Naton v. Bank of California

Decision Date04 May 1981
Docket NumberNos. 78-1059,78-1562,s. 78-1059
Citation649 F.2d 691
Parties27 Fair Empl.Prac.Cas. 510, 26 Empl. Prac. Dec. P 31,824 Paul NATON, Plaintiff-Appellee, v. The BANK OF CALIFORNIA, Defendant-Appellant. Paul NATON, Carl Gent, Lydia Kravich, Thomas Marlin, Orville Vaughn, Plaintiffs-Appellants, v. The BANK OF CALIFORNIA, Defendant-Appellee.
CourtU.S. Court of Appeals — Ninth Circuit

Andrew C. Peterson, Los Angeles, Cal., argued for Bank of California; Dennis H. Vaughan, Paul, Hastings, Jonofsky & Walker, Los Angeles, Cal., on brief.

Mark I. Schickman, San Francisco, Cal., argued for Naton; Michael Gilfix, Gilfix & Morse, Palo Alto, Cal., Arthur Leinwohl, Los Altos, Cal., Ralph Lee, Palo Alto, Cal., on brief.

Appeal from the United States District Court for the Northern District of California.

Before TRASK and HUG, Circuit Judges, and WYATT *, Senior District Judge.

HUG, Circuit Judge:

This action arises under the Age Discrimination in Employment Act of 1967 (ADEA), 29 U.S.C. §§ 621-34 (amended 1978). Plaintiff Paul Naton brought this suit against defendant Bank of California, N.A. (the "Bank") alleging that the Bank terminated his employment in 1975 because of his age. 1 The jury returned a special verdict for Naton. The Bank appeals from the judgment for Naton and from the district court's denial of the Bank's motions for dismissal of Naton's claim, for judgment n. o. v., and for a new trial. Naton appeals rulings of the district court regarding damages. In addition, four individuals who joined with Naton in the action appeal the dismissal of their claims. We remand for further proceedings.

I Facts

Paul Naton was hired by the Bank in 1965 at age 51 as a trust business development officer. In January of 1975 the Bank instituted a reduction in force which affected 148 employees. On January 17, 1975, the Bank advised Naton that he was terminated pursuant to a bank-wide reduction in force. Naton performed no services at the behest of the Bank after January 17, 1975. In the Bank's separation report, a copy of which was given to Naton, the exit interviewer made the following notation:

Terminated due to staff reduction.

Employee will receive 3 1/2 months separation pay from January 20, 1975 through May 2, 1975. Last day worked, January 17, 1975.

EFFECTIVE TERMINATION DATE: May 2, 1975.

Placed on leave of absence without pay May 5th to January 2, 1976.

Naton notified the Secretary of the Department of Labor of his intent to sue on November 24, 1975, 311 days after the Bank notified Naton that his employment was terminated.

On May 20, 1976, Naton filed this age discrimination suit as a class action pursuant to Federal Rule of Civil Procedure 23. The district court ruled that Rule 23 was not available in a class suit brought under the ADEA, but the court allowed those individuals whom Naton claimed to represent a thirty-day period within which to "opt-in" to the action, pursuant to 29 U.S.C. §§ 626(b), 216(b). Carl Gent, Lydia Kravich, Thomas Martin and Orville Vaughn ("opt-ins") filed consents to be represented.

On the Bank's motion for summary judgment, the district court ruled that the complaints of the "opt-ins" should be dismissed because they failed to file individual notices of intent to sue with the Secretary of Labor and to commence proceedings with the California Fair Employment Practices Commission (FEPC). The district court also struck Naton's prayer for compensatory damages for pain and suffering, ruling that such damages were not recoverable in ADEA actions. The district court rejected the Bank's argument that Naton's action should be dismissed for failure to timely file notice of intent to sue.

Naton's claim was tried before a jury, which returned a special verdict in his favor on the issue of liability. After conducting further proceedings concerning damages, the district court entered judgment in favor of Naton on September 9, 1977. The district court awarded Naton back pay for the period of January 17, 1975 through September 9, 1977, and "front pay" for the period of September 10, 1977 through June 30, 1979, the date of his normal retirement. From the back pay award, the district court deducted $5,040 in unemployment compensation benefits received by Naton, and $11,300.04 in sick leave and vacation pay, which the Bank had previously paid to Naton. The district court denied the Bank's motion for a judgment notwithstanding the verdict and, in the alternative, for a new trial.

II Timely Notice of Intent to Sue

Naton was required to file his notice of intent to sue with the Secretary of Labor within 300 days after "the alleged unlawful practice occurred." 29 U.S.C. § 626(d)(2). 2 The Bank contends that the limitations period began to run when Naton was informed of his discharge on January 17, 1975. Under that theory, Naton's notice of intent to sue, filed on November 24, 1975, was filed 11 days beyond the statutory period. On the other hand, Naton contends that his cause of action did not accrue until May 2, 1975, which was the "effective termination date" entered on the Bank's separation report and the date that Naton ceased drawing separation pay. Under Naton's theory, his notice of intent to sue was filed within 206 days of the unlawful practice, well within the 300-day period. Alternatively, Naton argues that the Bank is equitably estopped from asserting that the limitations period began to run on any date prior to May 2, 1975.

The district court ruled that the alleged unlawful practice occurred on May 2, 1975. Accordingly, it held that Naton's notice of intent to sue was timely filed, and it did not address the issue of equitable estoppel.

A. Date of the Alleged Unlawful Practice

In selecting the "effective termination date" as the date of the alleged unlawful practice, the district court relied heavily on the analysis in Moses v. Falstaff Brewing Co., 525 F.2d 92 (8th Cir. 1975). In Moses, the plaintiff in an age discrimination suit was notified of her discharge on November 12, and she ceased working for her employer on November 16. However, the plaintiff was officially terminated for administrative purposes on November 30, and she continued to draw vacation pay until that date. The Moses court ruled that the statutory notice period began to run on November 30, because the discharge was "not fully implemented" until the official termination date.

Although the district court's reliance on Moses was reasonable in light of the authority available to it at the time it rendered its decision, other courts since have disapproved of Moses. In Bonham v. Dresser Industries, Inc., 569 F.2d 187 (3d Cir.), cert. denied, 439 U.S. 821, 99 S.Ct. 87, 58 L.Ed.2d 113 (1978), the court held that an alleged unlawful practice occurs on the date that notice of termination and the last day of work coincide. Rejecting Moses, the court disapproved of a rule focusing on an employer's official termination date; employers might adopt different dates for different administrative purposes, and it would be inappropriate to determine the timeliness of an employee's suit on the basis of records within the exclusive control of the employer. In addition, a rule focusing on the date of termination of economic benefits might dissuade an employer from extending benefits to a discharged employee after the employee had ceased working. Id. at 191-92. Other circuits have adopted the Bonham test or a similar rule. See Wilkerson v. Siegfried Insurance Agency, Inc., 621 F.2d 1042 (10th Cir. 1980); Krzyzewski v. Metropolitan Government, 584 F.2d 802 (6th Cir. 1978) (Title VII); Payne v. Crane Co., 560 F.2d 198 (5th Cir. 1977); cf. Delaware State College v. Ricks, -- U.S. --, 101 S.Ct. 498, 66 L.Ed.2d 431 (1980) (in Title VII action, alleged unlawful practice occurred when college reached a final decision to deny tenure to plaintiff and plaintiff was notified). 3

For the reasons expressed in Bonham, we hold that when unequivocal notice of termination and the last day of work coincide, the alleged unlawful practice occurs on that date. In this case, there is no dispute that those events coincided on January 17, 1975. 4 We hold as a matter of law that the alleged unlawful practice occurred on that date, more than 300 days before Naton filed his notice of intent to sue. Because we find that Naton's notice was not timely filed, we consider his argument relating to equitable modification of the limitations period.

B. Equitable Estoppel

In Hageman v. Philips Roxane Laboratories, 623 F.2d 1381, 1385-86 (9th Cir. 1980), this court reserved the question whether the limitations periods in section 626(d) are subject to equitable modification. Decisions of other circuits strongly support the argument that the limitations periods in section 626(d)(1) & (2) are not jurisdictional requirements, but are of the nature of statutes of limitations, subject to equitable modification. See Wright v. Tennessee, 628 F.2d 949, 952-53 (6th Cir. 1980) (en banc) (citing to decisions of several other circuits).

We agree that the limitations period set forth in section 626(d)(2) may be equitably modified. The supporting policy reasons are expressed in Dartt v. Shell Oil Co., 539 F.2d 1256 (10th Cir. 1976), aff'd by equally divided court, 434 U.S. 99, 98 S.Ct. 600, 54 L.Ed.2d 270 (1977):

The ADEA is remedial and humanitarian legislation and should be liberally interpreted to effectuate the congressional purpose of ending age discrimination in employment. Additionally, strict compliance with section 626(d)(1)'s time limitation should not be required of laymen attempting to enforce their statutory rights.

Id. at 1260 (citations omitted). Our decision on equitable modification is compatible with our adoption of the Bonham test for determination of the commencement of the limitations period. The limitations period begins to run upon the occurrence of an alleged unlawful practice, even though the selection of a...

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