Leo ROSEN et al., Plaintiffs, v. PUBLIC SERVICE ELECTRIC AND GAS COMPANY, Defendant. Morgan SWEENEY and Utility Co-Workers Association, Plaintiffs, v. PUBLIC SERVICE ELECTRIC AND GAS COMPANY, Defendant.
Civ. A. Nos. 245-66, 955-68
United States District Court, D. New Jersey.
Aug. 25, 1970
On Rehearing Nov. 24, 1970. Supplemental Opinion May 24, 1971.
328 F. Supp. 454
Luke A. Kiernan, Jr., Newark, N. J., for defendant.
OPINION
WORTENDYKE, District Judge:
Both of the captioned cases were instituted under the Civil Rights Act of 1964, 78 Stat. 241,
Pending the decision of the Court of Appeals in Civil 245-66, Morgan Sweeney and Utility Co-Workers Association, as plaintiffs, instituted an action in this Court (Civil 955-68) against the same defendant in the case then on appeal. That action came to issue upon the answer of the defendant, filed October 29, 1968, and the Court of Appeals took notice of the pendency of that more recent action. At page 782 of its Opinion the Court of Appeals stated that
“* * * we have already noted that a second suit has been filed duplicating the charge that the modified [pension] plan violates Title VII. Because this second suit has not yet been disposed of, and because it deals with precisely the same substantive issues as the amendment to the original complaint, we deem it unnecessary to determine whether the grant of summary judgment as to that portion of the first complaint was in error.1 It was suggested at oral argument that consolidation of the two actions, i. e., the original complaint as amended and the second complaint, would be sought if discrimination alleged in the modified pension plan was in fact a partial continuation of the discriminatory scheme of the original pension plan.”
this court directed a remand. We believe that this would be the proper procedure to follow and that upon such consolidation the issues involved in the initial complaint, the amendment thereto, and the second complaint, can be sifted out and disposition made of them.2, and 3.
Defendant is a public utility corporation existing under the laws of the State of New Jersey, engaged in the manufacture, sale and distribution of gas and electric energy, with its principal place of business in the City of Newark, New Jersey.
Plaintiff Utility Co-Workers Association (Union) is an independent union having its office in the same City and duly certified by the National Labor Relations Board as the collective bargaining representative for certain employees in all of defendant‘s commercial offices on January 10, 1949.
On January 10, 1911 defendant instituted a welfare plan for all of its employees. That plan included a retirement or pension plan, non-contributory in character, i. e., involving no contribution thereto by employees. Attached to the Stipulation and marked joint exhibit No. 1, is a copy of the negotiated collective bargaining agreement between the parties, dated June 21, 1965, effective May 1, 1965, which includes the negotiated supplementary agreements respectively effective May 1, 1967 and May 1, 1969. There is also attached to this Stipulation, and bearing exhibit No. 2, a copy of the pension plan in effect prior to May 1, 1967 as well as a copy of the pension plan as modified or revised effective from May 1, 1967, marked joint exhibit No. 3.
Between July 1, 1965 and May 1, 1967 there were early retirements on pension by some male employees, members of the plaintiff Union, as well as during the period from May 1, 1967 to the date of the Stipulation.
At the time of the institution of C. 245-66 by Rosen, Sweeney and the Union on March 10, 1966, and since 1911, male employees were eligible for retirement at age 65, with 25 years service, and with mandatory retirement at age 70. Male employees were eligible for retirement at age 60 with 30 years service at a re-
At the time of the institution of C. 245-66 the plaintiff Union and the defendant were parties to a then current labor agreement which, by its terms expired on April 30, 1967. On January 24, 1967 plaintiff Union and defendant commenced collective bargaining negotiations for certain revisions of the existing Pension Plan. Those negotiations ripened into a new labor agreement which replaced the agreement which would expire on April 30, 1967. That new agreement was duly ratified by the membership of the Union and executed by the parties thereto on July 17, 1967, effective retroactively from May 1, 1967. That agreement included the following provisions:
“Section 3. Normal Retirement for Age
(1) Each employee may at his or her option retire at age sixty-five or thereafter, and must retire at age seventy.
(2) Each employee who retires under the provisions of this Section 3 shall be paid for life, in monthly installments, a pension computed at the annual rate of 1% of the average annual compensation of such employee for the five years of highest earnings within the last ten years of the employee‘s service, multiplied by the number of years, and any fraction of a year, of the employee‘s service.
Section 4. Early Retirement
(1) Each employee may at his or her option retire at age sixty or thereafter but before attainment of age sixty-five upon completion of twenty years of service.
(2) Each employee who retires under the provisions of this Section 4 shall be paid for life, in monthly installments, a pension computed at the annual rate of 1% of the average annual compensation of such employee for the five years of highest earnings within the last ten years of the employee‘s service, multiplied by the number of years, and any fraction of a year, of the employee‘s service, and reduced by one-quarter of 1% for each month that such employee is less than age sixty-five at the time of retirement, and by an additional one-quarter of 1% for each month that such employee is less than age sixty-two at the time of retirement, except that in the case of a female employee who retires under the provisions of this Section 4, no reduction in the amount of the pension shall be made on account of service prior to May 1, 1967.”
The Union and the defendant commenced further collective bargaining negotiations for a new agreement on April 1, 1969. That agreement, which was duly ratified by the union membership, became effective for the period May 1, 1969 to April 30, 1971. By its terms the parties agreed “to permit a vesting of the pension benefits for any member whose service with the company is terminated for any reason and who has attained the age of 50 and completed at least 15 years of service.”
Plaintiff Rosen retired from his employment with the defendant on September 9, 1966 at the age of 65 with full pension.
The parties stipulated that this Court has jurisdiction to hear and determine the issues involved in the above captioned cases upon the record herein consisting of the items contained in the stipulation, all pleadings filed in the captioned cases, the exhibits, if any, attached thereto, and the pretrial conference orders. Counsel for the respective parties agreed that they might refer to and use excerpts from the Congressional Record relating to the Civil Rights Act of 1964 and any matters related thereto.
Inland Steel Co. v. National Labor Relations Board, 170 F.2d 247 (7 Cir. 1948),
On January 24, 1967 plaintiff Union and the defendant commenced collective bargaining negotiations for certain revisions of the existing pension plan after a charge had been filed with the EEOC alleging that Public Service was committing an unlawful employment practice, within the meaning of Title VII of the Civil Rights Act of 1964, by maintaining a pension plan that discriminated on the basis of sex, because it permitted retirement at different ages and length of service for men and women. Upon these charges, and following an investigation, the Commission issued a decision, dated January 26, 1966, finding reasonable cause to believe that the pension plan did violate Title VII. By letter dated February 9, 1966, the Director of Compliance of the Commission informed employee Rosen that such reasonable cause had been found and that the Commission would attempt to eliminate the practice by conciliation. By a subsequent letter dated February 9, 1966, the Director advised Rosen that conciliation would be undertaken and continued by the Commission. Thereafter on March 10, 1966 the earlier action (C. 245-66) was commenced in this Court.
As will appear from the Stipulation in the present actions, there existed a collective bargaining agreement between the Union and defendant which, by its terms, expired on April 30, 1967. In anticipation of such expiration, as will also appear from the stipulation herein, the Union and the defendant on January 24, 1967 commenced collective bargaining negotiations for a new agreement, to succeed that which would expire on April 30, 1967, and in those negotiations the Pension Plan was revised in a resulting new agreement between the Union and the employer which became effective, retroactively, to May 1, 1967 and terminated April 30, 1969. The terms and provisions of the collective bargaining agreement which took effect May 1, 1967, have already been hereinabove at length set forth. The provisions thereof relating to retirement and pensions were duly ratified by the members of the Union and constituted the final fruits of the negotiations between the employer and the representatives of the Union acting in behalf of the employees. Stipulation, par. 6; Joint Exhibit No. 1.
The defendant argues that because the proceedings before the EEOC were completely ex parte and non-adversary, the statements and conclusions of the Commission are not binding upon this Court. Defendant contends that this Court is now confronted with “the threshold question of whether Title VII was ever intended to reach pension or retirement plans.” In support of its contention that Title VII of the Civil Rights Act of 1964 does not apply to retirement or pension plans defendant relies heavily upon Gruenwald v. Gardner, 390 F.2d 591 (2 Cir. 1968), cert. den. 393 U.S. 982, 89 S.Ct. 456, 21 L.Ed.2d 445 (1968). Although the opinion in that case stated that “the trend of authority makes it clear that the variation in amounts of retirement benefits based upon differ-
The Court of Appeals in Rosen (409 F.2d 775) agreed with appellant that:
“[T]he original complaint was not mooted by the May 1, 1967 revision in the pension plan because of the possibility that some employees may have suffered money damages before the change was made.”
Accordingly, the case was remanded:
“for a determination as to whether any of the named appellants, and any other male members of the union may have retired between the date of the initial 1965 charges before the EEOC and the May 1, 1967 change, and thus may have been harmed by the alleged discrimination in the pension benefit formula. Such a finding, of course, would require the court to rule on whether the original pension plan, prior to its modification, violated Title VII of the Civil Rights Act of 1964.
If the district court does not find any party entitled to the kind of relief above described for harm caused by alleged discrimination prior to the May 1, 1967 pension plan revision, then we agree with the appellee that the issues raised in the original complaint are moot.”
What complicates the questions now confronting this Court are the alleged oral amendment of the original complaint and the consolidation of that complaint with the new case of Sweeney (C. 955-68). In Sweeney, the plaintiffs contend that the attempted elimination of the discrimination alleged to exist under the original plan was offset by so much of the revised plan as was embodied in the exception contained in Section 4(2) which states that “in the case of a female employee who retires under the provisions of this Section 4, no reduction in the amount of the pension shall be made on account of service prior to May 1, 1967.”
I find that the plan as it existed prior to the revision of May 1, 1967 violated Title VII of the Civil Rights Act of 1964 by discriminating against male employees in favor of female employees on no other apparent basis than that of sex. However, I also find that the revision of the plan, effective May 1, 1967, eliminated the discrimination against male employees which existed under the previous plan, but favored female employees to the extent that it eliminated provisions for the reduction in the amount of their pensions on account of service prior to May 1, 1967. I find that the foregoing exception in favor of female employees constituted a discriminatory violation of Title VII. The effect of this exception may be illustrated by the following chart:
| 1965 | Original Pension Plan | ||
| MALE | 60 years of age | ||
| $10,000 average annual salary | |||
| 30 years employment | |||
| $10,000 x 1% x 30 years = $3,000 full pension if retirement was at 65 | |||
| $3,000 x 24% (penalty) = $720 | |||
| 3,000.00 full pension reduced by 720.00 penalty for early retirement | |||
| $2,280.00 | |||
| Pension = $2,280.00 | |||
| FEMALE | 60 years of age | ||
| $10,000 average annual salary | |||
| 30 years employment | |||
| $10,000 x 1% x 30 years = $3,000 full pension | |||
| NO REDUCTION FOR EARLY RETIREMENT | |||
| Pension = $3,000.00 | |||
| 1968 | (After May 1, 1967) Amended Pension Plan | ||
| MALE | 60 years of age | ||
| $10,000 average annual salary | |||
| 30 years employment | |||
| $10,000 x 1% x 30 years = $3,000 full pension if retirement was at 65. | |||
| $3,000 x 21% (new penalty) = $630 | |||
| $3,000.00 full pension reduced by 630.00 penalty for early retirement | |||
| $2,370.00 | |||
| Pension = $2,370.00 | |||
| FEMALE | 60 years of age | ||
| $10,000 average annual salary | |||
| 30 years employment | |||
| $10,000 x 1% x 30 years = $3,000 full pension | |||
| As of May 1, 1967 | |||
| $10,000 x 1% x 29 years = $2,900.00 pension as of May 1, 1967 | |||
| $10,000 x 1% x 1 year (period between May 1, 1967 and retirement date in 1968) = $100.00 | |||
| $100.00 x 21% (penalty applied to sums earned after May 1, 1967) = $21.00 | |||
| $100.00 - $21.00 = $79.00 pension + $2900.00 (pension May 1, 1967) | |||
| Total Pension as of 1968 = $2,979.00 | |||
PENSION PAYMENTS PER ANNUM
| 1965 | 1968 | |
| Male 60 | $2,280.00 | $2,370.00 |
| Female 60 | $3,000.00 | $2,979.00 |
The Equal Employment Opportunity Commission found defendant‘s original pension plan to be in conflict with the provisions of Title VII. Guidelines in this area, issued by the Commission, in 1968, after the filing of these actions, clearly barred differences in optional or compulsory retirement ages based on sex. Federal Register, Vol. 33, No. 38 at p. 3344. A ruling to the same effect had earlier been made by the Commission in this case. Such guidelines are entitled to considerable weight in construing a statute. Udall v. Tallman, 380 U.S. 1, 85 S.Ct. 792, 13 L.Ed.2d 616 (1965); Weeks v. Southern Bell Telephone & Telegraph Co., supra, 408 F.2d at 235; International Chemical Workers Union v. Planters Manufacturing Company, 259 F.Supp. 365 (N.D.Miss.1966). After reviewing Title VII, its legislative history and the cases decided subsequent to its enactment, this Court concurs with the judgment of the Equal Employment Opportunities Commission that differences in retirement plans, be the plan optional or compulsory, are violative of Title VII of the Civil Rights Act of 1964.
The Civil Rights Act of 1964 is set forth on pages 287 through 319 of the United States Code Congressional and Administrative News, 88th Congress. The Legislative History of the Act as a whole is found on pages 2355 through 2519 of the same compilation, but makes no reference to the inclusion of “sex” as a criterion of the proscribed discrimination. The word is well understood and therefore requires no construction for an interpretation of the sentence of which it forms a part. It must be taken at its commonly accepted meaning. Georgia Power Co. v. Equal Employment Opportunity Commission, 412 F.2d 462 (5 Cir. 1969). In Phillips v. Martin Marietta Corporation, 411 F.2d 1 (5 Cir. 1969) cert. granted 397 U.S. 960, 90 S.Ct. 994, 25 L.Ed.2d 252 (1970) a summary judgment for the employer was affirmed in a holding that “the words of the statute are the best source from which to derive the proper construction” where the court found that “a perusal of the record in Congress will reveal that the word ‘sex’ was added to the bill only at the last moment and no helpful discussion is present from which to glean the intent of Congress.”4
“except that in the case of a female employee who retires under the provisions of this Section 4, no reduction in the amount of the pension shall be made on account of service prior to May 1, 1967.”
That exception perpetuates the discriminatory features of the earlier plan by continuing to grant higher pension benefits to women, hired prior to May 1, 1967, than are granted to men hired at the same time. The criticized exception must be rescinded as violative of the Civil Rights Act.
Certainly Congress envisioned that difference would exist, such as in the area of benefits to widows or widowers of employees, but such differences, it seems, must be based on factors other than sex. Indeed, in 1963, one year before the passage of the Civil Rights Act of 1964, Congress declared it illegal to discriminate between similarly-situated employees, on the basis of sex, with regard to wages unless such differential was based upon a factor other than sex.
The plans in question were part of the negotiated collective bargaining agreements between defendant and the representatives of its employees. The degree of mutuality of acceptance is contested. Whether the plans were contractually agreed upon or not is irrelevant since private parties cannot agree to perform illegal acts. United Mine Workers of America v. Pennington, 381 U.S. 657, 85 S.Ct. 1585, 14 L.Ed.2d 626 (1965); United Brotherhood of Carpenters and Joiners of America v. United States, 330 U.S. 395, 67 S.Ct. 775, 91 L. Ed. 973 (1947); Local 53 of International Association of Heat and Frost Insulators and Asbestos Workers v. Vogler, 407 F.2d 1047 (5 Cir. 1969) (Congress, under the Commerce Clause, may invalidate private agreements violative of the Civil Rights Act).
The defendant argues that even if the original pension plan is void, the 1967 amended plan cures any illegality and that the exception therein merely recognizes rights accrued prior to the revision of the pension plan. The exception in the 1967 amended plan envisions a phasing out of the discriminatory pension system. Gradual improvement of employment opportunities does not in and of itself constitute compliance with Title VII. United States by Clark v. H. K. Porter Company, 296 F.Supp. 40, 59 (N.D.Ala.1968).
According to the terms of the pension plan, retirement benefits were and are non-contributory, i. e. the entire expense of the Welfare Plan is borne by the Company. Joint Exhibit No. 3. The pension plan is administered by the Company, which can discontinue the plan at any time though it must provide for employees and beneficiaries of former employees. id. at 10 and 11. The pension plan can be amended by the company but there is a conflict between Section 15 of Joint Exhibit No. 3 and Article XVII, Section 1(a) of Joint Exhibit No. 1 as to whether or not benefits can be reduced in order to conform with governmental requirements. This question and the question of whether or not the pension is compensation, although excluded as such under the pension plan (Joint Exhibit No. 3, Section 1(7)) are not before this Court.
The New Jersey Supreme Court has held that a pension plan is not a “mere ephemeron and the promise to pay a pension upon performance of the fixed terms a mere illusion.” Stopford v. Boonton Molding Company, 56 N.J. 169, 265 A.2d 657 at 665 (1970). If an employee, in this State, performs all of the conditions precedent to a pension plan he acquires a vested right to an agreed upon lifetime pension. id. at 655. Termination cannot operate retroactively so as to cut off previously accrued funding obligations. id. at 665. Whether or not the benefits under this plan vested prior to 1967 is irrelevant to the determination of the legality of such plan pursuant to the Civil Rights Act of 1964. This Court will not and cannot renegotiate a labor agreement for these parties—its func-
Both parties have stipulated that damages would be assessable if this Court found the pension plan provisions in question to be illegal. Actual calculation of damage, it was agreed, would be undertaken by the parties and then submitted to this Court for review.
It is therefore on this 25th day of August, 1970,
Ordered that, in light of the findings above, both parties submit to this Court a schedule of all male employees who retired after July 1, 1965, under the age of sixty-five, including therein the amounts deducted from their incomes as penalty for early retirement.
It is further ordered that defendant Public Service Electric and Gas Company will immediately cease and desist from discriminating between male and female employees as to pension and retirement benefits.
ON MOTION FOR REHEARING AND RECONSIDERATION
OPINION and ORDER
Defendant, Public Service Electric and Gas Company moved, on October 13, 1970, for an Order granting a rehearing and reconsideration respecting this Court‘s Opinion in favor of plaintiffs herein, filed on August 25, 1970, 328 F.Supp. 454. On the argument of the motion, respective counsel were permitted to argue the merits of the aforementioned Opinion. In part, therefore, defendant‘s motion has been granted since the argument on the motion partially took the form of a rehearing and this subsequent opinion constitutes a reconsideration of the issues involved.
Defendant reiterated its prior contention that the 1967 revised pension plan presently in operation is not violative of Title VII of the Civil Rights Act of 1964. Under the present plan all employees, male or female, who opt for early retirement at age 60 suffer a 21% penalty reduction from their full pension; except however, the plan preserves for females added benefits for years worked prior to May 1, 1967,1 which benefits have been described as antecedent or accrued rights.
Plaintiffs have maintained throughout this litigation that the preservation of these allegedly antecedent rights results principally in a perpetuation of the discriminatory practice under the former pension plan. This Court, in accord with that contention, stated in its Opinion of August 25, 1970, at p. 463:
“That exception perpetuates the discriminatory features of the earlier plan by continuing to grant higher pension benefits to women, hired prior to May 1, 1967, than are granted to men hired at the same time.”
Because the present plan continues to implement the effects of the prior discriminatory practice, the result is a present and future discrimination which is violative of Title VII of the Act, United States v. Sheet Metal Workers Int. Ass‘n. Local U. 36, 416 F.2d 123 (8th Cir., 1969); Griggs v. Duke Power Co., 420 F.2d 1225 (4th Cir., 1970). The relief prayed for by the plaintiffs should, therefore, be granted.
Accordingly, this Court‘s Opinion, filed on August 25, 1970, is reaffirmed in all respects.
Therefore, it is on this 24th day of November, 1970,
Ordered that the defendant‘s motion is denied and the Opinion of this Court filed on August 25, 1970 remains as the Opinion of this Court respecting all issues herein.
The nature of these actions is disclosed in my Opinion filed August 25, 1970, 328 F.Supp. 454, which found that the pension plan of the defendant Public Service in its collective bargaining agreement effective May 1, 1967, was violative of the provisions of the Civil Rights Act of 1964, 78 Stat. 241,
On August 11, 1970 the parties filed in this Court a written stipulation supplementing that previously filed on June 17, 1970. The supplemental stipulation provided that “if the Court resolves the meritorious issues favorable to plaintiffs, the Court, at a subsequent date, will determine whether any affirmative relief, i. e., damages, are recoverable in a case of this kind. Conversely if the Court resolves the said issues in favor of the defendant, a judgment for defendant will be entered thereon.”
On February 19, 1970, upon due notice, the parties orally argued before the Court cross-motions respecting the issues of damages and the allowance of a counsel fee which had been expressly reserved in the Court‘s Order of August 25, 1970. In reserving decision upon the issues presented by the argument the Court informed the defendant that it might later be required to furnish the names of the retirees during the period in question.
Defendant argues that the authority of this Court to award damages by way of affirmative relief is found in
The uncontroverted evidence in this case is that the Union, acting in behalf of its entire membership, through collective bargaining negotiations followed by membership approval, adopted three successive labor agreements with the defendant from 1965 to 1969, and accepted the benefits prescribed thereunder. No evidence to the contrary having been produced this Court assumes that all
That portion of the Civil Rights Act dealing with affirmative relief,
All of the above mentioned factors have appealed to the Court‘s discretion. There is, however, a further item for consideration. The defendant‘s records disclose that during the period in question, being November 15, 1965 to the present, the following number of employees retired early: 6 females, 48 males. The great disparity in the number of male and female employees retiring early, together with the factors hereinabove considered, persuade this Court that this case is not one that calls for any affirmative relief by way of compensatory damages. This Court firmly believes that to grant damages to those male employees who retired early during the period would do nothing more than allow a windfall and a reward for having chosen early retirement to the detriment of those who worked considerably longer to obtain full pension
The questions on this damage issue have caused me much concern. I do not, however, feel that the discriminatory practice complained of herein is the usual type of Title VII complaint. There is no charge of loss of wages, promotions, etc. There have been no precedents to follow in respect to a charge of discrimination in a pension plan. The obscurity of the circumstances under which the term “sex” was included among the statutorily proscribed criteria for employment, and the absence of a clear-cut legislative history as far as this criterion is concerned, further contra-indicates an award of damages. Ultimately the decision herein denying damages rests upon the invocation of this Court‘s discretion after considering the totality of the circumstances.
Plaintiffs also seek a reasonable attorney‘s fee as part of the costs of this action under the provisions of Title VII, Section 706(k) of the Act,
In light of the circumstances and nature of the litigation and the number of hours spent thereon, I award $7,500.00 to plaintiffs’ attorney as a reasonable attorney‘s fee.
Let an appropriate Order in conformity with the foregoing Opinion be submitted.
REYNIER J. WORTENDYKE, JR.
UNITED STATES DISTRICT JUDGE