Chastang v. Flynn & Emrich Co.

• Decision Date: 10 June 1976
• Docket Number: Nos. 74-2171,s. 74-2171
• Parties: 12 Fair Empl.Prac.Cas. 1533, 12 Empl. Prac. Dec. P 11,003 Vincent R. CHASTANG, Appellee, v. FLYNN AND EMRICH COMPANY et al., Appellants, The Equitable Trust Company, Defendant. Vincent R. CHASTANG, Appellant, v. FLYNN AND EMRICH COMPANY et al., Appellees. Frank UGIANSKY, Appellee, v. FLYNN AND EMRICH COMPANY et al., Appellants, The Equitable Trust Company, Defendant. Frank UGIANSKY, Appellant, v. FLYNN AND EMRICH COMPANY et al., Appellees. to 74-2174.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 1040

541 F.2d 1040

12 Fair Empl.Prac.Cas. 1533,

12 Empl. Prac. Dec. P 11,003

Vincent R. CHASTANG, Appellee, v. FLYNN AND EMRICH COMPANY et al., Appellants, The Equitable Trust Company, Defendant.

Vincent R. CHASTANG, Appellant, v. FLYNN AND EMRICH COMPANY et al., Appellees.

Frank UGIANSKY, Appellee, v. FLYNN AND EMRICH COMPANY et al., Appellants, The Equitable Trust Company, Defendant.

Frank UGIANSKY, Appellant, v. FLYNN AND EMRICH COMPANY et al., Appellees.

Nos. 74-2171 to 74-2174.

United States Court of Appeals Fourth Circuit.

Argued Feb. 3, 1976.

Decided June 10, 1976.

David S. Cordish, Baltimore, Md. (Cordish & Cordish, Baltimore, Md., on brief) for Flynn & Emrich Co. et al.

Harry Goldman, Jr., Baltimore, Md., for Chastang and Ugiansky.

Ramon V. Gomez, Atty., E. E. O. C., Washington, D. C. (Abner V. Sibal, Gen. Counsel, Joseph T. Eddins, Associate Gen. Counsel, Beatrice Rosenberg, Charles L. Reischel and Lutz Alexander Prager, Attys., E. E. O. C., Washington, D. C., on brief), for amicus curiae.

Before HAYNSWORTH, Chief Judge, BRYAN, Senior Circuit Judge, and WINTER, Circuit Judge.

WINTER, Circuit Judge:

Alleging that a profit sharing and retirement plan which provided differing benefits to male and female participants illegally discriminated on the basis of sex, Vincent R. Chastang and Frank Ugiansky brought suit against their employer, Flynn & Emrich Company (Company), the individuals comprising the members of the Profit Sharing Trust Committee (the Committee), and the corporate trustee under the plan, The Equitable Trust Company (Equitable). The district court found that the plan illegally discriminated against male employees. It awarded to plaintiffs as damages the difference between the amount of benefits they received and those that would be paid to similarly situated females; it dismissed Equitable from the suit; and it declined to award plaintiffs attorneys' fees. Plaintiffs the Company and the individual defendants have appealed. We affirm except with respect to the dismissal of Equitable.

I.

In December, 1943, the Company established a non-contributory retirement plan for salaried employees. It executed an "Employees' Profit Sharing and Retirement Trust Agreement" (the plan) under which the Company makes contributions of a portion of its profits, if any, into a fund from which payments are made to salaried employees upon their retirement. The fund is administered by the Committee, which is and has been comprised primarily of officers and/or directors of the Company. Equitable acts as corporate trustee for the plan. The duties of the trustee are confined to record keeping, investing funds and paying out benefits in accordance with instructions given it by the Committee.

While the plan permits early retirement for male and female employees, males, prior to 1970, faced greater obstacles than females in qualifying for full benefits in the event they elected early retirement. The obstacles were derived from the provisions of the plan as to when an employee's interest in the fund became vested or non-forfeitable. ¹ Beginning at the end of her second year of employment, 10% of a woman's proportionate share of the fund established by the plan would become non-forfeitable for each year of her employment. Thus, at the end of eleven years, 100% of her proportionate interest in the fund would have become non-forfeitable, and she would receive full benefits if she retired at any time thereafter. By contrast, only 5% of a man's proportionate interest in the fund would become non-forfeitable for each year of employment after the first two years. Further, after a man had accumulated a 50% non-forfeitable interest in his proportionate share of the fund, the percentage would generally not increase unless he worked until age 65, ² at which time a male employee became entitled to full benefits based upon a 100% non-forfeitable interest.

Chastang was employed by the Company in February, 1937, and retired effective July 25, 1968, at the age of 52. Ugiansky was employed by the Company in January, 1951, and retired effective March 24, 1969, at the age of 42. ³ Each man received only 50% of his proportionate share of the retirement fund. After filing complaints with the Equal Employment Opportunity Commission and receiving "right to sue" letters, each brought suit in district court alleging that the plan unfairly discriminated against male employees.

II.

It is well settled that retirement benefits are within the " compensation, terms, conditions, or privileges of employment" covered by § 703(a) of Title VII, 42 U.S.C. § 2000e-2(a). Rosen v. Public Service Electric & Gas Co., 477 F.2d 90 (3 Cir. 1973); Bartmess v. Drewrys U. S. A., Inc., 444 F.2d 1186 (7 Cir.), cert. denied, 404 U.S. 939, 92 S.Ct. 274, 30 L.Ed.2d 252 (1971). See also Gilbert v. General Electric Co., 519 F.2d 661, 663 (4 Cir.), cert. granted, 423 U.S. 822, 96 S.Ct. 36, 46 L.Ed.2d 39 (1975); Peters v. Missouri-Pacific R. R. Co., 483 F.2d 490 (5 Cir.), cert. denied, 414 U.S. 1002, 94 S.Ct. 356, 38 L.Ed.2d 238 (1973). These cases all proceed on the well established "business necessity" test established in Phillips v. Martin Marietta Corp., 400 U.S. 542, 544, 91 S.Ct. 496, 27 L.Ed.2d 613 (1971), and Griggs v. Duke Power Co., 401 U.S. 424, 431, 91 S.Ct. 849, 28 L.Ed.2d 158 (1971). Martin Marietta held that under Title VII, disparate treatment on the basis of sex is sustainable only if the employer can show that the disparity is required either by "business necessity" or by a bona fide occupational qualification reasonably necessary to the normal operation of the business. Of course, in the instant case there is no claim that only women can perform the duties of the positions covered by the plan.

The Company and the individual defendants argue that the "business necessity" test is inapplicable to sexual, as distinguished from racial, discrimination where the difference in treatment of employees of different sexes is justified as a means of redressing the disparity between the economic and physical capabilities of men and women. They rely on cases such as Kahn v. Shevin, 416 U.S. 351, 94 S.Ct. 1734, 40 L.Ed.2d 189 (1974), and Gruenwald v. Gardner, 390 F.2d 591 (2 Cir. 1968), which uphold the rights of the state and federal governments, respectively, to favor women in order to compensate for other disabilities which females face in American society.

We are not persuaded. Martin Marietta is certainly to the contrary with respect to qualifications for employment, and we see no basis on which to treat qualifications for employment differently from qualifications for retirement. Moreover, defendants' authorities did not deal with Title VII, but rather with the equal protection and due process clauses of the fourteenth and fifth amendments respectively. While these cases hold that these constitutional provisions require only that a rational basis be shown to justify discrimination between men and women, ⁴ Title VII, by contrast, precludes all discrimination on the basis of sex unless justified by a compelling business reason. Gilbert v. General Electric Company, 519 F.2d at 667; Robinson v. Lorillard Corporation, 444 F.2d 791 (4 Cir.), cert. denied, 404 U.S. 1006, 92 S.Ct. 573, 30 L.Ed.2d 655 (1971). Furthermore, in the instant case, the Company has not established even a rational basis for the disparity in the retirement plan. The only justification put forth is that because of lack of physical strength women are unable to qualify for higher-paying Company jobs involving manual labor, and thus should be favored in the pension plan in order to compensate them for being relegated to lower-paying positions. But the plan at issue does not apply to manual laborers; it applies only to clerical and office workers. As the district court observed, "It is a non sequitur to justify a discriminatory practice . . . on the basis that male manual foundry workers earn more than female office workers when the males who are discriminated against under the retirement plan are not the manual foundry workers but the male supervisory and office personnel." Chastang v. Flynn & Emrich Co., 365 F.Supp. 957, 966 (D.Md.1973). Since the disparity in benefits does not meet even a rational basis test, it must be held in violation of Title VII.

We find no other business necessity to justify the disparate treatment. The Company's concern to compensate women because they generally earn less than men is belied by its failure to extend benefits to female foundry workers, the lowest-paid of the female employees. The possible justification of discouraging early retirement by male employees suggested and rejected by the district court is not pressed on us on appeal.

III.

Each plaintiff was awarded damages equal to his total proportionate share of the retirement fund less the amount he actually received upon leaving the Company's employ. The Company and the individual defendants contend that this award is a forbidden retroactive application of Title VII. See Robinson v. Lorillard Corporation, 444 F.2d 791 (4 Cir.), cert. denied, 404 U.S. 1006, 92 S.Ct. 573, 30 L.Ed.2d 655 (1971). They argue that damages should be limited to those benefits which were earned subsequent to July 2, 1965 the effective date of the Civil Rights Act of 1964.

We recognize that Rosen v. Public Service Electric & Gas Co., 477 F.2d 90 (3 Cir. 1973) on remand, 11 FEP Cases, 330 (D.N.J.1974), aff'd without opinion, 527 F.2d 645 (1976), tends to support the position of the Company and the individual defendants; nonetheless, we agree with the district court.

Each year that plaintiffs worked for the Company, both prior and subsequent to the effective date of the Act, they received the same credit for their proportionate share of the fund as did female employees. In the fund's annual statements and its advice to each participant of his interest in the fund, plaintiffs were treated as having the proportionate...