EEOC v. Chrysler Corp.

• Decision Date: 23 June 1982
• Docket Number: Civ. A. No. 81-72347.
• Citation: 546 F. Supp. 54
• Parties: EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff, v. CHRYSLER CORPORATION, Defendant.
• Court: U.S. District Court — Western District of Michigan

546 F. Supp. 54

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff, v.CHRYSLER CORPORATION, Defendant.

Civ. A. No. 81-72347.

United States District Court, E. D. Michigan, S. D.

June 23, 1982.

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Dorothy M. Smith, Jan C. Leventer, Detroit, Mich., for plaintiff.

Thomas G. Kienbaum, Detroit, Mich., for defendant.

MEMORANDUM OPINION AND ORDER

PHILIP PRATT, District Judge.

The Equal Employment Opportunity Commission(EEOC) alleges that the Chrysler Corporation has violated the Age Discrimination in Employment Act of 1967 (ADEA), as amended, 29 U.S.C. §§ 621 et seq. by a program of both voluntary and involuntary retirement of workers.This federal question is currently before the Court on defendant's Motions to Dismiss Representative Claims, and for Partial Summary Judgment, and plaintiff's Motion for Preliminary Injunction all arising from the retirements under Chrysler's Special Early Retirement Program (SER) of approximately 1600 salaried non-bargaining unit employees, occurring in September, 1979, and April, July, and December of 1980.For the reasons set forth below, defendant's motions are denied and plaintiff's motion is granted in part and denied in part.

The EEOC has brought this action in its representative capacity¹ to enforce the ADEA's provision that "no ... bona fide employee benefit plan shall require or permit the involuntary retirement of any individual between the ages of 40 to 70 because of the age of such individual;".²By its motion for preliminary injunction, the EEOC seeks reinstatement of all retirees who were retired contrary to ADEA's provisions, as well as back pay and liquidated damages, in addition to prospective relief enjoining Chrysler from further implementation of the special early retirement program.

Chrysler, by its motion to dismiss representative claims, seeks to limit EEOC's representation to the claimants named in the complaint, Messrs. McSorley and Sadowski.Defendant also seeks partial summary judgment that involuntary retirement, when the retiree's job has been eliminated, does not violate the ADEA.

I.BACKGROUND

The Court takes judicial notice of the fact that defendantChrysler Corporation was faced with an extreme economic crisis in 1979.³Chrysler was forced to make cutbacks in both the number of operating facilities and manpower.From a total employment of 256,200 in 1978, Chrysler ultimately reduced its work force to 101,159 as of August 21, 1981.⁴From 26,000 salaried employees who were not represented by a union as a bargaining unit, Chrysler reduced that work force to its present level of approximately 16,000.Of the roughly 10,000 Michigan salaried employees who lost their jobs during the 1979-80 reduction in force (RIF), approximately 1600 retired under Chrysler's SER program.

Chrysler's Pension Plan (plaintiff's Exhibit 74) and the Corporate Personnel Procedure (CPP) which implements it, CPP 2-1038(plaintiff's Exhibit 76) provide for several different retirement programs depending on the age, years of corporate service and health of the employee.Normal retirement is available to Chrysler employees who have reached the age of 65 and have at least 10 years of corporate service.Chrysler Pension Plan§ 2.2.Former employees with at least 10 years of corporate service are entitled to a deferred pension which pays full benefits depending upon the years of corporate service, upon reaching age 65.Former employees may begin to draw actuarially reduced amounts as early as age 55.

The focus of this litigation is Chrysler's provisions for early retirement under § 2.4 of its Pension Plan.The early retirement provisions in § 2.4A apply to employees between 60 and 65 years of age with 10 years of credited service;⁵ to employees between 55 and 60 years whose corporate service when added to their age equals at least 85; and to those less than 55 years of age with more than 30 years of service who volunteer for retirement.Voluntary retirees who initiate the retirement request receive full pension benefits less an actuarial reduction to compensate for the longer period during which pension benefits will be paid.Employees who fall within the age and service categories, supra, and who are terminated may at their option convert that termination into a voluntary early retirement.

The Pension Plan also provides for early retirement at corporate option (COR) or under Mutually Satisfactory Conditions (MSC), for employees aged 55-65 with at least 10 years of corporate service.Chrysler's Pension Plan§ 2.4B. Benefits under this subsection are the same as those available to "normal" retirees at the age of 65, in that they are not subject to an actuarial reduction, plus a temporary supplement comparable to Social Security benefits payable until the retiree qualifies for Social Security.

This COR/MSC retirement option has been denominated "Special Early Retirement"(SER) by Chrysler management.CPP 2-1038, pp. 47-48(plaintiff's Exhibit 76).Employees qualify for SER in the event of (1) a permanent plant shutdown; (2) a layoff which appears to be permanent; (3) an employee's physical or mental inability to satisfactorily perform work due to a permanent partial disability; or (4) an employee's extended disability.

In 1979, Chrysler, by its Employee Benefits Committee decided to extend an offer of Special Early Retirement to all qualified employees in an effort to reduce the salaried work force.Notes from Employee's Benefit Committee Meeting, August 1, 1979, (plaintiff's Exhibit 77).The intent of the program was to offer retirement with full, i.e. actuarially unreduced, benefits to employees with requisite age and service, who were not yet 65, the "normal" retirement age.Employees accepting this offer would receive basic and temporary pension benefits, continue under group life insurance until age 65, corporation paid group medical benefits (seeplaintiff's Exhibit 75, p. 5), and be permitted to retain income earned from other sources without diminution of pension benefits.

Under published guidelines for implementing the SER offer, employees who were offered early retirement and declined were not to be penalized by forced retirement.⁶Individual layoff decisions were not to be made until management was aware of how much of the reduction in force (RIF) had been accomplished by voluntary acceptances of SER.Chrysler initiated its program by distributing its offer letter to all employees eligible as of August 31, 1979, in September 1979.To meet its RIF objective, after receiving all the responses to the SER offer, Chrysler was nevertheless forced to lay off workers.Employees otherwise eligible for Corporate Option Retirement who did not volunteer for SER and were subsequently selected for a layoff deemed to be permanent were retired at corporate option rather than being laid off.

Because of the continuing crisis, SER programs were re-offered in April, July, and December of 1980.Each offer was made in the context that continuing layoffs would be necessary and those eligible for voluntary SER who refused might nevertheless be laid off permanently, not as retaliation for turning down the SER but to accomplish the RIF.At the end of this period of manpower reductions approximately 1600 had signed forms which indicated a voluntary acceptance of SER.In addition 30 employees eligible for voluntary SER, but who did not accept it, were retired at Corporate Option after they had been selected for permanent layoff.

The key issue before the Court is whether the RIF by either the voluntary SER or mandatory COR violates the ADEA, and if so what remedies are appropriate at this preliminary stage of the litigation.The Court must address the threshold question of which retirees the EEOC is currently representing in this opt-in class action.

II.CHRYSLER'S MOTION TO DISMISS REPRESENTATIVE CLAIMS

The substantive provisions of the ADEA, whose purpose is to eliminate age discrimination in the workplace, are frequently analogized to those of Title VII which focuses on the elimination of discrimination due to sex, race, and national origin.SeeOscar Mayer v. Evans,441 U.S. 750, 756, 99 S.Ct. 2066, 2071, 60 L.Ed.2d 609(1979);Marshall v. Chamberlain Mfg. Corp.,601 F.2d 100, 104(3rd Cir.1979).

Congress eschewed the Title VII enforcement scheme in favor of the enforcement provisions of the Fair Labor Standards Act (FLSA).SeeLorillard v. Pons,434 U.S. 575, 578-80, 98 S.Ct. 866, 868-69, 55 L.Ed.2d 40(1978).

Section 7 of the ADEA,29 U.S.C. § 626, incorporates the civil penalties of the § 16 FLSA enforcement procedures, 29 U.S.C. § 216, and gives federal courts jurisdiction to enjoin violations of the ADEA under § 17 of the FLSA, 29 U.S.C. § 217.

The purpose of the FLSA is to enforce minimum wage and overtime compensation laws.Congress adapted the provisions to remedy ADEA violations by treating amounts owing to a person as a result of age discrimination as "unpaid minimum wages or unpaid overtime compensation."29 U.S.C. § 626(b).Although prevailing employees are entitled to both unpaid wages and an additional equal amount as liquidated damages for any violation of the FLSA, 29 U.S.C. § 216(b), (c), under the ADEA liquidated damages are available only where the violation is willful.29 U.S.C. § 626(b).The ADEA also provides for tolling of the statute of limitations for up to a year while the EEOC "is attempting to effect voluntary compliance ... through informal methods of conciliation, conference and persuasion ...."29 U.S.C. § 626(e)(2)(as amended April 6, 1978).

Under the FLSA/ADEA scheme, private individuals may bring suit on their own behalf or for "other employees similarly situated" for "employment, reinstatement, promotion and amounts owing due to violations of the Act, and liquidated damages."29 U.S.C. § 216(b).Although employees similarly situated to the claimant may join in an individual's suit...