Kalvinskas v. California Institute of Technology, 94-55958

• Decision Date: 27 September 1996
• Docket Number: No. 94-55958,94-55958
• Citation: 96 F.3d 1305
• Parties: 71 Fair Empl.Prac.Cas. (BNA) 1647, 69 Empl. Prac. Dec. P 44,293, 65 USLW 2233, 112 Ed. Law Rep. 694, 20 Employee Benefits Cas. 1932, 96 Cal. Daily Op. Serv. 7233, 96 Daily Journal D.A.R. 11,896, Pens. Plan Guide P 23926W John J. KALVINSKAS, Plaintiff-Counter-Defendant-Appellant, v. CALIFORNIA INSTITUTE OF TECHNOLOGY, Defendant-Counter-Claimant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1305

96 F.3d 1305

71 Fair Empl.Prac.Cas. (BNA) 1647,

69 Empl. Prac. Dec. P 44,293, 65 USLW 2233,

112 Ed. Law Rep. 694,

20 Employee Benefits Cas. 1932,

96 Cal. Daily Op. Serv. 7233,

96 Daily Journal D.A.R. 11,896,

Pens. Plan Guide P 23926W

John J. KALVINSKAS, Plaintiff-Counter-Defendant-Appellant, v. CALIFORNIA INSTITUTE OF TECHNOLOGY Defendant-Counter-Claimant-Appellee.

No. 94-55958.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Aug. 8, 1995.

Decided Sept. 27, 1996.

Robert M. Teets, Jr. and Stephen E. Webber, Law Offices of Stephen E. Webber, Los Angeles, CA, for plaintiff-counter-defendant-appellant.

Brent R. Bohn and James A. Zapp, Paul, Hastings, Janofsky & Walker, Los Angeles, CA, for defendant-counter-claimant-appellee.

Laurie A. McCann, American Association of Retired Persons, Washington, DC, for amicus American Association of Retired Persons.

Gail S. Coleman, Equal Employment Opportunity Commission, Washington, DC, for amicus Equal Employment Opportunity Commission.

Appeal from the United States District Court for the Central District of California, Lourdes G. Baird, District Judge, Presiding. D.C. No. CV-93-04073-LGB(JBK).

Before: BROWNING, NORRIS, and REINHARDT, Circuit Judges.

WILLIAM A. NORRIS, Circuit Judge:

This appeal requires us to interpret the Age Discrimination in Employment Act (ADEA), 29 U.S.C. § 621 et seq., as amended by the Older Workers Benefit Protection Act of 1990 (OWBPA), Pub.L. No. 101-433, 104 Stat. 978. At issue is the meaning of a provision in the OWBPA that permits an employer to offset long-term disability benefits with the pension benefits for which a retirement-age employee is eligible.

I

The facts are not in dispute. Kalvinskas was employed as a research scientist at the Jet Propulsion Laboratory of the California Institute of Technology (Caltech) from 1974 to March 1990. Over the course of his 16 years of service to Caltech, Kalvinskas obtained six patents, published 16 technical papers, and received numerous awards. In March 1990, Parkinson's disease forced Kalvinskas to take medical leave from Caltech. After a six-month elimination period, he became eligible on September 1, 1990, for Long-Term Disability benefits (LTD benefits) provided by Caltech. ¹ The LTD plan had a maximum LTD benefit period of 36 months. The LTD plan further provided that Kalvinskas' monthly LTD benefits would be reduced by any state disability insurance benefits, social security disability benefits, and retirement benefits paid or payable at the "normal retirement age" under Caltech's retirement plans. While on medical leave, Kalvinskas retained his status as an employee of Caltech and his right to return to work should his health improve.

Before Kalvinskas took medical leave, his monthly salary was $6682. After he took medical leave, the amount of his LTD benefits varied slightly from month to month due to changes in the amount of the state disability and social security offsets. In January 1992, Kalvinskas' monthly LTD benefits were On June 7, 1993, Kalvinskas sued Caltech in Los Angeles Superior Court, alleging age discrimination in violation of the California Fair Employment and Housing Act (FEHA), ² Cal.Gov't Code §§ 12900 et seq., and the ADEA. Kalvinskas sought to require Caltech to pay him his monthly $2043 in LTD benefits without reduction for retirement benefits he could receive only by retiring. Caltech cross-claimed for $10,216, the sum of five monthly LTD payments it had inadvertently paid to Kalvinskas after he turned 65 because of a delay in processing. Caltech removed the case to the district court pursuant to 28 U.S.C. § 1441(b), and the district court granted it summary judgment. ³ The district court interpreted the ADEA as expressly permitting an employer to offset long-term disability benefits with the pension benefits for which a retirement-age employee is eligible, even if the offset would require the employee to retire in order to receive the pension benefits. The district court's decision turned on its interpretation of the word "eligible," which it held to refer to the opportunity to retire, rather than the opportunity to receive pension benefits independent of retirement status. Because the district court overlooked the critical distinction between retirement status and pay status, we reverse. We hold that Caltech violated § 4(f)(2) of the ADEA, 29 U.S.C. § 623(f)(2), by offsetting Kalvinskas' disability benefits with pension benefits that he could receive only by retiring.

$2043. On January 14, 1992, Kalvinskas turned 65 and became eligible for retirement under the two Caltech retirement plans in which he participated. At that time, had he elected to retire, his monthly retirement benefits would have been $2061, an amount slightly more than the $2043 he was then receiving in monthly LTD benefits. Unlike pension plans that allow employees to receive pension payments while still employed, the pension plans at issue in this case required Kalvinskas to retire as a condition precedent for receipt of pension benefits. What gave rise to this litigation was Caltech's decision to offset Kalvinskas' LTD benefits by the amount of the pension benefits he could have received only by retiring, thereby reducing Kalvinskas' income stream from Caltech to zero.

II

At the outset, we emphasize that this is not a case about double-dipping. Kalvinskas acknowledges that the ADEA permits an employer to offset long-term disability benefits by the pension benefits for which an employee is "eligible," but argues that at the time of the offset he was not "eligible" for any pension benefits because he had not retired. Kalvinskas' legal theory is that by offsetting his disability benefits with pension benefits he could receive only by retiring, thereby reducing his income stream to zero, Caltech effectively coerced him into retiring on the basis of age in violation of § 4(f)(2) of the ADEA, which prohibits employee benefit plans that "require or permit the involuntary retirement of an individual." 29 U.S.C. § 623(f)(2). ⁴ Essentially, Kalvinskas argues We agree with Kalvinskas, as the district court did, see Order at 11-12, that by offsetting his LTD payments by the amount of the pension payments he could receive only by retiring, thereby reducing his income stream to zero, Caltech "require[d]" his involuntary retirement within the meaning of § 4(f)(2). Without deciding what degree of reduction in disability benefits would "require or permit the involuntary retirement of any individual" under § 4(f)(2), we hold that a reasonable person in Kalvinskas' position would feel he had no choice but to retire. ⁵ Thus, Caltech's LTD plan, as applied to Kalvinskas, "require[d]" his involuntary retirement within the meaning of § 4(f)(2).

that by reducing his income stream to zero, Caltech left him with no choice but to retire, thereby terminating his status as an employee and closing the window of opportunity to resume working at Caltech should his health improve.

Caltech attempts to avoid this conclusion by arguing that a "mere reduction" in disability payments cannot be deemed to "require" involuntary retirement under § 4(f)(2). See Appellees' Br. at 9-10. It attempts to distinguish, for this purpose, between a "mere reduction" in disability payments and an "absolute exclusion" from participation in a disability benefits plan. Id. Caltech offers no support for its distinction, ⁶ and we reject it. At least as applied to the facts of this case, the coercive effect on Kalvinskas would have been no greater had he been excluded from participation in the disability benefits plan altogether, than it was in fact by a "mere reduction" in his disability benefits to zero.

III

Having decided that Caltech's reduction of Kalvinskas' LTD benefits "require[d]" his involuntary retirement within the meaning of § 4(f)(2), we now turn to the question whether Caltech's LTD plan was protected by a safe harbor created by § 4(l)(3)(B) of the ADEA, 29 U.S.C. § 623(l)(3)(B). Section 4(l)(3)(B) permits the reduction of long-term disability benefits by pension benefits "for which an individual who has attained the later of age 62 or normal retirement age is eligible." 29 U.S.C. § 623(l)(3)(B) (emphasis added). ⁷ Kalvinskas and amicus Equal Employment We cannot resolve the dispute between Kalvinskas and the EEOC on the one hand, and Caltech on the other, by recourse to the statutory language itself, because Congress left the word "eligible" undefined. We move on, therefore, to a consideration of the statute's legislative history and its purposes. See United States v. van den Berg, 5 F.3d 439, 443 (9th Cir.1993) ("Because there is no plain meaning ... that is dispositive of the disagreement between the parties, we move on to a consideration of the statute as a whole, its history, and its purposes.").

Opportunity Commission (EEOC) ⁸ argue that § 4(l)(3)(B) does not make lawful Caltech's offset of Kalvinskas' disability benefits by his pension benefits because Kalvinskas did not become "eligible" for his retirement pension within the meaning of § 4(l)(3)(B) simply by reaching age 65. Instead, they argue that Kalvinskas became "eligible" for his pension benefits only after he in fact retired. In contrast, Caltech argues that Kalvinskas became "eligible" within the meaning of § 4(l)(3)(B) when he reached age 65.

Looking at the legislative history, we find no committee report addressing the meaning of the word "eligible" in § 4(l)(3)(B). We do find, however, relevant statements by sponsors of the OWBPA. See Federal Energy Admin. v. Algonquin SNG, Inc., 426 U.S. 548, 564, 96 S.Ct. 2295, 2304, 49 L.Ed.2d 49 (1976) (statements of sponsor deserve substantial weight); Church of Scientology v. United States Dep't. of Justice, 612 F.2d 417, 424 n. 13 (9th Cir.1980) (court may look to statements by initiators or sponsors of proposed legislation when meaning of words is in doubt). Senator...