The opinion of the court was delivered by: SAND
This action was commenced on December 28, 1978, under § 7(b) of the Age Discrimination in Employment Act of 1967, 29 U.S.C. § 621 et seq. (the "ADEA" or the "Act"), and § 17 of the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. § 201 et seq. (the "FLSA").
Jurisdiction is founded on ADEA § 7(c), 29 U.S.C. § 626(c).
Plaintiff, the Equal Employment Opportunity Commission (the "EEOC"), alleges that defendant, The Home Insurance Company ("Home"), violated ADEA § 4(a) when it reduced the mandatory retirement age under its retirement plan from 65 to 62. This change became effective in 1974, prior to the 1978 amendment to the Act which prohibited employers from involuntarily retiring employees under age 70 because of their age. Pub.L. 95-256, § 2(a), 92 Stat. 189. See  U.S. Code Cong. & Ad. News 504.
Plaintiff seeks an injunction restraining defendant from withholding wages allegedly owed 143 former Home employees who were involuntarily retired prior to age 65 and also asks that the Court permanently enjoin defendant and its employees from violating the provisions of ADEA § 4. Defendant denies that it violated the ADEA and asserts several affirmative defenses, claiming, inter alia, that this action is time barred; that the lowering of the mandatory retirement age was lawful under ADEA § 4(f)(2), 29 U.S.C. § 263(f)(2); and that it acted in good faith reliance on administrative rulings and regulations as permitted under § 10 of the Portal-to-Portal Act of 1947, 29 U.S.C. § 259.
This case is before the Court on remand from the Court of Appeals for the Second Circuit, 672 F.2d 252, 27 FEP Cases 1665 (2d Cir. 1982), rev'g and remanding 25 E.P.D. [CCH] P 31,556, 25 FEP Cases 353 (S.D.N.Y. January 21, 1981). The issue of liability has been tried to the Court, with the issues relating to remedy reserved pending the outcome of this trial. Plaintiff's motion, returnable the first day of trial, to amend its complaint to assert a claim for liquidated damages under FLSA § 16(c), 29 U.S.C. § 216(c), was denied in an oral Opinion delivered the same day. See Trial Transcript, at 10-28. Upon the close of trial, plaintiff renewed its motion for leave to amend its complaint, which the Court hereby denies for the reasons stated in its prior Opinion.
The following constitutes our findings of fact and conclusions of law pursuant to Fed.R.Civ.Proc. 52(a).
Home, since 1948 and at all times relevant to this suit, maintained a noncontributory retirement benefit plan for its employees (the "Plan"). From the date of its adoption until its amendment effective January 1, 1974, the Plan provided for "mandatory" and "normal" retirement at age 65. As the term implies, the mandatory retirement age is the age beyond which the employee is not permitted to work; the normal retirement age is the age at which an employee can retire without any actuarial reduction in pension benefits. The Plan also provided that an employee could retire between the ages 55 and 65 with reduced pension benefits.
In the latter part of 1972, in anticipation of an upcoming review of all employee benefits at Home, Joseph F. Quinn, general counsel and senior vice-president of Home, commissioned a study by Towers, Perrin, Forster & Crosby ("Towers, Perrin"), a consulting firm in the field of employee benefits. According to Mr. Quinn's testimony, the purpose of this study was to consider means by which Home's employee benefits could be made more competitive with those offered elsewhere in the industry. Specifically, consideration was to be given to reducing the Plan's normal retirement age to 62. On March 29, 1973, Towers, Perrin issued the commissioned study, recommending, inter alia, that early retirement be liberalized to allow "retirement on unreduced accrued benefits after age 62 and 10 years of service." Defendant's Exhibit F, at 13-14, 43. The only reference in the study to the mandatory retirement age was a recommended minor change relating to the date following an employee's 65th birthday upon which retirement should occur. Id. at 43.
The study was presented to Home's Retirement Committee (the "Committee"), which, despite its limited title, was charged with reviewing all employee benefits for the purpose of recommending changes to the board of directors.
The Committee departed from the Towers, Perrin study in two significant respects. After reviewing the study, the Committee decided to increase early retirement benefits by further diminishing the actuarial reduction for employees retiring between the ages 58 and 61. In addition, the Committee adopted at the last of its meetings the suggestion of one of its members, Roger Bayles, that the mandatory retirement age be reduced to 62.
The Committee's recommendations were then set forth in a memorandum from Mr. Quinn to Messrs. Washburn and Tullis, Home's chairman of the board and president, respectively. Although the memorandum was silent as to the Committee's reasoning for the lowered mandatory retirement age, with regard to the lowered actuarial reductions it stated:
"Under this schedule the penalty for early retirement at ages 57 through 61 would be significantly reduced from present and the Committee feels that this is consistent with its objective of promoting turnover."
Defendant's Exhibit G, at 2.
Among the amendments to the Plan ultimately adopted by Home's board of directors and made effective January 1, 1974, were the lowering of both the mandatory and normal retirement ages from 65 to 62 and the increase of pension benefits payable to those retiring between the ages of 55 and 62. In addition, to lessen the disruptive impact that the lowered mandatory retirement age would have on Home's older employees, a grandfathering provision was adopted. Under this provision, all employees age 60 or older on January 1, 1974, could continue to work until the earlier of the July 1st nearest their 65th birthday or January 1, 1977.
Home, wishing for purposes of employee relations to publicize its enhancement of employee benefits (which increased the annual cost of such benefits by an estimated $1,447,000), resorted to several means to apprise its employees of the changes made. The most significant of these were a four-page brochure issued in late 1973 and a new employee-benefit handbook distributed in early 1974. In addition, a slide-talk presentation of the Plan changes was prepared and given to Home's senior and middle management personnel, who in turn convened meetings of all employees in defendant's various branch offices and explained the Plan changes by similar slide presentations and/or general discussion. Home in these communications assiduously avoided the use of the term "mandatory": the term appears nowhere in the sixty-page handbook and but once, in parentheses and with no elaboration, in the brochure; the slide presentation refers solely to changes in the normal retirement date. However, the presence of a grandfather clause to deal with those "caught by surprise" by the amendment served to make clear that retirement at age 62 was not otherwise optional.
Subsequent to, and independent of, these efforts, sometime between late November and mid-December 1974 each employee received by mail at his residence a data sheet setting forth employee benefit and retirement-related information, known as a "Benefacts statement." Such Benefacts statements were mailed annually to each employee around Thanksgiving time pursuant to a contractual relationship between defendant and Benefacts, Inc., an independent consultant in the field of employee-benefit communication. The testimony discloses that these statements were an annually received item, eagerly awaited and much discussed by the employees and creates the strong presumption that each employee received his or her Benefacts report for 1974, the first such report to reflect the 1973 Plan amendments. Their content, in relevant part, is amply exemplified by the following excerpt from Defendant's Exhibit N-8 (a Benefacts statement sent to an employee subject to the grandfather clause), the underscored text representing individualized insertions:
"When you retire at age 63 on January 1, 1977, you will receive estimated monthly benefits of $615 from the Home Retirement Plan, and Social Security."
The straightforward language employed in this report -- prepared by a consulting firm specializing in employee-benefit communications -- and the testimony at trial generally depicting the nature and extent of the discussion evoked by the lowered mandatory and normal retirement ages, as well as by the grandfathering provision, clearly establish that these 1974 Benefacts statements individually notified each employee of the date upon which he or she would be compelled to retire.
Plaintiff claims that defendant has failed to sustain its burden of proving that each of the 143 employees received notice of a mandatory retirement date. But, as noted supra, the evidence shows that, in addition to the brochures and Benefacts mailing, Home held a series of meetings to explain the changes effected in the Plan to all of its employees. The testimony indicates that, not surprisingly, these changes were the subject of widespread discussion among the employees. While Home, in its efforts to maximize the positive aspects of the Plan changes, underplayed the mandatory nature of the lowered retirement age, it is difficult to conceive that any employee nearing that age was not fully aware of the change. Although Home has the burden of proof on the issue of notification, it certainly adduced enough evidence so that it is not without significance that not a single one of the 143 employees was called to testify to a lack of knowledge in late 1974 that the mandatory retirement age had been lowered.
The first of what ultimately amounted to 143 terminations under the lowered mandatory retirement age provision took place on February 1, 1976; the two-year gap between the provision's adoption and the first termination was occasioned by the grandfathering clause. Anywhere from one to twelve months prior to termination, the employee would receive a form headed "Office Memorandum", which stated the individual's date of retirement, the several options available for the distribution of retirement benefits, and other information relating to retirement. Employee terminations continued from February, 1976 until Home once again amended the mandatory retirement provision, effective October 1, 1977, by raising the mandatory retirement age to 65.
A. The Statute of Limitations
We consider first defendant's assertion, which the parties have fully briefed and argued at this stage of the proceedings, that the monetary relief plaintiff seeks on behalf of the 143 employees is time-barred. It is defendant's contention that this monetary relief is barred by the statute of limitations set forth in the Portal-to-Portal Act (the "PPA") § 6(a), 29 U.S.C. § 255(a),
made applicable to ADEA actions brought under FLSA § 17 by ADEA § 7(e)(1), 29 U.S.C. § 626(e)(1),
as well as by the express terms of FLSA § 17.
The evident purpose of the proviso appearing at the end of FLSA § 17 is to preclude the EEOC, as the plaintiff in an injunctive proceeding, from obtaining monetary relief on behalf of individuals whose claims would be time-barred were they themselves bringing suit. The statute, therefore, requires us to entertain the fiction of the filing of complaints by the 143 individuals on December 28, 1978, seeking back pay awards under the ADEA for unlawful termination. ...