Coffy v. Republic Steel Corp., Civ. A. No. C74-217.
| Decision Date | 15 March 1978 |
| Docket Number | Civ. A. No. C74-217. |
| Parties | Thomas E. COFFY, Plaintiff, v. REPUBLIC STEEL CORP., Defendant. |
| Court | U.S. District Court — Northern District of Ohio |
Richard J. French, John J. Horrigan, Asst. U. S. Attys., Cleveland, Ohio, for plaintiff.
Victor E. DeMarco and Michael A. Nims, Jones, Day, Cockley & Reavis, Cleveland, Ohio, for defendant.
Following the decision of the United States Supreme Court in Alabama Power Co. v. Davis, 431 U.S. 581, 97 S.Ct. 2002, 52 L.Ed.2d 595 (5th Cir., June, 1977), the United States Court of Appeals for this circuit vacated this court's judgment in favor of the defendant and remanded the case for reconsideration in light of Alabama Power. In the last paragraph of its memorandum and order of August 29, 1975, this court summarized its ruling:
Qualification for SUB Supplemental Unemployment Benefits credit units does not depend upon mere passage of time. During his period of military service it is determined that plaintiff did not automatically accrue SUB credit units, as a "perquisite of seniority." Consequently, section 7.2 of the SUB Plan barring the plaintiff from receiving SUB credit units during his period of military service is valid and enforceable under section 9(c)(1) of the Act. P. 17, original memorandum.
Applying section 9 of the Military Selective Service Act, 50 U.S.C. § 459, the Supreme Court in Alabama Power determined that an employee resuming employment after military service is entitled to "credit toward his pension for his period of military service." The court considered "Davis' right to pension credit for his years in the military in light of" principles derived from prior cases relating to seniority rights under section 9 of the Act. After reviewing its most recent cases, Accardi v. Pennsylvania R. Co., 383 U.S. 225, 86 S.Ct. 768, 15 L.Ed.2d 717 (1966), and Foster v. Dravo Corp., 420 U.S. 92, 95 S.Ct. 879, 43 L.Ed.2d 44 (1975),1 the Court thus stated their essence:
. . . our cases have identified two axes of analysis for determining whether a benefit is a right of seniority secured to a veteran by § 9. If the benefit would have accrued, with reasonable certainty, had the veteran been continuously employed by the private employer, and if it is in the nature of a reward for length of service, it is a "perquisite of seniority." If, on the other hand, the veteran's right to the benefit at the time he entered the military was subject to a significant contingency, or if the benefit is in the nature of short term compensation for services rendered, it is not an aspect of seniority within the coverage of § 9.
In Alabama Power, the Court had no trouble finding that "the reasonable certainty" requirement of earlier veteran's rights rulings in McKinney v. Missouri K-TR Co., 357 U.S. 265, 78 S.Ct. 1222, 2 L.Ed.2d 1305 (1958), and Tilton v. Missouri Pac. R. Co., 376 U.S. 169, 84 S.Ct. 595, 11 L.Ed.2d 590 (1964), had been met. The Court noted that "respondent's Davis's work history both before and after his military tour of duty demonstrates that if he had not entered the military, he would almost certainly have accumulated accredited service for the relevant period." Similarly, in Coffy's case, as recognized in this court's memorandum of August 29, 1975, "the parties agree that plaintiff Coffy would have been entitled to 52 the maximum SUB credits at the time of his layoff had he been working at Republic rather than engaged in military service."
Turning to the "nature of the benefit itself," the second "axis of analysis" to be considered, the Supreme Court confronted Alabama Power's argument that:
Pension payments should be viewed as compensation for service rendered like the vacation payments in Foster, rather than as a perquisite of seniority like the severance payments in Accardi.
While agreeing that "pension payments have some resemblance to compensation for work performed," the Court concluded:
Other aspects of pension plans like the one established by petitioner suggest that the "true nature" of the pension payment is a reward for length of service. The most significant factor pointing to this conclusion is the lengthy period required for pension rights to vest in the employee. It is difficult to maintain that a pension increment is deferred compensation for a year of actual service when it is only the passage of years in the same company's employ, and not the service rendered, that entitles the employee to that increment. Emphasis added.
Thus, the Court determined that pension benefits are a perquisite of seniority; and military service counts as part of the employee's continuous service.2
What then is the "true nature" or "real nature" of the SUB benefit sought by Coffy under the Collective Bargaining Plan established by the United Steel Workers and Republic Steel?3 The purpose of the SUB plan was thus described in the original memorandum:
This court posed the issue:
The decision in this case, applying the essence of Foster, turns on whether the Plan's SUB credit units are "designed to measure time on the payroll rather than hours on the job," and whether the qualification for credit units is a "work requirement that constitutes a bona fide effort to compensate for work actually performed." P. 10, original memorandum.
Applying Foster, the court analyzed this SUB plan upon the full evidentiary record developed at the trial and concluded:
"Hours worked for the Company" in any week, the first qualification for earning a ½ credit unit, meets the Foster test of a "work requirement." It constitutes a bona fide effort to relate qualification for weekly benefits under the SUB Plan to work actually performed, and is designed to measure "hours on the job," rather than "time on the payroll." Pp. 11-12, original memorandum.
A covered Republic Steel employee depletes his SUB credits by receiving benefits during a layoff due to unemployment. Upon resuming employment, his weekly hours of work or wage substitutes (as explained in the original memorandum) rebuild his credits back to the maximum level of fifty-two credits (fifty-two weeks). Thus, this court concludes that SUB benefits are "in the nature of short term compensation for services rendered" and "not an aspect of seniority within the coverage of § 9," Alabama Power, supra, 431 U.S. at 589, 97 S.Ct. at 2007. Or in the words of Aiello v. Detroit Free Press, Inc., 570 F.2d 145 (6th Cir., 1978) (), entitlement to SUB benefits "requires more than continued status, such as a work requirement demanding actual performance on the job."
Moreover, the completion of "two years of continuous service prior to his lay-off" (a universal requirement of eligibility) does not relate the benefits to length of service, as plaintiff argues, since the same minimum period applies equally to all employees. Hence, judged by their "real nature," SUB benefits are not perquisites of seniority.
Plaintiff cites Franks v. Bowman Transportation Co., Inc., 424 U.S. 747, 96 S.Ct. 1251, 47 L.Ed.2d 444 (1976), a Title VII case that, among other things, held that an award of seniority retroactive to the date of an individual job application was appropriate under Title VII's objective of making persons whole for injuries suffered on account of unlawful employment discrimination. The majority opinion in Franks recognizes that "seniority systems and the entitlements conferred by credits earned thereunder are of vast and increasing importance in the economic employment system of this nation." While the majority opinion speaks separately of "competitive status" seniority and "benefit" seniority,"4 this distinction was not germane to the Court's ruling, and the Court did not decide the present issue of whether SUB benefits are a perquisite of seniority under section 9 of the Universal Military Training and Service Act of 1948. The Court's references to section 9 and cases decided under that section were rather to support the Court's holding "that employee expectations arising from a seniority system agreement may be modified by statutes furthering a strong public policy interest." Id. at 778, 96 S.Ct. at 1271.
Citing Hoffman v. Bethlehem Steel Corp., 477 F.2d 860 (3rd Cir. 1973), and Akers v. General Motors Corp., 501 F.2d 1042 (7th Cir. 1974), the plaintiff states:
In the only two appellate decisions addressing the precise issue involved in this case, the Third and Seventh Circuits have held that SUB benefits constitute "perquisites of seniority" entitled to the protection of the Act.
This court reaffirms its refusal to follow Hoffman on the grounds and for the reasons stated at pp. 14-17 of its original memorandum of August 29, 1975. In part, this court in that opinion pointed out:
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Coffy v. Republic Steel Corp
...On remand, the District Court adhered to its decision that SUB credits are not seniority rights entitled to statutory protection. 461 F.Supp. 344 (1978). The Court of Appeals affirmed on the opinion of the District Court. 590 F.2d 334 (1978). We granted certiorari, 444 U.S. 924, 100 S.Ct. 2......