Brennan v. Taft Broadcasting Co., 73-3760

• Decision Date: 09 September 1974
• Docket Number: No. 73-3760,73-3760
• Citation: 500 F.2d 212
• Parties: 8 Fair Empl.Prac.Cas. 665, 8 Empl. Prac. Dec. P 9668 Peter J. BRENNAN, Secretary of Labor, United States Department of Labor, Plaintiff-Appellant, v. TAFT BROADCASTING COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 212

500 F.2d 212

8 Fair Empl.Prac.Cas. 665, 8 Empl. Prac. Dec. P 9668

Peter J. BRENNAN, Secretary of Labor, United States

Department of Labor, Plaintiff-Appellant, v. TAFT BROADCASTING COMPANY, Defendant-Appellee.

No. 73-3760.

United States Court of Appeals, Fifth Circuit.

Sept. 9, 1974.

William J. Kilberg, Sol. of Labor, U.S. Dept. of Labor, Washington, D.C., Beverely R. Worrell, Reg. Sol., U.S. Dept. of Labor, Norman H. Winston, Assoc. Reg. Sol., George D. Palmer, Atty., Birmingham, Ala., Carin Ann Clauss, U.S. Dept. of Labor, Donald S. Shire, Washington, D.C., for plaintiff-appellant.

James E. Simpson, Birmingham, Ala., for defendant-appellee.

Before TUTTLE, COLEMAN and AINSWORTH, Circuit Judges.

COLEMAN, Circuit Judge.

This is an action for damages and to enjoin an alleged violation of the Age Discrimination in Employment Act of 1967 (29 U.S.C. 621 et seq.) which provides in part:

'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; . . ..'

The Secretary of Labor alleges that defendant Taft Broadcasting Company violated the above quoted section of the Act by compelling Rufus Jones to retire at age 60 and by thereafter refusing to rehire him.

The defense is that Taft's discharge of Jones is allowed under 29 U.S.C. 623(f)(2) which provides:

'623(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, except that no such employee benefit plan shall excuse the failure to hire any individual; . . ..'

The District Court dismissed the action on the ground that defendant came within the statutory exception of 29 U.S.C. 623(f)(2) in that its Profit-Sharing Retirement Plan (hereinafter the Plan) is a 'bona fide employee benefit plan, such as a retirement plan, which is not a subterfuge to avoid the purposes of this (Act)'.

We affirm.

FACTS

The facts were stipulated.

Taft bought WBRC-TV in Birmingham, Alabama, in 1957 and continued the employment of Rufus Jones (age 47) who for six years had been an employee there. In 1963 employees of WBRC-TV became eligible, at their option, to participate in Taft's 'Profit Sharing Retirement Plan'. On March 28, 1963, at the urging of Taft and on the basis of a summary of the 'Plan' posted at WBRC-TV, Jones elected to participate.

In 1968 and again in 1969, the President of Taft advised Jones that under its 'Plan' he was obliged to retire on 1 June 1970, at which time he would be sixty years of age. In response, Jones offered to waive his benefits in the 'Plan' in return for a later retirement. He also contacted representatives of his union who urged Taft to continue Jones' employment.

On April 27, 1970, Taft's Board of Directors, responding to a letter to Taft's President from Jones, considered his case and decided not to permit him to work beyond age 60. Pursuant to applicable provisions of the 'Plan', his employment was terminated as scheduled.

The previous month, Jones had filed a 'grievance' as allowed by the terms of the collective bargaining agreement between his union and Taft. The arbitrator, concerning himself 'solely with contractual rights of the Grievant' and not dealing with the terms of the 'Act', found that there 'has been no violation of the Grievant's rights'.

Taft's 'Profit Sharing Retirement Plan' is funded exclusively through company profits. Ten percent of profits, minus certain specified deductions, are paid to a trustee who distributes these funds to plan members upon their retirement.

The amount an employee receives upon retirement is determined by the number of 'units' he earns while working for the company. At the end of each fiscal year, a Plan member is assigned 'units' based upon his salary during the year, the length of his service in the company, and his age. Significantly, no additional units on the basis of age or on the basis of continuing service are assigned to persons over 60 years of age. The amount set aside for an employee each year is determined by multiplying the number of his 'units' by the value of each unit. The value of each unit is the total contributions to the plan divided by the total number of units. Thus, the formula to determine the amount set aside for each year for an employee is:

Number of his Units X Total Contributions/Number of Units of All Participants.

The sense of the retirement provisions of the 'Plan' is that employees must retire at age 60 absent consent of the company to work until a later date. Additionally, Taft may retire employees for cause any time after their 50th birthday. The precise language used in the 'Plan' is as follows:

Section 5.1. Retirement Under Plan

'5.1(a) Normal Retirement. The normal retirement date for each Participant shall be the first day of June coinciding with or next following the date on which he has attained age 60. A Participant terminating his employment on his normal retirement date shall be retired under the Plan as of such date.

'5.1(b) Later Retirement. A Participant, with the approval of the Company, may remain an Employee after his normal retirement date. In such event, he shall be retired under the Plan as of his later date of termination of employment.

'5.1(c) Early Retirement. A Participant whose employment with all Employers terminates for any cause (including a failure to return prior to expiration of a leave of absence) on or after his 50th birthday, but prior to his normal retirement date, shall be retired under the Plan as of the date of such termination of employment or earlier commencement of such leave of absence.'

Jones had not seen the actual text of the 'Plan' when he assented to membership in 1963 but joined on the basis of a posted summary of the 'Plan' which stated only the following provision relating to retirement:

'The Normal retirement date of each Participant is the June 1 on which he has reached age 60. A Participant retiring from employment with the company on his normal retirement date is deemed retired under the Plan as of such date.'

The summary also contained the following provision on the assignment of profit-sharing 'units':

'One unit for each full month that such Participant's age as of the end of such fiscal year exceeds age 35 but not age 60, provided that no units shall be assigned for age under this clause to any Participant who is over age 60 as of the end of such fiscal year.'

THE ISSUES

The Secretary-Appellant defines the issues as follows:

I. The lower court erred in holding that the exception provided in Section 4(f)(2) of the Age Discrimination in Employment Act excused defendant's action in forcing the retirement of its 60-year old technical supervisor; A. Defendant's 'Profit Sharing Retirement Plan' is not a plan 'such as a retirement, pension, or insurance plan' and thus does not come within the terms or purposes of the Section 4(f)(2) exception; B. Even if defendant's 'profit sharing retirement plan' could qualify as a type of plan contemplated by Section 4(f)(2), it is not bona fide since one of its 'salient provisions'-- the compulsory retirement feature-- was not communicated to the participating employees at WBRC;

II. The lower court erred in holding that defendant was under no statutory obligation to consider Jones' application for reemployment by reason of the proviso in Section 4(f)(2) 'that no employee benefit plan shall excuse the failure to hire any individual'.

We shall discuss these issues in the order presented.

Does the defendant-appellee's 'Plan' come within the terms and purposes of the Section 4(f)(2) exception?

We respond in the affirmative.

Taft's 'Plan' was instituted in 1963. Jones exercised his option to participate in 1963. The Act was approved December 15, 1967. Quite obviously, Congress sought to avoid legal and constitutional problems likely to arise from any ex post facto effort to invalidate existing employee benefit plans. Consequently, it included the Section 4(f)(2) exception.

Its language is plain: 'a 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.' The key phrase is 'employee benefit plan.' The words, 'retirement, pension, or insurance', are added in a clearly descriptive sense, not excluding other kinds of employee benefit plans if, conceivably, there could be any.

Taft's 'Plan' was effectuated far in advance of the enactment of the law, eliminating any notion that it was adopted as a subterfuge for evasion.

In construing the exception, as written, we must obey the mandate of the Supreme Court in Labor Relations Board v. Highland Park Mfg. Co., 341 U.S. 322, 71 S.Ct. 758, 95 L.Ed. 969 (1951). In Highland it was claimed that the term 'national or international labor organization' as used in the National Labor Relations Act is a technical one, meaning 'union', thereby excluding the CIO, which was 'a federation'. The Supreme Court summarily rejected this argument, saying that if Congress meant terms in a statute to have other than their ordinarily accepted meaning, 'it would and should have given them a special meaning by definition'.

Contrary to these teachings, one matter heavily emphasized by the Secretary is an Internal Revenue Service Bulletin (Guides for Qualifications of Pension, Profit-Sharing and Stock Bonus Plans, Publication 778-2-72) which defines retirement plans as including only those plans where employer contributions are based upon the anticipated costs of retirement, thereby excluding plans such as Taft's 'Profit Sharing Retirement Plan', in which contributions are based...