Von Aulock v. Smith, 82-2279

• Decision Date: 21 October 1983
• Docket Number: No. 82-2279,82-2279
• Citation: 720 F.2d 176
• Parties: 33 Fair Empl.Prac.Cas. 3, 32 Empl. Prac. Dec. P 33,870, 232 U.S.App.D.C. 1, 4 Employee Benefits Ca 2274 Wilhelm H. VON AULOCK and J.M. Hidalgo, Appellants, v. J. Clay SMITH, Jr., Acting Chairman, Equal Employment Opportunity Commission.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 176

720 F.2d 176

33 Fair Empl.Prac.Cas. 3, 32 Empl. Prac. Dec.

P 33,870,

232 U.S.App.D.C. 1, 4 Employee Benefits Ca 2274

Wilhelm H. VON AULOCK and J.M. Hidalgo, Appellants, v. J. Clay SMITH, Jr., Acting Chairman, Equal Employment Opportunity Commission.

No. 82-2279.

United States Court of Appeals District of Columbia Circuit.

Argued May 25, 1983.

Decided Oct. 21, 1983.

Appeal from the United States District Court for the District of Columbia (D.C.Civil Action No. 81-02959).

Beth Nolan, Atty., Dept. of Justice, Washington, D.C., with whom J. Paul McGrath, Asst. Atty. Gen., Dept. of Justice, Stanley S. Harris, U.S. Atty., Larry L. Simms, Deputy Asst. Atty. Gen., Dept. of Justice, Philip B. Sklover, Associate General Counsel, Vella M. Fink, Asst. General Counsel, Colleen M. O'Connor and Christopher Mackaronis, Attys., E.E.O.C., Washington, D.C., were on brief, for appellee.

Edgar Pauk of the Bar of the Supreme Court of N.Y., pro hac vice, New York City, by special leave of Court, with whom Jonathan A. Weiss, New York City, Michael Nussbaum and Kate A. Martin, Washington, D.C., were on brief, for appellants.

Before TAMM, GINSBURG and BORK, Circuit Judges.

Opinion for the Court filed by Circuit Judge BORK.

BORK, Circuit Judge:

Appellants challenge an Interpretative Bulletin of the Equal Employment Opportunity Commission ("EEOC") that they allege authorizes their employers to maintain pension plans that violate the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. Secs. 621-634 (1976 & Supp. V 1981). The issue on this appeal is whether appellants' complaint presents a case or controversy--i.e., whether appellants have standing--even though invalidation of the Interpretative Bulletin would not compel appellants' employers to grant prospective or retrospective relief from the allegedly unlawful pension plans. The district court granted appellee's motion to dismiss for lack of jurisdiction. Von Aulock v. Smith, 548 F.Supp. 196 (D.D.C.1982). We affirm because we conclude that appellants' injury, which was suffered at the hands of their employers, is not fairly traceable to the EEOC's maintenance of the Interpretative Bulletin as an interpretive regulation.

I.

According to the complaint, whose factual allegations we must accept as true in reviewing the jurisdictional dismissal, see Warth v. Seldin, 422 U.S. 490, 501, 95 S.Ct. 2197, 2206, 45 L.Ed.2d 343 (1975), appellant Von Aulock is an employee of Bell Laboratories in New Jersey. He is a participant in a Bell pension plan established on January 1, 1979, the day Bell raised its mandatory retirement age from 65 to 70 in order to comply with the 1978 amendment of the ADEA. Under Bell's plan, Von Aulock's pension will be calculated on the basis of his employment status at the time he reaches the normal retirement age of 65. Thus, although Von Aulock has continued to work past that age, his pension benefits have not been increased to take account of this work. In addition, Von Aulock's pension benefits will not be increased to reflect his shorter expected lifespan when he retires and begins collecting benefits at an age past 65. Finally, Von Aulock is not eligible for a new Bell plan that has higher benefits and is generally available to persons who are active employees on August 10, 1980, but is not available to employees such as Von Aulock who are past the age of 65 on that date; that is, the benefit improvement does not apply to employees past the age of 65.

Appellant Hidalgo is a former employee of Rockwell International in California and a participant in a Rockwell pension plan. Hidalgo retired from Rockwell at the age of 66, taking advantage of Rockwell's raising of its mandatory retirement age from 65 to 70. Nonetheless, Hidalgo's benefits under Rockwell's pension plan were based on his employment status at the time he reached 65; the benefits took no account of his salary and cost-of-living increases in his final year of employment.

Appellants alleged in their complaint that their employers' pension plans discriminated against them solely because they were over age 65. They further alleged that their employers' refusal to adjust pension benefits to take account of service past age 65 has no age-related cost justification. The Bell and Rockwell pension plans, they therefore alleged, violated the ADEA's prohibition on "discriminat[ion] against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's age." 29 U.S.C. Sec. 623(a)(1) (1976).

Rather than suing their employers under the ADEA, appellants brought this action against the EEOC. They alleged in their complaint that Bell and Rockwell maintain the challenged pension plans "because they are authorized to do so by" an Interpretative Bulletin of the EEOC. Complaint paragraphs 28, 36. They contended that the Interpretative Bulletin is contrary to the ADEA and sought a judgment, pursuant to 28 U.S.C. Sec. 2201 (1976), both declaring the invalidity of the current Bulletin and requiring the EEOC to promulgate new regulations consistent with the ADEA.

The challenged Bulletin is an interpretation of section 4(f)(2) of the ADEA. That section declares:

It shall not be unlawful for an employer ...

(2) to observe the terms of a bona fide seniority system or any bona fide employment benefit plan such as a retirement, pension, or insurance plan, which is not a subterfuge to evade the purposes of [the ADEA] ....

29 U.S.C. Sec. 623(f)(2) (Supp. V 1981). When Congress raised the upper age limit on coverage of the ADEA from 65 to 70, it became necessary to clarify the legal status of pension plans based, as many are, on a retirement age of 65. On May 25, 1979, the Department of Labor, which at that time had responsibility for administering the ADEA, issued the Interpretative Bulletin that is the subject of this lawsuit. 44 Fed.Reg. 30,648 (1979) (codified at 29 C.F.R. Sec. 860.120(f)(iv)(B) (1981)).

The Interpretative Bulletin discusses two types of retirement plans: "defined contribution" plans and "defined benefit" plans. Under the former type of plan, employers make designated contributions to the accounts of participating employees, who, at retirement, receive the amount that has accumulated, through employer contributions and interest, in their accounts. Under the latter type of plan, employees receive designated periodic payments upon retirement, and employers fund the plans with whatever is necessary, which depends on changing actuarial projections, to make the designated payments. ¹ Appellants challenge five provisions of the Interpretative Bulletin, one relating to defined contribution plans, and four relating to defined benefit plans.

Subsection (1) states, in relevant part, that "[a] defined contribution plan may provide for the cessation of employer contributions after the normal retirement age of any participant in the plan," unless the plan is "supplemental" to a defined benefit plan or to another defined contribution plan. 29 C.F.R. Sec. 860.120(f)(iv)(B)(1). ² Subsections (3), (4), (5), and (7) provide that a defined benefit plan need not give credit, in calculating benefit accrual, for an employee's service past normal retirement age and need not actuarially adjust the benefits accrued to reflect abnormally late retirement. Those subsections also state that a defined benefit plan need not provide for the accrual of benefits during service past normal retirement age. Finally, they provide that a defined benefit plan need not take account of salary increases or plan improvements that take effect after an employee's normal retirement age, though denial of such increases and improvements is conditioned on the employer's giving the employee the benefit of any improvements made in the plans that apply to persons already retired; in short, the late-retiring employee must be treated either as a retiree or as a younger employee. ³ We assume that appellants' description of the Bell and Rockwell pension plans is accurate and, therefore, that the Interpretative Bulletin does, as appellants allege, condone the two challenged plans.

One month after the Department of Labor promulgated the Bulletin, the EEOC took over the administration and enforcement of the ADEA. Reorg. Plan No. 1 of 1978, 3 C.F.R. 321 (1979), reprinted in 5 U.S.C. app. at 1155-56 (1982), and in 92 Stat. 3781 (1978). The EEOC announced that it had undertaken a complete review of Labor Department interpretations of the ADEA and that those interpretations would remain in effect until new interpretations were adopted. 44 Fed.Reg. 37,974-75 (1979). Since that time, the EEOC has issued modified interpretations on a variety of subjects covered by the Labor Department carryover interpretations. See 46 Fed.Reg. 47,724 (1981); 44 Fed.Reg. 68,858 (1979). But the Interpretative Bulletin challenged by appellants, which the EEOC maintains is still under substantive review, remains in effect. See 46 Fed.Reg. at 47,726. ⁴

Soon after the filing of the complaint in this case, appellee Smith moved to dismiss the action on the ground that the complaint failed to present a justiciable case or controversy. Appellee argued that the Interpretative Bulletin, being merely an agency interpretation and hence not binding on employers, was not the cause of appellants' injury and that its invalidation would not likely result in redress of appellants' injury. Appellants countered that Bell's and Rockwell's maintenance of their plans was in fact fairly traceable to the Interpretative Bulletin. More particularly, they alleged that, because the Portal-to-Portal Pay Act, 29 U.S.C. Sec. 259 (1976), is applicable to the ADEA, 29 U.S.C. Sec. 626(e)(1) (Supp. V 1981), they suffer a direct injury in that the Bulletin deprives them of any remedy against their employers for any discriminatory action taken in good faith reliance on an EEOC interpretation, even if that interpretation eventually is...