United States District Court, Western District of New York
September 19, 1991
SARAH M. CIPRIANO AND JEUNE M. MILLER, PLAINTIFFS,
BOARD OF EDUCATION OF THE CITY SCHOOL DISTRICT OF THE CITY OF NORTH TONAWANDA, NEW YORK, AND NORTH TONAWANDA UNITED TEACHERS, DEFENDANTS.
The opinion of the court was delivered by: Curtin, District Judge.
This case, brought under the Age Discrimination in Employment
Act ("ADEA"), 29 U.S.C. § 621 et seq., is before the court on
defendants' motion for reconsideration of the court's decision
of December 7, 1988, granting partial summary judgment to
plaintiffs. See Cipriano v. Board of Educ. of Sch. Dist. of
North Tonawanda, 700 F. Supp. 1199 (W.D.N.Y. 1988), on remand
from, 785 F.2d 51 (2d Cir. 1986).
Very briefly, the facts of the case are as follows.
Plaintiffs Sarah M. Cipriano and Jeune M. Miller were teachers
in the North Tonawanda school system. They both retired in
June, 1981, at the age of sixty-five,
each having taught for more than twenty years. Both plaintiffs
were employed under a collective bargaining agreement,
effective July 1, 1980, through June 30, 1983, that offered
early retirement incentives to those teachers between the ages
of fifty-five and sixty who retired during the life of the
contract and who had more than twenty years of service in the
school system. Although plaintiffs met every other requirement
of the retirement incentive, both exceeded the age limitation
of the plan, and thus were ineligible for its benefits.
Plaintiffs sued, claiming that the plan as a whole, and as
applied to them, was discriminatory in violation of the ADEA.
This court dismissed the case on defendants' motion for summary
judgment, but was reversed, and the case was remanded by the
Second Circuit. Id. On remand, the court rejected plaintiffs'
argument that the retirement plan itself was discriminatory,
Cipriano, 700 F. Supp. at 1211, but held that the plan was
discriminatory as applied to plaintiffs. Id. The court held,
further, that defendants' discriminatory actions toward
plaintiffs were "willful" under the ADEA. Id. at 1211-12.
Defendants moved to reconsider this decision. After some
delay, the motion was argued on June 23, 1989. That very day,
the United States Supreme Court issued its decision in
Public Employees Retirement System of Ohio v. Betts,
492 U.S. 158, 109 S.Ct. 2854, 106 L.Ed.2d 134 (1989). The Court's
opinion in Betts changed the law with respect to § 4(f)(2) of
the ADEA, 29 U.S.C. § 623(f)(2), the statutory defense relied
on by the school board which was rejected by this court in its
December, 1988, decision. Defendants now argue that this court
must apply the Betts' standard retroactively to these facts.
Defendants further argue that, under Betts, the court should
reverse its prior decision.
I. MUST BETTS BE APPLIED RETROACTIVELY?
The Supreme Court in its most recent term has altered the
rules of retroactivity of civil decisions as they apply in this
case. See James B. Beam Distilling Co. v. Georgia, ___ U.S.
___, 111 S.Ct. 2439, 115 L.Ed.2d 481 (1991). James Beam,
although fractured in its ultimate conclusions, must be read to
uphold at least the following principle: "it is error to refuse
to apply a rule of federal law retroactively after the case
announcing the rule has already done so." Id. 111 S.Ct. at 2446
(Souter, J., announcing judgment of the Court). While Justice
Souter is joined only by Justice Stevens in this conclusion, it
is apparent that four other Justices would go as far. Justice
White, concurring in the judgment because he believes that the
case to be applied retroactively in James Beam could be so
applied under any of several rationales, notes that there is
"no precedent in civil cases applying a new rule to the parties
in the case but not to others similarly situated. . . ." Id. at
2448 (White, J., concurring in the judgment). Justices
Blackmun, Marshall, and Scalia would go even farther. In
separate opinions by Justices Blackmun and Scalia, each joined
by all three Justices, these three members of the Court would
"requir[e] retroactive application of each new rule we
announce." Id. at 2450 (Blackmun, J., concurring in the
judgment). Thus, even if Justice White's opinion is left out of
the equation, five Justices of the Court have endorsed the
principle that, in civil cases, where the Court has
retroactively applied a newly announced rule to the case at
hand, all lower courts must do likewise. In so holding, at
least five Justices agree that the balancing-test analysis of
Chevron Oil Co. v. Huson, 404 U.S. 97, 106-07, 92 S.Ct. 349,
355-56, 30 L.Ed.2d 296 (1971), relied upon by the dissent and
by the plaintiffs in this case, is inapplicable to such a case.
This rule comports with established precedent in the Second
Circuit. In Welyczko v. U.S. Air, Inc., 733 F.2d 239, 241 (2d
Cir.), cert. denied, 469 U.S. 1036, 105 S.Ct. 512, 83 L.Ed.2d
402 (1984), the Second Circuit explained:
Were we asked to decide if retrospective effect
should be given to a new rule which our court had
pronounced, the policy factors enumerated in
[Co. v. Huson] would indeed be determinative. . . .
Similarly, had the Supreme Court given no
indication whether Del-Costello [v. International
Brotherhood of Teamsters, 462 U.S. 151, 103 S.Ct.
2281, 76 L.Ed.2d 476 (1983)] should apply
retroactively, a Chevron Oil analysis would also be
in order. But these factors are not present here. .
. . Thus, when [the] Court itself has given
retrospective application to a newly-adopted
principle, "no sound reason exists for not doing so
here." Holzsager v. Valley Hospital, 646 F.2d 792,
797 (2d Cir. 1981). A court of appeals must defer
to the Supreme Court's directive on this issue,
explicit or implicit.
(Emphasis added.) This reasoning has been acknowledged
repeatedly by Second Circuit courts. See Gonzalez v. Home Ins.
Co., 909 F.2d 716
, 723 (2d Cir. 1990); Cates v. Trans World
Airlines, Inc., 561 F.2d 1064
, 1073 (2d Cir. 1977); Adames v.
Mitsubishi Bank, Ltd., 751 F. Supp. 1548
, 1558 (E.D.N.Y. 1990);
Fernandez v. Kogan, 738 F. Supp. 795
, 798 (S.D.N.Y. 1990); Song
v. Ives Lab., Inc., 735 F. Supp. 550
, 552 & n. 3 (S.D.N Y
1990); Kofer v. Village of Pelham, 710 F. Supp. 483, 485
(S.D.N.Y. 1989). See also United States v. Fitzgerald,
545 F.2d 578
, 582 (7th Cir. 1976).
Applying James Beam and Welyczko here, Betts must be given
retroactive effect in this case. Not only did the Court, in
Betts, apply its new standard to dismiss the case at hand,
Betts, 492 U.S. at 182, 109 S.Ct. at 2868-69, but the Court
subsequently remanded a court of appeals decision to be
considered in light of Betts, Westinghouse Elec. Corp. v.
E.E.O.C., 493 U.S. 801, 110 S.Ct. 37, 107 L.Ed.2d 7 (1989),
thus indicating the Court's desire that Betts be applied
The irony of this conclusion is that immediately after
Betts, Congress set about the task of expressly repudiating its
holdings. Within sixteen months, Congress amended the ADEA by
passing the Older Workers Benefit Protection Act, Pub.L. No.
101-433, 104 Stat. 978 (October 16, 1990) (codified at
29 U.S.C. § 621, 623), which stated:
The Congress finds that, as a result of the
decision of the Supreme Court in Public Employees
Retirement System of Ohio v. Betts, [492 U.S. 158]
109 S.Ct. 256 [2854, 106 L.Ed.2d 134] (1989),
legislative action is necessary to restore the
original congressional intent in passing and
amending the Age Discrimination in Employment Act
of 1967 (29 U.S.C. § 621 et seq.), which was to
prohibit discrimination against older workers in
all employee benefits except when age-based
reductions in employee benefit plans are justified
by significant cost considerations.
29 U.S.C. § 621 (statutory note). This law, however, applies
only prospectively. See 29 U.S.C. § 623 (statutory note).
Numerous courts have retroactively applied Betts, both before
Congress' action, Robinson v. County of Fresno, 882 F.2d 444,
445-46 (9th Cir. 1989); Gabarczyk v. Board of Educ. of Sch.
Dist. of Poughkeepsie, 738 F. Supp. 118, 122-23 (S.D.N.Y. 1990);
E.E.O.C. v. United Air Lines, Inc., 1990 WL 147056 (N.D.Ill.
Sept. 26, 1990), and after, E.E.O.C. v. Westinghouse Elec.
Corp., 925 F.2d 619, 623 (3d Cir. 1991) ("Westinghouse II");
Bell v. Trustees of Purdue Univ., 761 F. Supp. 1360, 1363-65
(N.D.Ind. 1991); Grossman v. RCA Global Communications, 1991 WL
44837 (S.D.N.Y. March 22, 1991). The court will now apply the
Betts standards to the facts of this case.
II. RETROACTIVE APPLICATION OF BETTS
Section 4(a)(1) of the ADEA, 29 U.S.C. § 623(a)(1), makes it
unlawful for an employer
to fail or refuse to hire or to discharge any
individual or otherwise discriminate against any
individual with respect to his compensation,
terms, conditions, or privileges of employment,
because of such individual's age.
In Cipriano, the Second Circuit held "[i]t is undisputed that,
if it were not for § 4(f)(2) [of the ADEA,
29 U.S.C. § 623(f)(2)], the incentive plan would run afoul of § 4(a)(1) of
the ADEA. . . ." Cipriano, 785 F.2d at 53. Thus, the central
question for that
court, and this court on remand, was whether the Board of
Education and/or union had sustained its burden of establishing
a § 4(f)(2) defense. See Cipriano, 700 F. Supp. at 1211-12.
Betts, however, completely undercuts the basic premise of
that analysis. In Betts, the Court held that § 4(a)(1) did not
prohibit discrimination in employee benefit plans, "so long as
the plan is not a method of discriminating in other,
non-fringe-benefit aspects of the employment relationship. . .
." Betts, 492 U.S. at 177, 109 S.Ct. at 2866. The Court
concluded that, in drafting the ADEA, "Congress left the
employee benefit battle for another day, and legislated only as
to hiring and firing, wages and salaries, and other
non-fringe-benefit terms and conditions of employment." Id. For
plaintiffs to prevail in this case they must now show that the
Board of Education's retirement incentive "plan provision
actually was intended to serve the purpose of discriminating in
some non-fringe-benefit aspect of the employment relation." Id.
at 181, 109 S.Ct. at 2868.
Plaintiffs cannot make this showing. The retirement incentive
plan offered by the Board was clearly a "fringe benefit." As
the Second Circuit found, it "did not compel plaintiffs to take
early retirement." Cipriano, 785 F.2d at 58. This case was
brought, "not by employees who claim that they were tricked by
the option into prematurely leaving the workforce, but rather
by employees who protest at having been excluded from the
option." Id. Thus, the employee benefit plan at issue here did
not discriminate in a "non-fringe-benefit aspect of the
employment relationship," Betts, 492 U.S. at 177, 109 S.Ct. at
2866, and, as such, is outside the purview of the ADEA.
In oral argument, plaintiffs relied on two
post-Betts appellate decisions to support their position that
the North Tonawanda school board's retirement plan violated
Betts' tougher requirements. The first case cited by plaintiff,
American Ass'n of Retired Persons v. Farmers Group,
943 F.2d 996 (9th Cir. 1991), is distinguishable from this case on its
facts. In Farmers Group, the company amended an employee
benefit plan to preclude pension payments, actuarial increases,
and credits for those remaining with the company after age
sixty-five. There was evidence this was done because the
company wanted those over sixty-five to quit. Id. Because it
impacted the present employment status of ADEA-protected
employees, the company plan violated Betts. Id. Here, the
retirement incentive had no impact on Sarah Cipriano's or Jeune
Miller's wages or salaries, nor on their decision to stay or
leave the school system.
The other case cited by plaintiffs, Westinghouse II, 925 F.2d
at 627 & n. 13, is also of no help. Plaintiffs quote
extensively from a footnote to the opinion which states that
"the intentional use of a fringe benefit as an economic
`disincentive' to continued employment for older workers," id.
at 627 n. 13, would meet the Betts test. The text accompanying
the note reaffirms Betts' holding that an employer must intend
an employee benefit plan "to discriminate against older workers
with respect to a nonfringe benefit and the plans [must] ha[ve]
that effect even if the path to that effect is an indirect
one." Id. at 627. In Cipriano, plaintiffs are unable to make
this showing. There is simply no proof that the North Tonawanda
school board's early retirement incentive was "an economic
disincentive" for plaintiffs to continue to work.
Accordingly, because plaintiffs cannot satisfy
Betts' requirements, defendants' motion for reconsideration of
this court's prior decision, Cipriano v. Board of Educ. of Sch.
Dist. of North Tonawanda, 700 F. Supp. 1199 (W.D.N.Y. 1988), is
granted. That decision, to the extent it is inconsistent with
this decision and order, is hereby vacated. Defendants' motion
for summary judgment is granted.
Judgment shall issue in accordance with this decision and
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