Cheng v. GAF Corp.

• Decision Date: 14 October 1982
• Docket Number: No. 77 Civ. 3159.,77 Civ. 3159.
• Citation: 566 F. Supp. 350
• Parties: James K.J. CHENG, Plaintiff, v. GAF CORPORATION, Defendant.
• Court: U.S. District Court — Southern District of New York

566 F. Supp. 350

James K.J. CHENG, Plaintiff, v. GAF CORPORATION, Defendant.

No. 77 Civ. 3159.

United States District Court, S.D. New York.

October 14, 1982.

Legal Service for the Elderly Poor, New York City, for plaintiff; Jonathan A. Weiss, New York City, of counsel.

Epstein, Becker, Borsody & Green, P.C., New York City, for defendant; Robert L. Jauvtis, New York City, of counsel.

OPINION AND ORDER

OWEN, District Judge.

Before me are three motions by defendant GAF Corporation. In the first, GAF seeks to amend its answer to assert that the various applicable statutes of limitations bar all of plaintiff's claims. In the second, GAF seeks summary judgment pursuant to Rule 56 as to various aspects of plaintiff's claims in this discrimination action. GAF's third motion is for attorney's fees and costs pursuant to 28 U.S.C. § 1927 for allegedly frivolous proceedings by the plaintiff in the United States Supreme Court, the Court of Appeals, and this Court following an adverse ruling in the Supreme Court.

GAF's motion to amend its answer is addressed to the Court's discretion and is granted. I do note, however, that to the extent that new issues are raised by the amendment, some appear to have been ruled upon herein.

Turning next to the motion for summary judgment, I will draw the facts from those which the parties do not dispute and from plaintiff's statement of the disputed facts. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). Plaintiff, James K.J. Cheng, is a Chineseborn, naturalized citizen of the Oriental race. In July, 1962, he was hired as a Senior Research Chemist by GAF Corporation. On June 30, 1975, he was forced into involuntary retirement at the age of 61. Plaintiff alleges that the following course of conduct culminated in his termination.

On June 13, 1975, Mr. Francis W. Gaube, the GAF personnel manager at the plant where plaintiff was employed, informed plaintiff that he would have to either accept a demotion to the lower paying job of lab technician or choose to retire early pursuant to GAF's early retirement plan. Because a demotion would have been accompanied both by a $5,672 pay cut and by personal and professional humiliation, plaintiff refused to accept a new position as a lab technician. Consequently, Mr. Gaube then informed plaintiff that his employment at GAF would be terminated as of June 30, 1977. At or after that date, the responsibility for completing plaintiff's projects at GAF fell to a 27 year-old employee of the corporation.

Plaintiff further alleges that his termination was part of plaintiff's ongoing practice of discriminating against him and other Oriental individuals because of their race. In plaintiff's case this discrimination took various forms. At five different times, plaintiff claims, he was passed over for a promotion to the vacant position of supervisor. Each time a less experienced Caucasian individual was appointed. Moreover, plaintiff was never considered for a position as a group leader although he was qualified for that position as well. At other times, plaintiff was denied publicity and credit for work he had done, was refused the assignment of a parking place, and was disparaged to his co-workers by his superiors. More generally, plaintiff avers that GAF has systematically paid its Oriental workers less than it has paid non-Oriental employees and has systematically denied Orientals both salary raises and promotions.

Defendant GAF, on the other hand, tells a different story. Francis W. Gaube states that in the spring of 1975, GAF instituted a cost reduction program occasioned by a generally poor economic climate. Part of that program anticipated a reduction in personnel. Thus, managerial personnel were instructed to give him lists of names of "surplus" employees. Gaube then reviewed the personnel record of each individual on the list and determined whether that individual could be relocated within the corporation or whether they should be offered early retirement. Dr. Michael T. Schiraldi, the group leader in charge of plaintiff's unit, included Mr. Cheng on his "surplus" list. Faced with Dr. Schiraldi's recommendation, Mr. Gaube presented the situation to plaintiff and offered either to demote plaintiff to a position as a lab technician and to reduce his salary from $19,400 to $13,728 or to grant plaintiff early retirement status. In late June of 1975, Mr. Gaube states, plaintiff told him that he would accept early retirement.

While acknowledging these conflicting facts, defendant poses a number of legal issues which it asserts requires complete or partial summary judgment. First, noting that plaintiff's first claim for relief alleges that defendant, by compelling plaintiff to accept early retirement, violated § 623(a)(1) of the Age Discrimination in Employment Act ("ADEA") because it discriminated against him on the basis of his age,¹ GAF nevertheless contends that plaintiff's early retirement fell within a specially enumerated exception to § 623. That exception is set out in § 626(f)(2):

It shall not be unlawful for an employer, employment agency, or labor organization ... to observe the terms of a bona fide seniority system or any bona fide employee benefit plan such as 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.

29 U.S.C. § 623(f)(2) (1967) (emphasis added).² Thus, a defendant who (1) observes the terms (2) of a bona fide employee retirement plan (3) which is not a subterfuge to evade the purposes of the ADEA successfully raises a defense to a claim of unlawful age discrimination. Here, however, I find that GAF did not observe the terms of its own plan. Because I reach this determination, I need not decide whether defendant's plan is "bona fide" or whether it is a "subterfuge".

The "GAF SALARIED EMPLOYEES PENSION PLAN" is explicit in its retirement terms. At ¶ 5.1, it states,

Normal Retirement. A Participant shall cease his employment with the Company and shall retire on the first day of the month coincident with or immediately following his 65th birthday which date shall be known as his Normal Retirement Date.

At ¶ 5.2, it states the terms for early retirement:

Early Retirement. A Participant who has attained his 55th birthday may at his own request be retired on the first day of any month.... (emphasis added).

From these provisions it is clear that, in the normal course, an employee of GAF is automatically retired upon reaching the age of 65 but that upon reaching the age of 55 the employee has the option of taking earlier retirement. The contractual scheme makes no provision for the early retirement of individuals, for reasons other than disability, see ¶ 5.3, at the option of the corporation. On similar facts, the Court of Appeals for the Seventh Circuit concluded that "in this context an employer does not observe the terms of the plan unless the plan expressly sanctions the decision to force the employee to retire early as well as the decision to pay him substantial benefits." Sexton v. Beatrice Foods Co., 630 F.2d 478, 486 (7th Cir.1980) (emphasis added); see also, Allen v. Colgate-Palmolive Company, 539 F.Supp. 57 (S.D.N.Y.1981). Relief on this ground is therefore denied.

Defendant next complains that plaintiff failed to timely file a complete notice of intent to sue with the Secretary of Labor as required by § 626(d) of the ADEA. While plaintiff did file a timely notice with the Secretary by mail on December 3, 1975, it was limited to the claim that:

I was forced by GAF Corporation of New York into involuntary early retirement effective July 1, 1975 because of my age, 61, rather than my technical ability/competence.

No other type of discrimination, e.g., refusal to promote, was mentioned in plaintiff's notice of intent to sue. Thus, the claims of paragraphs 9, 10, 24 and 25 are dismissed to the extent they are intended to allege separate justiciable bases for relief. As stated in United Air Lines, Inc. v. Evans, 431 U.S. 553, 558, 97 S.Ct. 1885, 1889, 52 L.Ed.2d 571 (1977):

A discriminatory act which is not made the basis for a timely charge is the legal equivalent of a discriminatory act which occurred before the statute was passed. It may constitute relevant background evidence in a proceeding in which the status of a current practice is at issue, but separately considered, it is merely an unfortunate event in history which has no present legal consequences.

Nor does Shehadeh v. Chesapeake & Potomac Tel. Co., 595 F.2d 711, 724-25 (D.C. Cir.1978), cited by plaintiff, affect this result on the theory of a continuing violation. While Shehadeh applied that theory to a number of post-termination events, the Court recognized that certain pre-termination events, albeit in a similar vein, had become "legally stale". Shehadeh, supra, 595 F.2d at 718.

Defendant next moves to dismiss plaintiff's first claim for relief on the ground that it is barred by the statute of limitations. Pursuant to § 626(e), the statute of limitations applicable to claims arising under the ADEA is set forth in § 255 of the Portal-to-Portal Pay Act, 29 U.S.C. § 251, et seq. That section provides a three-year limitations period for willful violations of the ADEA. Plaintiff here alleges such a willful violation and has timely filed. Defendant's motion is therefore denied.

Defendant next asserts that compensatory damages are not available to plaintiff pursuant to the ADEA. I agree. Although the Court of Appeals for this Circuit has not yet reached the question, five other Courts of Appeals have determined that an ADEA claimant is limited to his statutory damages under the ADEA. Naton v. Bank of California, 649 F.2d 691 (9th Cir.1981); Wehr v. Burroughs Corp., 619 F.2d 276 (3rd Cir.1980); Walker v. Pettit Construction Co., 605 F.2d 128 (4th Cir. 1979); Vazquez v. Eastern...