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Lipani v. Bohack Corp.

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT


decided: December 6, 1976.

ANTHONY M. LIPANI, PLAINTIFF-APPELLANT,
v.
BOHACK CORPORATION, DEFENDANT-APPELLEE. ROBERT LOESCH, PLAINTIFF-APPELLANT, V. BOHACK CORPORATION, DEFENDANT-APPELLEE

Appeal from a judgment of the Eastern District, John R. Bartels, Judge, granting defendant's motion for summary judgment on the ground that plaintiffs were not entitled under section 9(b) of the Military Selective Service Act, 38 U.S.C. § 2021(a), to have time spent in the military counted toward the accrual of vacation and sick leave benefits upon reinstatement to their former position.

Lumbard, Friendly and Mulligan, Circuit Judges.

Author: Lumbard

LUMBARD, Circuit Judge:

Plaintiffs-appellants appeal from the judgment of the Eastern District, reported at 368 F. Supp. 282 (E.D.N.Y. 1973), in which Judge Bartels granted defendant's motion for summary judgment. Appellants raise two claims on appeal: first, that the district court erred in concluding that vacation and sick leave benefits as provided by the collective bargaining agreement were not perquisites of seniority protected under the veterans reemployment provisions of the Military Selective Service Act (hereinafter "the Act"), § 9(b), 50 U.S.C. App. § 459;*fn1 and, second, that even if the benefits are not perquisites of seniority, appellants are entitled to have their military service time counted toward the accrual of these benefits by virtue of section 9(c) of the Act.*fn2 We find no merit in these contentions and, accordingly, affirm.

The case was decided by the district court on cross motions for summary judgment and upon a stipulated set of facts. Plaintiffs are veterans who were employed by Bohack Corporation prior to entering the military and who were reinstated by Bohack to their former positions upon completing their military service. LiPani was employed from May 6, 1969, until his entry into the service on July 14, 1969 (2 months and 8 days). He was reemployed by Bohack on October 18, 1971 and, at the end of calendar year 1971, had worked for Bohack a total of approximately 4 months and 20 days. Loesch was employed from March 10, 1969, until he left for the service on July 31, 1969 (4 months and 20 days). He was reemployed on October 18, 1971 and, at the end of calendar year 1971, had worked for Bohack a total of approximately 7 months and 2 days.

Bohack credited both appellants with two years seniority as required by section 9(b) of the Act; however, Bohack refused to credit the time appellants spent in the military toward the computation of vacation and sick leave benefits. Accordingly, at the end of calendar year 1971 LiPani was treated as though he had worked for Bohack for 4 months and 20 days and, under the terms of the collective bargaining agreement,*fn3 was deemed ineligible for either a vacation or a full year's sick leave benefits; since Loesch had accumulated a total of 7 months and 2 days in Bohack's service, under the agreement he was deemed eligible for one week of paid vacation in December of 1971. Seeking to have his time in the military credited toward the computation of 1971 vacation and sick leave benefits, Loesch brought suit demanding additional vacation pay for one week and sick leave allowance for the year 1971; LiPani sued for a full two weeks vacation pay and sick leave allowance for 1971.*fn4

The district court rejected appellants' argument that vacation and sick leave benefits accrued by mere continuous association with the company and found that under the terms of the contract vacation and sick leave benefits had to be "earned during the year predicated upon work and not by the mere passage of time." 368 F. Supp. at 284. The district court based this finding on such factors as 1) that the contract required an employee to perform "six (6) months of continuous working service" before being entitled to a one week vacation, 2) that vacation pay was computed on the basis of the employee's weekly earnings including premiums, and, 3) that in the event an employee entitled to a vacation was laid off, the employee was awarded any vacation and sick leave earned but not taken in the past year plus vacation pay and sick leave prorated on the basis of time worked in the year of the lay-off. See 368 F. Supp. at 284. The court then went on to conclude that Congress did not intend to preclude the use of a bona fide work requirement as a prerequisite to the granting of vacation and sick leave benefits. See 368 F. Supp. at 285.

The district court's opinion preceded the Supreme Court's holding in Foster v. Dravo Corp., 420 U.S. 92, 43 L. Ed. 2d 44, 95 S. Ct. 879 (1975), and is reinforced by it. In Foster the Court dealt with a collective bargaining agreement under which eligibility for vacation was tied to a 25 week work requirement, which plaintiff was unable to meet because of intervening military service. The Third Circuit found that under the contract, benefits were not a reward for mere length of service and hence not a form of seniority, but were a form of deferred compensation for work performed. In affirming the Supreme Court noted that because a vacation is commonly conceived of as a reward for and respite from a lengthy period of labor, "the statute should be applied only where it clearly appears that vacations were intended to accrue automatically as a function of continued association with the company." 420 U.S. at 101. Significantly, in finding the collective bargaining agreement's provision for vacation benefits to be based upon a bona fide work requirement, the Court focused upon three factors highly similar to those noted by the district court: 1) the presence of a 25 week work requirement; 2) the fact that vacation benefits were computed on the basis of work performed; and 3) the fact that the agreement provided for a pro rata distribution of benefits in the event an employee was laid off. 420 U.S. at 99-100.

Appellants argue that the present case is distinguishable from Foster on the ground that the collective bargaining agreement there required that employees receive earnings in 25 weeks each year in order to be eligible for vacation benefits; in contrast, appellants argue that the contract here at issue provides that one week of paid vacation accrues after "six months of continuous working service" and thereafter benefits accrue merely by virtue of the fact that an individual is in the "employ" of the company. If read literally and in isolation, the language of Article X(A) of the contract might lead to the conclusion that LiPani was not entitled to any vacation benefits (because he did not complete six months of "working service") but Loesch was entitled to the full year's benefits (because he met the six-month work requirement and, under the statute, was in the "employ" of the company for more than 12 months). However, we conclude that in light of related provisions of the contract and the record, Judge Bartels was clearly correct in finding that the vacation and sick leave benefits here are predicated upon work and not the mere passage of time. In an affidavit submitted in support of appellee's motion for summary judgment Robert Bohack, personnel director for Bohack, stated that pursuant to the agreement vacation and sick leave benefits at Bohack must be earned and "do not accrue automatically with the mere passage of time"; further, Bohack stated that in negotiating the terms of the agreement the concept that vacation is an earned benefit was considered by all parties to be "indisputable" and was assumed to be the general rule. As noted earlier, under the agreement vacation pay is computed on the basis of the employee's actual earnings including premiums and in the event of a lay-off eligible employees receive benefits on a pro rata basis. As the Court noted in Foster, such provisions lend substantial support to appellee's claim that the vacation benefits are a form of deferred compensation. See 420 U.S. at 100.

Similarly, we find that sick leave benefits under the contract are a form of deferred compensation of the same general nature as vacation pay, see Jackson v. Beech Aircraft Corp., 517 F.2d 1322, 1326 (10th Cir. 1975); but see Nichols v. Kansas City Power & Light Co., 391 F. Supp. 833, 840-41 (W.D. Mo. 1975); Aiello v. Detroit Free Press, Inc., 397 F. Supp. 1401 (E.D. Mi. 1974), rehearing den. 77 CCH Labor Cases para. 10,999 (June 25, 1975); in fact, because it appears that neither of the appellants was ill during 1971, under Articles X(A) and XII(A) of the contract, appellants' claim for added sick leave amounts to a claim for additional vacation benefits. As in the case of vacation benefits, sick leave benefits are prorated in the event an employee is laid off; further, in the case of employees who have worked less than one year, the contract provides that sick leave allowance is earned on a pro rata basis. Moreover, unlike vacation benefits, which increase with seniority,*fn5 there is no relationship between the size of the benefits and seniority: each employee receives 10 days of sick leave allowance for each year of "completed" employment regardless of the employee's length of association with the company. Thus, we agree with the district court that under the agreement vacation and sick leave benefits are to be earned by work and do not accrue automatically from continued association with the company. The fact that the work requirement correlates only loosely with the benefits and that appellants are able to hypothesize " bizarre results" is not sufficient to invoke the statutory guarantee.*fn6 See Foster v. Dravo Corp., supra, 420 U.S. at 99-101; Jackson v. Beech Aircraft Corp., supra, 517 F.2d at 1327.

Finally, appellants contend that Bohack employees on leave of absence continue to acquire vacation and sick leave benefits; accordingly, appellants claim that they are entitled to have time spent in the service counted toward the accrual of these benefits by virtue of section 9(c) of the Act, which entitles returning servicemen to the same treatment given employees on furlough or leave of absence. See Foster v. Dravo Corp., supra, 420 U.S. at 102, n.10; Accardi v. Pennsylvania Railroad Co., 383 U.S. 225, 231, 15 L. Ed. 2d 717, 86 S. Ct. 768 (1966). As the district court found, see 368 F. Supp. at 285, the contract contains no specific provision for vacation or sick leave benefits for employees on furlough or leave of absence. However, in an affidavit Alex MacBain, the union business representative, indicated that in practice the contract is construed to allow employees who are on union business or jury duty, as well as employees who are unable to work because of illness or disability, to continue to accrue vacation and sick leave benefits. See McKinney v. Missouri-Kansas-Texas Railroad Co., 357 U.S. 265, 273-74, 78 S. Ct. 1222, 2 L. Ed. 2d 1305 (1958). Taking these allegations as true, we fail to see how they put into operation section 9(c) of the Act. The Act requires only that an employer give to a returning serviceman the same treatment he would give to an employee on a leave of absence or a furlough. See Foster v. Dravo Corp., supra, 420 U.S. at 102, n.10; Accardi v. Pennsylvania Railroad Co., supra, 383 U.S. at 231 (1966). Nothing in MacBain's affidavit contradicts the affidavits submitted by appellee, which averred that appellants were given treatment identical to that provided employees on extended leaves of absence. The record is devoid of any indication that Bohack has ever granted an employee a two-year leave of absence and we deem it highly unlikely that if such an event did occur, the company would allow the employee to continue to accrue vacation and sick leave benefits. It is noteworthy that under Article XIV of the contract the maximum leave of absence obtainable is eight weeks (although this does not include absences due to illness). Because it is clear that the Act was not intended to place returning servicemen in a better position than other employees, see Tilton v. Missouri Pacific Railroad Co., 376 U.S. 169, 181, 11 L. Ed. 2d 590, 84 S. Ct. 595 (1964); Fishgold v. Sullivan Drydock & Repair Corp., 328 U.S. 275, 286, 90 L. Ed. 1230, 66 S. Ct. 1105 (1946), we find no merit in appellants' claims under section 9(c) of the Act.

Affirmed.

Disposition

Affirmed.


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