Adama v. Doehler-Jarvis, Div. of NL Industries, Inc.

• Decision Date: 11 June 1982
• Docket Number: DIVISION,DOEHLER-JARVI,Docket No. 50519
• Citation: 115 Mich.App. 82,320 N.W.2d 298
• Parties: , 33 Fair Empl.Prac.Cas. (BNA) 503, 30 Empl. Prac. Dec. P 33,231 Marinus ADAMA, et al., Plaintiffs-Appellees and Cross-Appellants, v.OF NL INDUSTRIES, INC., a foreign corporation, Defendant-Appellant and Cross-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 298

320 N.W.2d 298

115 Mich.App. 82, 33 Fair Empl.Prac.Cas. (BNA) 503,

30 Empl. Prac. Dec. P 33,231

Marinus ADAMA, et al., Plaintiffs-Appellees and Cross-Appellants, v. DOEHLER-JARVIS, DIVISION OF NL INDUSTRIES, INC., a foreign

corporation, Defendant-Appellant and Cross-Appellee.

Docket No. 50519.

Court of Appeals of Michigan.

Submitted Jan. 6, 1982.

Decided April 7, 1982.

Released for Publication June 11, 1982.

Miller, Cohen, Martens & Sugarman, P. C. by William L. Martens, Roger J. McClow and Renate Klass, Detroit, for plaintiffs-appellees and cross-appellants.

Dickinson, Wright, McKean, Cudlip & Moon by John Corbett O'Meara, Thomas G. Kienbaum, Henry W. Saad, and Joseph C. Marshall, III, Detroit, for defendant-appellant and cross-appellee.

Before BASHARA, P. J., and ALLEN and T. M. BURNS, JJ.

PER CURIAM.

Plaintiffs brought this action alleging age discrimination under the Fair Employment Practices Act (FEPA), M.C.L. Sec. 423.301 et seq.; M.S.A. Sec. 17.458(1) et seq., since reenacted in the Elliott-Larsen Civil Rights Act, M.C.L. Sec. 37.2101 et seq.; M.S.A. Sec. 3.548(101) et seq. The action arises as a result of defendant's closing of its automobile parts casting plant at Grand Rapids and the subsequent transfer of that business to defendant's Toledo II plant. Plaintiffs contend that defendant's consideration of the costs of supplemental pension benefits for the Grand Rapids work force in making its decision to close the Grand Rapids plant constituted discrimination on the basis of age prohibited under the FEPA.

Defendant, on the other hand, claimed that the decision to close the Grand Rapids plant was based solely on economic reasons. This was due mainly to the total decline of the zinc market which accounted for 85% of the Grand Rapids plant's business, whereas it accounted for only 25% of Toledo II's business. Accordingly, defendant closed the Grand Rapids plant and transferred much of that business to Toledo II. It also provided a system whereby employees from Grand Rapids could transfer to Toledo in order to preserve their jobs and their pensions.

In the first phase of a bifurcated jury trial, defendant was found liable for violation of the age discrimination prohibitions. The jury, in a separate proceeding, assessed damages, including attorney fees. Defendant appeals the finding of liability and the award of attorney fees. Plaintiffs filed a cross-appeal as to damages.

I

We find no merit in defendant's contention that plaintiffs' cause of action is preempted by the National Labor Relations Act (NLRA), 29 U.S.C. Sec. 151 et seq.

Title VII of the Civil Rights Act of 1964, 42 U.S.C. Sec. 2000e et seq., allows individual actions against an employer based on discrimination even where the action would be available under the NLRA. Alexander v. Gardner-Denver Co., 415 U.S. 36, 94 S.Ct. 1011, 39 L.Ed.2d 147 (1974). Federal preemption occurs when compliance with both federal and state regulations is not possible, when the nature of the subject matter requires federal supremacy and uniformity or when Congress intended to displace the state legislation. Florida Lime & Avocado Growers, Inc. v. Paul, 373 U.S. 132, 83 S.Ct. 1210, 10 L.Ed.2d 248 (1963). Such is not the case with state employment discrimination statutes. Title VII encourages states to exercise their powers over discriminatory employment practices. New York Gaslight Club, Inc. v. Carey, 447 U.S. 54, 100 S.Ct. 204, 64 L.Ed.2d 723 (1980). Historically, states have exercised broad powers in the regulation of employment practices. That subject matter, consequently, falls within the ambit of traditional state regulation. Hillman v. Consumers Power Co., 90 Mich.App. 627, 631, 282 N.W.2d 422 (1979).

Moreover, the critical inquiry in determining whether the NLRA preempts a state regulation is not whether the state is enforcing a law relating specifically to labor relations or one of general application, but whether the controversy presented to the state court is identical to or different from that which could have been, but was not, presented to the Labor Board. It is only in the former situation that a state court's exercise of its jurisdiction necessarily involves a risk of interference with the unfair labor practice jurisdiction of the board. Sears, Roebuck & Co. v. San Diego County District Council of Carpenters, 436 U.S. 180, 98 S.Ct. 1745, 56 L.Ed.2d 209 (1978). Plaintiffs' claims brought under the Michigan FEPA are different from those which could have been brought under the NLRA. There is no interference with the NLRA and, thus, no preemption.

II

A central issue in this appeal is whether an employer's consideration of pension costs in a decision to terminate a business operation in this state is a violation of the Michigan age discrimination laws. ¹ This is a question of first impression for the Court.

The closest any tribunal has come to addressing this issue was in Mastie v. Great Lakes Steel Corp., 424 F.Supp. 1299 (E.D.Mich., 1976), where the Court considered an alleged violation of the Federal Age Discrimination in Employment Act (ADEA), 29 U.S.C. Sec. 621 et seq. In Mastie, two workers, who were not among those selected for work in another mill after the mill in which they were employed was shut down, alleged age discrimination based in part on the fact that their retention would have required the employer to incur higher pension costs. In finding that plaintiffs had failed to establish a case of age discrimination by a preponderance of the evidence, the Court held that, when faced with a reduction in force, a company may consider a person's salary and fringe benefits in relation to other employees. The Court determined that the ADEA does not contemplate that an employer must ignore employment costs or face possible charges of violation of the act. 424 F.Supp. 1318. The court concluded:

"Both the legislative history and Department of Labor regulations tend to support the proposition that higher labor costs associated with the employment of older employees constitute 'reasonable factors other than age' which an employer can consider when faced with possible termination of an older employee." Id.

We recognize the factual and legal differences between the claims in Mastie and those of the instant case. However, we conclude that the Mastie rationale, that the costs involved in employing older workers, including pension costs, may be considered where the business decision involves the possible closing out of all operations.

We find further support for this conclusion in the standard used to determine the existence of age discrimination under both the ADEA and the Michigan age discrimination law.

In Mastie, the Court determined that the proper interpretation of the ADEA is that age must be "a determining factor" in an employer's personnel policies or practices before a violation of the act occurs. 424 F.Supp. 1321. This interpretation relies on Laugesen v. Anaconda Co., 510 F.2d 307, 316-317 (CA 6, 1975). There the Court recited the general law relative to proximate cause in tort that there may be more than one proximate cause of an event. It held that, because there could be more than one reason for terminating an employee, a plaintiff was entitled to recover under the ADEA if one such factor was his age and if, in fact, his age made a difference in determining whether he was to be retained or discharged. ²

This Court adopted the Laugesen standard as the proper burden of proof to be applied in an age discrimination suit brought under Michigan law in Gallaway v. Chrysler Corp., 105 Mich.App. 1, 5, 306 N.W.2d 368 (1981).

Analysis of the Laugesen-Gallaway "determining factor" standard necessarily leads to the logical conclusion that an age-related cost factor may be involved in a decision to close out business operations, which results in the termination of employees, without violating the ADEA or the Michigan age discrimination laws. The rule is valid so long as that factor did not make a significant difference in the employer's determination to close out operations.

Consequently, in the instant case, pension costs, as an age-related factor, would only have been illegally applied if that consideration was afforded such weight in relation to the other factors considered so as to have been a major determinative factor, one that made a "significant" difference in the decision. Gallaway, supra, 5-6, 306 N.W.2d 368.

It should be noted that our holding on the foregoing grounds has been reached without weighing the substantial and persuasive arguments relative to the application of sound business judgment in the making of a decision to terminate a business operation. ³ We are not of the opinion that such a discussion, though relevant, is necessary to this opinion.

III

Defendant claims the jury verdict, that it violated the FEPA in making the decision to close down the Grand Rapids operation, was not supported by sufficient evidence. In support of this claim, defendant argues that, while it did consider the costs of the Grand Rapids supplemental pension plan in its deliberations relating to the proposed closing, pension costs were not the determinative factor in the decision, but only one factor among many. The record indicates that the other factors defendant considered included a decline in the market for cast zinc automobile parts for the production of which the Grand Rapids plant devoted 85%-90% of its activity. It also examined the lack of profitability of the Grand Rapids plant which had operated at a deficit for four of the six years prior to its closing. It reflected on the opportunity to develop the burgeoning cast aluminum auto parts market along with consolidating the declining zinc market at Toledo II where 75%-80% of production consisted of aluminum castings. It considered the opportunity to improve through consolidation the overall profitability of the entire Doehler-Jarvis Division of NL Industries and a...