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ROSEN v. PUBLIC SERV. ELEC. & GAS CO.

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY


August 25, 1970

Leo Rosen et al., Plaintiffs
v.
Public Service Electric And Gas Company, Defendant. Morgan Sweeney et al., Plaintiffs v. Same, Defendant

Wortendyke, D. J.

The opinion of the court was delivered by: WORTENDYKE

WORTENDYKE, D. J.:

Both of the captioned cases were instituted under the Civil Rights Act of 1964, 78 Stat. 241, § 703(a)(1), 42 U.S.C. § 2000e-2(a)(1). Both cases require a determination of whether or not a non-contributory pension fund, which treats males and females differently, violates the provisions of 42 U.S.C. § 2000e-2. In the first of these actions (C. 245-66) this Court, on March 19, 1968, entered an Order for summary judgment, from which the plaintiffs in that cause appealed to the United States Court of Appeals for the Third Circuit. The judgment appealed from was vacated and the cause remanded to this Court for further proceedings consistent with the Opinion of the Appellate Court. Its decision of April 1, 1969 is reported in 409 F.2d commencing at page 775. The Appellate Court directed that this Court

 

"* * * insofar as the original complaint is concerned, determine * * * whether any of the named appellants and any other male members of the union, may have retired between the date of the initial 1965 charges before the EEOC and the May 1, 1967 change, and thus may have been harmed by the alleged discrimination in the pension benefit formula;"

 and stated that

 

"Such a finding * * * would require the court to rule on whether the original pension plan, prior to its modification, violated Title VII of the Civil Rights Act of 1964."

 The same Opinion concludes that

 

"* * * if no male employee was harmed by the pre-May 1967 pension plan, that should dispose of the original complaint and injunctive relief is unnecessary."

 Pending the decision of the Court of Appeals in Civil 245-66, Morgan Sweeney and Utility Co-Workers Association, as plaintiffs, instituted an action in this Court (Civil 955-68) against the same defendant in the case then on appeal. That action came to issue upon the answer of the defendant, filed October 29, 1968, and the Court of Appeals took notice of the pendency of that more recent action. At page 782 of its Opinion the Court of Appeals stated that

 

"* * * we have already noted that a second suit has been filed duplicating the charge that the modified pension plan violates Title VII. Because this second suit has not yet been disposed of, and because it deals with precisely the same substantive issues as the amendment to the original complaint, we deem it unnecessary to determine whether the grant of summary judgment as to that portion of the first complaint was in error. *fn1" It was suggested at oral argument that consolidation of the two actions, i.e., the original complaint as amended and the second complaint, would be sought if this court directed a remand. We believe that this would be the proper procedure to follow and that upon such consolidation the issues involved in the initial complaint, the amendment thereto, and the second complaint, can be sifted out and disposition made of them. *fn2" , *fn3"

 Pursuant to the mutual undertakings of counsel at the joint conference on October 20, 1969, in both cases, a stipulation of facts and agreement of the parties was filed in the consolidated actions on June 17, 1970. By the terms thereof the parties "agree to submit the above matters on the foregoing Stipulation and the Briefs of the attorneys for the respective parties, without oral argument." In that Stipulation the following facts appear:

 Defendant is a public utility corporation existing under the laws of the State of New Jersey, engaged in the manufacture, sale and distribution of gas and electric energy, with its principal place of business in the City of Newark, New Jersey.

 Plaintiff Utility Co-Workers Association (Union) is an independent union having its office in the same City and duly certified by the National Labor Relations Board as the collective bargaining representative for certain employees in all of defendant's commercial offices on January 10, 1949.

 On January 10, 1911 defendant instituted a welfare plan for all of its employees. That plan included a retirement or pension plan, non-contributory in character, i.e., involving no contribution thereto by employees. Attached to the Stipulation and marked joint exhibit No. 1, is a copy of the negotiated collective bargaining agreement between the parties, dated June 21, 1965, effective May 1, 1965, which includes the negotiated supplementary agreements respectively effective May 1, 1967 and May 1, 1969. There is also attached to this Stipulation, and bearing exhibit No. 2, a copy of the pension plan in effect prior to May 1, 1967 as well as a copy of the pension plan as modified or revised effective from May 1, 1967, marked joint exhibit No. 3.

 Between July 1, 1965 and May 1, 1967 there were early retirements on pension by some male employees, members of the plaintiff Union, as well as during the period from May 1, 1967 to the date of the Stipulation.

 At the time of the institution of C. 245-66 by Rosen, Sweeney and the Union on March 10, 1966, and since 1911, male employees were eligible for retirement at age 65, with 25 years service, and with mandatory retirement at age 70. Male employees were eligible for retirement at age 60 with 30 years service at a reduced pension. The female employees during the same period could retire, without reduction in pension, at age 60 with 20 years service and mandatory retirement at age 65.

 At the time of the institution of C. 245-66 the plaintiff Union and the defendant were parties to a then current labor agreement which, by its terms expired on April 30, 1967. On January 24, 1967 plaintiff Union and defendant commenced collective bargaining negotiations for certain revisions of the existing Pension Plan. Those negotiations ripened into a new labor agreement which replaced the agreement which would expire on April 30, 1967. That new agreement was duly ratified by the membership of the Union and executed by the parties thereto on July 17, 1967, effective retroactively from May 1, 1967. That agreement included the following provisions:

 "Section 3. Normal Retirement for Age

 

(1) Each employee may at his or her option retire at age sixty-five or thereafter, and must retire at age seventy.

 

(2) Each employee who retires under the provisions of this Section 3 shall be paid for life, in monthly installments, a pension computed at the annual rate of 1% of the average annual compensation of such employee for the five years of highest earnings within the last ten years of the employee's service, multiplied by the number of years, and any fraction of a year, of the employee's service.

 Section 4. Early Retirement

 

(1) Each employee may at his or her option retire at age sixty or thereafter but before attainment of age sixty-five upon completion of twenty years of service.

 

(2) Each employee who retires under the provisions of this Section 4 shall be paid for life, in monthly installments, a pension computed at the annual rate of 1% of the average annual compensation of such employee for the five years of highest earnings within the last ten years of the employee's service, multiplied by the number of years, and any fraction of a year, of the employee's service, and reduced by one-quarter of 1% for each month that such employee is less than age sixty-five at the time of retirement, and by an additional one-quarter of 1% for each month that such employee is less than age sixty-two at the time of retirement, except that in the case of a female employee who retires under the provisions of this Section 4, no reduction in the amount of the pension shall be made on account of service prior to May 1, 1967."

 The Union and the defendant commenced further collective bargaining negotiations for a new agreement on April 1, 1969. That agreement, which was duly ratified by the union membership, became effective for the period May 1, 1969 to April 30, 1971. By its terms the parties agreed "to permit a vesting of the pension benefits for any member whose service with the company is terminated for any reason and who has attained the age of 50 and completed at least 15 years of service."

 Plaintiff Rosen retired from his employment with the defendant on September 9, 1966 at the age of 65 with full pension.

 The parties stipulated that this Court has jurisdiction to hear and determine the issues involved in the above-captioned cases upon the record herein consisting of the items contained in the stipulation, all pleadings filed in the captioned cases, the exhibits, if any, attached thereto, and the pretrial conference orders. Counsel for the respective parties agreed that they might refer to and use excerpts from the Congressional Record relating to the Civil Rights Act of 1964 and any matters related thereto.

 Inland Steel Co. v. National Labor Relations Board, 170 F.2d 247 (7 Cir. 1948), cert. granted 336 U.S. 960, 69 S. Ct. 887, 93 L. Ed. 1112 (1949), affirmed 339 U.S. 382, 70 S. Ct. 674, 94 L. Ed. 925 held that "a retirement and pension plan is included in 'conditions of employment' and is a matter for collective bargaining" and that the employees' retirement and pension plan was part of the subject matter of compulsory collective bargaining within the meaning of the National Labor Relations Act. The Court, at page 250 of the Opinion in Inland Steel, stated that section 8(a)(5) required an employer to bargain collectively with the representative of his employees, subject to the provisions of Sec. 9(a) which provides that the duly selected representative of the employees in an appropriate unit shall be their exclusive representative for the purposes of collective bargaining in respect to rates of pay, wages, hours of employment, or other conditions of employment. See also Retail Clerks Union, No. 1550 v. NLRB (D.C. Cir. 1964), 117 U.S. App. D.C. 336, 330 F.2d 210, 215, cert. den. 379 U.S. 828, 13 L. Ed. 2d 39, 85 S. Ct. 59 (1964).

 On January 24, 1967 plaintiff Union and the defendant commenced collective bargaining negotiations for certain revisions of the existing pension plan after a charge had been filed with the EEOC alleging that Public Service was committing an unlawful employment practice, within the meaning of Title VII of the Civil Rights Act of 1964, by maintaining a pension plan that discriminated on the basis of sex, because it permitted retirement at different ages and length of service for men and women. Upon these charges, and following an investigation, the Commission issued a decision, dated January 26, 1966, finding reasonable cause to believe that the pension plan did violate Title VII. By letter dated February 9, 1966, the Director of Compliance of the Commission informed employee Rosen that such reasonable cause had been found and that the Commission would attempt to eliminate the practice by conciliation. By a subsequent letter dated February 9, 1966, the Director advised Rosen that conciliation would be undertaken and continued by the Commission. Thereafter on March 10, 1966 the earlier action (C. 245-66) was commenced in this Court.

 As will appear from the Stipulation in the present actions, there existed a collective bargaining agreement between the Union and defendant which, by its terms, expired on April 30, 1967. In anticipation of such expiration, as will also appear from the stipulation herein, the Union and the defendant on January 24, 1967 commenced collective bargaining negotiations for a new agreement, to succeed that which would expire on April 30, 1967, and in those negotiations the Pension Plan was revised in a resulting new agreement between the Union and the employer which became effective, retroactively, to May 1, 1967 and terminated April 30, 1969. The terms and provisions of the collective bargaining agreement which took effect May 1, 1967, have already been hereinabove at length set forth. The provisions thereof relating to retirement and pensions were duly ratified by the members of the Union and constituted the final fruits of the negotiations between the employer and the representatives of the Union acting in behalf of the employees. Stipulation, par. 6; Joint Exhibit No. 1.

 The defendant argues that because the proceedings before the EEOC were completely ex parte and non-adversary, the statements and conclusions of the Commission are not binding upon this Court. Defendant contends that this Court is now confronted with "the threshold question of whether Title VII was ever intended to reach pension or retirement plans." In support of its contention that Title VII of the Civil Rights Act of 1964 does not apply to retirement or pension plans defendant relies heavily upon Gruenwald v. Gardner, 390 F.2d 591 (2 Cir. 1968), cert. den. 393 U.S. 982, 21 L. Ed. 2d 445, 89 S. Ct. 456 (1968). Although the opinion in that case stated that "the trend of authority makes it clear that the variation in amounts of retirement benefits based upon differences in the attributes of men and women is constitutionally valid. . . . The appellant does not press his argument that the section in question is violative of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. (1964), 78 Stat. 253 (1964), but we find that that contention is also without merit." The complaint in Gruenwald alleged that certain provisions of the Social Security Act were unconstitutional in that women were accorded more favorable treatment than men in computing social security payments. The Court held that such provision did not constitute "invidious discrimination nor violate either the due process or equal protection clause." In Gruenwald, the statute in question dealt with assistance to the aged under the Social Security Act and not private pension plans. The Second Circuit found that the benefit differentials were not an invidious discrimination since they sought to reduce the disparity between the economic and physical capabilities of men and women. No such disparity has been shown to exist in this industry. Congress, in the Old Age Assistance program, was creating a broad national policy based on overall national problems and considerations. In the case at bar, the discrimination emanates from one pension plan in one company in one industry in a given, limited geographical area. Congress, of course, has a wider latitude in creating exceptions to its own laws. A private company cannot invoke the prerogatives of the Congress -- especially when it fails to present any justification for its action.

 The Court of Appeals in Rosen (409 F.2d 775) agreed with appellant that:

 

"The original complaint was not mooted by the May 1, 1967 revision in the pension plan because of the possibility that some employees may have suffered money damages before the change was made."

 Accordingly, the case was remanded:

 

"for a determination as to whether any of the named appellants, and any other male members of the union may have retired between the date of the initial 1965 charges before the EEOC and the May 1, 1967 change, and thus may have been harmed by the alleged discrimination in the pension benefit formula. Such a finding, of course, would require the court to rule on whether the original pension plan, prior to its modification, violated Title VII of the Civil Rights Act of 1964.

 

If the district court does not find any party entitled to the kind of relief above described for harm caused by alleged discrimination prior to the May 1, 1967 pension plan revision, then we agree with the appellee that the issues raised in the original complaint are moot."

 What complicates the questions now confronting this Court are the alleged oral amendment of the original complaint and the consolidation of that complaint with the new case of Sweeney (C. 955-68). In Sweeney, the plaintiffs contend that the attempted elimination of the discrimination alleged to exist under the original plan was offset by so much of the revised plan as was embodied in the exception contained in Section 4(2) which states that "in the case of a female employee who retires under the provisions of this Section 4, no reduction in the amount of the pension shall be made on account of service prior to May 1, 1967." I find that the plan as it existed prior to the revision of May 1, 1967 violated Title VII of the Civil Rights Act of 1964 by discriminating against male employees in favor of female employees on no other apparent basis than that of sex. However, I also find that the revision of the plan, effective May 1, 1967, eliminated the discrimination against male employees which existed under the previous plan, but favored female employees to the extent that it eliminated provisions for the reduction in the amount of their pensions on account of service prior to May 1, 1967. I find that the foregoing exception in favor of female employees constituted a discriminatory violation of Title VII. The effect of this exception may be illustrated by the following chart: 1965 Original Pension Plan MALE 60 years of age $ 10,000 average annual salary 30 years employment $ 10,000 X 1% X 30 years = $ 3,000 full pension if retirement was at 65 $3,000 X 24% (penalty) = $ 720 $ 3,000.00 full pension reduced by $ 720.00 penalty for early retirement = $ 2,280.00 Pension = $ 2,280.00 FEMALE 60 years of age $ 10,000 average annual salary 30 years employment $ 10,000 X 1% X 30 years = $ 3,000 full pension NO REDUCTION FOR EARLY RETIREMENT Pension = $ 3,000.00 1968 (After May 1, 1967) Amended Pension Plan MALE 60 years of age $ 10,000 average annual salary 30 years employment $ 10,000 X 1% X 30 years = $ 3,000 full pension if retirement was at 65. $3,000 X 21% (new penalty) = $ 630 $ 3,000.00 full pension reduced by $ 630.00 penalty for early retirement = $ 2,370.00. Pension = $ 2,370.00 FEMALE 60 years of age $ 10,000 average annual salary 30 years employment $ 10,000 X 1% X 30 years = $ 3,000 full pension As of May 1, 1967 $ 10,000 X 1% X 29 years = $ 2,900.00 pension as of May 1, 1967 $ 10,000 X 1% X 1 year (period between May 1, 1967 and retirement date in 1968) = $ 100.00 $ 100.00 X 21% (penalty applied to sums earned after May 1, 1967) = $ 21.00 $ 100.00 - $ 21.00 = $ 79.00 pension $ 2,900.00 (pension May 1, 1967) Total Pension as of 1968 = $ 2,979.00

19700825

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