Brennan v. Ace Hardware Corporation

• Decision Date: 03 April 1974
• Docket Number: No. 73-1498.,73-1498.
• Parties: Peter J. BRENNAN, Secretary of Labor, United States Department of Labor, Appellant, v. ACE HARDWARE CORPORATION, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

495 F.2d 368 (1974)

Peter J. BRENNAN, Secretary of Labor, United States Department of Labor, Appellant, v. ACE HARDWARE CORPORATION, Appellee.

No. 73-1498.

United States Court of Appeals, Eighth Circuit.

Submitted February 11, 1974.

Decided April 3, 1974.

Jacob I. Karro, Atty., U. S. Dept. of Labor, Washington, D. C., for appellant.

Dayton O. Rasmussen, Jr., and E. R. Freeberg, Midwest Employers Council, Inc., Omaha, Neb., for appellee.

Before MEHAFFY, Chief Judge, and GIBSON and WEBSTER, Circuit Judges.

GIBSON, Circuit Judge.

The Secretary of Labor appeals from a judgment entered for defendant Ace Hardware Corporation (hereinafter Employer) in this action instituted under Section 7(b) of the Age Discrimination in Employment Act of 1967, 29 U.S.C. § 621 et seq. We affirm the judgment entered for the Employer.

This appeal presents an issue of first impression before any appellate court. At issue is whether the Secretary's actions in this case complied with the statutory directive of attempting to effect voluntary compliance through "informal methods of conciliation, conference, and persuasion" pursuant to 29 U.S.C. § 626(b) before instituting legal action. The District Court¹ found he did not, holding that the Secretary did not properly attempt to achieve voluntary compliance by the Employer before instituting legal action.

Employer, a corporation with principal offices in Chicago, Illinois, operates warehouse distribution plants in Atlanta, Georgia; San Francisco, California; Chicago, Illinois; and Lincoln, Nebraska, the location of the alleged discriminatory practices in this case. In late 1971, Employer commenced operating the Lincoln plant and transferred Charles L. Bates from Chicago to be the general plant manager. In November, 1971, Bates reviewed the employees already assigned to the Lincoln plant and chose Dallas D. Howell, a truck driver for over 16 years with Employer, to be traffic manager, whose responsibilities included the initial interviewing of new applicants for positions as truck drivers. Howell had never hired employees before and was not aware of the Act. Bates was generally aware of the Act, but did not inform Howell of it. Bates made the final decision concerning the hiring of new employees, although Howell could eliminate applicants before Bates reviewed anyone.

When Howell assumed his position as traffic manager, the company had received 45 applications for six or seven positions as truck drivers. Howell adopted the following procedure to screen the applicants for employment. After reviewing the applications. Howell scheduled and conducted personal interviews. During those interviews, Howell would write certain comments on a section marked "remarks" on the application forms.² On Byrl A. Prichard's application, the notation "Age?" was written. Prichard was 52 years old during the winter of 1971. Robert H. Long's application had the same notation. Cecil Raymond Richard's application contained the comment, "to sic old." On James Elmer Johnson's application, "Age?" also appeared. "No" was written on the applications of Donald Eugene Rudy, Herbert Jess Grady, and Samuel D. Tipton. The record does not reveal if any comments were written on Bernard Chapman's application. Each of the above applicants was over 50 years of age. After the initial interview with Howell, some applicants were scheduled for polygraph examinations, Department of Transportation tests (known as D.O.T.'s), and physical examinations. None of the applicants over 50 years of age was hired by the Employer before December 29, 1971, the date of the first visit by the compliance officer with the Department of Labor.

Acting upon complaints of Prichard and Johnson, the Secretary decided to investigate the Employer for possible violations of the Act. On December 29, 1971, Donald R. Chleborad, a compliance officer with the United States Department of Labor, Employment Standard Administration, visited the Employer. Chleborad's job included investigating violations of the Act in question, the Fair Labor Standards Act, the Minimum Wage and Overtime Act, and others. On December 29th, Chleborad met with Bates from approximately 9:00 a. m. to 3:00 p. m. to discuss violations of the Act. He informed Bates that he was investigating possible violations of the Act as reported by Prichard and Johnson. Bates was cooperative, and the two reviewed and discussed the actual applications in Howell's office. Chleborad asked Bates what the notations referring to "age?" meant and was told that "`age' does not mean `age' as such; it means an unqualified individual or somebody who cannot do the job." Bates told Chleborad that Prichard was not hired because he was unqualified and that Johnson had failed the Department of Transportation tests. The meeting ended and Chleborad said that he would contact Bates again.

On January 7, 1972, Chleborad returned and initially met with Bates. Howell was called in by Bates and, upon questioning by Chleborad, said that Johnson had failed the Department of Transportation tests and Prichard was unqualified and had a bad attitude³ as reasons for the company refusing to hire them. Chleborad was informed that Long was being hired, as it turned out on a part-time basis when additional drivers were required (termed "extra board" by the Employer and "10%" by the workers). Chleborad was also told at this meeting that "age" referred to "an unqualified individual or that no job opening was available."

On January 28 or 29, 1972, Chleborad telephoned Bates and told him the failure to process applications of those over 50 years of age "would definitely appear to be a violation of the Age Discrimination Act." Bates said that he still would not hire Prichard. Chleborad told Bates that he would "submit the file accordingly to the supervisor, and in turn to the Regional Office for consideration."⁴ No other information pertinent to this appeal was exchanged between the Secretary and the Employer. The Secretary did not contact the Employer again before the commencement of this action, approximately four months later.

On May 23, 1972, the Secretary filed the complaint in this action against the Employer seeking to permanently enjoin any violations of the Act by the Employer, for costs of the action, further equitable relief including any "amounts due individuals by reason of said violations," interest on those amounts, and an order compelling the employment of these individuals.⁵ The individuals were not named in the complaint, and the trial mainly centered on the alleged violations in regard to Prichard and Johnson. During trial, the District Court admitted a field operations handbook (an exhibit of both parties) issued by the Secretary to compliance officers setting forth operative procedures to be employed to implement this Act and also other federal labor acts.

The District Court first held:

I think it is clear by the greater weight of the evidence that Howell preferred men of some maturity, but was reluctant to take as truck drivers men over the age of 50 years; that he would have hired men over the age of 50 years, if he had not been able to hire enough truck drivers under that age who were qualified; that age was a factor in Howell\'s mind from the outset of the employment of truck drivers in November, 1971, and remained a factor throughout that employment process; and that Byrl A. Prichard was not hired by the defendant because of age, in violation of the Act.

However, the District Court found for the defendant reluctantly, because the Secretary failed to comply with the voluntary compliance requirement of the Act, which in part reads:

Before instituting any action under this section, the Secretary shall attempt to eliminate the discriminatory practice or practices alleged, and to effect voluntary compliance with the requirements of this chapter through informal methods of conciliation, conference, and persuasion.

29 U.S.C. § 626(b).

In relying on the standards that the field operations handbook describes, the District Court found that the compliance officer failed to request the Employer to "make whole" Prichard (basically pay wages he would have received had he been hired), did not specifically and directly tell the Employer that the file was being referred for review, and did not allow the Employer the opportunity to express his views, in writing or otherwise, on the charges, specifically in light of the "make whole" remedy. Since these findings of fact are not clearly erroneous and the conclusions of law involve no interpretive error, we affirm the District Court with the following comments.

As we have not previously interpreted any provision of the Act and since the implementation of the Act will be affected by this decision, a more extensive analysis of the Age Discrimination in Employment Act (ADEA) is in order.

Passed in 1967, the Act was designed to promote "employment of older persons based on their ability rather than age" and to prohibit "arbitrary age discrimination in employment." 29 U.S.C. § 621(b); accord, Hodgson v. First Fed.Sav. & L. Ass'n of Broward Co., Fla., 455 F.2d 818, 820 (5th Cir. 1972) (here-inafter First Fed. Sav.); Stringfellow v. Monsanto Company, 320 F.Supp. 1175, 1179 (W.D.Ark.1970). President Johnson in his Older American message of January 23, 1967, recommended the passage of the Act and stated:

Hundreds of thousands, not yet old, not yet voluntarily retired, find themselves jobless because of arbitrary age discrimination. Despite our present low rate of unemployment, there has been a persistent average of 850,000 people age 45 and over who are unemployed. Today more than three-quarters of the billion dollars in unemployment insurance is paid each year to workers who are 45 and over. They comprise 27 percent of all the unemployed, and 40 percent of the longterm unemployed.

Quoted in H.R. No. 805, 90th Cong., 1st Sess., U.S.Cong. & Adm.News 2213, 2214 (1967). (The Senate...