Hannan v. Chrysler Motors Corp., Civ. No. 5-71628.

• Decision Date: 16 January 1978
• Docket Number: Civ. No. 5-71628.
• Parties: Virginia HANNAN, Plaintiff, v. CHRYSLER MOTORS CORPORATION, a Delaware Corporation, Defendant.
• Court: U.S. District Court — Western District of Michigan

443 F. Supp. 802

Virginia HANNAN, Plaintiff, v. CHRYSLER MOTORS CORPORATION, a Delaware Corporation, Defendant.

Civ. No. 5-71628.

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

January 16, 1978.

Robert L. Hamburger, Rothe, Mazey & Mazey, Detroit, Mich., for plaintiff.

Hira D. Anderson, Jr., Chrysler Corp., Detroit, Mich., for defendant.

MEMORANDUM OPINION

DeMASCIO, District Judge.

During the greater part of 1974 and continuing into mid-1975, the defendant Chrysler Corporation (Chrysler) experienced a serious economic recession caused by a drastic decline in automobile sales. To assure its economic survival, Chrysler curtailed its manufacturing and assembly operations and, for a period of time, suspended operations entirely to deplete inventories. Simultaneously with this effort, Chrysler management instructed its department heads to reduce by 50 percent its personnel in every facility at all levels. At the time, the plaintiff Virginia Hannan was employed at Chrysler's Detroit Trim Plant, where she worked directly for Mr. Jack Stickley in the personnel department. To comply with the cutback directive Mr. Stickley was required to reduce by 50 percent the number of salaried employees in each department at the Trim Plant. Mr. Stickley testified that department heads evaluated each employee in their department and thereafter selected those employees whom they believed could perform the expanded responsibilities required of a reduced work force. Those employees not selected were separated from employment by layoff or, if eligible, placed on early retirement by mutual agreement or at Chrysler's sole option pursuant to the provisions of the Salaried Employees Pension Plan.

The plaintiff was not selected to remain as a part of the reduced work force. The evidence presented at trial, however, supports the conclusion that plaintiff's release from her employment was occasioned by Chrysler's austerity program. We are unable, therefore, to conclude that Chrysler considered age in its decision not to retain plaintiff as a member of the reduced work force created in November, 1974. Consequently, the only possible claim of discrimination that the plaintiff has against Chrysler relates to Chrysler's decision to involuntarily retire plaintiff rather than place her on lay off. Her claim is that age discrimination was involved in the decision to adopt the first of the two alternatives.

The plaintiff testified that Mr. Stickley advised her that all separated employees 55 years of age and over would be compelled to accept retirement. Despite Mr. Stickley's denial that he made that representation, all the evidence supports the conclusion that Chrysler did involuntarily retire across the board all released employees over 55. Chrysler could have produced evidence to establish that some of its employees 55 years of age or older were in fact placed on layoff status rather than involuntary retirement. Such evidence would have been easily accessible from Chrysler's records.

During the trial, Chrysler contended for the first time that plaintiff's involuntary retirement was not based upon age but rather upon Chrysler's decision that plaintiff could not perform the "expanded duties" required of those remaining in the reduced work force. The evidence does not, however, support this contention. We cannot agree that plaintiff was not a capable employee. Chrysler's own employment records reflect that plaintiff performed her duties in a satisfactory manner. See, e. g., Pl. Ex. 14. Additionally, Chrysler rehired the plaintiff after ten previous layoffs indicating that Chrysler believed plaintiff could perform her tasks satisfactorily (Pl. Ex. 3). Chrysler employed plaintiff for 24 years without a whisper that she was incompetent. Therefore, despite Chrysler's assertion that plaintiff's forced retirement was based upon an evaluation made by Mr. Stickley, we find that plaintiff was a satisfactory employee and that her forced retirement was occasioned by Chrysler's policy to retire all employees 55 years and older as part of its austerity program.

Plaintiff alleges that her early forced retirement under these facts violates the Age Discrimination in Employment Act (ADEA) and the Fourteenth Amendment to the United States Constitution. We have previously held, however, that plaintiff's complaint did not state a claim under the Fourteenth Amendment. Thus, the sole issue presented by the facts as we find them is whether Chrysler violated the ADEA by arbitrarily exercising its option to involuntarily retire all of its employees 55 years of age and over to affect an austerity program. 29 U.S.C. § 623(a)(1) (1970). Chrysler argues that because of the exemption contained in 29 U.S.C. § 623(f)(2) it did not violate the ADEA. That section provides:

It shall not be unlawful for an employer . . . (2) to observe the terms of a bona fide seniority system or any bona fide employee benefit plan such as a retirement, pension, or insurance plan which is not a subterfuge to evade the purposes of this chapter . . . (Emphasis added.)

Chrysler's Salaried Employees' Pension Plan was adopted long before the passage of the ADEA and afforded plaintiff substantial retirement benefits. In this sense, we find that Chrysler's retirement plan was a "bona fide plan" and not a "subterfuge to evade the purposes" of the act. See Raymond v. Bendix Corporation, 15 F.E.P. Cases 49 (E.D.Mich.1977); McKinley v. Bendix Corporation, 420 F.Supp. 1001, 1003 (W.D.Miss.1976); Dunlop v. Hawaiian Telephone Company, 415 F.Supp. 330 (D.Hawaii 1976). The outcome of the sole issue presented here turns upon whether Chrysler could, as an alternative to placing plaintiff in a layoff status, arbitrarily force her to retire pursuant to a bona fide retirement plan.

Chrysler's argument is supported by Brennan v. Taft Broadcasting Company, 500 F.2d 212 (5th Cir. 1974), where the court held that a bona fide plan which permitted involuntary retirement at the option of the employer was exempt from the ADEA; and Zinger v. Blanchette, 549 F.2d 901, 905 (3d Cir. 1977), where the court held that a forced early retirement under a bona fide retirement plan did not violate the ADEA and further found a distinction between retirement and discharge, holding that a bona fide retirement plan was not something Congress intended to regulate when it enacted the ADEA.

In our view, however, these cases are not persuasive on the facts presented here. Chrysler did more than passively observe the terms of its retirement plan in placing this plaintiff on involuntary retirement. The word "observe" denotes a type of passive acquiescence that simply is not present when an employer has an arbitrary and unlimited option to place an employee on involuntary retirement to serve its immediate goals. We cannot assume that Congress chose the word "observe" without reflection. As Circuit Judge Tuttle pointed out in his persuasive dissent in Brennan v. Taft Broadcasting Company, supra, the statute does not state that it is not unlawful for the employer to "enforce" or to "carry out" the terms of the retirement plan. Chrysler went far beyond observing the terms of its retirement plan. See McMann v. United Air Lines, 542 F.2d 217, 219, note 2 (4th Cir. 1976) (dictum), rev'd on other grounds ___ U.S. ___, 98 S.Ct. 444, 54...