Petition for Writ of Certiorari — Nolan v. Otis Elevator Co.

Supreme Court brief1986

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FILED

MAY 27 1986

NO. JOSEPH a — JR.

IN THE

Supreme Court of the United States

OCTOBER TERM 1985

FRED S. NOLAN, et al., )

Petitioners, )

vs. )

OTIS ELEVATOR COMPANY and the _)

ATTORNEY GENERAL OF NEW JERSEY,

)

Respondents.

)

PETITION FOR WRIT OF CERTIORARI TO THE

SUPREME COURT OF NEW JERSEY

WILLIAM S. GREENBERG,

Counsel of Record,

GREENBERG & PRIOR

Attorneys for Petitioner

301 Carnegie Center

CN 5320

Princeton, New Jersey 08540

(609) 987-1200

JAMES F. SCHYVERIN

On the Petition \

EDITOR'S NOTE

THE FOLLOWING PAGES WERE POOR

HARD COPY AT THE TIME OF FILMING.

IF AND WHEN A BETTER COPY CAN BE

OBTAINED, A NEW FICHE WILL BE

ISSUED.

NO.

IN THE

Supreme Court of the United States

OCTOBER TERM 1985

FRED S. NOLAN, et al., )

Petitioners, )

VS. )

OTIS ELEVATOR COMPANY and the )

ATTORNEY GENERAL OF NEW JERSEY,

)

Respondents.

)

PETITION FOR WRIT OF CERTIORARI TO THE

SUPREME COURT OF NEW JERSEY

WILLIAM S. GREENBERG,

Counsel of Record,

GREENBERG & PRIOR

Attorneys for Petitioner

301 Carnegie Center

CN 5320

Princeton, New Jersey 08540

(609) 987-1200

JAMES F. SCHWERIN

On the Petition

em te Ae NT RS Ae Codi Crbe aS s 8 RO RED i COE. es BeSed OE IED — CPD ERE. © 68 Oe oe + en

QUESTIONS PRESENTED

l. Where there has been discrimination

on the basis of age barred by both the

Age Discrimination and Employment Act

and the New Jersey law against

discrimination is a state court action

preempted by the Employees Retirement

Income Security Act merely because it

provides a longer statute of

limitations?

2. Is the giving of additional benefits

to older employees upon closing of a

plant discriminatory when the employer

did so only because, committed by virtue

of an earlier attempt to open up more

positions for younger employees?

PARTIES TO THE PROCEEDING

The parties to the proceedings

below were the petitioners herein Fred

S. Nolan, Ralph R. Battista, Charles W.

Cleary, Joseph A. Davis, William J.

Davitt, Jr., Anthony G. Gomes, James

Halleck, Donald C. Halliwell, Phyllis J.

Kerkawich, Joseph M. Karkosky, Jr.,

Charles Kerr, Mary Largey, Armand

Machado, Edward M. McBride, Thomas P.

Nugent, Peter J. Reilly, Herman J.

Russomanno, Eugene A. Scannepico,

Raymond J. Smith, John T. tarr, Harold

C. Stoll, Louis C. Tremble, Walter Ward,

Daniel M. Watson,James Van Bramer, and

respondents Otis Elevator Company and

the Attorney General of the State of New

Jersey.

iii

TABLE OF CONTENTS

QUESTIONS PRESENTED.......... i

PARTIES TO THE PROCEEDING.... ii

TABLE OF AUTHORITIES......... Vv

OPINIONS BELOW.........-ecee. 2

JURISDICTION... .. ccc ccc ccccce 3

STATUTES AND REGULATIONS

INVOLVED... ccc cccccccesccecs 4

STATEMENT OF THE CASE........ 12

REASONS FOR GRANTING THE WRIT --

1. Preemption of the

right to bring a Superior

Court Action under New Jersey

Law Against Discrimination

impairs the joint Federal/

State scheme of preventing

2. Granting additional

severance benefits solely on

the basis of age is

discriminatory under the

APPENDIX:

A -

Decision of the Supreme

Court of New Jersey.......

Decision of the Superior

Court of New Jersey,

Appellate Division........

Order for Summary

Judgment in Favor

ee | ee ie

Opinion of the Superior

Court of New Jersey,

eB Nei ot Ree ee ree

Order of the United

States District Court

for the District of

ee ee eee ee

Opinion of the United

States District Court

for the District of

NOW JOFSCY.wccccsacessseses

TABLE OF AUTHORITIES

CASES CITED

Brownlow vs. Edgecomb Metals Co.,

573 F. Supp. 679 (N.D. Oh. 1983)..

EEOC vs. Baltimore and Ohio

Railroad Company, 632 F.2d 1107,

Ake (ECE GEEst BOER s bb.04%: 8 2 OS 0k

EEOC vs. Borden's Inc., 724 F.2d

£490 (IER CEE. Bees 6.6405 046 4a ue

EEOC vs. Great Atlantic and

Pacific Tea Co., 618 F.

Supp. 115 [Malls Wee, Somers ccuen cea’

EEOC vs. Home Insurance Co.,

Old F.2G 2352 (4G Cif. 2IEd) occsces

EEOC vs. Westinghouse Electric,

725 F.2d 211 (3d Cir. 1983),

cert. den. U.S. _,

105 S. Ct. 92, 83 L.Ed.2d

3B (19BE) . ccc ccncenesecccsssces

Kennedy vs. Whitehurst, 690 F.2d

932, GE (B.C. Choa Bower secuas ee

Oscar Mayer and Company vs. Evans,

441 U.S. 750, 99 S. Ct. 2066,

66 .L. 50.28 609 CA5707 ic cvccseeeee

Page

38, 41, 42

43, 44

38, 39, 42,

43, 44

45, 46

38, 39, 41,

43, 44

Rebaldo vs. Cuomo, 749 F.2d

133 (2d Cir. 1984), cert. den.

_. U.S. _, 105 &.Ct.

2702, 86 L.Ed.2d 718

oe PERT EROTEC TT eT CETTE E Tee 31,

Shaw vs. Delta Airlihkes,

463 U.S. 85, 103 S.

Ct. 2890, 77 L.Ed.2d

ing Me 8 ROLE ELLER SCTE CTO 18,

United Airlines v. McMann,

434 U.S. 192, 98 S.Ct.

444, 54 L.Ed.2d 402 (1977)....... 37,

Zipes v. Trans World Airlines,

$33 U.8. 363, 402 8. Ct.

_—___

1127, 71 B.B@. 1127 (1962)....... 27

STATUTES CITED

2. ry Pe meee 49

10 BARONE ccc cass wias 3

ee er rn -

20 ri iin Kae hanaeus 44

0 ee ns bcs hse e eee 5

om ee fl 2 ot) re nme 37

23 OO OAR oi iuey ideas eadas 6

20 B26. Sei ier es cee 24,

20, 21,

27, 28,

36, 37

22,

33,

vii

29 U.S.C. §1144. 2. ee eee eee e ee eees

29 C.F.R. §1625.2.....eee cence

29 C.F.R. §1625.2(b)......----ee-

NO.

IN THE

Supreme Court of the United States

OCTOBER TERM 1985

—

FRED S. NOLAN, et al.,

Petitioners, )

vs. )

OTIS ELEVATOR COMPANY and the )

ATTORNEY GENERAL OF NEW JERSEY,

)

Respondents.

)

PETITION FOR WRIT OF CERTIORARI TO

THE SUPREME COURT OF NEW JERSEY

Petititioners Fred S. Nolan, et al.

respectfully pray that a writ of

certiorari issue to review the judgment

of the Supreme Court of New Jersey

entered February 26, 1986.

OPINIONS BELOW

The opinion of the Sup Court of

New Jersey is reported at 102 N.J. 30

(1986) and is reprinted in the appendix

hereto at page la, et seq.

The decision of the Superior Court

of New Jersey Appellate Division is

reported at 197 N.J. Super. 468 and is

reprinted in the appendix hereto at page

a, et seq.

The decision of the Superior Court

of New Jersey, Law Division, is reported

at 197 N.J. Super. 70 and is reprinted

in the appendix hereto at page a, et

seq.

The decision of the United States

District Court, District of New Jersey,

is reported at 560 F. Supp. 119 and 7

reprinted in the appendix hereto at

page a, et seq.

JURISDICTION

The opinion of the Supreme

Court of New Jersey reinstating the

judgment of the Superior Court, Law

Division, was entered on February 26,

1986. There was no separate order or

judgment issued by the Supreme Court of

New Jersey. This petition for

certiorari has been filed within ninety

days of the New Jersey Supreme Court

decision. This Court's jurisdiction is

invoked pursuant to 28 U.S.C. §1257(3)

which states:

Final judgments or decrees

rendered by the highest court of

the State in which a decision

could be had, may be reviewed by

the Supreme Court as follows:

3) By writ of certiorari, ...

where validity of a State statute

is drawn in question on the ground

of its being repugnant to the

Constitution, treaties or laws

of the United States, ...

STATUTES AND REGULATIONS INVOLVED

EMPLOYEES RETIREMENT INCOME

SECURITY ACT, 29 U.S.C. §1144

(a) Except as provided in

subsection (b) of this section, the

provisions of this subchapter and

subchapter III of this chapter

shall supercede any and all State

laws insofar as they may now or

hereafter relate to any employee

benefit plan described in section

1003(a) of this title and not

exempt under section 1003(b) of

this title.

(d) Nething in this subchapter

shall be construed to alter, amend,

modify, invalidate, impair, or

supercede any law of the United

States (except as provided in

sections 1031 and 1137(b) of this

title) or any rule or regulation

issued under any such law.

AGE DISCRIMINATION IN EMPLOYMENT

mony 27 U.S.C. $623

(a) It shall be unlawful for an

employer -

(1) to fail or refuse to hire or to

discharge any individual or

otherwise discriminate against any

individual with respect to his

compensation, terms, conditions, or

privileges of employment, because

of such individual's age; ...

(f) It shall not be unlawful for

an employer, employment agency, or

labor organization -

(2) to observe the terms of a bona

fide seniority system or any bona

fide employee benefit plan such as

a retirement, pension, or insurance

plan, which is not a subterfuge to

evade the purposes of this

chapter...

AGE DISCRIMINATION IN EMPLOYMENT

ACT 29 U.S.C. §626

(d) No civil action may be

commenced by an individual under

this section until sixty days after

a charge alleging unlawful

discrimination has been filed with

the Equal Employment Opportunity

Commission. Such a charge shall be

filed -

(1) within 180 days after the

alleged unlawful practice occurred;

(2) in a case to which section

633(b) of this title applies,

within 300 days after the alleged

unlawful practice occurred, or

within 30 days after receipt by the

individual of notice of

termination of proceedings under

State law, whichever is earlier.

(e) (1) Sections 255 and 259 of

this title shall apply to actions

under this chapter.

PORTAL-TO-PORTAL ACT,

23 0.8.C. §255

Any action commenced on or

after May 14, 1947 to enforce any

cause of action ...

(a) if the cause of action accrues

on or after May 14, 1947 - may be

commenced within two years after

the cause of action accrued, and

every such action shall be forever

barred unless commenced within two

years after the cause of action

accrued, except that a cause of

action arising out of a willful

violation may be commenced within

three years after the cause of

action accrued; ...

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION

INTERPRETATIONS, Age Discrimination in

Employment Act, 29 CFR §1625.2

(b) The extension of additional

benefits, such as increased severance

pay, to older employees within the

protected age bracket may be lawful if

an employer has a reasonable basis to

conclude that those benefits will

counteract problems relating to age

discrimination. The extension of those

additional benefits may not be used as a

means to accomplish practices otherwise

prohibited by the Act.

NEW JERSEY LAW AGAINST DISCRIMINATION,

N.J.S.A. 1025-2.1

Nothing contained in this Act or

the Act to which this is a supplement

shall be construed ... to interfere with

the operation of the terms or conditions

and administration of any bona fide

retirement, pension, employee benefit or

insurance plan or program.

NEW JERSEY LAW AGAINST DISCRIMINATION,

Betice.A. 1025-12

It shall be unlawful employment practice

or, as the case may be, an unlawful

discrimination:

a. For an employer, because of ...

age ... to refuse to hire or employ

or to bar or to discharge from

employment such individual or to

discriminate against such

individual in compensation or in

terms, conditions or privileges of

employment; ...

NEW JERSEY LAW AGAINST DISCRIMINATION,

N.J.S.A. 10:5-13

Any complainant may initiate suit

in Superior Court under this Act without

eee Se aee

first filing a complaint with the

division or any municipal office.

Prosecution of such suit in Superior

Court under this Act shall bar the

filing of a complaint with the division

or any municipal office during the

pendency of any such suit.

At any time after 180 days from the

filing of a complaint with the division,

a complainant may file a request with

the division to present the action by

himself or through his own counsel to

the Office of Administrative Law. Jpon

such request, the director of the

division shall file the action with the

Office of Administrative Law, provided

that no action may be filed with the

Office of Administrative Law where the

director of the division has found that

no probable cause exists to credit the

iiss "

allegations of the complaint or has

otherwise dismissed the complaint.

A party to an action based upon a

violation of this Act shall mail a copy

of the initial pleadings or claims,

amended pleadings or claims,

counterclaims, briefs, and legal

memoranda to the division at the same

time as filing such documents with the

Office of Administrative Law or the

court. Upon application of the Office

of Administrative Law or to the court

wherein the matter is pending, the

division shall be permitted to

intervene.

STATEMENT OF THE CASE

This is an action instituted

in the New Jersey Superior Court

alleging age discrimination against the

petitioners' former employer, respondent

Otis Elevator Company.

The basic facts are

straightforward. All of the petitioners

were management level employees of Otis

at its Harrison New Jersey plant, and at

the time of the termination of their

employment in 1980, all had been with

the company 25 years or more. Each

petitioner received as a severance

benefit one week's salary per year of

service. All petitioners were at the

time of termination of employment less

than 55 years of age.

At the time of the closing,

other Otis employees, who were in all

se a awe

‘

;

respects similarly situated to

petitioners in terms of job titles and

years of service, but who were all 55

years of age or older, received benefits

in lieu of the severance pay given

petitioners which were significantly

more lucrative. Each of these other

employees was offered the opportunity to

enter into a “deferred compensation

agreement" under which on the last day

of each month commencing with a given

starting date and lasting for a period

of time stated in each individual

agreement, benefits were provided as per

a formula which resulted in these

employees receiving far more than the

severance pay given petitioners.

The giving of this deferred

compensation agreement to the other

employees was called by Otis the

“Harrison Special Supplemental

Retirement Plan" (HSSRP). In its

initial conception, it was intended to

be utilized to lure older employees into

utilizing the early retirement option

available to employees aged 55 or older

under the basic Otis retirement plan,

the Otis Basic Retirement Plan for

Salaried Employees (OBRPSE). The

benefits offered under the HSSRP were

calculated by tying into the benefits

for early retirement under the OBRPSE.

Under the HSSRP, all recipients must

have had 25 years or more of service

with Otis and be age 55 or older.

Sometime prior to putting the

HSSRP into effect, the decision was made

in the spring of 1980 to shut down the

Harrison plant entirely. Therefore, all

the employees as to whom the HSSRP was

being offered as well as the petitioners

had no choice to make about retirement

versus keeping their jobs at Harrison.

Nevertheless, employees who fit the

requirements created for HSSRP were

still given that benefit, while

petitioners were simply given the

severance pay previously described.

No official notice of the

existence of the HSSRP was ever given by

Otis to the petitioners. Only those

eligible to receive this plan were told

by management, and petitioners learned

of its existence only through informal

means. None of the employees who

participated in the HSSRP were actually

retired until June l, 1980 at the

earliest, and the individual agreements

effectuating participation in HSSRP were

Signed, at least in some instances,

subsequent to the actual retirement

date.

The architect of the HSSRP was

James Nelson of Otis’ parent company,

United Technologies. He stated that age

55 was selected as the cut off for the

HSSRP solely because that was the age at

which employees became eligible for

early retirement in the OBRPSE and for

no other reason. No consideration was

given to whether or not providing these

extra benefits would have any impact on

combatting age discrimination as per the

standards set forth in the Equal

Employment Opportunity Commission (EEOC)

interpretative regulation on that score.

The complaint in this case

alleged a single cause of action on

behalf of the 25 petitioners for

violation of the New Jersey Law Against

Discrimination (LAD). Respondent Otis

then removed the case to the United

States District Court for the District

of New Jersey. Its grounds for doing so

were that the LAD was preempted by the

Employees Retirement Income Security Act

(ERISA). Furthermore, it sought to

assert a counterclaim seeking

declaratory judgment that ERISA

preempted the LAD, and asserting that

the complaint actually stated cause of

action for benefits under ERISA, and

asking the court declare its fiduciary

duties. The District Court rejected the

assertion that there were grounds

establishing federal jurisdiction to

support the removal, and remanded the

case to the Superior Court of New

Jersey.

In Superior Court, Otis

continued to press its claim that ERISA

preempted the LAD, while abandoning the

theory that a cause of action wniee

ERISA was being advanced by petitioners.

On motion for summary judgment by Otis,

the Superior Court, Law Division

dismissed the complaint finding that

ERISA did preempt application of the

LAD. The Superior Court, Appellate

Division, reversed holding that

preemption of LAD would impair the ADEA

within the meaning of this Court's

decision in Shaw vs. Delta Airlines, 463

U.S. 85, 103 S. Ct. 2890, 77 L. Ed. 2d

490 (1983).

The New Jersey Supreme Court

granted certification and reversed the

Appellate Division, reinstating the

judgment of dismissal entered by the Law

Division. While the Supreme Court also

relied on preemption by ERISA, its

reasoning was significantly different

than that of the Law Division, — in

fact was based on a theory not advanced

by Otis and therefore not previously

addressed by petitioners, to wit, a

longer statute of limitations was

provided. The decision of the New

Jersey Supreme Court was issued on

February 26, 1986 with no separate order

or judgment accompanying it.

REASONS FOR GRANTING THE WRIT

1. PREEMPTION OF THE RIGHT TO BRING A

SUPERIOR COURT ACTION UNDER NEW JERSEY

LAW AGAINST DISCRIMINATION IMPAIRS THE

JOINT FEDERAL/STATE SCHEME OF PREVENTING

AGE DISCRIMINATION.

This Court has made it clear

that prevention of invidious

discrimination is, under federal law, a

joint matter of federal and state

cooperation. Allowing the states to

have their citizens seek protection

against discrimination through the

mechanism of a direct lawsuit is in

furtherance of that joint federal/state

scheme, and should not be preempted by

ERISA.

This Court laid down the

ground rules for applying ERISA

preemption to state antidiscrimination

laws in its decision in Shaw. While

Shaw was a Title VII case, there is no

question that the enforcement scheme

under the ADEA is basically the same

including the relationship between state

and federal agencies. Oscar Mayer and

Company vs. Evans, 441 U.S. 750, 99 S.

Ct. 2066, 60 L. Ed. 2d 609 (1979). This

Court concluded in Shaw that preemption

of the particular antidiscrimination law

at issue would impair Title VII because

it provided a means of enforcing Title

VII's commands. 463 U.S. at 101, 103 S.

Ct. at 2902. Allowing preemption to

defeat the possibility of the state

administrative agency granting relief

was seen as contrary to the purpose of

the statute:

This would frustrate the

goal of encouraging joint

state/federal enforcement of

Title VII; an employee's only

remedies for discrimination pro-

hibited by Title VII in ERISA

plans would be federal ones.

Such a disruption of the

enforcement scheme contemplated

by Title VII would, in the

words of §514(d), "modify" and

"impair" federal law. 463 U.S.

at 103, 103 &. Ct. af 2303.

Beside eliminating an

alternative forum, it was held that

preemption of state remedies would

increase the EEOC work load. Cclaims

that might otherwise be resolved at the

state level would have to go through

EEOC thereby resulting in an added

burden and the likelihood of less

effective enforcement of the statute.

463 U.S. 103, n. 23, 103 3. Ct. SE 2903.

The only limitation expressed

by the Court was that there would be no

impairment of Title VII to the extent

that a state statute prohibited conduct

lawful under Title VII. Concern was

expressed that, consistent with the

legislative intent behind ERISA,

employers not be faced with “conflicting

or inconsistent state and local

regulation of employee benefit plans."

463 U.S. at 105, 103 S. Ct. at 2904

quoting remarks of Senator Williams, 120

Cong. Rec. 29933 (1974). Therefore, to

the extent that a state law made

anything relating to an employee benefit

plan illegal, when it would be lawful

under Title VII, such provision would be

deemed preempted by ERISA. Ibid.

' This substantive consistency

between federal and state law is the key

to accomplishing the goals outlined in

Shaw. It certainly would make things

difficult for a company to create a plan

if it could be lawful in one state and

not in another. However, in this case,

the decision of the New Jersey Supreme

Court ignores that need for substantive

consistency in favor of relying only on

the length of the statute of aoe een

as grounds for finding cause is: aide

state law. It is submitted that the

need to combat unlawful discrimination

must take precedence over having a

single time limit for challenging

discrimination in a benefit plan.

In finding that the action

commenced in Superior Court would not

have been timely in pursuit of a federal

remedy, the New Jersey Supreme Court

adverted to the dual nature of the

statute of limitations for a federal

action. Thus, there must be a filing

with EEOC within 300 days of the alleged

unlawful practice, and an action must be

instituted within two years of accrual

under 29 U.S.C. §255, as adopted for the

ADEA in 29 U.S.C. §626(e). 102 N.J. at

42, sks In holding that the federal

remedy was no longer available, the

Supreme Court of New Jersey did not make

it clear on what basis it reached that

conclusion. Petitioners concede that at

the time the complaint in this action

was filed, the 300 days for filing a

complaint with EEOC had expired.

However, the two year period for

bringing an action in federal court had

not. While Otis has asserted at times

in the lower court proceedings that a

two year statute of limitations should

have been applied to the New Jersey

Superior Court action, and that it had

not been met by the May, 1982 filing,

that has not been conceded by

petitioners and has never been

adjudicated in this case. It is

petitioners' contention that the case

was filed within two years of the

accrual of the cause of action. The

plant was not actually closed until

after May, 1980, none of the

participants in the HSSRP actually were

retired until at least June 1, 1980, and

no notice of the HSSRP had been given to

any of the nonparticipants as of May,

1980.

Therefore, the sole basis for

saying that the federal remedy was no

longer available was the failure to file

with EEOC within 300 days.

Nevertheless, there is nothing

inconsistent about allowing a state

court action to be filed within two

years without recourse to administrative

remedies when employers, even looking

only at the ADEA, know that for two

years after accrual they are subject to

fh a E-ncres Ab

| MELE as bea iahtatics, Wire Kamala ie

a federal claim. This is especially

true in light of the fact that the

requirement of filing with EEOC is a

prerequisite to bringing an action in

federal court is not jurisdictional and

may be waived. Kennedy vs. Whitehurst,

690 F. 24 951, 961 (D.C.Cir. 1982),

citing to Zipes vs. Trans World

Airlines, 455 U.8. 385, 102 &. Ct. lid/,

71 LL. Ed. 1127 (1982).

The clear concern of this

Court in Shaw was the ability of

employers to create plans. It is

unrealistic to assume that the

possibility that in certain instances

the claimant may bring suit outside of a

particular statute of limitations is

going to be taken into consideration to

any extent in deciding upon the terms of

an ERISA benefit plan. Employers will

certainly look at federal law to see

what subtantive provisions are lawful

and should not have to review che laws

of all 50 states to see if there will be

an inconsistency. The holding in Shaw

that preemption will follow where a

state antidiscrimination law is broader

than Title VII, or here the ADEA, as it

relates to an employee benefit plan

fully allays that concern. To extend

it, as the New Jersey Supreme Court has

done, to statute of limitations

considerations goes far beyond the Shaw

rationale, or that expressed in the

legislative history of ERISA.

Certainly the element of

limiting the work load of EEOC which was

given recognition in Shaw is just as

much served by having discrimination

allegations resolved in the state courts

eee

as it is by use of state administrative

agencies. In fact, in New Jersey it is

a reality that there is a ecektar

likelihood that a matter brought in

Superior Court will be removed from

federal jurisdiction than if a complaint

is filed with the New Jersey Division of

Civil Rights. At the same time as the

New Jersey legislature amended its

statute to provide that an action may be

brought in Superior Court, bypassing

state administrative remedies, it also

provided that if, after 180 days from

the filing with the Division on Civil

Rights, no resolution had been reached,

a complainant could demand that the

matter be immediately forwarded to the

Office of Administrative Law for

prosecution directly by the party

alleging discrimination. The clear

nas in cade ouninhs - <li

import of such a provision is that

matters filed with the Division on Civil

Rights may well not be speedily

resolved, necessitating that the

Claimant go forward himself in order to

get resolution. The right to initiate a

Superior Court action should be viewed

together with the other provisions of

N.J.S.A. 10:5-13 as a system designed to

open as many avenues as possible for

resolution within New Jersey of

discrimination claims. It ill serves

the purpose of joint federal/state

administration of antidiscrimination

remedies to place limits on which form

of remedy may be utilized in a state

such as New Jersey which has chosen to

have additional ones available.

It has previously been held

that the mere fact that a state provides

pee oes

alternative antidiscrimination remedies

in the form of administrative

proceedings or a court action does not

mean that the state is not a deferral

state under the ADEA. Brownlow vs.

Edgecomb Metals Co., 573 F. Supp. 679

(N.D.Oh. 1983). The court there noted

that while it did not know why the Ohio

legislature had established dual

remedies, it was not the court's

province to question state legislative

motives, and recognition was given to

the “varied and myriad approaches of the

many states." Id. at 683.

This Court's attention is also

directed to another ERISA preemption

matter, Rebaldo vs. Cuomo, 749 F. 2d 133

(2d Cir. 1984), cert. den. _ U.S. ,

105 S.Ct. 2702, 86 L. Ed.2d 718 (1985).

The actual holding in that case was that

a state statute placing limits on

hospital charges for self insured

employee benefit plans precluding such

plans from negotiating discount rates

from hospitals was not preempted by

ERISA. ‘The rationale of this decision

was that the regulation of the amount

that hospitals could charge too remotely

affected employee benefit plans to fall

within the preemptive scheme of ERISA.

Id. at 138. However, Judge

VanGraafeiland went on to indicate his

own belief that ERISA preemption should

not be a means of stifling state

experiments on means of effectuating

matters which are the shared

eeemeeitinbitee of the federal and state

governments. His conclusion was:

In sum, the writer

does not believe that

Congress intended that ERISA

would preempt a project of co-

operative federalism, such as

we have here, a project that

was authorized and ratified

by federal statute and is

intended in substantial part

to conserve federal funcs.

Id. at 140.

Certainly, the Shaw decision

makes it clear that combating

discrimination is the shared

responsibility of federal and state

government. To that end, measures aimed

at providing greater means of fighting

such discrimination, such as the

providing of a right to file a lawsuit

in New Jersey, should not be hamstrung.

The actual argument put

forward by Otis before the New Jersey

Supreme Court was that the entire right

to bring a direct action in Superior

Court should be preempted by ERISA and

only administrative proceedings allowed.

Nothing in the New Jersey Court opinion

indicates acceptance of that argument.

Rather, the New Jersey Court on its own

carved out an even more limited area

preemption based solely on statute of

limitation concerns. By passage of

statutes such as Title VII and the ADEA,

Congress has shown a strong policy

interest in limiting discrimination. To

the extent that ERISA preempts state

law, but not federal statutes, the

policy would seem undoubtedly to be one

of having only a single standard by

which employers may judge whether the

plans are proper. The best way of

accomodating these interests is that

which this Court utilized in Shaw,

namely recognizing that substantitive

provisions as to the content of plans

going beyond what is prohibited by

federal law will be preempted.

ee I ee ee a, te

Sa ee

The New Jersey Supreme Court

acknowledged that one of the purposes

behind deferral was to avoid eave ae

the federal system. Yet it found that

this would not be served by allowing

recourse to a state lawsuit as was

utilized here. 102 N.J. at 46. There

is simply no justification for this

conclusion. Use of a state remedy to

conclusion, including a lawsuit, will

certainly preclude the concurrent

ability to prosecute a federal action.

Thus, it clearly will serve the purpose

of lessening the burden on the federal

enforcement structure.

As to the other purpose

served, use of an administrative remedy,

that does no more than provide a limited

time period for an attempt at

reconciliation, and does not preclude

ultimate litigation in the federal

courts. To the extent that opportunity

for use of the administrative process

may be lost, it should be deemed heavily

outweighed by the goal of making

available remedies for discriminatory

actions by employers. If the Shaw test

is satisfied, then the only truly

relevant need for uniformity is

protected and allowing preemption on any

other basis aids only those who would

discriminate in defiance of both federal

and state law.

2. GRANTING ADDITIONAL SEVERANCE

BENEFITS SOLELY ON THE BASIS OF AGE

IS DISCRIMINATORY UNDER THE ADEA.

Under this Court's decision in

Shaw, the sole ground for determining

ERISA preemption is whether or not the

conduct at issue violates the relevant

federal discrimination statute. In this

case, the granting of extra benefits to

SAA dan DRA eM. TENS Coe ie

employees aged 55 and older who were in

Pe ENR Yop

all other respects the same as

petitioners was discriminatory under the

aed arate «

ADEA.

ty pees

The governing section of the

Bs ete

ADEA is 29 U.S.C. §623(f) (2) which

provides that it is not discriminatory

to observe the terms of a bona fide

employee benefit plan which is nota

subterfuge to avoid the purposes of the

ADEA. A bona fide plan simply needs to

exist and actually pay benefits, United

Airlines vs. McMann, 434 U.S. 192, 98 S.

Ct. 444, 54 L. Ed. 2d 402 (1977). There

is no question that the HSSRP axiste and

benefits have been paid to some

employees, so whether it is bona fide is

not an issue in this case.

What petitioners do assert is

that there is no plan within the meaning

of §623, and even if there is, it is a

subterfuge to avoid the purposes of the

Act.

Existence of a plan in

circumstances similar to those presented

here has been addressed in EEOC vs.

Westinghouse Electric, 725 F. 2d 211

(3rd Cir. 1963), cert. den. U.8. ,

105 &. Ct. 92, 83 Lb. Ed. 246 36 {idea} 3

EEOC vs. Borden's Inc., 724 F.2d 1490

(9th Cir. 1984); and EEOC vs. Great

Atlantic and Pacific Tea Co., 618 F.

Ae Ree RAKE Mh

Seika

hei aS

i NT ee pS

;

Supp. 115 (N.D. Oh. 1985). In all three

instances, attempts to characterize

severance benefits as a plan cite the

meaning of the ADEA were rejected. They

are compelling support for petitioners'

assertion here that there has been

unlawful age discrimination.

In the Westinghouse case, it

was held that layoff benefits did not

constitute a plan within the meaning of

the ADEA because they were analogous to

a fringe benefit. Under the generally

applicable Westinghouse pension plan,

employees laid off without fault for

lack of work were eligible for Layoff

Income Benefits (LIB) if they had at

least two years service and were not

entitled to early retirement as

specified in the Plan. The minimum age

under which anyone could elect early

retirement was 55 for persons with more

than 30 years service laid off as result

of the plant closing, who inka seein

between their 55th and 60th birthday.

When the plant was closed, a number of

employees aged 55 and older were

informed by Westinghouse that they were

ineligible for LIB because they were

entitled to early retirement.

Although the District Court

found that denial of the LIB to older

workers was based upon reasonable

factors other than age and that

Westinghouse had operated under the

terms of a bona fide benefit plan, the

Third Circuit reversed. It was held

that the relationship between

eligibility for early retirement and age

served to deny LIB to older workers who

had accumulated more years of service,

and therefore was a distinction based on

age. 725 F. 2d at 222, and n. 7

Furthermore, there _ no bona

fide employee benefit plan because LIB

was not a plan within the meaning of

§623(f£) (2).

In the Borden's case, the

company closed a dairy operation and

terminated all but a few management

personnel. By addenda to a Collective

Negotiations Agreement cman about a

month prior to the closing of the plant,

severance pay was created as a benefit

in the event of closure. Employees

eligible for normal or early retirement

were excluded from severance pay; for

retirement eligibility an employee had

to have at least two years of continuous

service and be at least 55 years of age.

Employees excluded by these criteria

et ee ee es oe a ee | eee otn one te eee —

from receiving severance pay filed a

Claim under the ADEA.

The Ninth Circuit held that

where eligibility for benefit is

conditioned upon eligibility for

retirement which in turn is limited to

employees 55 or older, age was the “but

for" cause of denial of severance pay.

724 F. 2d at 1393. Severance pay was

not a plan within the meaning of

§623(f£) (2) as it had only a loose

connection to existing pension plans.

Even if severance pay policy had been

part of an overall benefit scheme,

denial of severance pay to retirement

eligible employees was still found open

to question. Id. at 1396-97.

Most recently in the A & P

case, the employer once again tried to

claim existence of a plan falling within

the statutory exception by virtue of the

fact that severance pay was tied to the

regular pension plan. Severance pay was

denied to all those employees eligible

for early retirement, for which one had

to be at least 55 years old. The court

found that A & P had simply dragged in

its pensicn plan “to clothe its

severance pay plan with legitimacy and

to achieve results which it was not

designed to achieve." 618 F. Supp. at

121. The severance pay and the

underlying pension plan were found not

to be “part and parcel of a total,

integrated benefit package." Id. at

122. They were adopted at different

times and documented separately. Ibid.

Therefore, the result was the same as in

Westinghouse and Borden upon which the

court in A & P relied.

Nothing really differentiates

the HSSRP from what went on in

Westinghouse, Borden's and A& P. Simply

because the word “plan” was used in

creating a name, does not make it a plan

within the meaning of the ADEA. The

piant was closed and the benefit given

to the participants in the HSSRP was in

lieu of the severance pay received by

petititoners. The only difference

between petitioners and those in the

HSSRP was age.

Otis has claimed in this case

that its actions were shielded by the

fact that the ADEA, at 29 U.S.C. §626(e)

adopts §10 of the Portal-To-Portal Act

of 1947, 29 U.S.C. §259. §10(a) of that

statute provides that an employer may

rely on “any written administrative

regulation, order, ruling, approval or

OD APM AL at Ow Se ae

ce la et, fe tel walt Meg. <6 nba ot hie:

{

interpretation, of the government agency

responsible for enforcement of the

statute. .

An employer seeking to rely on

this defense "must prove a good faith

reliance by objective evidence.” EEOC

vs. Baltimore and Ohio Railroad Company,

632 F.2d 1107, 1112 (4th Cir. 1980).

The administrative bulletin or other

document must be specific enough to

cover the particular employment

situation. Ibid. As stated in EEOC vs.

Home Insurance Co., 672 F.2d 252 (2d

Cir. 1982):

Thus, the Portal Act

defense requires the employer

to establish three

interrelated elements:

(1) that its action was taken in

reliance on the ruling of the

administrator,

(2) that it was

in conformity with that ruling,

(3) that it was in good faith.

672 F. 2d 263.

The Second Circuit in’ the Home

Insurance case rejected the notion that

general good faith is enough. The

employer must have more than an honest

intention to ascertain what the Act

requires. If there is not conformity

with the requirements there cannot be

good faith sufficient to “save the day."

Id. at 265.

In this case, the testimony of

the architect of the HSSRP, James Nelson

of United Technologies, does not

establish any entitlement to the

Portal-To-Portal defense. Opinion

letter WH-451 of the Wage-Hour

Administrator (January 31, 1978)

expressed an opinion that giving greater

severance pay to older employees would

not violate the ADEA because it would

grant additional financial security to

those who might have more relocation

problems. In 1979 however, authority to

implement the ADEA was transferred to

EEOC. In November, 1979, it issued

proposed regulations including

§1625.2(b) which as proposed read:

The extension of additional

benefits such as longer

vacations, increased severance

pay or more favorable shift

preferentials may be lawful

in certain circumstances when

made to older employees within

the protected age to promote

or encourage opportunities for

such individuals who might

otherwise experience dis-

proportionate hardship, so

long as the extension of such

benefits does not create an

unreasonable hardship for the

younger employees within the

protected age bracket.

The regulat ons even as

proposed certainly had to put Otis on

notice that additional benefits to older

employees including increased severance

pay would only be lawful “in certain

circumstances" and had to be premised on

encouragement of opportunity for older

employees. Mr. Nelson testified that in

constructing the HSSRP no consideration

was given to promoting opportunities for

older persons. No studies were done as

to possible job opportunities elsewhere

for older vs. younger employees. While

Mr. Nelson indicated that he had

referred to §1625.2(b), he stated that

was done only to the extent that in his

mind it was consistent with the existing

early retirement policy allowing

retirement at age 55.

Subsequently, after receiving

comments on the proposed §1625.2(b),

EEOC amended that section. The actual

section as adopted states that

additional benefits to older employees

"may be lawful if an employer has a

reasonable basis to conclude that those

benefits will counteract problems

related to age discrimination." The

original language regarding hardship to

younger employees was deleted by EEOC,

because, as stated at 46 Fed. Reg.

47724, that language had been deemed

ambiguous and raised questions regarding

the legal basis for discrimination

between members of the class protected

by ADEA. As further stated, the section

was never intended to sanction

discrimination between individuals

protected by the statute.

In addition to there being no

plan qualifying for the ADEA exception,

petitioners also assert that the HSSRP

was a subterfuge. There is no dispute

that it was initially to be used to

entice older employees to retire and

open opportunities for younger persons.

If that had stayed the situation, it

might well be that Otis could say that

it was simply offering an opportunity

for voluntary retirement and therefore

was not violating any law. However,

once the decision to close the plant was

made, that element disappeared.

Everybody was going to lose their jobs.

Naturally, anyone accorded the choice

between the severance pay given

petitioners and the early retirement

plan providing a lot more money would

choose the latter. There was nothing

voluntary about the HSSRP by the time it

was actually given to those who

participated, by which time the plant

closing decision was a reality known to

all. In that situation, giving

additional benefits to the older

employees as severance from their

employment at least had to fit within

the limitations expressed in the EEOC

regulation. Because the whole plan was

dreamed up in the first place to get

older employees out of the way, it was

clearly not aimed at combating problems

of age discrimination. Where everyone

is being terminated because the plant is

closing, everyone similarly situated in

terms of level of employment and years

on the job should be treated equally.

CONCLUSION

For the aforestated reasons,

the petition for a writ of certiorari to

the Supreme Court of New Jersey should

be granted.

Respectfully submitted,

William S. Greenberg

Counsel of Record

GREENBERG & PRIOR

Attorneys for Petitioners

301 Carnegie Center

CN 5320

Princeton, New Jersey 08540

(609) 987-1200

Dated: May 21, 1986

Nhibiee det Smedlae

APPENDIX A

SUPREME COURT OF NEW JERSEY

A-51 September Term 1985

FRED S. NOLAN, RALPH R. BATTISTA,

CHARLES W. CLEARY, JOSEPH A. DAVIS,

WILLIAM J. DAVITT, Jr., ANTHONY G.

GOMES, JAMES HALLECK, DONALD C.

HALLIWELL, PHYLLIS J. GORLEY

KERKAWICH, JOSEPH M. KARKOSKY, JR.,

ARMAND MACHADO, EDWARD M. McBRIDE,

THOMAS P. NUGENT, PETER J. REILLY,

HERMAN J. RUSSOMANNO, EUGENE A.

SCANNEPICO, RAYMOND J. SMITH,

JOHN T. STARR, HAROLD C. STOLL,

LOUIS C. TREMBLE, JAMES VAN BRAMER,

WALTER WARD and DANIEL M. WATSON,

Plaintiffs-Respondents,

Vv.

OTIS ELEVATOR COMPANY, a

corporation organized and existing

under the laws of the State of

New Jersey,

Defendant-Appellant.

Argued November 19, 1985 -

Decided February 26, 1985

On certification to the Superior

Court, Appellate Division, whose

opinion is reported at 197 N.J.

Super 468 (1984).

Peter F. Healey, a member of the

District of Columbia bar, argued

the cause for appellant (Stoldt,

Horan & Cino, attorneys; John D.

Appendix A

Horan of counsel and on the

briefs).

William S. Greenberg argued the

cause for respondent (Greenberg,

Kelley & Prior, attorneys; James

F. Schwerin on the briefs).

Susan L. Reisner, Deputy Attorney

General, argued the cause for

intervenor New Jersey Division on

Civil Rights (Irwin I.

Kimmelman, Attorney General of

New Jersey, attorney; Andrea M.

Silkowitz, Deputy Attorney

General, of counsel; Ms. Reisner

and Nancy Kaplen Miller, Deputy

Attorney General, on the brief).

Rosemary Alito submitted a brief

on behalf of amicus curiae Equal

Employment Advisory Council

(Carpenter, Bennett & Morrissey,

attorneys).

The opinion of the Court was delivered

by O'HERN, J.

The threshold question in

this appeal is whether the federal

Employee Retirement Income Security

Act of 1974 (ERISA) preempts the

application of New Jersey's Law

Against Discrimination (NJLAD) to a

claim of age discrimination in an

Appendix A

employee pension plan when the action

is broughtafter the comparable federal

time requirement for such an action

has not been met. The underlying

substantive issue is whether a

supplementary plan of voluntary early

retirement benefits offered to

supervisory employees who have

attained age 55 with 25 years of

eligible service discriminated against

younger workers who may have the same

number of years in service.

We hold that ERISA preempts

the untimely claim under state law and

therefore do not resolve the

substantive issues, although we note

the apparent impediments to such a

Claim posed by saving provisions of

the federal Age Discrimination in

Employment Act (ADEA).

The plaintiffs in this case

Appendix A

were all employees of defendant, Otis

Elevator Company, at its Harrison, New

Jersey plant. They were

management-level employees who were

not represented by a labor union. The

Harrison plant was closed on December

31, 1980. Plaintiffs were laid off

from work at various times; some of

the plaintiffs stayed on until the

final closing-down of the plant even

though their employment had previously

been formally terminated.

Each plaintiff received as a

severance benefit one week's salary

for each year of service. All of the

plaintiffs had at least 25 years or

more of service and were under the age

of 55. Other Otis employees who were

over 55 years of age but otherwise

similarly situated with the plaintiffs

did not receive severance pay but

instead became eligible immediately

etd, O Nate hae tain:

Appendix A

for benefits under a special

supplemental retirement plant. Under

this special plan, those over-3S

employees receive 90 percent of their

final average annual earnings for a

four-year period or until they reach

the age of 62, whichever is longer.

The 90 percent benefit is calculated

on the basis of the income from all

sources, including income derived from

social security as well as benefits

payable under Otis' basic retirement

plan. The basic plan remains in

effect for all of the employees

whether over or under 55, pursuant to

vested rights they have in it.

Plaintiffs instituted this action under

the NJLAD for relief in the form of

benefits equal to those received by

employees who qualified for the

Supplemental plan.

Because the case arises on

Appendix A

motion for summary judgment, we accept

as true the plaintiffs’ version of the

facts. Judson v. Peoples Bank & Trust

Co. of Westfield, 17 N.J. 67, 74-75

(1954). The background relevant to

the creation of the so-called

"Harrison Special Supplemental

Retirement Plan” (HSSRP) is drawn from

the deposition testimony of James

Nelson, Manager of Employee Benefits

for United Technologies Corporation,

the parent corporation of Otis.

Mr. Nelson was responsible

for the design and costing of the

HSSRP. The plan was developed after

Otis made a special request to United

Technologies regarding use of a

deferred-compensation program. The

requirements written into the plan

were that any recipient: (1) must

have had 25 years or more of service

with Otis because this was deemed a

Appendix A

significant period of service, and (2)

must have attained the age of 55

because that was the standard saris

retirement age used in existing Otis

' benefit plans. The Harrison plan was

based in structure on one used

previously in conjunction with a

} reduction in force at Pratt and

Whitney, an aerospace division of

} United Technologies. No policy exists

} within United Technologies regarding

the offering of such a plan in any

given situation. Apparently the HSSRP

was offered to eligible employees of

Otis in January or February 1980.

As initially contemplated,

the HSSRP was to be utilized as part

Peers

of a scaling-down of the Harrison

operation before any decision was made

to close it down completely. It was

Said to be designed to encourage

employees who were eligible for early

Appendix A

retirement to retire voluntarily

sooner rather than later and to make

remaining opportunities available to

more people. The

deferred-compensation program was

established specifically for the two

occasions on which it was used: the

1976 reduction-in-force at Pratt and

Whitney, end the situation regarding

the Otis facility in Harrison. Unlike

longstanding benefit plans, such as

the Otis Basic Retirement Plan for

Salaried Employees (OBRPSE), which

have printed booklets describing the

plans and their benefits that are

routinely made available to all

employees, no booklet was ever

printed for the HSSRP. In fact, the

plan was not made known by Otis to any

employees other than the ones who met

the criteria for inclusion; salaried

management employees with 25 years or

Appendix A

more of service who were age 55 or

older. Similarly, the 1976 Pratt and

Whitney plan was never publicized in

booklet form either.

Nelson testified that in

creating the HSSRP, he did check all

ERISA regulations and various other

regulations of the United States

Department of Labor, and consulted

with the legal staff at Otis Elevator

Company. The individual agreement

form for those participating in the

HSSRP stated that it was to be

interpreted under the laws of New

York, the state where Otis Elevator

Company's headquarters were located.

Nelson himself never saw any opinion

letters from the wage-hour

administrator regarding age

discrimination in severance benefits

although he did state that he

consulted published information. With

10a

Appendix A

regard to proposed Equal Employment

Opportunity Commission (EEOC)

regulations appearing in the Federal

regarding extension of additional

benefits to older employees to

encourage opportunities for such

individuals, Nelson testified that he

considered only the fact that age 55

was consistent with existing retirement

policies and that because originally

the plan was to be utilized together

with a phase-out rather than a

closing, it would make more

opportunities available to remaining

people. No study was ever undertaken

on behalf of Otis or United regarding

the differences in severance benefits

or compensation to be paid to any

Harrison employees on the basis of

age, nor was any report ever prepared

as to reasons for paying more to

lla

Appendix A

employees age 55 with 25 years or more

of servive thant to those who also had 25 years

or more of service but were not age 55. There

were no studies or even discussions of

the problem of getting new or other

employment for older employees who

would no longer be working at Otis’

Harrison facility. On the question of

promoting opportunities for

individuals who might experience

disproportionate hardship due to their

age, Nelson testifed that the only

factor considered was that age 55 was

consistent with existing retirement

policies.

Otis apparently began to

Joffer the HSSRP to eligible employees

in January or February of 1980.

Eligibility to participate in the

HSSRP was limited to managerial

employees who, by virtue of their

service, already qualified for early

retirement under Otis’ basic pension

12a

Appendix A

plan. Defendants assert that by March

or April of 1980 a number of

plaintiffs herein had learned from

eligible employees that the HSSRP had

offered to eligible employees.

been

Defendant asserts that it was not

until May 1980 that the decision was

made to close the Harrison plant due

to its continuing losses and that the

closing was not completed until

December 1980. Plaintiffs contest

this point most vigorously. They

assert that since Otis planned to shut

down the plant long before May, the

HSSRP plan was not bona fide, but was

a scheme to evade the strictures

against discrimination on account of

a subterfuge to avoid the

and

age

economic warfare that

closing of a plant.

that they should be

with other

treated equally

members of the work force.

attends the

Plaintiffs argue

l3a

Appendix A

No action was brought in

state or federal forums, however,

until May 12, 1982, when the 25

individual plaintiffs filed a Superior

Court complairec against defendant,

alleging a cause of action arising

under the New Jersey Law Against

Discrimination (NJLAD), N.J.S.A.

10:5-1 to -42, for discrimination on

the basis of age.

After removal to and remand

from the United States District Court

for New Jersey, the case came on for

summary judgment in the Superior

Court, Law Division. The Law Division

granted Otis’ motion for summary

judgment on the ground that federal

regulation of employee benefit plans,

through ERISA, preempts the NJLAD when

the NJLAD is used to challenge an

employee benefit plan. Under

applicable federal law, inconsistent

léa

Appendix A

provisions of state law relating to

employee benefit plans are preempted

unless their preemption would impair

federal law. Shaw v. Delta Air Lines,

Inc., 463 U.S. 85, 102-03, 77 L.Ed..2d

490, 504-05 (1983). The trial court

found that the NJLAD, under which

plaintiffs' claim was brought, related

to an ERISA-regulated employee benefit

plan and that its preemption would not

impair the federal age discrimination

law. 197 N.J. Super. 70, 75-77

(1983).

On appeal, the Appellate

Division reversed, finding that a

sufficient interrelationship exists

between the NJLAD and the ADEA so that

enforcement of the federal law would

be hampered if the state law were

preempted. The court therefore

concluded that even a limited

preemption of a right of direct suit

tite Tadeo unk pie in th

l5a

Appendix A

under the NJLAD would impair the ADEA.

197 N.J. Super, 468, 472-73.

We granted the defendant's

petition for certification. 101 N.J.

272 (1985).

The history and background

of the federal Employee Retirement

Income Security Act (ERISA), 29

U.S.C.A. §§1001 to 1461, have been set

forth in a series of United States

Supreme Court decisions. A brief

description of the act will suffice.

Congress enacted ERISA in

1974 “to protect participants of

employee benefit plans and their

beneficiaries from the abuses which

previously existed in many retirement

plans." See Note, ERISA: Preemption

of State Health Care Laws and Worker

Well-Being, 4 U. I1l. L.R. 825 (1981)

(footnotes omitted). Both lower

l6a

Appendix A

courts found -- and plaintiffs do not

argue otherwise -- that the HSSRP is

an “employee benefit plan." See 29

U.S.C.A. §1002(3) (“employee benefit

plan" includes both pension plans and

health and welfare plans). The

statute imposes participation,

funding, and vesting requirements on

pension plans. It also sets various

uniform standards, including rules

concerning reporting, disclosure, and

fiduciary responsibility for both

pension and welfare plans. rt is: &

“comprehensive and reticulated

statute," which Congress adopted after

careful study of private retirement

pension plans. Nachman Corp. VW.

Pension Benefit Guar. Corp., 446 U.S.

359, 361, 64 L.Ed.2d 354, 358 (1980).

Congress, through ERISA, wanted to

insure that “if a worker has been

promised a defined pension benefit

inde SiC eaiit vag Loans

17a

Appendix A

upon retirement--and if he has

fulfilled whatever conditions are

required to obtain a vested |

benefit--that he actually receive it."

iad. at 375, 64 L. Ed.2d at 367.

Congress has provided for civil and

Criminal enforcement of the act, and

an insurance program was created to

protect employees against the loss of

benefits upon termination of pension

plans that lack sufficient funds to

pay such benefits in full. Id. at 361

n.l, 64 L.Ed.2a@ at 358 n.l.

“Pre-erption may be either

express or implied, and ‘is compelled

whether Congress' command is

explicitly stated in the statute's

language or implicitly contained in

its structure and purpose.

Fidelity

Federal Sav. & Loan Ass'n v. De la

Cuesta, 458 U.S. 141, 152-53, 73

L.Ed.2d 664, 675 (1982) (citation.

18a

Appendix A

omitted) (quoted in Shaw v. Delta Air

Lines, Inc. supra, 463 U.S.at 95, 75

L.Ed.2d at 500). In enacting ERISA,

Congress took nothing for granted. To

guarantee federal uniformity in the

supervision and administration of

pension plans, Congress displaced

entirely all prior state regulation of

such employee benefit programs. The

act includes one of the most sweeping

preemption provisions ever contained

in any federal program. Section

514(a) of ERISA preempts "any and all

State laws insofar as they may now or

hereafter relate to any employee

benefit plan [covered by ERISA]." 29

U.S.C.A. §1144(a). In Alessi v.

Raybestos-Manhattan,Inc., 451 U.S.

504, 68 L.Ed.2d 402 (1981), the United

States Supreme Court held that ERISA

preempted a New Jersey statute that

did not allow employers to reduce a

19a

Appendix A

retiree's pension benefit by an amount

gual to the retiree's workers'

compensation award. The Court stated:

"It is of no moment that New Jersey

law intrudes indirectly, through a

workers’ compensation law rather than

directly, through a statute called

‘pension regulation.' ERISA makes

clear that even indirect state action

bearing on private pensions may

encroach upon the area of exclusive

federal concern." Id. at 525, 68

L.Ed.2d at 418. Saved only are state

laws regulating insurance, banking and

securities, and generally-applicable

state criminal laws. ae. 0,8. C2.

§1144(b) (2) (A) and (b) (4).

The parties agree, as the

lower courts found, that the NJLAD

"relates to" ERISA benefit plans and

comes within §514 of ERISA. The only

hope for survival of New Jersey's law

eam

20a

Appendix A

against discrimination stems from its

symbiotic relationship with federal

laws against discriminat’ m. Section

514(d)of ERISA provides that:

"Nothing in this subchapter shall be

construed to alter, amend, modify,

invalidate, impair, or supersede any

law of the United States *** or any

rule or regulation issued under any

such law." 29 U.S.C.A §1144(d).

Quite simply, the question is whether

preemption of the NJLAD will impair a

law of the United States.

The key case is, of course,

Shaw v. Delta Airlines, supra, 463

U.S. 85, 77 L.Ed.2d 490. At issue in

Shaw was a provision of the New York

Human Rights Law, N.Y.Exec. Law §§290

to 301 (McKinney 1982 and Supp.

1982-83), that required employee

health-benefit plans to pay sick-leave

benefits to employees unable to work

2la

Appendix A

because of pregnancy or other

nonoccupational disabilities. N.Y.

Exec. Law §204. Noting that ERISA

originally contained a limited

preemption clause that encompassed

only state laws applicable to the

specific subjects covered by ERISA and

that Congress rejected this provision

in favor of the present language, the

Court found that “the section's

pre-emptive scope was as broad as its

language.” Shaw, supra, 463 U.S. at

98, 77 L.Ed.2d at 502. In the

preemptive section of 514(a) Congress

used the phrase “relate to” in its

broad sense; hence the

pregnancy~-benefit provisions clearly

related to the administration of an

ERISA plan. Id. at 100, 77 L.Ed.2d at

502-03.

Turning then to the only

available savings provision, that of

22a

Appendix A

section 514(d) that ERISA should not

be construed to impair oF supersede

any law of the United States, the

Court noted that Title VII of the

Federal Civil Rights Act required

recourse to available state

administrative remedies whenever an

emp loyment practice prohibited by

Title VII occurs ina state that

prohibits the practice and has

established an agency to enforce the

prohibition. Id. at 101-02, 77

L.Ed.2d at 504 (citing 42 U.S.C.

§ 2000e-5(b)). Hence, the Court

concluded that a full preemption of

New York's Human Rights Law would

impair Title VII to the extent that

the state law against discrimination

provides a means of enforcing Title

VII's command. Insofar as the state

law outlaws emp loyment practices that

are lawful under Title VII, however,

23a

Appendix A

preemption would not impair the

federal program within the meaning of

§514(d). Shaw, supra, 463 U.S. at

102-03, 77 L.Ed.2d at 504-05.

Therefore, the court invalidated that

provision of the New York law that

would have mandated pregrancy

benefits, a substantive requirement

not contained in the federal plan.

Id. at 109, 77 L.Ed.2d at 508.

(Congress has since amended Title VII

with the Pregnancy Discriminatin Act

of 1978, 42 U.S.C.A. §2000(e) (II) .)

Although phrased in terms of

preempting state benefits plans only

insofar as the plan prohibits

practices that are lawful under

federal law, we perceive in Shaw an

underlying principle in favor of

uniformity of administration of

benefit plans. That Court emphasized

an ERISA sponsor's statement:

24a

Appendix A

Finally, I wish to make note

of what is to many the

crowning achievement of this

legislation, the reservation

to Federal authority the

sole power to regulate the

field of employee benefit

plans. With the preemption

of the field, we round out

the protection afforded

participants by eliminating

the threat of conflicting

and inconsistent State and

local regulation.

{Shaw, supra, 463 U.S.

at 99, 77 L.Ed. at 502

(quoting 120 Cong. Rec.

29197 (1974) (Statement of

Rep. Dent)).]

Thus, “(w)Jhile §5214(d) many

operate to exempt provisions of state

laws upon which federal laws depend

for their enforcement, the combination

of Congress’ enactment of an

all-inclusive pre-emption provision

and its enumeration of narrow,

specific exceptions to that provision

makes us reluctant to expand §514(d)

into a more general saving clause."

Id. at 104, 77 L.Ed.2d at 505

25a

Appendix A

(emphasis supplied). The Court

concluded: "Congress applied the

principle of pre-emption ‘in its

broadest sense to foreclose any

non-Federal regulation of employee

benefit plans,' creating only very

limited exceptions to preemption."

Id. (qouting 120 Cong. Rec. 29197

(1974) (remarks of Rep. Dent)). Thus,

the question of the availability of

the state remedy sought turns on

whether it is necessary to the

continued life of the federal program.

III

The federal Age

Discrimination in Employment Act

(ADEA) has an

exhaustion-of-state-remedies

requirement similar to that of Title

VII. The scheme was discussed in

Oscar Mayer & Co. v. Evans, 441 U.S.

————

26a

Appendix A

750, 65 L.Ed.2d 609, (1979), as being

substantially patterned upon the Title

VII deferral provisions that were

reviewed in Shaw v. Delta Airlines,

supra. Section 14(b) of the ADEA

provides that:

In the case of an

alleged unlawful practice

occurring in a State which

has a law prohibiting

discrimination in employment

because of age and establishing

or authorizing a State authority

to grant or seek relief from such

discriminatory practice, no suit

may be brought under section 626

of this title [establishing right

to bring civil action for age

discrimination] before the

expiration of sixty days after

proceedings have been commenced

under the State law, unless such

proceedings have been earlier

terminated * * * .

(29 U.S.C.A. §633(b)-]

Noting that Congress

intended under Title VII to screen

from the federal courts those problems

of civil rights that could be settled

to the satisfaction of the grievant in

27a

Appendix A

a voluntary and localized matter, the

| Court concluded that the construction

of section 14(b) in ADEA pila -texiow

| that of Title VII in that it is

intended that resort to administrative

| remedies in states with agencies

empowered to remedy age discrimination

is mandatory and not optional. Oscar

Mayer, supra, 441 U.S. at 753, 60

L.Ed.2d at 624. The Court therefore

concluded that prior resort to

appropriate state proceedings is

required under section 14(b) just as

under Title VII. Id. at 756, 60

L.Ed.2d at 616.

Since state

age-discrimination proceedings

therefore form a part of the federal

enforcement program, under the

principles of Shaw v. United Airlines,

Supra, the state law is not entirely

preempted. The preemption would be

28a

Appendix A

partial; the state program could

survive to the extent that it is not

inconsistent with the federal program.

Shaw, supra, 463 U.S. at 103-04, 77

L.Ed.2d at 504-05. Plaintiffs argue

that since the substantive commands of

both the NJLAD and the ADEA are

essentially the same, there is no

inconsistency.

We are left, however, with

this inconsistency. No civil action

at all may be commenced by an

individual under the ADEA “until 60

days after a charge alleging unlawful

discrimination has been filed with the

Equal Employment Opportunity

Commission," 29 U.S.C.A. §626(d), and,

in the case of a deferral state, must

be commenced “within 300 days after

the alleged unlawful practice

occurred, or within 30 days after

receipt by the individual of notice of

29a

Appendix A

termination of proceedings under State

law, whichever is earlier." 29

U.S.C.A. §626(d) (2) (emphasis

supplied). How then can it be said

that the federal right "depends on"

the state program, Shaw, supra, 463

U.S. at 103, 77 L.Ed.2d at 504-05,

when in a given case the federal right

has expired? 1/

1/Strictly speaking, there are two

relevant federal time periods under

the ADEA. In a deferral state, such

as New Jersey, the plaintiff must (1)

comply with 29 U.S.C.A. §626(d) (2),

which requires that a charge alleging

discrimination be filed with the EEOC

within 300 days of the alleged

unlawful practice, and (2) comply with

29 *U.S.C.A. §626(e), which

incorporates the statute of

limitations from the Portal-to-Portal

Act under 29 U.S.C.A. §255. See Hay

'v. Wells Cargo, Inc., 596 F.Supp. 635,

638 (D. Nev. 1984).

The limitations period under §255

is three years in the case of a

willful violation; otherwise it

is two years. * * * Therefore,

even though plaintiff may have

filed his claim in federal court

within the three year limitations

Ce ee ce

30a

Appendix A

It is the familiar question

of substance and procedure. See

Guaranty Trust Co. v. York, 326 U.S.

99, 89 L.Ed.2d 2079 (1945). Generally

speaking, the time within which a

federal right is to be enjoyed is

measured by the federal period of

limitations. Where a federal statue

established a limitation period for

the enforcement of federal rights, and

(Footnote continued)

period of §§626(e) and 255 the

claim is still subject to

dismissal if the time

requirements for filing a charge

under §626(d) are not met.

[Id. (citation omitted) .]

Since the plaintiffs have "failed to

file" a charge with the EEOC within

300 days of [their] termination, as

required by §626(d) (2) ***," their

claim is “barred unless a reason for

equitable modification of the

limitations period appears." Id. ;