Bishop v. Jelleff Associates, Civ. A. No. 2452-71.

• Citation: 398 F. Supp. 579
• Decision Date: 11 March 1974
• Docket Number: Civ. A. No. 2452-71.
• Parties: Purnie BISHOP et al., Plaintiffs, v. JELLEFF ASSOCIATES et al., Defendants.
• Court: United States District Courts. United States District Court (Columbia)

398 F. Supp. 579

Purnie BISHOP et al., Plaintiffs, v. JELLEFF ASSOCIATES et al., Defendants.

Civ. A. No. 2452-71.

United States District Court, District of Columbia.

March 11, 1974.

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Robert J. Wieferich, Washington, D. C., for plaintiffs.

Williams, Connolly & Califano, Washington, D. C., for defendants.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

Findings of Fact

JUNE L. GREEN, District Judge.

This is a class action brought by former employees of the defendant Frank R. Jelleff, Inc. who allege that they were terminated from and affected in their employment by unlawful age discrimination of the defendants in violation of 29 U.S.C. § 621 et seq., Age Discrimination in Employment Act. There is also a separate claim for breach of an employment contract by one former employee, John Gonsa.¹

The class consists of forty individuals who, pursuant to 29 U.S.C. §§ 626(b), 216(b), filed a statutory written consent to join in the action.²

The defendants in this action are: Frank R. Jelleff, Inc., a woman's specialty store operation with branches in the Washington Metropolitan Area; Jelleff Associates, a holding company which owns all the stock in Frank R. Jelleff, Inc.; I. Lee Potter, a shareholder in Jelleff Associates and a Trustee of the Jelleff Retirement Trust (hereafter "Trust"); Alan L. Potter, President of Frank R. Jelleff, Inc. and a Trustee of the Trust; Joseph Boyle, Controller of Frank R. Jelleff, Inc. and a Trustee of the Trust; and Eleanor Crunkleton, a Trustee of the Trust.

Background

Frank R. Jelleff, Inc. (hereinafter "Jelleff's") was acquired by Jelleff Associates in March 1968 from the then principal shareholder, Margaret Gollan Jelleff, the widow of the founder of the store, Frank R. Jelleff. The acquisition involved a complex stock purchase and financing agreement which essentially provided for a substantial down payment and a long term payout.

The financial arrangement, while apparently legitimate, does appear to the Court to be one which contemplates payment of the outstanding debt from the profits of Frank R. Jelleff, Inc. The diversion of profits, normally reinvested or applied to the benefit of the business from which they flow, to the payment of the debt of the purchasers, definitely detracts from the strength of the business. While this Court cannot act as a reviewer of business decisions, it must be aware of all factors which may influence or substantiate a claim of age discrimination.

At the time of the purchase, Jelleff's was operating at a profit although it had experienced a gradual decline in sales since the death of Frank R. Jelleff in 1961. At that time, Jelleff's largest unit was the F Street store located in the downtown business area and its typical customer was the mature woman.

Since the acquisition, Jelleff's has suffered consistent business losses, in part at least, attributable to the massive civil disturbances which occurred in Washington in early April 1968, and to the general decline in downtown retail sales. Due to these losses (Def.Ex.49), Jelleff's eventually closed its downtown store and a branch store (Shirlington) in suburban Virginia. Poor business conditions and excessive payroll expenses (Def.Ex. 50) also resulted in a substantial reduction in the number of employees. In early 1969, Jelleff's employed over 900 employees, which number declined to approximately 237 at the time of this trial in January of 1974.

Since 1942, Jelleff's has maintained a retirement trust (hereafter sometimes "pension plan") for its employees, to which contributions are made entirely by the company. In general, a participant in the pension plan is an employee at least 30 years of age, but no more than 50, at the time of hiring. After an employee reaches 15 continuous years of employment and 50 years of age, he becomes vested in the plan, entitling him to receive certain monthly pension benefits upon retirement. The plan also provides for early retirement on actuarially reduced benefits. Certain defendants in this action are trustees in the Trust created to fund the benefits provided under the plan.

Since originally instituted, the plan has been amended on twelve occasions by the old management. Present management amended the plan to provide for a new method of calculating employee benefits, part of which provides for a reduction of retirement by one-half benefits received under Social Security. All employees hired prior to this amendment have the option of choosing the old or new method of calculation. However, whichever option is selected, credited service is limited to 25 years. The new plan benefits retirees in the higher pay scale.

The Court finds that much dissatisfaction has occurred among Jelleff's retirees for the simple reason that Jelleff's failed to provide them with a meaningful, understandable explanation of computations for retirement. If the alternatives were listed on separate pages headed "Option 1 under 10a" or "Option 2 under 10b", it would have been clear that there was a choice involved and that 10b was the old way of figuring, undiminished by Social Security (Pl.Ex.38). These operational shortcomings of defendants, however, do not present any basis of recovery for plaintiffs.

Class Action Claims

The plaintiffs charge that the new owners and management embarked on a concerted and deliberate plan to discharge older employees and to reduce or deny them certain employee benefits. They claim that this plan is evidenced by a pattern of terminations and by a design on the part of management to reduce the company liabilities under its pension plan and to liquidate the plan so as to secure a reversion to the company.

The reasons for terminations may be broken down into three basic categories: voluntary resignations, discharge for cause, and what defendants have called "reductions in force". The plaintiffs have not shown a management policy involving age discrimination which affected this group as a class. There was evidence, however, that management sought to expand its product line to appeal to a younger market while presumably still attempting to retain its traditional customers. This policy of attempting to attract a younger clientele was coupled with a generalized policy to reduce the number of personnel in order to cut expenses. This change in business operations had a serious impact on certain of Jelleff's "old-time" employees.

However, because the reasons given for termination were varied, the Court finds it necessary to analyze each plaintiff's circumstances separately to determine whether any individual was the subject of age discrimination. Since the Court must give each plaintiff separate consideration, it does not find any basis for awarding class relief.

Individual Cases

The Court has heard testimony from 32 former employees with regard to their individual claims of age discrimination. Although the Court has found no basis for class relief, it now proceeds to determine whether any individual employee was subject to age discrimination. The findings with respect to these employees as well as the eight other members of the class have been formulated by the Court from consideration of each individual's circumstances and are set forth here in succeeding paragraphs.

1. The defendants in this case previously served interrogatories upon each member of the class which were due after more than 30 days and by agreement of counsel, on November 15, 1972. On January 19, 1973, defendants filed a motion to compel answers from certain former employees who failed to provide discovery. On March 6, 1973, this Court denied the motion but afforded the defendants the right to renew the motion before the pretrial examiner as to interrogatories still unanswered. At the same time, the Court advised counsel for the plaintiffs to seek the answers from the delinquent members of the class.

Pursuant to motion of the defendants, the pretrial examiner issued an order dated October 9, 1973, to the delinquent class members advising them that they had failed to answer the long pending interrogatories on separate paper, in writing, and under oath, and that unless they provided such answers within 30 days, their claim would be dismissed. At the time of trial, commencing January 14, 1974, Thelma Brown, Lewis Paul Rhodes and William George Taylor³ had failed to comply with this order and their claims were accordingly dismissed with prejudice.

2. Upon receiving a class action notice pursuant to Rule 23 of the Federal Rules of Civil Procedure, Ruth Guy opted out of the class, and her case is therefore not before the Court.

3. In the course of the trial, counsel for the plaintiffs represented that Leonard B. Ward, who had previously appeared in Court but had not testified, had chosen not to join in the action. Counsel requested his dismissal. His claim is therefore dismissed with prejudice.

4. Four plaintiffs, Alberta Davis, Mary Penley, Esther C. Samuel and Mary E. Wiederhoeft, did not appear at the trial to present testimony and there was no evidence adduced on their behalf indicating the circumstances of their termination. Their claims are therefore dismissed with prejudice.

5. Beulah N. Sandberg was an employee who terminated in 1963. Her claim, if any, would have arisen under prior management and prior to the passage of the relevant statute. This plaintiff, however, does question the computation of the Retirement Fund.

6. Claims of six additional plaintiffs may also be disposed of on essentially procedural grounds. Dorothy K. Smith, Lauretha C. Talley, Mary Speanburg, Vera Valaiti, Gertrude Guy and Willye Carter failed to comply with the two year statute of limitations as set forth in 29 U.S.C. §§ 626(e), 255. The Court does not find a "willful" violation of the Act and would therefore decline to apply the three year statute of limitations. (See Conclusions of Law, # 5, infra.)

7. Lastly, four...