Ct. iz
CIEE Ga aia crads cues noes cg anion i, 10, 13, 20
Tribble v. Westinghouse Electric Corp., 508 F. Supp.
14 (E.D. Mo. 1980), affd, 669 F.2d 1193 (8th
Cir. 1962), cert. denied, U.S... 103S.
Shi ee I a a ek ee eee ees 21, 22
United States v. Campos-Serrano, 404 U.S. 293
EC a re ee er Pe aan 15
Wehr v. Burroughs Corp., 619 F.2d 276 (3d Cir.
Er PEC ee See er 8, 12, 14
Whittlesley v. Union Carbide Co., F.2d ao
Fair Empl. Prac. Cas. (BNA) 1089 (2d Cir.
DE Se eee ae re ee 29
Wilson v. Wehadkee Yarn Mills, 32 Fair Empl. Prac.
Cas. (BNA) 847 (M.D. Ala. 1983)............ 26
Wise v. Olan Mills, Inc., 495 F. Supp. 257 (D. Colo.
ES rane Se CS ery ERNE re ere 22
STATUTES
ee I ce 5 oe Aas a rahe a ee 8
ae eck et Uns a ue aren 00
Vill
TABLE OF AUTHORITIES—(Continued )
Cases: Page
. Re Teel. dy ee er er eee ree 2
, RODS eee. A ee ee eae rr dl
29 U.S.C. §§211(b), 216(b), 216(c) and 217...... 1]
PR TE | Ren en eg oe ee ee 13
Ns NN acct pk Of 54 Cores k een Re as 2, 10
a ec IE Oh boo coke sb etseaveavcaveus 8
29 U.S.C. §626(b)..... 2, 3, 10, 11, 15, 18, 19, 24, 25
oR beg Df) a aa errr 19
RR ge a er ere 26
Va. Code $660.17 and G0. 164.1 ........6.5.58.. 26
TREATISES
Prosser, The Law of Torts §15 (4th Ed. 1971) .... 16
OTHER AUTHORITIES
SAS Ce TR Fe CNP 56 6 ced ce ie es 16
Recent Issues In Litigation Under The Age Discrim-
ination In Employment Act, 41 Ohio St. L.J. 349
Coed le age dag wh eX We ATs 8 16
ix
No.
IN THE
SUPREME COURT OF THE UNITED STATES
October Term, 1984
AVTEX FIBERS, INC.,
Petitioner,
v.
ROBERT L. MCDOWELL,
Respondent
PETITION FOR A WRIT OF CERTIORARITO
THE UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Petitioner Avtex Fibers, Inc.” respectfully prays that
a writ of certiorari issue to review the judgment of the
United States Court of Appeals for the Third Circuit en-
tered on July 12, 1984, affirming in part and reversing in
part the judgment of United States Magistrate William
F. Hall, Jr.
2. All the parties to this case are listed on the cover caption of
this Petition. Pursuant to Supreme Court Rule 21.1(b), Avtex states
that it is a subsidiary of AVI Holding Corporation; that the other
subsidiary of AVI Holding Corporation is Nitro Leasing Corporation;
and that Avtex has a wholly-owned subsidiary, Avtex Fibers — Front
Royal, Inc.
2
OPINIONS BELOW
The opinion of the Court of Appeals has not yet been
officially reported. It is unofficially reported at 35 Fair
Empl. Prac. Cas. (BNA) 371, and appears in Appendix
“A” beginning at page A-1. The opinion of United States
Magistrate William F. Hall, Jr. is not reported. It appears
in Appendix “B” beginning at page A-13.
JURISDICTION
The judgment of the Court of Appeals was entered
on July 12, 1984. This petition is filed within ninety days
of that date. The jurisdiction of this Court is invoked un-
der 28 U.S.C. §1254(1).
STATUTES INVOLVED
Section 4(a) of the Age Discrimination in Employ-
ment Act, 29 U.S.C. §623(a), provides:
It shall be unlawful for an employer —
(1) to fail or refuse to hire or to discharge any
individual or otherwise discriminate against any in-
dividual with respect to his compensation, terms,
conditions, or privileges of employment, because of
such individual’s age;
(2) to limit, segregate, or classify his employees
in any way which would deprive or tend to deprive
any individual of employment opportunities or other-
wise adversely affect his status as an employee, be-
cause of such individual’s age; or
(3) to reduce the wage rate of any employee in
order to comply with this Act.
Section 7(b) of the Age Discrimination in Employ-
ment Act, 29 U.S.C. §626(b), provides:
The provisions of this Act shall be enforced in ac-
cordance with the powers, remedies, and procedures
3
provided in sections 11(b), 16 (except for subsection
(a) thereof), and 17 of the Fair Labor Standards Act
of 1938, as amended (29 U.S.C. §§211(b), 216, 217),
and subsection (c) of this section. Any act prohibited
under section 4 of this Act shall be deemed to be a
prohibited act under section 15 of the Fair Labor
Standards Act of 1938, as amended (29 U.S.C. §215).
Amounts owing to a person as a result of a violation
of this Act shall be deemed to be unpaid minimum
wages or unpaid overtime compensation for purposes
of sections 16 and 17 of the Fair Labor Standards Act
of 1938, as amended (29 U.S.C. §§216, 217):
Provided, that liquidated damages shall be payable
only in cases of willful violations of this Act. In any
action brought to enforce this Act the court shall have
jurisdiction to grant such legal or equitable relief as
may be appropriate to effectuate the purposes of this
Act, including without limitation judgments compel-
ling employment, reinstatement or promotion, or en-
forcing the liability for amounts deemed to be unpaid
overtime compensation under this section. Before in-
stituting any action under this section, the Secretary
shall attempt to eliminate the discriminatory prac-
tice or practices alleged, and to effect voluntary com-
pliance with the requirements of this Act through
informal methods of conciliation, conference, and
persuasion.
4
STATEMENT OF THE CASE
Introduction
This Petition arises from an action brought by Robert
L. McDowell against Avtex Fibers, Inc. (‘““Avtex”) under
the Age Discrimination in Employment Act (“ADEA”).
The jury found Avtex liable. After Avtex agreed to rein-
state McDowell, the trial court exercised its discretion to
establish back pay damages by first calculating the
amount of salary and benefits McDowell lost as a result
of his termination and then deducting, among other
things, pension benefits and unemployment compensa-
tion benefits paid to McDowell. The trial court also
awarded liquidated damages in an amount equal to the
back pay award.
Avtex appealed from that portion of the order award-
ing liquidated damages, arguing that the trial court ap-
plied an incorrect legal standard in finding Avtex’ viola-
tion to have been willful and that, in any event, the evi-
dence was insufficient to support a finding of willfulness.
McDowell cross-apppealed, challenging the deduction by
the trial court of pension plan benefits and unemploy-
ment compensation benefits from his back pay award.
The Third Circuit affirmed the award of liquidated
damages to McDowell, holding that liquidated damages
are appropriate if the employee proves that he was dis-
charged “because of age and that the discharge was vol-
untary and not accidental, mistaken, or inadvertent.”
(A-22; emphasis in original). The trial court had found
“no basis for concluding that the plaintiff's discharge was
not voluntary and that it was accidental, mistaken or
inadvertent.” (A-7).
The Third Circuit further held that McDowell’s back
pay award must be increased in two respects. First, it
held as a matter of law that the ADEA did not permit the
trial judge to deduct from the back pay award the pen-
sion benefits paid to McDowell by Avtex after his termi-
nation. Second, the Third Circuit held as a matter of law
5
that the ADEA permitted Avtex no credit against the back
pay award for unemployment compensation benefits
McDowell received after his termination. In reversing the
trial court’s decision to make these deductions for pen-
sion and unemployment compensation benefits, the
Third Circuit in effect determined that the trial court lacks
discretion under the ADEA to deduct these items from
back pay awards.
Factual Background
Avtex manufactures and sells rayon, polyester and
acetate fibers. Avtex once operated five manufacturing
plants, but in late 1979 and early 1980 was forced to close
two of its plants, in Virginia and West Virginia, because
of poor business conditions. Avtex laid off all 1,350 man-
ufacturing employees at those facilities, and made pro-
portionate reductions elsewhere in support staff.
McDowell conceded at trial that the reduction was re-
quired by poor business conditions in the fiber markets
and the economy in general. Before the layoffs, McDowell
was a research chemist with Avtex’ Research & Devel-
opment Department in Front Royal, Virginia. The De-
partment consisted of thirty professional employees and
twenty-eight technicians. McDowell’s supervisor, Mr.
Hettich, was instructed by Avtex management to reduce
the Department’s staff by seventeen employees (J.A
174-75).° Accordingly, nine professionals and eight tech-
nicians were terminated.* Hettich testified that he ter-
3. References to the parties’ Joint Appendix filed in the Third
Circuit appear as “J.A. ”
4. Before the reduction-in-force, seventy-three percent of the
professional employees in the Department were older than fifty years
of age (J.A.194). After the reduction-in-force, seventy-one percent of
the professional employees in the Department were older than fifty
(J.A. 195). Viewing the Department as a whole, both professionals
and technicians, fifty-three percent of all employees were older than
fifty years of age before the reduction-in-force, while fifty-four per-
cent of the retained employees were older than fifty.
6
minated McDowell because the bulk of McDowell’s work
was in research and product development, two areas
which Avtex decided to cut back (J.A. 175-76, 178). Het-
tich further testified that McDowell did not fully under-
stand cost and budget procedures (J.A. 152); did not ad-
equately communicate with his superiors about the plan-
ning and progress of his work (J.A. 152, 157); had acted
without Hettich’s approval in committing Avtex to a se-
crecy agreement (J.A. 161); and had_ refused
management’s request that he assist in the installation of
an experimental laboratory (J.A. 169-73).
. McDowell thereafter filed suit against Avtex alleging
that his discharge violated the ADEA. The case was tried
before United States Magistrate William F. Hall, Jr. pur-
suant to the parties’ stipulation under 28 U.S.C. §636(c),
which permits federal magistrates, with the parties’
consent, to try both jury and non-jury cases and to enter
final judgments appealable directly to the Court of Ap-
peals.
The liability issue was submitted to a jury. McDowell
openly conceded that he had no direct evidence that he
was discriminated against by age (J.A. 37); he produced
no evidence that Hettich was aware that he was discrim-
inating by age in terminating him. The inferential evi-
dence adduced by McDowell was as follows: First,
McDowell’s statistician testified that there was a statis-
tically significant relationship between the ages of the
older employees and the chance that they would be ter-
minated. Avtex’ statistician, using a different statistical
test, disagreed. Neither expert testified that the statisti-
cal test used by the other was inappropriate. Both opin-
ions went to the jury. Second, McDowell attempted to
show that three younger retained employees were less
valuable to the Department than he was. Third, McDowell
introduced salary increase forms for two younger em-
ployees. One referred to the employee as having “good
potential” and the other referred to the employee as “one
of the very few bright young men in our department.”
7
(J.A. 105-06). McDowell’s counsel suggested in her ex-
amination of Hettich that these comments evidenced his
“unconscious preference for youth” (J.A. 103-06), and
emphasized repeatedly in her closing statement that Het-
tich unconsciously discriminated against McDowell be-
cause of his age (J.A. 61-65).
The jury returned a verdict that Avtex had violated
the ADEA in terminating McDowell. The jury made no
determination concerning the willfulness of that viola-
tion. Upon stipulation by the parties, the issues of
damages, liquidated damages and other relief were then
submitted to Magistrate Hall.
After the verdict, on Avtex’ initiative (A-8 through
A-11), McDowell was reinstated to his former position
with Avtex, with a salary reflecting the raises he would
have been eligible to receive in the period since his
termination, and with full pension and other benefits as
though he had never been terminated.
The Trial Court’s Damage Calculation
McDowell having been reinstated, the remaining re-
medial issues were submitted to Magistrate Hall. Mag-
istrate Hall entered an Order awarding McDowell
$47,593.01 in back pay and benefits, and an equal amount
as liquidated damages (A-7).
In calculating the amount necessary to make
McDowell whole, Magistrate Hall totalled the amount of
salary and benefits McDowell would have earned had he
not been terminated. From that amount, Magistrate Hall
first deducted McDowell’s termination and vacation pay,
and the amounts McDowell had earned from other em-
ployment after his termination (A-2). McDowell did not
object to these deductions.
Magistrate Hall next deducted the pension payments
McDowell had received after his discharge, finding that
McDowell would not have received those amounts ex-
8
cept for his discharge? (A-3).
McDowell had also received certain unemployment
compensation benefits after his termination. The parties
stipulated that those payments were made in part from
the state unemployment funds of Virginia and Pen-
nsylvania, and in part by the United States Government
pursuant to the Trade Act of 1974, 19 U.S.C. § 2101 et
seq. Finding that the deductibility of unemployment com-
pensation benefits was a matter committed to his
discretion, Magistrate Hall deducted from McDowell’s
back pay award the benefits paid from the state unem-
ployment funds to which Avtex had contributed, but not
the payments made pursuant to the Trade Act.
The foregoing computation resulted in a back pay
award of $47,593.01 (A-5).
With respect to McDowell’s request for liquidated
damages, Magistrate Hall relied on Wehr v. Burroughs
Corp., 619 F.2d 276, 283 (3rd Cir. 1980), in which the
Third Circuit, in addressing the proof necessary to sup-
port an award of liquidated damages, concluded that “|i]t
is sufficient to prove that the company discharged the
employee because of age and that the discharge was vol-
untary and not accidental, mistaken or inadvertent” (A-
6). Magistrate Hall first found that the jury’s verdict on
liability established that McDowell was discharged be-
cause of age® (A-7). Turning to the second part of the
Wehr test and applying it literally, Magistrate Hall found
“no basis for concluding that the plaintiff's discharge was
not voluntary and that it was accidental, mistaken or
inadvertent.” (A-7) (emphasis added). The trial court
therefore concluded that McDowell was entitled to liq-
uidated damages.
5. The parties stipulated that the Avtex pension plan is wholly
funded by Avtex.
6. The ADEA makes it unlawful for an employer to “discharge
any individual . .. because of such individual’s age.” 29 U.S.C. § 623
(a) (1).
9
Avtex appealed the liquidated damages deter-
mination, contending that the standard applied by the
magistrate made liquidated damages automatic upon a
finding of liability because all discharges are voluntary.
McDowell cross-appealed, arguing that the magistrate
erred in deducting his pension and unemployment com-
pensation benefits from the award of back pay.
The Third Circuit’s Decision
The Third Circuit affirmed the award of liquidated
damages and reversed the deductions of pension and un-
employment compensation benefits from back pay.
On the liquidated damages issue, the Court approved
the standard used by Magistrate Hall and the manner in
which it was applied (A-21-24). The Court did not ad-
dress Avtex’ argument that, to recover liquidated
damages, a plaintiff must show that the employer
intentionally, or at least recklessly, violated the ADEA.
The Third Circuit has thus adopted a legal standard by
which liquidated damages are automatic upon a finding
of liability, even if the discrimination is unconscious or
unintentional. This is the most liberal of a perplexing
array of standards for “willfulness” that have been artic-
ulated in the Circuits.
The Third Circuit held that the pension payments
made to McDowell after his termination may not, as a
matter of law, be deducted from the back pay award. The
Court termed pension benefits “indistinguishable [from
unemployment compensation benefits] for purposes of
deciding this case”, and characterized them as “collateral
benefits” to McDowell, notwithstanding that Avtex was
the sole contributor to the pension fund and the parties
had agreed that McDowell’s pension account would be
restored to the level it would have achieved had McDowell
never been discharged or received post-termination ben-
efits (A-19-21). No court had ever before held that post-
termination pension benefits may not be deducted from
10
a back pay award where the plaintiff's pension plan is
fully restored.
On the question whether Avtex was entitled toacredit
against the back pay award for the unemployment com-
pensation benefits received by McDowell after his
discharge, the Third Circuit became the first Court of
Appeals to hold that the trial judge lacks the discretion
under the ADEA to deduct such benefits.
ARGUMENT
I. THISCOURT SHOULD RESOLVE THE CONFLICT IN
THE COURTS OF APPEALS AS TO WHAT CONSTI-
TUTES A “WILLFUL VIOLATION” OF THE ADEA
Introduction
The ADEA provides that liquidated damages are pay-
able “only in cases of willful violations of this Act.” 29
U.S.C. §626(b). The term “willful” is not defined in the
ADEA, and the Circuits have reached different conclu-
sions as to the meaning of that term. This Court has al-
ready recognized the conflict among the Circuits by
granting certiorari in Trans World Airlines, Inc. v.
Thurston, No. 83-997, cert. granted, ____ U.S. ____, 104
S.Ct. 1412 (1984)’ on the issue “whether specific intent
to discriminate is necessary to establish willfulness” un-
der the ADEA.
The Statutory Language
Section 4(a) of the ADEA makes it unlawful for an
employer “to discharge any individual or otherwise dis-
criminate against any individual ... because of such
individual’s age.” 29 U.S.C. §623(a). This prohibition is
7. That case has been consolidated with Air Line Pilots As-
sociation, International v. Thurston, No. 83-1325, cert. granted,
U.S. , 104 S. Ct. 1706 (1984). Oral argument is scheduled
for October 9, 1984.
a ee F
11
enforced by express incorporation of the remedial rights
and procedures of the Fair Labor Standards Act (“FLSA”),
with certain specific exceptions. 29 U.S.C. §626(b)
(incorporating 29 U.S.C. §§211(b), 216(b) and 216(c)
and 217 of the FLSA). One of those exceptions involves
the award of liquidated damages.
The FLSA provides for the recovery of liquidated
damages equal to the pecuniary losses sustained by the
employee by way of lost wages, salary increases, and other
benefits. 29 U.S.C. §216(b). The award of liquidated dam-
ages is automatic for a violation of the FLSA. See, e.g.,
Barcelona v. Tiffany English Pub, Inc., 597 F.2d 464,
468 (5th Cir. 1979). Cf. Crosland v. Charlotte Eye, Ear
and Throat Hospital, 686 F.2d 208, 216-17 (4th Cir.
1982); Syvock v. Milwaukee Boiler Mfg. Co., 665 F.2d
149, 154 (7th Cir. 1981). Section 7(b) of the ADEA,
however, authorizes the award of liquidated damages
“only in cases of willful violations.” 29 U.S.C. §626(b)
(emphasis added). By authorizing the award of liqui-
dated damages only in cases of willful violations, and
thereby departing from the automatic award of those dam-
ages under the FLSA, Congress clearly intended to cre-
ate two levels of liability under the ADEA: non-willfu!
and willful. In Lorillard v. Pons, 434 U.S. 575, 581 (1978),
this Court observed that “while incorporating into the
ADEA the FLSA provisions authorizing awards of liqui-
dated damages, Congress altered the circumstances un-
der which such awards would be available in ADEA ac-
tions by mandating that such damages be awarded only
where the violation of the ADEA is willful.” (Emphasis
added). See also Syvock v. Milwaukee Boiler Mfg. Co.,
665 F.2d 149, 155 (7th Cir. 1981) (‘the legislative his-
tory of the ADEA suggests that the Congressional fram-
ers thought that non-willful discrimination towards an
individual was quite possible”).
12
Standards for Willfulness in the Circuits
This Court has recognized that “willful... is a word
of many meanings, its construction often being influ-
enced by its context.” Spies v. United States, 317 U.S.
492, 497 (1943). The Circuits have reached different con-
clusions as to the meaning of “willful” in the context of
the ADEA.
Some Circuits have interpreted “willful” to require
awareness on the part of the employer that its actions are
in violation of the ADEA. For example, the First Circuit
has concluded that an act is “willful” if done “voluntarily
and intentionally, and with the specific intent to do some-
thing the law forbids; that is to say, with bad purpose
either to disobey or to disregard the law.” Loebv. Textron,
Inc., 600 F.2d 1003, 1020 n.27 (1st Cir. 1979). The Sev-
enth Circuit has adopted a similar interpretation, con-
cluding that “willfulness” should be found “only if there
is some showing as to the defendant’s knowledge of the
illegality of his actions.” Syvock v. Milwaukee Boiler Mfg.
Co., 665 F.2d 149, 155 (7th Cir. 1981).
The Sixth Circuit has held that a violation is willful
only if the employer “acted deliberately, intentionally and
knowingly in firing the plaintiff because of his age.”
Blackwellv. Sun Electric Corp., 696 F.2d 1176, 1184 (6th
Cir. 1983). It is not necessary, in order to establish will-
fulness, to prove that the employer was aware of the im-
plications of his actions under the ADEA. Id. The Ninth
Circuit has adopted virtually the same standard. Kelly v.
American Standard, Inc., 640 F.2d 974, 980 (9th Cir.
1981).®
8. The Sixth and Ninth Circuits believed that they were adopt-
ing the standard for willfulness articulated by the Third Circuit in
Wehr v. Burroughs, 619 F.2d 276 (3d Cir. 1980). See Blackwell, 696
F.2d at 1183-84; Kelly, 640 F.2d at 980. The Second Circuit has also
interpreied Wehr to require a knowing and voluntary violation of the
ADEA. See Goodman v. Heublein, Inc., 645 F.2d 127, 131 (2d Cir.
1981). In fact, the Wehr opinion does contain language suggesting
that liquidated damages should be awarded only for intentional vi-
13
The Fifth Circuit deems a violation willful if “the em-
ployer is aware that his actions are governed by the
[ADEA]”, but permits reduction or elimination of the
award if the Court finds that the employer’s actions were
in good faith and the employer had reason to believe its
conduct did not violate the ADEA. Hedrick v. Hercules,
Inc., 658 F.2d 1088, 1096 (5th Cir. 1981).° The Fourth
and Tenth Circuits have adopted the same standard, but
without the “good faith” exception. EEOC v. Prudential
Federal Savings and Loan Association, __ F.2d __,
35 Fair Empl. Prac. Cas. (BNA) 783, 790( 10th Cir. 1984);
Crosland v. Charlotte Eye, Ear & Throat Hospital, 686
F.2d 208, 217 (4th Cir. 1982).
The Second Circuit requires the employee to show
that “the employer either knew or showed reckless dis-
regard for the matter of whether its conduct was prohib-
ited by the ADEA.” Air Line Pilots Association, Inter-
national v. Trans World Airlines, Inc., 713 F.2d 940,
956 (2d Cir. 1983), cert. granted sub nom., Trans World
Airlines, Inc. v. Thurston, No. 83-997, US. ;
olations. See Wehr, 619 F.2d at 283 “|The term ‘willful’] . . . applies
to violations which are intentional, knowing or voluntary... .” The
language of the Wehr Court applied by the trial court and approved
by the Third Circuit in the present case, however, was as follows:
“It is sufficient to prove that the company discharged the em-
ployee because of age and that the discharge was voluntary and
not accidental, mistaken, or inadvertent.” 619 F.2d at 283.
This standard does not require an intentional violation, but only an
intentional act that is later found to be discriminatory. Kelly,
Blackwell and Goodman, therefore, apparently misinterpreted Wehr.
9. This “good faith” standard is rooted in the Fifth Circuit's
holding that Section 11 of the Portal-to-Portal Pay Act, 29 U.S.C.
§260, which amends the enforcement provisions of the FLSA in-
corporated into the ADEA, is itself incorporated into ADEA. See Hays
v. Republic Steel Corp., 531 F.2d 1307 (5th Cir. 1976). The other
Circuits that have considered the question whether the Section 11
good faith standard applies in ADEA cases have held to the contrary.
See, e.g., Loeb v. Textron, Inc., 600 F.2d 1003, 1020 (1st Cir. 1979).
14
104 S. Ct. 1412 (1984). The Court emasculated that
standard, however, by going on to hold that “|i]n a dis-
criminatory treatment case ... an employer’s action, if
taken because of an impermissible factor such as age,
cannot be the result of negligence, mistake, or other in-
nocent reason.” 713 F.2d at 956 (emphasis in original).
In the present case, the Third Circuit had adopted a
standard for willfulness which requires merely that the
actions of the employer be voluntary and not accidental,
mistaken, or inadvertent:
“It is sufficient to prove that the company discharged
the employee because of age and that the discharge
was voluntary and not accidental, mistaken, or
inadvertent.” Opinion of the Court below (A-23),
quoting from Wehr v. Burroughs Corp.,619 F.2d 276,
283 (3d Cir. 1980) (emphasis in original). !°
Consequently, once an employee shows that his dis-
charge was voluntary, the employee is entitled to liqui-
dated damages, as a matter of law, without any evidence
that the employer knew, or recklessly disregarded,
whether its actions were violative of the ADEA. Since
discharges are voluntary in nature, and not accidental,
mistaken or inadvertent, this standard eliminates any
meaningful distinction between willful violations of the
ADEA and violations that are not willful. This standard
appears to lead to an automatic award of liquidated
10. The Third Circuit went on to state an alternative test: “In
our view, it would also be sufficient to prove that the discharge was
precipitated in reckless disregard of consequences.” Opinion of the
Court below (A-22), quoting from Wehr v. Burroughs Corp., 619
F.2d 276, 283 (3d Cir. 1980). Since the award of liquidated damages
will be automatic in nearly every case of age discrimination, under
the test quoted in the text, it is hard to imagine a case of age dis-
crimination which would call for application of the test quoted in
this footnote. Thus, at the trial level in this case, Magistrate Hall
found it necessary to apply only the first test.
15
damages, even though Congress chose statutory lan-
guage indicating that the award of liquidated damages
was to be the exception and not the rule:
“Provided, that liquidated damages shall be payable
only in cases of willful violations of this Act.” 29
U.S.C. §626(b) (emphasis added).
This Court has recognized that in enacting the ADEA
“Congress exhibited both a detailed knowledge of the
FLSA provisions and their judicial interpretation and a
willingness to depart from those provisions regarded as
undesirable or inappropriate for incorporation.” Lorillard
v. Pons, supra, 434 U.S. at 581. With respect to the re-
medial provisions of the FLSA, Congress chose to depart
from the automatic award of liquidated damages by pro-
viding that such damages shall be payable “only in cases
of willful violations.” The Third Circuit, however, has
adopted a standard for willfulness that virtually reads this
statutory language out of the ADEA, in contravention of
the principle that a statute “ ‘ought. . . to be so construed
that. . .noclause, sentence, or word shall be superfluous,
void or insignificant.” United States v. Campos-
Serrano, 404 U.S. 293, 301 n.14 (1971). A better stan-
dard for “willfulness” is that the employer act with knowl-
edge that (or at least reckless disregard as to whether) its
actions violate the ADEA. This standard will preserve a
meaningful distinction between willful and non-willful
violations of the ADEA.
The Legislative History
The legislative history of the ADEA shows that Con-
gress intended to draw a meaningful distinction between
willful and non-willful violations, so that the award of
liquidated damages would be the exception and not the
rule. The original bill made it a crime to willfully commit
any practice made unlawful by the bill. That criminal
provision was eliminated, however, and replaced by the
16
current provision authorizing the award of liquidated
damages in cases of willful violations. In explaining the
elimination of criminal penalties, Senator Javits made it
clear that liquidated damages were intended to serve as
a penalty (without the higher standard of proof associ-
ated with criminal penalties):
“(T]he criminal penalty in cases of willful violation
has been eliminated and a double damage liability
substituted. This will furnish an effective deterrent
to willful violations and at the same time avoid the
difficult problems of proof which would occur under
a criminal provision.” 113 Cong. Rec. 7076 (1976)
(emphasis added).
As the Fifth Circuit has recognized, “it is quite ap-
parent that Senator Javits ... held the view that liqui-
dated damages could effectively supply the deterrent and
punitive purposes which both criminal penalties and pu-
nitive damages normally serve.” Dean v. American Se-
curity Insurance Co., 559 F.2d 1036, 1040 (5th Cir.
1977), cert. denied, 434 U.S. 1066 (1978). See also Rog-
ers v. Exxon Research & Engineering Co., 550 F.2d 834,
840 (3d Cir. 1977), cert. denied, 434 U.S. 1022 (1978):
Smith and Leggette, Recent Issues in Litigation Under
the Age Discrimination in Employment Act, 41 Ohio St.
L. J. 349, 369 (1980). Generally, to recover punitive
damages, there must be “circumstances of aggravation
or Outrage, such as spite or ‘malice’ or a fraudulent or evil
motive on the part of the defendant, or such conscious
and deliberate disregard of the interests of others that his
conduct may be called willful or wanton.” W. Prosser,
The Law of Torts §15 at 9-10 (4th Ed. 1971) (footnotes
omitted). The standard for willfulness articulated by the
Third Circuit, which requires no evidence that the em-
ployer knew or recklessly disregarded whether his ac-
tions were prohibited, is incompatible with the punitive
purpose of liquidated damages. See, e.g., Lake Shore &
Mich. S. Ry. Co. v. Prentice, 147 U.S. 101, 107 (1893)
17
(“guilty intention on the part of the defendant is required
in order to charge him with exemplary or punitive
damages”).
The legislative history also shows an awareness by
Congress that a violation of the ADEA may arise from
unconscious age discrimination. Syvock v. Milwaukee
Boiler Mfg. Co.,665 F.2d 149, 155(7th Cir. 1981). Indeed,
a number of Circuits have recognized that a violation of
the ADEA may arise from unconscious discrimination
because of age. See, e.g., Kelly v. American Standard,
Inc., 640 F.2d 974, 980 (9th Cir. 1981); Smith v. Uni-
versity of North Carolina, 632 F.2d 316, 337 (4th Cir.
1980); Blackwell v. Sun Electric Corp., 696 F.2d 1176,
1184 (6th Cir. 1983). Yet under the standard for willful-
ness articulated by the Third Circuit, unconscious dis-
crimination will constitute a willful violation, so long as
the actions of the employer were voluntary and not ac-
cidental, mistaken, or inadvertent. '' Clearly Congress did
not intend to subject employers to punitive penalties, in
the form of liquidated damages, in cases of unconscious
discrimination. As the Seventh Circuit properly con-
cluded in Syvock v. Milwaukee Boiler Mfg. Co., supra,
665 F.2d at 155:
11. In appealing to the Third Circuit, Avtex contended not only
that the trial court had applied an incorrect legal standard, but also
that the evidence in this case was insufficient to support a finding
of “willfulness” under the ADEA. The Third Circuit’s Opinion in this
case, after concluding that the trial court applied the correct legal
standard for liquidated damages, goes on, in footnote 6 (A-23), to
cite certain items of evidence and to state: “We believe this evidence
is sufficient to support a finding of willfulness.”
The evidence in question, however, has never been evaluated
by a fact finder pursuant to a legal standard which requires any
inquiry into defendant's state of mind. Beyond that, Avtex continues
to maintain that a finding of “willful violation” cannot be made in
this case. The evidence cited in the Third Circuit’s footnote 6 (A-23),
upon analysis, is the kind of inferential evidence which could sup-
port a liability verdict. But there is no evidence — and the Third
Circuit cites none — which even implies a willful violation of the
law.
18
“(The standard for willfulness] must distinguish
those situations in which an employer consciously
discriminates against an employee because of age
from those in which the discrimination is uncon-
scious. This distinction is just as necessary in dis-
parate treatment cases as it is when the plaintiff sues
on a discriminatory impact theory. We think that a
finding of willfulness should lie only if there is some
showing as to the defendant’s knowledge of the il-
legality of his actions” (footnote omitted).
In sum, the standard for willfulness articulated by
the Third Circuit in the present case is contrary to the
statutory language and legislative history of the ADEA,
and is inconsistent with the standards adopted by other
Circuits. In light of the conflict among the Circuits, and
the importance of the ADEA in civil rights litigation, cer-
tiorari should be granted in this case.
Il. THIS COURT SHOULD RESOLVE THE CONFLICT
IN THE CIRCUITS CONCERNING THE POWER OF
THE DISTRICT COURTS TO DEDUCT PENSION
AND UNEMPLOYMENT COMPENSATION BENE-
FITS FROM BACK PAY AWARDS IN APPROPRI-
ATE CASES
This case presents the Court with the opportunity to
provide the lower courts and the business community
with much-needed guidance as to how damages should
be ascertained for a violation of the ADEA. The Third
Circuit’s unprecedented ruling that trial courts have no
discretion to allow deductions against back pay for pen-
sion and unemployment compensation benefits received
by a terminated employee violates Congress’ intentions
as expressed in Section 7(b) of the ADEA, 29 U.S.C.
§626(b), and conflicts with all previous judicial interpre-
tations of thatprovision.
The remedial provision of the ADEA, Section 7(b),
provides in pertinent part:
Te
19
“In any action brought to enforce this Act, the court
shall have jurisdiction to grant such legal or equi-
table relief as may be appropriate to effectuate the
purposes of this Act....” 29 U.S.C. §626(b)
(emphasis added). !*
Courts have repeatedly emphasized that awards under
this provision should make the plaintiff “whole.” See, e.g.,
Cline v. Roadway Express, Inc., 689 F.2d 481, 490 (4th
Cir. 1982) (the “ordering equitable principle is that a
conpensatory back pay award should only make thé
wrongly discharged employee monetarily whole under his
employment contract; it should not provide a windfall.”’).
Cf. Albemarle Paper Co. v. Moody, 422 U.S. 405, 418
(1975) (the purpose of a back-pay award under Title VII,
42 U.S.C. §2000 e-5(g), is “to make persons whole for
injuries suffered on account of unlawful discrimination”).
The Third Circuit itself recognized in Rodriguez v.
Taylor, 569 F.2d 1231, 1238 (3d Cir. 1977), cert. denied,
436 U.S. 913 (1978) that the make-whole objective
“should be the touchstone for the district courts in fash-
ioning both legal and equitable remedies in age discrim-
ination cases.” Applying that principle, the Court in
Rodriguez held that an employer is entitled to a credit
against an ADEA back pay award for the full amount of
plaintiff's earnings from other employment in the period
after his illegal termination:
“{A] victim of employment discrimination is entitled
to be restored to the economic position he would have
occupied but for the unlawful discrimination. The
only provision in ADEA authorizing more favorable
pecuniary relief stipulates liquidated damages be cal-
culated on the basis of the underlying compensatory
12. The argument has been rejected that by failing to specify
deductions from back-pay awards — as is done in Title VII, 42 U.S.C.
§2000 e-5(g) — Congress did not intend to allow appropriate de-
ductions under the ADEA. See Rodriguez v. Taylor, 569 F.2d 1231,
1243 (3d Cir. 1977), cert. denied, 436 U.S. 913 (1978).
20
award in the event of a willful violation. By not set-
ting off Mr. Rodriguez’s earnings during the interim
period, the district court’s order affords him income
from two jobs that he could not have simultaneously
performed. Thus, the plaintiff was placed in a better
economic position than he would have achieved had
he not been discriminated against in the first place.”
569 F.2d at 1243. |
Reversing the trial court’s exercise of discretion in
applying these principles, the Third Circuit in this case
has done just what Rodriguez disapproved — it has placed
McDowell in a better economic position than he would
have achieved if he had never been terminated by Avtex.
It has further stripped the trial courts of all flexibility in
calculating back pay awards to effectuate the purposes of
the ADEA. The policies relied upon by the Third Circuit
in reaching its result are irreconcilable with the make-
whole purpose that guides back pay awards in other Cir-
cuits.
A. THE RULE THAT THE DISTRICT COURT HAS
NO DISCRETION TO DEDUCT PENSION PAY-
MENTS FROM AN AWARD OF BACK PAY UNDER
THE ADEA OFFENDS THE ADEA MAKE-WHOLE
OBJECTIVE
The Third Circuit is the first court to hold that pen-
sion benefits paid to an employee after his termination
may not, as a matter of law, be deducted from an ADEA
back pay award. Because this ruling is a marked depar-
ture from precedent, and because it has such far-
reaching consequences, '* this Court should grant certi-
13. For example, the brief filed in this Court by Trans World
Airlines, Inc. as Petitioner in Trans World Airlines, Inc. v. Thurston,
supra, notes that the pilots involved in that case had been paid re-
tirement benefits of approximately $1.1 million as of December 31,
1981. Brief for Petitioner at 13 n.6. Under the Third Circuit’s ruling,
TWA would not be allowed a deduction in that amount from its back
pay liability even if the pilots were reinstated and treated for pension
21
orari on this issue.
The trial court in this case noted that the pension
plan in question was wholly employer-funded, and that
in reinstating McDowell, Avtex had agreed to restore his
pension entitlements to the level they would have reached
if he had never been terminated (A-3). Exercising its dis-
cretionary judgment, the district court concluded:
“Under these circumstances, where the plaintiff has
been paid pension benefits during the period of his
discharge, which he would not have received except
for his discharge, and he has been reinstated with
his entitlement under the defendant’s pension plan
fully restored by the defendant’s payments to that
plan, the interim pension payments which the plain-
tiff has received should be deducted from the award
of damages for back pay. See, Hannan v. Chrysler
Motors Corp., 443 F. Supp. 802, 805 (E.D. Mich.
1978); Robb v. Chemetron Corp., 17 FEP Cas (BNA)
1535, 1542 (S.D. Texas 1978); see also Tribble v.
Westinghouse Elec. Corp., 508 F. Supp. 14, 16 (E.D.
Missouri 1980).” (A-3 to A-4).
Reversing this exercise of discretion, the Third Circuit
has directed that, as a matter of law, such pension plan
payments are not deductible in computing back pay
awards under the ADEA (A-19 to A-21).
Courts have heretofore uniformly deducted interim
pension benefits from back pay awards under the ADEA.
Hagelthorn v. Kennecott Corp., 710 F.2d 76, 86-87 (2d
Cir. 1983); Orzelv. City Wauwatosa Fire Dept., 697 F.2d
743, 756 (7th Cir. 1983), cert. denied, _ U.S.
104 S.Ct. 484 (1983); Fariss v. Lynchburg Foundry,
F.Supp. __, 35 Fair Empl. Prac. Cas. (BNA) 852,
853 (W.D. Va. A August 3, 1984); Malloy v. City of
Duquesne, No. 83-2624 (W.D. Pa. March 9, 1984);
purposes as if they had never been retired or received any benefits
at all.
22
Schulner v. Jack Eckerd Corp., 572 F. Supp. 56, 59 (S.D.
Fla. 1983); Wise v. Olan Mills, Inc., 495 F. Supp. 257,
260 (D. Colo. 1980); Tribble v. Westinghouse Electric
Corp., 508 F. Supp. 14, 16 (E.D. Mo. 1980, aff'd, 669
F.2d 1193 (8th Cir. 1982), cert. denied, _ US. ;
103 S. Ct. 1767 (1983);'* Hannan v. Chrysler Motors
Corp., 443 F. Supp. 802, 805 (E.D. Mich. 1978); Robb v.
Chemetron Corp., 17 Fair Empl. Prac. Cas. (BNA) 1535,
1542 (S.D. Tex. 1978).
Similarly, at least two Courts of Appeals have held
that severance pay received by an employee should be
deducted from the back pay award. EEOC v. Sandia Corp.,
639 F.2d 600, 626 (10th Cir. 1980); Laugesen v.
Anaconda Co., 510 F.2d 307, 317 (6th Cir. 1975). An-
other Circuit Court had held that vacation and sick leave
benefits paid to a terminated employee should be de-
ducted. Naton v. Bank of California, 649 F.2d 691, 700
(9th Cir. 1981). The Court in EEOC v. Sandia, supra,
went so far as to hold that the district court had abused
its discretion in failing to deduct the severance payment:
“(T]he cases support the offsetting of severance pay
since it is a payment made wholly by the employer;
thus it is not a collateral benefit and moreover would
not have been made if termination had not occurred
14. The Tribble Court reasoned as follows:
“Though plaintiff's pension benefits were vested, he had no en-
titlement to receive them while he remained in defendant’s em-
ploy. Had plaintiff remained in defendant’s employ he would
not have received any benefits until mandatory retirement at
age sixty five. By virtue of defendant’s violation of the Act, plain-
tiff received [$6,840]. Plaintiffs recovery should only return
him to the financial position he would have enjoyed, but for the
involuntary termination. The jury properly included in its
award the pecuniary loss suffered by plaintiff because he was
not able to work at age sixty five and thereby maximize his pen-
sion benefits. As such, the ‘interim’ pension benefits must be
deducted from the lost wages award as they are, on the cir-
cumstances of this case, virtually identical to severance pay.”
508 F. Supp. at 16 (citations omitted; emphasis added).
23
and, therefore, goes beyond the damages necessary
to place the claimants in a whole position.” 639 F.2d
at 626.
To support its ruling in the present case, the Third
Circuit erroneously labels pension payments as
“collateral” (A-19); erroneously rules that “collateral
benefits” should not be deducted from back pay awards
(A-19 to A-20); and, to support the foregoing, articulates
policies which clearly conflict with the make-whole ob-
jective of the ADEA.
The Third Circuit’s conclusion that the pension ben-
efits in this case are “collateral” simply ignores the fact
that the pension plan in question is wholly employer-
funded (A-3). See, e.g., Naton v. Bank of California, 640
F.2d 691, 700 (9th Cir. 1981) (holding the collateral
source rule inapplicable to vacation and sick leave ben-
efits paid to the employee “because the Bank is the ex-
clusive source of the benefits’’).
More importantly, identifying the source of a pay-
ment as “collateral” does not, even in the Third Circuit,
lead to the conclusion that it should not be deducted. In
Rodriguez v. Taylor, supra, 569 F.2d 1231 at 1238, the
Court determined that the District Court should have de-
ducted plaintiff's interim earnings from other employ-
ment — surely a benefit wholly “collateral” to the de-
fendant. This reasoning is irreconcilable with the Third
Circuit’s decision in the present case.
The Third Circuit identified three policy reasons for
non-deduction of pension benefits. First, it found that
“pension plan benefits are designed to serve social poli-
cies independent of those served by back pay awards”
(A-19). This observation is simply irrelevant to the “make-
whole” objective which in other Circuits — and hereto-
fore in the Third Circuit — has guided the calculation of
back pay awards.
Second, the Third Circuit stated:
24
“[A] rule proscribing [sic] the deduction of pension
plan benefits would dilute the purpose of ending dis-
crimination. . . .” (A-19).
If this is taken to mean that (where possible) ADEA back
pay awards should be higher rather than lower, it ap-
pears to be bad law.'° In any event, the Congressional
statutory scheme utilizes liquidated damages to serve the
function of deterring ADEA violations.
Third, the Third Circuit reasoned that since liqui-
dated damages are awarded in an amount equal to back
pay, Avtex would save two dollars — one dollar in back
pay and one dollar in liquidated damages — for every
dollar by which back pay was reduced (A-20-A-21). Al-
though the Court characterized this as an “inequitable
result,” the same result obtains when an employee’s back
pay award is reduced by amounts the employee earns
from other employment after his termination. See
Rodriquez v. Taylor, supra, 569 F.2d at 1243. Yet no
court has held that the effect of such a deduction is in-
equitable to the employee because he “loses” an equal
amount in liquidated damages. The Third Circuit’s de-
cision in this case wrongly permits the liquidated dam-
15. Among other consequences, such a rule increases the in-
ducement to plaintiffs to seek windfall awards in federal court rather
than accept the results of EEOC or state agency mediation. See 29
U.S.C. §626(b), in which Congress directed the EEOC to pursue
“voluntary compliance with the requirements of this Act through
informal means of conciliation, conference and persuasion.” See also
Johnson v. Al Tech Specialties Steel Corp., 731 F.2d 143 (2d Cir.
1984), in which the Court held that punitive damages and damages !
for mental distress and the like are unavailable under the ADEA:
“In an era of burgeoning federal case loads, Congress’s intent to
resolve as many discrimination disputes as possible in an agency
proceedings rather than in law suits comports with sound prin-
ciples of judicial administration. A system which would permit
complainants potentially to recover considerably larger sums if
they resist settlement and initiate litigation would undermine
this central feature of both Title VII and the ADEA.” Id. at 148.
ee
SE —
25
ages award to dictate calculation of back pay, rather than
vice versa as intended by the statute. See 29 U.S.C.
§626(b).
The Third Circuit’s ruling will have varying effects
depending upon whether the employee is reinstated,
whether his pension plan is restored, whether the plan
itself is contributory or wholly-funded by the employer,
whether the employee is vested or not, and whether the
employee takes a deferred or lump sum payout upon his
termination. If a plaintiff takes a lump sum distribution
of his pension fund, the Third Circuit’s non-deductibility
rule would presumably penalize the employer by that full
amount.
To best deal with the different types of pension plans
and the various circumstances of individual cases, the
decision to deduct pension benefits from a back pay award
should be left to the district court’s discretion — exer-
cised (as Magistrate Hall did in this case) with the object
of making the plaintiff whole.
B. THE DECISION WHETHER TO DEDUCT UN-
EMPLOYMENT COMPENSATION ~— BENEFITS
FROM ADEA BACK PAY AWARDS SHOULD BE
LEFT TOTHE DISCRETION OF THE TRIALCOURT
The Third Circuit’s holding that the district court
does not have the discretion to deduct unemployment
compensation benefits from an ADEA back pay award is
without precedent. Before this decision, the Courts of Ap-
peals had uniformly held that Section 7(b) commits to
the trial court’s discretion the decision whether to make
such deductions. Syvock v. Milwaukee Boiler Manufac-
turing Co., 665 F.2d 149, 162 (7th Cir. 1981); Naton v.
Bank of California, 649 F.2d 691, 699-700 (9th Cir.
1981); Marshall v. Goodyear Tire & Rubber Co., 554 F.2d
730, 736 (5th Cir. 1977).!© See also Boich v. Federal Mine
16. The following district court decisions have deducted un-
employment compensation from ADEA back pay awards: Jacobson
v. Pitman-Moore, Inc., 582 F. Supp. 169, 179 (D. Minn. 1984);
26
Safety & Health Review Commission, 704 F.2d 275,
287-87 (6th Cir. 1983) (Federal Mine, Health and Safety
Act). The Third Circuit’s decision has therefore created
a conflict among the Circuits which this Court should
resolve.
The present case is particularly suitable for review.
At the trial level, Avtex did not rely on the proposition
that employers generally fund state unemployment com-
pensation programs. Rather, Avtex placed before the trial
court a complete factual record of its contributions to the
Virginia and Pennsylvania compensation funds during
the pertinent time period, the decline in Avtex’ work force
during that period, and the payments to McDowell from
those funds. This record demonstrated a close correla-
tion between Avtex’ contributions and the number of its
employees laid off.'!’ On this record, the trial court, be-
NOTES (Continued )
Schulner v. Jack Eckerd Corp., 572 F. Supp. 56, 59 (S. D. Fla. 1983);
Gathercole v. Global Associates, 560 F. Supp. 642, 648 (N.D. Cal.
1983), rev'd on other grounds, 727 F.2d 1485 (9th Cir. 1984); Wilson
v. Wehadkee Yarn Mills, 32 Fair Empl. Prac. Cas. (BNA) 847 (M.D.
Ala. 1983); Buchholz v. Symons Mfg. Co., 445 F. Supp. 706, 712-13
(E.D. Wis. 1978); Coates v. National Cash Register Co., 433 F. Supp.
655, 633 (W.D. Va. 1977); Chernoff v. Pandick Press, Inc., 440 F.
Supp. 822(S.D.N.Y. 1977); Bishop v. Jelleff Associates, 398 F. Supp.
579, 597 (D.D.C. 1974); Schulz v. Hickok Mfg. Co., Inc., 358 F.
Supp. 1208, 1217 (N.D. Ga. 1973).
17. The parties stipulated in the trial court that Avtex’ unem-
ployment tax rate in Pennsylvania — based by statute on the amount
of unemployment compensation benefits paid to former Avtex
employees, see 43 Pa. Stat. Ann. §281.1(d) (Purdon 1982) — in-
creased from 2% in 1978 to 6.3% in 1982. The amount of unem-
ployment tax paid by Avtex increased from $201,983 in 1978 to
$549,101 in 1982. During the same period the total taxable wages
earned by Avtex employees in Pennsylvania dropped from
$10,099,154 to $8,715,904. Second Joint Stipulation of Fact 410.
The parties further stipulated that Avtex’ unemployment tax rate in
Virginia — also based by statute on the amount of payments made
to former Avtex employees, see Va. Code §§60.179—60. 184.1 (1982
& Supp. 1983) — increased from 1% in 1978 to 9% in 1981. The
amount of unemployment tax paid by Avtex to the Virginia fund
27
lieving it had discretion in the matter (A-4-A-5), deducted
state unemployment compensation benefits (in the
amount of $3,131.00) from the back pay award (A-5). At
the same time, the trial court refused to deduct benefits
McDowell had received from a federal program to which
Avtex had not contributed (A-5).
Reversing, the Third Circuit ignored the unbroken
line of ADEA decisions committing the decision to the
trial court’s discretion and elected to follow Craig v. Y &
Y Snacks, Inc., 721 F.2d 77 (3d Cir. 1983), in which a
split panel of the Third Circuit had adopted the position
of three Circuits'® that unemployment compensation
benefits may not be deducted from Title VII back pay
awards. However, even under Title VII there is a split in
authority: four other Circuits leave to the trial court’s dis-
cretion the decision whether to deduct unemployment
compensation benefits from a Title VII back pay award.
See Merriweather v. Hercules, Inc., 631 F.2d 1161, 1168
(Sth Cir. 1980); EEOC v. Enterprise Association
Steamfitters Local No. 638, 542 F.2d 579, 592 (2d Cir.
1976), cert. denied, 430 U.S. 911 (1977); '° Satty v. Nash-
ville Gas Co., 522 F.2d 850 (6th Cir. 1975) (without
increased from $165,784 in 1978 to $1,071,315 in 1981. At the same
time, the total taxable wages earned by Avtex employees in Virginia
fell from $16,578,437 to $9,600,000. Second Joint Stipulation of Fact
q11.
18. See Brown v. A.J. Gerrard Manufacturing Co., 715 F.2d
1549, 1550 (11th Cir. 1983) (en banc) (per curiam); Kauffman v.
Sidereal Corp., 695 F.2d 343, 346-47 (9th Cir. 1983) (per curiam);
EEOC v. Ford Motor Co., 645 F.2d 183, 195-96 (4th Cir. 1981), rev'd
on other grounds, 458 U.S. 219 (1982), adhered to original position
on remand, 688 F.2d 951, 952 (4th Cir. 1982) (per curiam). Accord,
Rasimas v. Michigan Department of Mental Health, 714 F.2d 614,
627-28 (6th Cir. 1983) (Hoffman, J., dissenting), cert. denied,
—— U.S. __, 104 S. Ct. 2151 (1984).
19. Affirming the trial court’s deduction of public assistance
benefits from a Title VII back pay award in that case, Judge Oakes
observed that “we are not in the business of redistributing the wealth
beyond making the victim of discrimination whole.” 542 F.2d at 592
(emphasis added).
28
discussion), affd in part, vacated in part on other
grounds, 434 U.S. 136 (1977); Bowe v. Colgate-Palmolive
Co., 416 F.2d 711, 721 (7th Cir. 1969).
This Court’s most pertinent holding, announced in
NLRB v. Gullett Gin Co., 340 U.S. 361 (1950), is that it
lies within the discretion of the NLRB whether to deduct
unemployment compensation benefits from back pay
awards under the National Labor Relations Act. As de-
tailed above, the Circuits are increasingly divided as to
the applicability of this rule to ADEA and Title VII back
pay awards.
The Third Circuit’s ruling in the present case of-
fends the ADEA make-whole objective because
McDowell has been placed in a better position than he
would have occupied had he never been terminated. Far
from undercutting the purposes of the ADEA, the trial
court’s deduction of unemployment compensation in this
case is faithful to the statute’s make-whole objective
which renders irrelevant the issue whether the employer
pays less than he would have paid had the plaintiff had
not received unemployment compensation. The goal to
be achieved is restoration, not punishment. Cf. Craig,
supra, 721 F.2d at 86 (Seitz, J. dissenting) (“by provid-
ing only a make-whole remedy [under Title VII] Con-
gress has made the windfall issue irrelevant”); Robinson
v. Lorillard Corp., 444 F.2d 791, 804 (4th Cir.), cert.
dismissed, 404 U.S. 1006 (1971) (“back pay |under Title
VII] is not a penalty imposed as a sanction for moral
turpitude; it is compensation for the tangible economic
loss resulting from an unlawful economic practice”). The
Third Circuit in Craig in fact acknowledged that the col-
lateral benefit rule “may have somewhat punitive
undertones, as it focuses on what the defendant should
pay rather than what the plaintiff should receive.” 721
F.2d at 83.
The Third Circuit in this case also failed to recognize
that variations in state law relating to unemployment tax-
ation and the differences in the level of benefits paid to
29
terminated employees will prevent its ruling from pro-
ducing uniformity in economic restoration of injured
plaintiffs, even within a Circuit. Committing the deduct-
ibility question to the trial court’s discretion, to be exer-
cised on the basis of the record presented by the parties,
best accommodates the make-whole objective of the
ADEA. As this Court has recognized in the context of
Title VII back pay awards:
“The courts of appeals must maintain a consistent
and principled application of the backpay provision,
consonant with the twin statutory objectives, while
at the same time recognizing that the trial court will
often have the keener appreciation of those facts and
circumstances peculiar to _ particular cases.”
Albemarle Paper Co. v. Moody, 422 U.S. 405, 421-22
(1975) (emphasis added).?°
In this case, the trial judge took careful account of
the source of McDowell’s unemployment compensation.
The court deducted the portion that came from the state
unemployment funds to which Avtex contributed, and
refused to deduct the portion that was funded by the fed-
eral government without any contribution by Avtex. The
court’s exercise of its discretion under Section 7(b) was
made with awareness of the ADEA’s remedial objective
and fairly accommodated the interests of employer and
employee. The Third Circuit’s ruling deprives the trial
court of the ability to fashion a back pay award that serves
the ADEA’s make-whole remedial objective and fairness
in particular circumstances. It should be reviewed by this
Court.
20. Recent rulings by several Courts of Appeals which permit
recovery of front pay in lieu of reinstatement have emphasized that
the purpose of the ADEA “is to make people whole and that which
makes people whole is a matter for the discretion of the trial court
under the facts and circumstances of the individual case.” Davis v.
Combustion Engineering, Inc., __— F.2d , 35 Fair Empl. Prac.
Cas. (BNA) 975,980 (6th Cir. 1984) (citing Gibson v. Mohawk Rub-
ber Co., 695 F.2d 1093, 1097 (8th Cir. 1982). See also, Whittlesley
v. Union Carbide Co., __ F.2d ___., 35 Fair Empl. Prac. Cas. (BNA)
1089, 1091-92 (2d Cir. 1984).
30
CONCLUSION
For the reasons set forth herein, Petitioner Avtex
Fibers, Inc. respectfully requests that a writ of certiorari
issue to review the opinion and judgment of the Third
Circuit.
Respectfully submitted,
Thomas A. Allen
1234 Market Street, 17th Floor
Philadelphia, PA 19107
(215) 854-7064
Counsel of Record for
Avtex Fibers, Inc.
LeRoy E. Perper
Brent S. Gorey
Peter J. Mooney
WHITE AND WILLIAMS
Of Counsel
APPENDIX A
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
ROBERT McDOWELL : CIVIL ACTION
v. - FILED MAY 20, 1983
AVTEX FIBERS, INC __: NO. 81-4822
MEMORANDUM AND ORDER
WILLIAM F. HALL, JR. MAY 20, 1983
UNITED STATES MAGISTRATE
In a bifurcated trial of this action brought pursuant
to the Age Discrimination in Employment Act, 29 U.S.C.
§621 et seq. (ADEA), the question of whether the
plaintiff's discharge by the defendant violated the ADEA
was tried to a jury which returned a verdict for the
plaintiff on November 19, 1982. By stipulation the issue
of damages for the unlawful discharge has been submit-
ted to the court. The parties filed Joint Stipulations of
Fact on January 12, 1983 and February 10, 1983 in
which they agree on certain items of damages to which
the plaintiff is entitled.
The plaintiff asks that he be awarded lost earnings or
“back pay,” measured generally as the amount which he
would have earned had he not been unlawfully dis-
charged, and he asks that he be awarded an additional
equal amount as “liquidated damages” to which the
employee is entitled for “willful” violations of the ADEA,
pursuant to Section 626(b).
In December of 1982 the defendant offered to re-
instate the plaintiff, and that offer was accepted in Janu-
ary of 1983. The parties have stipulated that from his
termination in January of 1980 through January of 1983,
the plaintiff would have earned $97,584.00 in salary
A-1
A-2
from the defendant had he continued to be employed by
the defendant.
The parties have stipulated that his salary as of
January of 1980 was $2,445.00 per month and that he
would have received a 7% raise effective August 1, 1980,
making his salary $2,615.00 per month, a 7% raise on
August 1, 1981, making his salary $2,795.00 per month,
and a 7% raise effective August 1, 1982, making his
salary $2,993.00 per month. Thus the salary which he
would have earned from the defendant is as follows:
1980 (11 months) : $27,745.00
1981 (12 months) : 32,295.00
1982 (12 months) : 34,551.00
1983 (1 month) : 2,993.00
$97,584.00
The defendant has conceded that the plaintiff is entitled
to damages for lost health benefits in the amount of
$280.00, making the amount of total damages for back
pay and lost benefits $97,864.00.
The parties have also stipulated that upon the
plaintiff's termination he received payments of $3,054.00
representing pay for vacation, and $1,222.50 represent-
ing two weeks termination pay, for a total of $4,276.50,
which must be deducted from any award of damages for
back pay as follows:
$97,864.00
— 4,276.50
$93,587.50
According to their stipulation the plaintiff was gain-
fully employed elsewhere during the period after his
discharge by the defendant. He was paid $13,267.50 in
1980 and $1,825.00 in 1981 by Dunhill. He was paid
$2,464.36 in 1981 by Chemservices. In 1982, Resource
Technology Services, Inc. paid him $7,732.39, and in
A-3
1983 it paid him $1,500.00. The parties stipulate that
these interim earnings are to be deducted from the
award of damages for back pay:
$93,587.50
26,789.25
$66,798.25
The defendant contends that the award of damages
for back pay should be further reduced by the amount of
$16,074.24 which the plaintiff received as pension pay-
ments upon his discharge, at the rate of $502.32 per
month starting June 1, 1980, for thirty-two payments,
and that it should also be reduced by the amount of
$13,901.00 which he received as unemployment com-
pensation benefits after his discharge by the defendant.
It has been stipulated by the parties that the pension
payments which the defendant seeks to have deducted
from the award for back pay were made from a pension
plan to which the defendant made payments without
contribution by the plaintiff. It has been further stipu-
lated that in re-employing the plaintiff, the defendant
will take the necessary steps so that the plaintiff's pen-
sion benefits will be the same as if his employment with
the defendant had not been interrupted by the dis-
charge, including making whatever contribution to the
pension plan is necessary in order to achieve that result.
Under these circumstances, where the plaintiff has
been paid pension benefits during the period of his
discharge, which he would not have received except for
his discharge, and he has been reinstated with his en-
titlement under the defendant’s pension plan fully re-
stored by the defendant’s payments to that plan, the
interim pension payments which the plaintiff has re-
ceived should be deducted from the award of damages
for back pay. See, Hannan v. Chrysler Motors Corp., 443
F. Supp. 802, 805 (E.D. Michigan 1978); Robb v.
A-4
Chemetron Corp., 17 FEP Cas (BNA) 1535, 1542 (S.D.
Texas 1978); See also, Tribble v. Westinghouse Elec.
Corp., 508 F. Supp. 14, 16 (E.D. Missouri 1980). The
plaintiff's award of damages for back pay is thus subject
to deduction of the pension payments which he received
during the period of his discharge as follows:
$66,798.25
—16,074.24
$50,724.01
In their Second Joint Stipulation of Fact filed on
February 10, 1983 the parties agree that the plaintiff's
unemployment compensation benefits were derived from
three main sources. They have stipulated as follows:
Mr. McDowell’s unemployment compensation ben-
efits were paid in part by the Commonwealths of
Virginia and Pennsylvania from their regular un-
employment compensation funds, and in part by the
United States Government pursuant to the Trade
Act of 1974, 19 U.S.C. §2101 et seq. The specific
amounts are as follows:
Time Period State Unemployment Federal
Compensation Benefits Benefits Total
2/80-6/80.... $1,220 (Virginia) $ 2,606 $ 3,826
2/81-10/81 .. $1,911 (Pennsylvania) $ 8,164 $10,075
:. Peers $3,131 $10,770 $13,901
Thus the state funded unemployment compensation
benefits which the plaintiff received following his dis-
charge totaled $3,131.00 to which, according to the
parties stipulation, the defendant made contributions.
The balance, $10,770.00 were federally funded from the
U.S. Treasury without contributions from the defendant.
See 19 U.S.C. §§2292, 2313.
The decision whether to deduct unemployment com-
pensation benefits received by the plaintiff from the
amount awarded as damages for back pay in an action
pursuant to the ADEA is entrusted to the discretion of
the court. Syvock v. Milwaukee Boiler Mfg. Co., Inc., 665
A-5
F.2d 149 (7th Cir. 1981); Marshall v. Goodyear Tire and
Rubber Co., 554 F.2d 730 (5th Cir. 1977). In exercising
that discretion in this case, I considered the extent to
which the unemployment compensation benefits re-
ceived by the plaintiff were clearly derived from a col-
lateral source, i.e. a source wholly independent of the
defendant. See, Naton v. Bank of California, 649 F.2d
691, 699-700 (9th Cir. 1981). Of the benefits which the
plaintiff received, those paid from state unemployment
compensation funds are not clearly wholly independent
of the defendant in that the defendant was a contributor
to those funds. In contrast, the benefits which the plain-
tiff received pursuant to the Trade Act of 1974, are from
a Clearly collateral source and a deduction of the amount
of those benefits will not be made. The award of damages
for back pay will therefore be reduced by the deduction
of unemployment compensation benefits received by the
plaintiff as follows:
$50,724.01
— 3,131.00
$47,593.01
The plaintiff has also requested the award of “liq-
uidated damages.” The prerequisites to the award of
liquidated damages in an ADEA case are prescribed by
29 U.S.C. §626 which provides, in subsection (b), in
pertinent part, that the provisions of the ADEA shall be
enforced in accordance with the powers, remedies and
procedures provided in the Fair Labor Standards Act, 29
U.S.C. §216(b). Section 216(b) of that act provides, in
pertinent part, that a violating employer: “shall be liable
to the employee or employees affected in the amount of
their unpaid minimum wages or their unpaid overtime
compensation, as the case may be, and in an additional
equal amount as liquidated damages.” Section 626(b)
authorizes the award of liquidated damages as that term
is used in Section 216(b). Section 626(b) provides that
“amounts owing to a person as a result of a violation of
A-6
the chapter shall be deemed to be unpaid minimum
wages or unpaid overtime compensation for purposes of
sections 216 and 217 of this title: Provided, that liqui-
dated damages shall be payable only in cases of willful
violations of this chapter.”
Thus, in order for the plaintiff to be awarded liqui-
dated damages, it must be found that his discharge was
willful. The aforementioned sections supply no defini-
tion of willful; however, the Court of Appeals for the
Third Circuit has provided the definition which must be
applied here. In Wehr v. Burroughs Corp., 619 F.2d 276
(3d Cir. 1980), the Court ruled at page 283 that
[C]ongress did not intend to restrict the meaning of
“willful” ... to intentional violations of ADEA. It is
sufficient to prove that the company discharged the
employee because of age and that the discharge was
voluntary and not accidental, mistaken, or inadvert-
ent. In our view, it would also be sufficient to prove
that the discharge was precipitated in reckless dis-
regard of consequences.
In affirming the award of liquidated damages the
Court rejected the defendant’s contention that the Dis-
trict Court erred in charging that willfulness required a
showing that the discharge was done intentionally, de-
liberately and knowingly. Although the court held that
the trial court’s charge placed a higher burden on the
plaintiff than required in establishing willfulness, it
found no reversible error in the trial court’s jury charge,
apparently because the plaintiff prevailed despite the
higher burden imposed upon him.
Applying the definition supplied in Wehr v. Bur-
roughs, supra the issue here is whether the discharge of
the plaintiff was because of age and was voluntary and
not accidental, mistaken or inadvertent. (Alternatively,
the issue can be stated in terms of whether the plaintiff's
discharge was precipitated in reckless disregard of its
consequences. )
A-7
The jury found, based on the evidence presented,
that the plaintiff's discharge was because of age. Upon a
thorough review of that evidence, I find no basis for
concluding that the plaintiff's discharge was not volun-
tary and that it was accidental, mistaken or inadvertent.
I find, therefore, that his discharge was willful within the
meaning of the ADEA and that he is entitled to liqui-
dated damages measured as an amount equal to his net
back pay. Accordingly, the plaintiff is awarded liquidated
damages in the amount of $47,593.01.
The terms of the plaintiff's reinstatement by the
defendant are set out in an exchange of correspondence
between counsel, which has been marked by them as
exhibits A, B and C, copies of which are attached to this
Memorandum and incorporated by reference, and those
terms are further set out in their Joint Stipulations of
Fact filed January 12, 1983 and February 10, 1983. The
parties have stipulated that the plaintiff's salary upon
reinstatement is to be at the rate of $2,993.00 per month,
the rate of his salary effective August 1, 1982. In addi-
tion, the parties have stipulated that in reinstating the
plaintiff the defendant will take the necessary steps so
that the plaintiff's pension benefits will be the same as if
he had not been discharged in January of 1980, but had
instead been retained as an employee through the
present. They further stipulate that the plaintiff, as an
employee 60 years old with 30 years of service, etc., will
be included within the actuarial assumptions, based on
factors including the current assets of the fund, the
number of employees, their length of service, their age,
market conditions, and other factors, which determine
the defendant’s contribution to the pension plan.
An implementing order is attached hereto.
A-8
Alice W. Ballard, Esquire December 22, 1982
Samuel and Ballard
4013 Chestnut Street
Philadelphia, PA 19104
Re: McDowell v. Avtex Fibers, Inc.
Dear Alice:
Irrespective of whether the issues of back pay, etc.,
are settled or tried, and irrespective of whether either
party appeals any issue in the above case, Avtex is
offering to reinstate Mr. McDowell at a comparable sal-
ary and position to what he had before the reduction in
force in January of 1980.
Accordingly, it would be helpful to Avtex to know
what Mr. McDowell’s plans are in this respect — in
particular, when he will be moving back to Front Royal
and coming to work.
Thank you.
Very truly yours,
WHITE AND WILLIAMS
Thomas A. Allen
Ee ————E———
A-9
Thomas Allen, Esquire BY HAND
White & Williams
1234 Market Street
17th Floor
Philadelphia, PA 19107 January 3, 1983
Re: McDowell v. Avtex Fibers, Inc.
Dear Tom:
This will respond to your letter of 12/22/82 about Mr
McDowell’s reinstatement as an Avtex employee.
As I’m sure you can understand, we have some
doubts about the bona fides of the reinstatement offer,
given the position taken by Avtex on the reinstatement
question in its pre-trial briefs. However, if certain assur-
ances (described below) are forthcoming from Avtex,
and if good faith is established, Mr McDowell will be in
a position to start working at Front Royal one month
after the reinstatement terms are agreed to. The re-
quested assurances are as follows:
(1) Mr McDowell’s job will be that of a professional
chemist in the R & D Department, performing
work comparable to that being carried out by
others of that category;
(2) Mr McDowell's salary will be an amount equal
to his prior salary, plus, at a minimum, the
increases received by the still-employed R & D
professionals who have had the lowest total in-
crease since Mr McDowell’s departure. This sal-
ary agreement is without prejudice to our claim
before Judge Hall that Mr McDowell is entitled
to constructive increases in excess of this min-
imum;
(3) Mr McDowell will be entitled to all existing
Avtex benefits at their current levels as if he had
been continuously employed;
(4)
(5)
(6)
A-10
Avtex will suppiy relocation assistance to enable
Mr. McDowell to establish a residence for him-
self in Front Royal (through the purchase of a
small house or condominium), and to sell his
currently-owned house without loss to himself;
Avtex must assure Mr McDowell that he will not
be laid off from his R & D assignment again,
unless the professional staff there is reduced
below five (5) in number, and there is no pos-
sibility of his being absorbed into a plant position
at Front Royal or Lewistown. Alternatively, we
would accept a minimum guarantee of two years
of employment, with regular, at-will status there-
after, equivalent to the position he would have
been in had he worked continuously until 1985;
Mr Hettich will make his best efforts to over-
come what he characterized as communications
problems with Mr McDowell.
I do hope that these assurances can be made, so that
Mr McDowell can enjoy the restoration of his earning
power and professional role. Of course, this letter is sent
without waiver of our right to argue that the reinstate-
ment offer is not bona fide, and that front pay is more
appropriate.
Sincerely,
Alice W. Ballard, Esq.
A-11
854-7064 January 7, 1983
HAND DELIVERY
Alice W. Ballard, Esquire
4013 Chestnut Street
Philadelphia, PA 19104
RE: McDowell vs. Avtex
Dear Alice:
This is in response to your letter of January 3, 1983
requesting assurances from Avtex with respect to its
reinstatement offer. I will respond to your paragraphs by
number.
1. Agreed.
2. Agreed.
3. Agreed.
4. It is impossible to tell what would be requested in
this regard, were Avtex to state a blanket agreement. In
any event, Avtex has already helped Mr. McDowell buy
one house, which he still owns (in addition to his house
in West Chester). Avtex is willing to pay for the move-
ment of Mr. McDowell’s household goods, plus the ex-
pense of a motel for a reasonable period (three weeks) for
Mr. McDowell to find a place to live.
5. Your second alternative is agreeable — i.e. a
minium guarantee of two years of employment — with
the caveat, as a minimal protection to Avtex in this
situation, that Mr. McDowell must behave and perform
his job in a professional manner.
6. Agreed. Of course, this is a two-way street, and it
is presumed that Mr. McDowell will make similar efforts.
Since I started to dictate this letter, you and I have
discussed these matters bv telephone.
We look forward to your client’s response.
Very truly yours,
WHITE AND WILLIAMS
By
Thomas A. Allen
A-12
APPENDIX B
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Nos. 83-1434 and 83-1455
McDOWELL, ROBERT,
Appellant in No. 83-1455
V.
AVTEX FIBERS, INC.,
Appellant in No. 83-1434
APPEAL FROM THE UNITED STATES
DISTRICT COURT FOR THE
EASTERN DISTRICT OF PENNSYLVANIA
(D.C. Civil No. 81-4822)
Argued March 8, 1984
Before: ALDISERT,. HIGGINBOTHAM and PECK,°*
Circuit Judges.
(Filed July 12, 1984)
THOMAS A. ALLEN (Argued)
PETER J. MOONEY
WHITE AND WILLIAMS
1234 Market Street
17th Floor
Philadelphia, PA 19107
Attorneys for Appellant, Cross-Appellee
*Honorable John W. Peck, United States Court of Appeals for the
Sixth Circuit, sitting by designation.
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A-13
ALICE W. BALLARD (Argued)
ANNA M. DURBIN
SAMUEL & BALLARD, P.C.
1500 Walnut Street
Suite 920
Philadelphia, PA 19102
Attorneys for Appellee, Cross-Appellant
OPINION OF THE COURT
HIGGINBOTHAM, A. LEON, JR., Circuit Judge.
This case arises from a claim of age discrimination
under the Age Discrimination in Employment Act
("ADEA"), 29 U.S.C. § 626(b)(1976 & Supp. IV 1980).
Plaintiff/appellee Robert L. McDowell (“McDowell”)
initiated the underlying action against Avtex Fibers,
Inc. (“Avtex"), alleging that his discharge violated the
ADEA. A jury found in favor of McDowell on the issue of
liability, but the issue of damages was submitted to
Magistrate Hall' by stipulation of the parties.
1.
This case was tried before Magistrate William F. Hall, Jr.
pursuant to the parties’ stipulation under 28 U.S.C. 8
636(c)(1). The parties stipulated further that any appeal
would be brought directly to this court. In Wharton-Thomas
v. United States of America, 721 F.2d 922 (3d Cir. 1983), this
court held that a magistrate does have the authority to enter
a final, appealable judgment if the parties consent. Because
the parties have consented in this case, we will consider
Magistrate Hall's order final for purposes of this appeal.
We will refer to this proceeding before the magistrate as the
proceeding before the trial judge or trial court
interchangeably throughout this opinion.
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Magistrate Hall awarded McDowell lost earnings minus
mitigation as compensatory damages and an equal
amount in liquidated damages on the ground that
Avtex’s violation was willful.
Avtex appeals from that portion of the order
awarding liquidated damages arguing that the trial
court applied an incorrect legal standard in finding
Avtex’s violation to have been willful and that, in any
event, the evidence was insufficient to support a
finding of willfulness. McDowell in his cross-appeal
challenges the trial court’s deduction of unemployment
compensation benefits and pension plan benefits from
his back pay award.’
We believe that the trial court applied a proper legal
standard in finding a willful violation of the ADEA and
that the evidence was sufficient to support a finding of
willfulness. We thus affirm the district court's order on
this issue. With regard to the trial court’s deduction of
pension plan and unemployment compensation
benefits from McDowell's back pay award, we find it
imiproper; accordingly, we will reverse that portion of
the order of the trial court and will remand this case for
reconsideration of the damages question in a manner
consistent with this opinion.’
l.
The principal issue before this court concerns the
total amount of damages for which Avtex is liable. In
presenting the issue of damages to the trial court,
McDowell asked that he be awarded lost earnings or
2. Avtex Fibers is the appellant in No. 83-1434 and
cross-appellee in No. 83-1455. McDowell is the appellee in No.
83-1434 and cross-appellant in No. 83-1455.
3. We will grant McDowell's motion to supplement the issues on
appeal and to file a supplemental brief on cross-appeal.
A-15
“back pay” measured generally as the amount which he
would have earned had he not been unlawfully
discharged. Seeking to mitigate damages for which it
would have been liable, Avtex argued that, in addition
to certain agreed upon reductions, the back pay award
should be further reduced by the amounts received by
McDowell as unemployment compensation benefits
and pension plan benefits after his discharge by Avtex.
The parties stipulated that the pension payments were
derived from a pension plan to which Avtex had made
payments without contributions from McDowell.
Moreover, the parties stipulated that Avtex would pay
into this pension plan so as to return McDowell's
pension benefits to the level they would have reached
but for the interruption of his employment due to his
unlawful discharge. McDowell has been reinstated with
his entitlement under the pension plan fully restored.
In addition to back pay, McDowell was awarded by
the trial court an equal amount in the form of
“liquidated damages.” Such damages are proper if
Avtex willfully violated the ADEA. Avtex argued,
however, that the trial court erred in finding
willfulness and that the evidence was insufficient to
support a finding of willfulness.
II.
Mitigation of Damages
A. Unemployment Compensation Benefits
We will address first McDowell's challenge to the
trial court’s deduction of unemployment compensation
benefits from his back pay award. Without benefit of
this court’s decision in Craig v. Y & Y Snacks, Inc.,
(“Craig”) 721 F.2d 77 (3d Cir. 1983), the trial court
A-16
reasoned that the propriety of deducting
unemployment compensation benefits from
McDowell's back pay award under ADEA is entrusted to
the discretion of the trial judge. Accordingly, the trial
court exercised its discretion and found the deduction
of unemployment benefits to be appropriate.
After the trial court decided this case, this court
confronted an identical issue in Craig, id., brought
under Title VII. In Craig, this court aligned itself with
the Fourth, Ninth and Eleventh Circuits and adopted
the rule that unemployment benefits may not be
deducted from a Title VII back pay award. Id. at 85; see
Brown v. A.J. Gerrard Manufacturing Co., 715 F.2d
1549, 1550 (11th Cir. 1983)(in banc)(per curiam);
Kauffman v. Sidereal Corp., 695 F.2d 343, 346-47
(9th Cir. 1982)(per curiam); EEOC v. Ford Motor Co.,
645 F.2d 183, 195-96 (4th Cir. 1981), rev'd on other
grounds, 458 U.S. 219 (1982), adhered to original
position on remand, 688 F.2d 951, 952 (4th Cir.
1982)(per curiam).
Although Craig concerned a Title VII case, we can
find no persuasive reason for reaching a different
result simply because this case involves an ADEA
violation rather than a Title VII violation. There is no
legislative history or case law speaking to this precise
issue. Instead, similarities between Title VII and the
ADEA and this court’s reasoning in Craig require a
holding in this case that unemployment compensation
benefits may not be deducted from an ADEA award.
As the Supreme Court noted in Lorillard v. Pons,
434 U.S. 575, 584 (1978),
[t}here are important similarities between the
two statutes, to be sure, both in their aims - the
elimination of discrimination from the
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workplace - and in their substantive
prohibitions. In fact, the prohibitions of the
ADEA were derived in haec verba from Title
VII.4
Thus, while fashioning a rule to further the ends of
Title VII, the majority stated in Craig that the
deduction of unemployment compensation from a back
pay award may not be left to the discretion of the trial
court. Accordingly, it declared that back pay is “the
presumptive remedy for unlawful employment.” Craig,
721 F.2d at 85.
The majority in Craig reasoned that permitting the
deduction of unemployment compensation benefits
would undercut Title VII's purpose of ending
discrimination to the extent that the back pay award is
reduced by unemployment compensation. Moreover,
the majority relied on Title VII's purpose of
compensating injured victims in a “make whole”
fashion when it forbade the unemployment
compensation deduction. Id. at 84. It quoted with
approval the Fourth Circuit's reasoning that
|alwards of back pay under Title VII should not be
affected by a system of compensation which is
designed to serve a wholly independent social
policy. To decide otherwise would undercut to
some degree the corrective force of a Title VII
back pay award.
4. Title VII with respect to race, color, religion, sex or national
origin, and the ADEA with respect to age make it unlawful for
an employer “to fail or refuse to hire or to discharge any
individual.” or otherwise to “discriminate against any
individual with respect to his compensation, terms.
conditions, or privileges of employment,” on any of those
bases. 42 U.S.C. § 2000e-2(a)(1) (1976); 29 U.S.C. §
623(a){1) (1982). Compare 42 U.S.C. § 2000e-2(a)(2)(1970 &
Supp. V 1975). see Rule 3.2(c) with 29 U.S.C. § 623(a)(2)
(1982)
A-18
Id., quoting EEOC v. Ford Motor Co., 645 F.2d 183,
196 (4th Cir. 1981).
The majority also reasoned that enunciating a rule
of law would “foster uniformity in applying the back
pay remedy” and would “avoid the conflicting results
reached when such an issue is left to the discretion of
the district courts, which may differ in their individual
resolution of the legal and policy questions.” Craig, 721
F.2d at 85.
The majority in Craig thus adopted the rule that
unemployment compensation benefits may not be
deducted from a Title VII back pay award. They adopted
this rule even though under Title VII back pay itself is
considered a discretionary remedy. Lorillard v. Pons,
434 U.S. at 584; see Albemarle Paper Co. v. Moody,
422 U.S. 405, 421 (1975).
Under the ADEA, however, back pay is not a
discretionary award. Unlike Title VII, the ADEA
mandates that an employer “shall be liable to the
employee or employees affected in the amount of their
unpaid minimum wages. . .” while preserving no
discretion for the district court in this regard. 29
U.S.C. § 216(b). As the Supreme Court indicated in
Lorillard v. Pons, 434 U.S. at 584,
the ADEA incorporates the FLSA provision that
employers “shall be liable” for amounts deemed
unpaid minimum wages or _ overtime
compensation, while under Title VII. the
availability of backpay is a matter of equitable
discretion, see Albemarle Paper Co. v. Moody,
422 U.S. at 421 (footnote omitted).
In our view the reasons supporting this court's
decision concerning Title VII in Craig apply even more
so to this case involving the ADEA. Indeed, as stated
above, while th. ends of the two statutes are virtually
identical, the ADEA back pay awards. unlike Title VII
A-19
back pay awards, are not discretionary. Thus, we
conclude that unemployment compensation benefits,
even if supported by contributions by the employer,
may not be deducted from an ADEA back pay award.
See Craig, 721 F.2d at 85; Brown v. A.J. Gerrard
Manufacturing Co., 715 F.2d at 1550.
B. Pension Plan Benefits
Having decided that unemployment compensation
benefits may not be deducted from ADEA back pay
awards, we next turn to the question of whether the
deduction of pension plan benefits should be treated
differently from the deduction of unemployment
compensation benefits. We believe that these two forms
of employee benefit plans are indistinguishable for the
purpose of deciding this case.
Here, pension plan benefits, like unemployment
compensation benefits, are collateral benefits. Both
unemployment compensation benefits and pension
plan benefits are designed to serve social policies
independent of those served by back pay awards. The
employer contributes to both forms of benefits either
directly or indirectly.
Not only should both benefits be treated identically
because of these similarities, but the reasons set forth
in Craig for precluding the deduction of unemployment
compensation benefits from Title VII back pay awards
also support our decision not to allow the deduction of
pension plan benefits even though the wrongful
termination together with vested rights in the benefits
made the employee eligible for the benefits. Just as
with unemployment compensation benefits, a rule
proscribing the deduction of pension plan benefits
would dilute the purpose of ending discrimination,
“[tlo the extent that a back pay award is reduced by
[pension plan benefits) . . .” Craig, 721 F.2d at 84
(analvzed in terms of Title VI] and unemployment
A-20
compensation benefits). Moreover, “awards of back pay
under [the ADEA] should not be affected by a system of
compensation which is designed to serve a wholly
independent social policy.’ Craig, id., quoting Ford
Motor Co., 645 F.2d at 196 (analyzed in terms of Title
VII). Finally, “[t}o decline to deduct state [pension plan
benefits] in computing back pay is not to make the
employees more than whole .. . . Since no
consideration has been given or should be given to
collateral losses in framing an order to reimburse
employees for their lost earnings, manifestly no
consideration need be given to collateral benefits which
employees may have received.”* NLRB v. Gullett Gin
Co., 340 U.S. 361, 364 (1951)(emphasis in
original)(analyzed in terms of the NLRA and
unemployment compensation benefits).
More importantly, deducting pension benefits
received by McDowell from his back pay award could
potentially reduce the amount in liquidated damages to
which he otherwise could be entitled while benefitting
the employer by giving it a windfall -- a result certainly
not intended by the ADEA. This apparent inequitable
result of mitigating the back pay award occurs because
under the ADEA liquidated damages are measured by
doubling the back pay award. See 29 U.S.C. § 216(b).
Consequently, for every dollar deducted from back pay
a dollar is deducted from the liquidated damages
award; thus, the employer would end up paying two
dollars less in total damages for every dollar McDowell
5. We recognize that in those cases involving the NLRA, such as
NLRB v. Gullett Gin Co., 340 U.S. 361 (1951). the Supreme
Court left it to the discretion of the NLRB to determine
whether credit should be given for unemployment
compensation benefits. However, the Court's rationale in
approving the Board's decision which refused to deduct
unemployment compensation benefits seems equally
applicable to this ADEA setup.
A-21
received in pension plan benefits or unemployment
compensation benefits. Hence, even though McDowell
would be made whole as to back pay (that is, he will not
have suffered any net dollar loss), he would not get the
full benefit of the liquidated damages provision.
The employer, on the other hand, would end up
paying less back pay than he would have spent in
actual pay but for the discrimination. Additionally, if
liquidated damages are deemed appropriate he would
pay less liquidated damages than he would have been
liable for paying, but for the pension benefits which
McDowell received.
For these reasons, in this case we believe
unemployment compensation benefits and pension
plan benefits should be treated identically with regard
to the propriety of deducting them from ADEA back pay
awards. Thus, under the rule enunciated in this case,
it would be improper for a court to permit either
unemployment compensation benefits or pension plan
benefits to be deducted from ADEA back pay awards. A
different result would put us in conflict with Craig and
the spirit of the ADEA.
Ill. Liquidated Damages
The final question which we must decide is
whether the trial court applied an improper legal
standard in finding Avtex guilty of a willful violation of
the ADEA and therefore liable for liquidated damages.
We believe that the trial court applied the correct
standard in finding Avtex’s violation of the ADEA to
have been willful. Finally, we conclude that the
evidence was sufficient to support a finding of
willfulness. We therefore will affirm on this issue.
The ADEA states that its provisions shall be
enforced in accordance with the powers, remedies and
procedures provided in the Fair Labor Standards Act.
See 29 U.S.C. § 626(b). Section 216(b) of the Fair
A-22
Labor Standards Act provides, in pertinent part, that a
violating employer “shall be liable to the employee or
employees affected in the amount of their unpaid
minimum wages, or their unpaid overtime
compensation, as the case may be, and in an additional
equal amount as liquidated damages.” 29 U.S.C.
§ 216(b). Section 626(b) provides that “[a}mounts
owing to a person as a result of a violation of this
chapter shall be deemed to be unpaid minimum wages
or unpaid overtime compensation for purposes of
sections 216 and 217 of this title: Provided, That
liquidated damages shall be payable only in cases of
willful violations of this chapter.” 29 U.S.C. § 626(b).
In Wehr v. Burroughs Corp., 619 F.2d 276 (3d Cir.
1980), this court articulated the standard for
determining whether a particular violation under the
ADEA was willful: |
It is sufficient to prove that the company
discharged the employee because of age and that
the discharge was voluntary and not
accidental, mistaken, or inadvertent. In our
view, it would also be sufficient to prove that the
discharge was precipitated in reckless disregard
of consequences.
Id. at 283. (emphasis added).
It is conceded that the trial court correctly used
this statement as the governing precept. See Mem. Op.
at 7, reprinted in App. at 13. In applying this precept,
the court then stated that it could “find no basis for
concluding that the plaintiffs discharge was not
voluntary and that it was accidental, mistaken or
inadvertent.” Id. at 8, reprinted in App. at 14
(emphasis added). That the trial court stated its
conclusion as a double negative is more a matter of
literary style than a stumble into reversible error.
Because the court correctly recognized the burden of
a en ge er
A-23
proof when announcing its choice of the controlling
legal precepts, we are not willing to say that a reviewing
court is required to conclude that a perhaps inartful
linguistic form used to apply the precept demonstrated
a fatal breach.°®
Moreover, even accepting arguendo that the trial
court was stating a burden, we are not inclined to
reverse on this issue because of the distinction
between the burden of persuasion and the burden of
production. The Supreme Court distinguished these
two burdens for Title VII cases in Texas Department of
Community Affairs v. Burdine, 450 U.S. 248 (1981).
Although the burden of persuasion, or proof, always
rests with the plaintiff, once plaintiff establishes a
prima facie case of unlawful discrimination, the
burden of production, or going forth with the evidence,
to rebut the presumption shifts to the defendant. “If
the trier of fact believes the plaintiffs evidence, and if
the employer is silent in the face of the presumption,
the court must enter judgment for the plaintiff because
no issue of fact remains in the case.” Id. at 254. If,
however, defendant presents sufficient evidence to
rebut the presumption, the burden of production
6. Avtex also contends that the record does not contain
sufficient evidence to support an award of liquidated
damages. Mr. McDowell introduced evidence that he was
discharged while younger individuals were retained and that
these individuals were less qualified than he. Moreover. he
argued that Avtex’'s justifications for retention of these
younger individuals were a mere pretext for discriminating
against him on the basis of age. In addition, Mr. McDowell
offered expert testimony concerning the statistical
significance of Avtex’s pattern of discharge which fell more
heavily on older employees in the protected class. Finally, Mr.
McDowell revealed information in retained employees’ files
which he argued demonstrated Avtex's preference for
younger employees. We believe this evidence is sufficient to
support a finding of willfulness.
A-24
returns to the plaintiff and merges with his burden of
persuasion to prove intentional discrimination. Id. at
256. This court has applied this burden scheme in age
discrimination cases arising under the ADEA. See,
e.g., Massarsky v. General Motors Corp., 706 F.2d
111, 117-18 (3d Cir. 1983).
The trial court's language can be interpreted as a
determination that the defendant did not meet its
burden of production, a burden imposed on it by
Burdine. By stating that it could “find no basis for
concluding that the plaintiffs discharge was not
voluntary,” it can be said that the trial court was merely
recognizing defendant's silence in the face of the
presumption of discrimination raised by plaintiff. The
entry of judgment for plaintiff, therefore, was not only
correct but mandated by Burdine.
We, thus, conclude that the court did not implicate
the burden scheme and its choice of language,
although perhaps illconsidered, was a matter of style.
To the extent it may be argued that the court did
implicate the burden scheme, we conclude that the
trial court simply determined that the defendant failed
to rebut plaintiffs prima facie case.
We will affirm the district court's finding of
willfulness. We will reverse its finding concerning
damages. Accordingly. we will remand this case solely
for the purpose of applying Craig to the damages
question in a manner consistent with this opinion.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circutt
se an
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