Drnek v. City of Chicago

• Decision Date: 24 May 2002
• Docket Number: No. 01 C 0840.,01 C 0840.
• Parties: Donald DRNEK, Plaintiff, v. CITY OF CHICAGO, an Illinois Municipal Corporation, Defendant. James D. Minch, Richard A. Graf, and Richard Cosentino, individually, and on behalf of a class of all individuals who are similarly situated, Plaintiffs, v. City of Chicago, an Illinois Municipal Corporation, Defendant.
• Court: U.S. District Court — Northern District of Illinois

205 F.Supp.2d 894

Donald DRNEK, Plaintiff, v. CITY OF CHICAGO, an Illinois Municipal Corporation, Defendant.

James D. Minch, Richard A. Graf, and Richard Cosentino, individually, and on behalf of a class of all individuals who are similarly situated, Plaintiffs, v. City of Chicago, an Illinois Municipal Corporation, Defendant.

No. 01 C 0840.

United States District Court, N.D. Illinois, Eastern Division.

May 24, 2002.

William W. Thomas, Futterman & Howard, Chtd., Clinton A. Krislov, Michael R. Karnuth, Krislov & Associates, Ltd., Joan Matlack, Putterman & Howard, Ronald L. Futterman, Futterman & Howard, Chtd., Chicago, IL, for Plaintiffs.

Patricia M. Carroll-Smit, Barbara Susan Smith, City of Chicago, Law Department Corporation Counsel, Mara Stacy Georges, Nancy L. Van Allen, City of Chicago, Department of Law, Chicago, IL, for Defendants.

MEMORANDUM OPINION AND ORDER

BUCKLO, District Judge.

On March 25, 2002, I granted in part and denied in part the City's motion to dismiss the plaintiffs' age discrimination and due process complaints. See Drnek v. City of Chicago, 192 F.Supp.2d 835 (N.D.Ill.2002). The City moves to amend that order to include a certification of the following question for interlocutory appeal under 28 U.S.C. § 1292(b):

whether allegedly illicit motives on the part of individual legislators and municipal officials for enacting a retirement plan that mandatorily retires police and fire personnel at age 63 and results in their replacement with younger workers can demonstrate subterfuge under section 623(j) of the ADEA.

Mot. at 5. I also treat the motion as one to reconsider in light of the City's primary reliance on a case that it did not cite in its underlying briefs. See Minute Order of 4/10/02.

I. Motion to Reconsider

"Motions for reconsideration serve a limited function; to correct manifest errors of law or fact or to present newly discovered evidence. Such motions cannot in any case be employed as a vehicle to introduce new evidence that could have been adduced during pendency of the [underlying] motion.... Nor should a motion for reconsideration serve as the occasion to tender new legal theories for the first time." Rothwell Cotton Co. v. Rosenthal & Co., 827 F.2d 246, 251 (7th Cir.1987). Nonetheless, "reconsideration performs a valuable function where the Court has patently misunderstood a party, or has made a decision outside the adversarial issues presented to the Court by the parties, or has made an error not of reasoning but of apprehension." Bank of Waunakee v. Rochester Cheese Sales, Inc., 906 F.2d 1185, 1191 (7th Cir.1990).

The City challenges a very narrow part of my opinion: my consideration of the plaintiff's allegations of discriminatory animus in deciding that there were questions of fact precluding dismissal. At oral argument, the plaintiffs produced allegations that the City's true purpose for enacting the mandatory retirement ordinance was to clear out older employees to make room for promotional opportunities for younger employees. The City argued, then and now, that I could not look beyond the face of the ordinance to determine whether it was a subterfuge to evade the purposes of the ADEA. I rejected the City's reliance on Pacific Gas Electric Co. v. State Energy Resources Conservation and Development Commission, 461 U.S. 190, 103 S.Ct. 1713, 75 L.Ed.2d 752 (1983), for the proposition that inquiry into the motives of the legislators' state of mind was never permissible. I held that Pacific Gas was distinguishable on two grounds: (1) that subterfuge is a factual question, whereas preemption, the issue in Pacific Gas, is a matter of law; and (2) that the legal standards in Pacific Gas and under the ADEA were different, and that the "true motive" of the legislators does matter for the purposes of § 623(j)(2) of the ADEA. See 192 F.Supp.2d at 844. The City argues that I erred in distinguishing Pacific Gas and points to Bell v. Purdue University, 975 F.2d 422 (7th Cir.1992), which it did not cite in any of its briefs on the underlying motion. The Seventh Circuit in Bell, when presented with anecdotal evidence that the defendants preferred younger employees, stated that "the defendants cannot be liable for their motives if their conduct has not evaded the ADEA's prohibitions." Id. at 429.

Bell involved an application of the Supreme Court's decision in Public Employees Retirement System of Ohio v. Betts, 492 U.S. 158, 109 S.Ct. 2854, 106 L.Ed.2d 134 (1989), to a challenge to a fringe benefit plan under § 623(f)(2) of the ADEA, rather than § 623(j), which is the provision at issue in this case. Section 623(a)(1) of the ADEA prohibits the failure or refusal to hire any individual, termination, or other discrimination "with respect to [the] compensation, terms, conditions, or privileges of employment, because of such individual's age." At the time Betts was decided, § 623(f)(2) provided an exemption from § 623(a)(1), and provided that it was not unlawful to observe the terms of a bona fide benefit plan that was not a subterfuge to evade the purposes of the ADEA, with the proviso that no plan could require or permit age-based involuntary retirement. Betts, 492 U.S. at 165-66, 109 S.Ct. 2854. In Betts, the Court rejected an administrative interpretation of "not a subterfuge" that put the burden on the employer to demonstrate a cost-based justification for differential treatment of older employees, id. at 170-75, 109 S.Ct. 2854, then set about the more difficult task of defining "subterfuge" for the purposes of § 623(f)(2).

Noting that the purposes of the ADEA could not be separated from its substantive provisions, the Court held that a plan enacted after the enactment of the ADEA "cannot be a subterfuge to evade the ADEA's purpose of banning arbitrary age discrimination unless it discriminates in a manner forbidden by the substantive provisions of the Act." Id. at 176, 109 S.Ct. 2854. Section 623(a)(1) is the primary enforcement mechanism of the ADEA, and the Court acknowledged that "[t]he phrase `compensation, terms, conditions, or privileges of employment' in § [623](a)(1) can be read to encompass employee benefit plans of the type covered by § [623](f)(2)," but it rejected this interpretation because it "would in effect render the § [623](f)(2) exemption nugatory with respect to post-Act plans. Any benefit plan that by its terms mandated discrimination against older workers would also be facially irreconcilable with the prohibitions in § [623](a)(1) and, therefore, with the purposes of the Act itself." Id. at 177, 109 S.Ct. 2854.

Thus, in order to give effect to both § 623(a)(1) and § 623(f)(2), the Court concluded that § 623(f)(2) "exempt[s] the provisions of a bona fide benefit plan from the purview of the ADEA so long as the plan is not a method of discriminating in other, non-fringe-benefit aspects of the employment relationship." Id. After considering the legislative history, the Court concluded that "this result permits employers wide latitude in structuring employee benefit plans, [but] it does not render the `not a subterfuge' proviso a dead letter." Id. at 180, 109 S.Ct. 2854. It gave two examples of possible actionable subterfuges: (1) "adopt[ing] a [fringe benefits] plan provision formulated to retaliate against ... an employee" who had "participated in the filing of any age-discrimination complaints of litigation" in violation of § 623(d), which prohibits retaliation; and (2) "an employer's decision to reduce salaries for all employees while substantially increasing benefits for younger workers," i.e., "utilizing [the] benefits plan as a subterfuge for age-based discrimination in wages, an activity forbidden by § [623](a)(1)." Id. The Court concluded by stating that the defendant did not have a duty to prove the absence of subterfuge; instead, the existence of subterfuge was effectively an element of the plaintiff's prima facie case on which it bore the burden of proof. Id. at 181, 109 S.Ct. 2854.

The Seventh Circuit in Bell recited these standards and applied them to an employee challenge to a pension benefit plan that discontinued pension contributions for employees above the age of 65 even if those employees continued to work. Noting the two examples of subterfuge from Betts, the court held that the plaintiffs had not produced any evidence that would bring them within the purview of the examples. 975 F.2d at 429. The court rejected "statements and anecdotal evidence that some officials at Purdue preferred younger faculty," stating that, even if a jury could infer that the cut in contributions to the pension plan was intended to weed out older employees, "the defendants cannot be liable for their motives if their conduct has not evaded the ADEA's prohibitions." Id. With respect to the second Betts example, the court noted that the hike in fringe benefits to younger employees did not violate the ADEA, it was the underlying wage-cut that it camouflaged that did violate the ADEA. Id. In that regard, the plaintiffs had "offered no evidence that the fringe benefit cut in this case is anything more than meets the eye—an age differential in fringe benefits which is permitted under the ADEA." Id. Because there was no extrinsic proof of a violation of another substantive provision outside the scope of the exception, the court declined to find subterfuge even in the face of evidence of discriminatory animus.

The City argues that the Seventh Circuit's language and reasoning in Bell precludes the plaintiffs in this case from relying on evidence of discriminatory motives of individual City officials to establish subterfuge. The City asks me to follow Bell and hold that, because there is no evidence of a violation of the age limits in § 623(j)(1), there can be no subterfuge. They argue that the mandatory retirement ordinance cannot be a subterfuge as a matter of law, regardless of evidence of intent to discriminate on the basis of age, because § 623(j) makes...