LORAS COLLEGE, Aрpellee, v. IOWA CIVIL RIGHTS COMMISSION, Appellant.
No. 62323.
Supreme Court of Iowa.
Nov. 14, 1979.
285 N.W.2d 143
Robert M. Bertsch and Michael J. Melloy, of O‘Connor, Thomas, Hammer, Bertsch & Norby, Dubuque, for appellee.
The controlling question here is whether an employer‘s retirement plan is subject to the Iowa Civil Rights Act, Chapter 601A, The Code 1973, in particular the age discrimination provisions of section 601A.7 (1)(a), when a sixty-five-year old employee, who chose not to participate in the financial benefit portion of the plan, is terminated pursuant to the plan.1 The Iowa Civil Rights Commission found discrimination. On judicial review, the district court reversed the Commission. We affirm the district court.
Petitioner Loras College, the employer, is a privаte co-educational liberal arts institution located in Dubuque. It is funded, sponsored and partially sustained by the Roman Catholic Archdiocese of Dubuque. The college employs as faculty both priests and lay persons.
Respondent Iowa Civil Rights Commission is a state agency established under
Upon the complaint properly filed with the Commission by Dr. Edward J. Schuster, the employee, the Commission found that Loras discriminated against him because of his age in ending his employment as a teacher.
I. Background and proceedings. Dr. Schuster, a layman, was born March 25, 1908. He joined the Loras faculty in 1956 as an associate professor of modern foreign languages. He later was awarded tenured status as a full professor, teaching Spanish and German. Under Loras’ policy, tenure ends at age sixty-five. This allows for the hiring of younger teachers, for the constant and methodical regeneration of a qualified faculty, for the incorporation of new ideas and theories of education, and for maintaining the quality of education at Loras. See DeShon v. Bettendorf Community School District, 284 N.W.2d 329, 333 (Iowa 1979). Dr. Schuster became sixty-five during the 1972-73 academic year. He taught until May 13, 1973, when he was retired by Loras on the basis of his age.
Effective September 1, 1960, Loras had established a comprehensive retirement plan for lay persоns, who were faculty members, administrative personnel and key supervisory maintenance employees. The plan included a document entitled “Retirement Plan” (hereinafter referred to as “benefit program“), in which the policy of retiring all benefit participants at the normal retirement age of sixty-five was set forth. Under the terms of the benefit program each participant in the program would contribute five percent of his basic salary through payroll deductions by Loras. The college would add equal amounts as its contribution and apply the combined sum to the purchase of retirement benefits for the employee. The benefit program was voluntаry for such covered employees then serving and was compulsory for future employees in the covered categories.
As part of the retirement plan, Loras and its faculty established a policy that lay faculty members were to retire at the end of the academic year in which they attain the age of sixty-five. The policy was set forth
Although he clearly had the opportunity to participate in the benefit program of the retirement plan, Dr. Schuster chose not to participate. Therefore, the five percent employee contributions were not deducted from his salary from 1960 until his retirement in 1973.
The last signed contract between Loras and Dr. Schuster only provided employment for him for the 1972-73 academic year, in accordance with college policy and pursuant to the overall retirement plan.
The Commission found as a fact that the Loras benefit program as it was applied to its participants was not a subterfuge to evade the operation of the Iowa Civil Rights Act.
Loras suffered a significant decline in overall student enrollment commencing in 1971. The college also adopted a new curriculum, which went into effect in the fall of 1971, through which the graduation requirement of fourteen semester hours of foreign language was eliminated. These events led to a severe decline in the number of students taking language courses, with the resultant decrease in the need for faculty members teaching in the modern foreign language department.
A teacher in the foreign language department was expected to teach 270 student credit hours per year prior to 1972. In the fall of 1972 the number of teaching hours for each faculty member had fallen to seventy-five per year. Additionally, Loras had suffered significant financial losses during the five-year period from 1968 to 1972.
In 1972 and 1973 Loras found it necessary that the number of faculty be reduced in the department of modern foreign languages, and in 1973 the necessary reductions were determined to be mandatory. The department was to be reduced from five to three teachers. The question as to who should be terminated had to be answered.
Recognizing the retirement policy of Loras, Dr. Schuster, on December 9, 1972, applied in writing to the Faculty Council for an extension of his service beyond the retirement age of sixty-five.
The Faculty Senate and Faculty Council at Loras studied the matter of faculty staffing and made general recommendаtions to the president of Loras. All faculty members in the department of modern foreign languages were considered before the president of Loras made his decision to apply the retirement plan‘s policy of retirement to Dr. Schuster and thereby denied his request for an extension of service. In addition to Dr. Schuster, another faculty member, Dr. Prendergast, was also retired in 1973 in accordance with the same retirement plan. No teaching faculty members have been added to the department since the retirement of Drs. Schuster and Prendergast.
After his termination, Dr. Schuster sought comparable teaching positions. He was unable to find such employment for the 1973-74 school year. He did obtain a position at Northern Arizona University (NAU) for 1974-75, but at a lower salary. He remained with NAU until the end of the 1976-77 academic year, at which time he refused a similar appointment for the next year.
On August 1, 1973, Dr. Schuster filed a complaint with the Civil Rights Commission, charging age discrimination against him by Loras. On April 13, 1978, after an evidentiary hearing before a hearing officer, the Commission found in favor of Dr. Schuster, ordered Loras to reinstate him and awarded certain monetary damages.
Loras petitioned for judicial review in district court under
Because we find
Unless otherwise stated, all later references will be to the 1973 Code, which was in effect when the alleged discrimination occurred.
In view of the manner in which the parties proceeded on judicial review, this was a contested case before the Commission within the meaning of
II. Exception of the Loras retirement plan from Chapter 601A.
A. Contentions of the parties. The Loras retirement plan was effective in 1960. The Iowa Civil Rights Act became effective in 1965. 1965 Iowa Acts, ch. 121. The Act was amended in 1972 to include coverage of age discrimination. 1972 Iowa Acts, ch. 1032.
Under the Iowa Civil Rights Act it is an unfair or discriminatory practice, in violation of
There is no question here as to whether Loras had a “retirement plan or benefit system” within the meaning of
The Commission concedes in its brief that the
The Commission further concedes that if Dr. Schuster had participated in the Loras College benefit program,
Loras asserts, relative to Dr. Schuster, that because
Both parties cite a number of federal cases interpreting
We first consider the purposes of the Iowa Civil Rights Act and the “retirement plan” exception thereto. We will then consider: what is a retirement plan under
B. The purposes of Chapter 601A and the exception of section 601A.15. Our task is to determine the meaning of the language in
“[T]he polestar of all statutory construction [is the] search for the true intention of the legislature.” Iowa National Industrial Loan Co. v. Iowa State Department of Revenue, 224 N.W.2d 437, 439 (Iowa 1974). While this rule should be used to the exclusion of all other rules of statutory construction, the other rules must be applied together in light of the particular facts of each case when used to help us find the true legislative intent. Id.
We now set forth the general rules of statutory construction considered in this case.
(1) In considering legislative enactments we should avoid strained, impractical or absurd results.
(2) Ordinarily, the usual and ordinary meaning is to be given the language used but the manifest intent of the legislature will prеvail over the literal import of the words used.
(4) We should look to the object to be accomplished and the evils and mischiefs sought to be remedied in reaching a reasonable or liberal construction which will best effect its purpose rather than one which will defeat it.
(5) All parts of the enactment should be considered together and undue importance should not be given to any single or isolated portion.
(6) We give weight to the administrative interpretation of statutes, particularly when they are of longstanding. Id. at 440 (citations omitted).
In Franklin Manufacturing Company we had the opportunity to interpret
While the Act does not contain a separate section declaring the legislative purpose and policy behind the Act, it is obvious from the clear and plain language of the statute itself that its primary purpose, in the context of this case, is to prevent age discrimination in hiring and discharging workers. See
The legislature, within its broad discretion, has seen fit to provide an exception to the discrimination provisions of
The exception protects the employer‘s right to require the involuntary retirement of employees on the basis of their age, but only when the employer does so pursuant to a “retirement plan or benefit system” within the meaning of
It is important to note that, without this exception, an employer would never be permitted under the Act to retire an employee because of his age, unless such retirement is based upon the nature of the occupation. The Iowa Act (unlike its federal counterpart,
A recent amendment to
Beyond the general policy of favoring the involuntary retirement of employees when done pursuant to
C. Retirement plan under section 601A.15. We believe a “plan” in the context of
Not only did Loras provide for the payment of benefits to employees when thеy retired, but it also had an institutional policy establishing age sixty-five as the retirement age for all individuals in Dr. Schuster‘s position. This policy, of which Dr. Schuster had knowledge, must be considered as part of Loras College‘s “retirement plan or benefit system” within the meaning of
The “retirement plan or benefit system” used by Loras clearly applied to Dr. Schuster. He was subject to Loras’ policy to retire all faculty members at age sixty-five, and he had the option of participating in the benefit program.
D. Receipt of benefits by retired employees. We next must determine whether
The Commission found that Loras had in existence a bona fide retirement plan which was not a mere subterfuge to evade the operation of
We believe the opportunity to participate in the benefits of a “retirement plan or benefit system” is all that
A contrary construction would lead to an impractical and absurd result.
We hold today that when an employer‘s “retirement plan or benefit system” offers an employee the option to participate in the benefits from such a plan and the plan requires the retirement of the employee at a given age, the conscious decision by the employee not to participate in the retirement benefits from the plan does not entitle the employee to be retained beyond the mandatory retirement age established by the plan. Such an option does not render the plan а “mere subterfuge adopted for the purpose of evading the provisions of” the Iowa Civil Rights Act.
Because the Loras retirement plan did apply to Dr. Schuster and the plan came within the exception in
We also note that Loras adopted its retirement plan in 1960, approximately five years prior to the date upon which the Iowa Civil Rights Act first became law, and approximately twelve years prior to the date age discrimination was made part of the Act. Although we need not hold today that a “retirement plan or benefit system” within the meaning of
We do not determine whether a retirement plan, which does not pay benefits, or at least provide the employee with the option to participate in adequate benefits from the employer‘s benefit program, properly falls within the
AFFIRMED.
All Justices concur except MCCORMICK, LEGRAND, ALLBEE and LARSON, JJ., who dissent.
McCORMICK, Justice (dissenting).
When Loras College determined it was necessary to reduce the faculty of its modern foreign language department from five to three members, it selected the two persons for discharge on the basis of age. Because I believe this is exactly the kind of discrimination which is prohibited by the Iowa Civil Rights Act, I respectfully dissent.
I. I do not believe
As to the age factor, this essentially is the view of the dissent in United Air Lines, Inc. v. McMann, 434 U.S. 192, 98 S.Ct. 444, 54 L.Ed.2d 402 (1977), which involved the exception in
In 1978 Congress responded to the McMann decision and earlier similar decisions by two courts of appeals by amending the statute with the stated purpose of clarifying its original intention to prohibit involuntary retirement of persons in the protected age group. See H.R.Rep.No.950, 95th Cong., 2d Sess. 8 (1978), U.S.Code Cong. & Admin.News 1978, p. 504; S.Rep.No.493, 95th Cong., 1st Sess. 9-10 (1977). The amendments are the Age of Discrimination in Employment Act Amendments of 1978, Pub.L.No.95-256, § 2(a), 92 Stat. 189.
We hаve recognized enactments in similar circumstances, with considerably less evidence, to be clarifying rather than substantive. See Barnett v. Durant Community School District, 249 N.W.2d 626, 629-30 (Iowa 1977).
This bill changes the mandatory retirement laws and age discrimination laws in response to the 1978 amendments to the federal Age Discrimination in Employment Act of 1967 and makes changes in the civil rights law regarding age discrimination.
Section 10 prohibits pension plans from requiring mandatory retirement prior to age seventy. The exemptions are the same as those provided by federal law. 1979 Sess., 68th G.A., H.F. 680, at 5-6 (committee explanation).
I believe this shows an intention of the Iowa legislature to adopt the intention of Congress and, in so doing, to clarify its original intention in enacting the exception. When the legislature bases a statute on a federal statute, we рresume it intends what Congress intended. Stromberg Hatchery v. Iowa Employment Security Commission, 239 Iowa 1047, 1050, 33 N.W.2d 498, 500-01 (1948).
The Iowa statute previously provided no age limit on its prohibition against mandatory retirement. Before the 1978 amendments, the federal statute permitted mandatory retirement at age sixty-five. The amendments raised the limit to seventy. In bringing the Iowa statute into conformity, the legislature adopted the same age limit. Thus, the coverage of the Iowa statute was broader before the recent amendments, rather than more restrictive. At the very least, our legislature has signified its agreement with Congress that retirement plans and benefit systems which involuntarily retire individuals in the protected class on the basis of age have never been permitted by the exception. McMann has never been the law of Iowa. Congress has repudiated the McMann construction of the federal statute, and the Iowa legislature has shown it has always intended to proscribe age discrimination to at least the same extent.
II. This construction of the Act is also supported by comparing the Iowa prohibition against age discrimination with its prohibition against sex discrimination.
The amendments prohibiting sex discrimination were added to the Act in 1970. 1970 Sess., 63d G.A., ch. 1058. The exception relating to retirement plans and benefit systems was part of those amendments. Id. § 5. The age discrimination amendments were enacted in 1972. 1972 Sess., 64th G.A., ch. 1032. As part of those amendments, age was added to the exception. Id. § 3.
From this it is clear the exception is intended tо apply in the same way to distinctions in retirement programs based on sex and age. Thus, under the court‘s construction, the exception could be used to force retirement of all members of one sex, if all members of that sex had the option at some point in the past to participate in a pension system which would be available upon involuntary retirement.
The same logic would uphold discharging two faculty members on the basis of sex rather than age if that were part of the Loras retirement plan. I do not believe the legislature intended that an employee could be involuntarily discharged on either basis, but if one is appropriate so is the other.
III. The majority‘s assumption that the Act permits involuntary discharges based on age rests in part on rejection of federal court cases construing the ADEA.
IV. Even if
Retirement at age sixty-two for Plan members is permitted [by
section 4(f)(2) ] only because it is pursuant to the Plan. The retirement ages are determined actuarially and are part or parcel of the Plan. The defendant employer retires female Plan members at age sixty-two because it is compelled to do so under the terms of the Plan. However, retirement of non-members is not done because the plan compels it but because the employer desires to do so. [Defendant] probably has many sound business reasons for doing so—encouraging Plan membership, Plan member morale, etc.—but § 4(a) of the Act is a clear Congressional determination that the overall economic interests of the country, as served through older worker employment, override such parochial interests of employers. Id. at 228.
The court conceptually equated the retirement policy with refusing to hire a sixty-three year old woman because of the plan, a practice which clearly would be prohibited. Id. at 229. The court also relied on an interpretive bulletin of the Secretary of Labor which stated the federal exception did not apply to non-participating employees. Id. at 228-29. See
I аm unable to see any significance in the fact the federal exception is framed in slightly different language. The federal exception refers to a “bona fide employee benefit plan.” The Iowa exception refers to “any retirement plan or benefit system.” However, we have held “benefit system” means a benefit system which is part of a retirement plan. Franklin Manufacturing Co. v. Iowa Civil Rights Commission, 270 N.W.2d 829, 832. Similarly, the Iowa retirement plan must also be “bona fide” because it cannot be “a mere subterfuge adopted for the purposes of evading the provisions of this [Act].”
I would follow the American Hardware case. It is difficult to understand how the American Hardware result can be characterized аs “absurd.” Under this court‘s opinion, Dr. Schuster is denied the protection of the Civil Rights Act on the basis of a decision he made when he could not have known of that effect. In contrast, participants in the pension plan receive a valuable financial benefit in exchange for their agreement to subject themselves to the Loras retirement policy. Moreover, Loras has not had to contribute toward a pension for Dr. Schuster.
In sum, I would reverse the trial court on either of two alternative grounds. First, the Civil Rights Act in effect at the time relevant here prohibited mandatory retirement at any age. Second, even if the exception in
LEGRAND, ALLBEE and LARSON, JJ., join this dissent.