E.E.O.C. v. U.S. Steel Corp.

Decision Date14 December 1990
Docket NumberNo. 90-3041,90-3041
Citation921 F.2d 489
Parties54 Fair Empl.Prac.Cas. 1044, 55 Empl. Prac. Dec. P 40,448, 59 USLW 2412, 13 Employee Benefits Ca 1362 EQUAL EMPLOYMENT OPPORTUNITY COMMISSION and Pennsylvania Human Relations Commission, Appellees, v. UNITED STATES STEEL CORPORATION, Appellant.
CourtU.S. Court of Appeals — Third Circuit

Richard J. Antonelli (argued), Buchanan Ingersoll, Professional Corp., Jared H. Meyer, USX Corp., Pittsburgh, Pa., for appellant, U.S. Steel Corp.

Charles A. Shanor, General Counsel, Gwendolyn Young Reams, Associate General Counsel, Lorraine C. Davis, Asst. General Counsel, Estelle D. Franklin (argued), Washington, D.C., for appellee, E.E.O.C.

Before HIGGINBOTHAM, Chief Judge, and SLOVITER and ALITO, Circuit Judges.

OPINION OF THE COURT

ALITO, Circuit Judge:

This case presents the question whether the doctrine of res judicata precludes an individual who has unsuccessfully sued an employer for age discrimination from obtaining individual relief in a later suit that is brought by the Equal Employment Opportunity Commission and that asserts the same claim. The district court allowed, 728 F.Supp. 1167, such recovery, citing equitable considerations. We will reverse.

I.

This case grew out of a waiver requirement imposed in 1982 by the United States Steel Corporation (now USX) for employees seeking a "70/80 mutually satisfactory pension." The 70/80 pension, one of several potentially available to USX employees, is a lucrative early retirement plan that the company grants in its discretion to selected employees under age 62 who meet certain conditions relating to cumulative years of age and continuous service with the company. As implied by its name, the 70/80 mutually satisfactory pension was intended for those employees whose early retirement was desired both by the company and the employees. This pension was often granted to management employees whose jobs were eliminated during reductions in force.

In the late 1970's and early 1980's, some employees who had been granted 70/80 mutually satisfactory pensions filed charges alleging employment discrimination. USX believed that these discrimination claims were inconsistent with the understanding on which the 70/80 pension was based, i.e., that early retirement under this pension was mutually satisfactory to the company and the employee. Therefore, USX's board of directors adopted a new requirement, effective in October 1982, that employees accepting the 70/80 mutually satisfactory pension must sign a release form, known as PF-116-B, broadly waiving their rights under the Age Discrimination in Employment Act (ADEA), 29 U.S.C. Sec. 623 et seq., and other antidiscrimination statutes. Under the release, signatories agreed not to file claims or permit anyone else to file claims on their behalf, not to become members of a class pressing claims, not to assist in the prosecution of claims, and to withdraw any claims then pending. The release provided substantial penalties for breach, including the cancellation of the 70/80 mutually satisfactory pension or the conversion of that pension into a less desirable standard variety.

In late 1982, James Coventry and others initiated an ADEA class action against USX in the Western District of Pennsylvania (Coventry et al. v. United States Steel Corp., Civ. Action No. 83-977 (W.D.Pa.)). Under the special procedures for ADEA class actions (see 29 U.S.C. Secs. 216(b), 626(b)), Robert Ward and James Thayer chose to join as plaintiffs. The complaint in this case originally contained a general allegation of age discrimination with respect to termination, lay-off, and recall. In 1983, an amendment added a specific allegation that USX retaliated against the plaintiffs, in violation of section 4(d) of the ADEA, 29 U.S.C. Sec. 623(d), because they refused to sign the release. Some of the plaintiffs eventually settled with USX and obtained retroactive reinstatement of 70/80 pensions, as well as other relief. Coventry, Thayer, and Ward, went to trial before a jury and lost. They did not appeal.

Robert Mitchell, another USX employee, commenced a separate ADEA suit against USX in 1983 in the Northern District of Alabama. After an arbitrator ruled that Mitchell was not entitled to a 70/80 pension, Mitchell filed his complaint, alleging, among other things, that USX violated the ADEA by coercing and defrauding employees into giving up their rights and benefits, including the right to file charges with the EEOC. The jury returned a verdict in favor of USX, and Mitchell did not appeal this adverse judgment. Mitchell v. United States Steel Corp., No. CV83-P-248-S (N.D.Ala., Oct. 9, 1984). Instead, Mitchell filed a new complaint seeking a 70/80 pension in the same court. In December 1984, the district court dismissed this case with prejudice based on the prior judgment and the arbitrator's decision, (Mitchell v. United States Steel Corp., No. CV84-H2574-S (N.D.Ala., Dec. 11, 1984)), and again Mitchell took no appeal.

Meanwhile, in March 1984, the EEOC had filed a complaint in the Western District of Pennsylvania, alleging that USX was engaging in employment practices that violated section 4(d) of the ADEA, 29 U.S.C. Sec. 623(d), by requiring execution of the release as a condition for obtaining a 70/80 mutually satisfactory pension. In April 1984, the district court issued a preliminary injunction relating to the release. In 1987, the district court entered a permanent injunction prohibiting USX from (1) requiring employees to sign the release in order to obtain a 70/80 pension, (2) terminating or reclassifying the 70/80 pension of any employees who filed an ADEA claim with the EEOC or in a court proceeding, and (3) withholding 70/80 benefits from any person whose 70/80 pension was terminated or reclassified pursuant to the release. The court also ordered USX to remit pension benefits withheld as the result of the wrongful termination or reclassification of a 70/80 pension. Equal Employment Opportunity Commission v. United States Steel Corp., 671 F.Supp. 351 (W.D.Pa.1987).

USX subsequently submitted a list of employees who had been denied or had lost 70/80 benefits due to the release. USX argued, however, that some of these employees, who had already settled their ADEA claim, were not entitled to any further retroactive benefits. USX also contended that other former employees, including the Coventry plaintiffs and Mitchell, 1 were barred from receiving retroactive reinstatement in the 70/80 plan by the doctrine of res judicata. 2

The district court agreed with USX that employees who had settled their claims were not entitled to further retroactive benefits, but the court held, at the EEOC's request, that prejudgment interest should be granted to those employees from July 1983 or the original date on which they applied for a 70/80 pension until the date of the court's order. The district court also held that res judicata did not preclude retroactive relief for those employees who had unsuccessfully litigated their ADEA claims in separate actions. The court stated that it was required to "weigh the harm involved by allowing employees to repeatedly litigate an issue versus the harm involved by allowing [United States Steel] to profit by its discriminatory practices." The court then concluded that it was "persuaded that considerations of equity tip the scales of justice in favor of the employees."

USX appealed. Acknowledging the validity of the permanent injunction, USX contested only the award of prejudgment interest to the employees who had settled their claims and the award of benefits to the Coventry plaintiffs and Mitchell. Before this court, the EEOC conceded that the individuals who had settled their claims should not receive prejudgment interest. 3 Accordingly, the only question now before us is whether res judicata bars the award of individual relief for the former employees who previously litigated their ADEA claim and suffered an adverse final judgment.

II.

The doctrine of res judicata "is not a mere matter of technical practice or procedure" but "a rule of fundamental and substantial justice." Hart Steel Co. v. Railroad Supply Co., 244 U.S. 294, 299, 37 S.Ct. 506, 507, 61 L.Ed. 1148 (1917). It is "central to the purpose for which civil courts have been established, the conclusive resolution of disputes within their jurisdictions." Montana v. United States, 440 U.S. 147, 153-54, 99 S.Ct. 970, 973-74, 59 L.Ed.2d 210 (1979). Res judicata avoids "the expense and vexation attending multiple lawsuits, conserves judicial resources, and fosters reliance on judicial action by minimizing the possibility of inconsistent decisions." Id.

In this case, the district court held that res judicata does not preclude recovery by the unsuccessful individual litigants because the balance of equities tipped in their favor. The district court's desire to provide full relief for all of the victims of USX's illegal discrimination is certainly understandable, but the district court lacked the authority to put aside the rules of res judicata based on a weighing of the competing equities. "The doctrine of res judicata serves vital public interests beyond any individual judge's ad hoc determination of the equities in a particular case. There is simply 'no principle of law or equity which sanctions the rejection by a federal court of the salutary principle of res judicata.' " Federated Department Stores, Inc. v. Moitie, 452 U.S. 394, 398, 101 S.Ct. 2424, 2427, 69 L.Ed.2d 103 (1981) (citation omitted). We turn, therefore, to the established principles of res judicata that must govern the disposition of this appeal.

III.

The doctrine of res judicata "is often analyzed ... to consist of two preclusion concepts: 'issue preclusion' and 'claim preclusion'." Migra v. Warren City School Dist. Bd. of Educ., 465 U.S. 75, n. 1, 104 S.Ct. 892, n. 1, 79 L.Ed.2d 56 (1984). Claim preclusion, the...

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