that document, which is evidently re-executed at the same time as each Supplement.
The combination of the 1950 Agreement as modified and the current supplement is followed by an "Appendix" which lists the location and identity of each local bargaining representative, and describes the composition of the employees included in that bargaining unit. For the 1976 documents, there are 41 locals and units listed.
There then follows an Appendix B, listing locations and representatives at which the "union shop" provisions apply, and the original effective date of that status (or the date of certification).
At the time of each national or companywide negotiation over the 1950 Agreement and its current supplement, there is negotiated a separate but related document, the "Pension and Insurance Agreement", between Westinghouse and I.U.E. The locals are covered, but this agreement is company-wide with no provision for local supplements.
The subject dealt with embraces employee benefit plans, both welfare benefit plans and pension benefit plans. These terms are as defined by the Congress, first in the Welfare and Pension Plan Disclosure Act of 1958, and then by the Employment Retirement Security Act of 1974. For the definitions, see 29 USC § 302(a)(1) and (2) (WPPDA) and 29 USC § 1002(1) and (2) (ERISA). Both definitions include unemployment plans, such as LIB, under "welfare benefit plans".
The 1976 Pension and Insurance Agreement by Art. I, requires the company to put into effect an "insurance plan", Section 2(a) and (b), to make available a "pension plan", Section 2 (c)(d) and (e), to make available a "savings plan", Section 2(f) and (g), and to put into effect a "personal accident insurance plan", a "disability benefit plan," a "dependent life insurance plan", and an "in-hospital indemnity plan", Section 2(h) through (l). The "insurance plan" evidently includes coverages for life insurance, accidental death or dismemberment, accident and sickness, personal hospital expense, personal surgical, major medical, hospital expense and the like, see Art II, Section 3(d).
After provisions dealing with one or another of these plans, Article VI establishes the Layoff Income and Benefit plan (LIB) which is the focus of this lawsuit, and which will be reviewed in some detail later. It is sufficient for the moment to observe that it is designed as a supplement to unemployment compensation benefits in the event of layoff for lack of work. As EEOC insists, it is not a "pension plan" as that term has been defined by both WPDA and ERISA, but as EEOC overlooks, it is clearly a "welfare plan" as defined in both statutes.
It is followed by Article VII, dealing with an educational opportunity program providing tuition and fee benefits for training courses to maintain or improve skills for the job or for career development within the company.
There are no doubt other instruments in existence in respect to the various benefit plans dealt with by the agreement, and a number of them are referred to in it. They are not among the exhibits supplied except for the pension plan as it stood under the 1966 agreement (Exh. J-2) and as it stood under the 1976 agreement (Exh. J-4).
The pension plan, and the LIB plan expressed in Article VI, read in the context of all the agreements, contain the provisions mainly to be considered to resolve the issues raised.
It should be noted, too, that all these plans and their terms are the result of collective bargaining. The provisions of the bargained agreement for the pension plan are especially worth noting. These are found at Article I, Section 2 (c), (d) and (e) of the 1976 Pension Plan and Insurance Agreement.
Paragraph (c) is the agreement of the company to make the pension plan as negotiated available, but the agreement is subject to approval of (1) the Board of Directors and (2) the Commissioner of Internal Revenue.
Paragraph (d) requires that the negotiated pension plan is to be submitted to the Board within 30 days, and if approved then to the Commissioner, and if approved it is to take effect.
Paragraph (e) specifies that if the Board fails to approve the negotiated plan, then under a specified time schedule "the Company and the Union shall be obligated to meet to negotiate solely with respect to the subject matter of the Pension Plan . . ." A like provision is found in paragraph (g) for the savings plan, which also is subject to approval by the Board and the Commissioner. These provisions emphasize the collective bargaining nature of the pension plan.
It should also be observed that there is interplay between the Pension Plan and other collectively bargained agreements. For example, Section XII of the 1950 basic collective bargaining agreement, in dealing with seniority, defines "accumulated length of service" in terms of the years, months and days accumulated as "Credited Service under the Westinghouse Pension Plan". It also ties in with LIB, by excluding credit for service "that was relinquished by his election to receive the Lump Sum Option payment provided under the Layoff Income and Benefits Plan".
Similarly, the LIB plan, in defining an "eligible employee", refers to one "who is not entitled to early retirement, as specified by the Westinghouse Pension Plan".
Also, the Pension Plan, in Section 2, C-3 and D-2, ties in with the LIB plan insofar as the making of a Lump-Sum payment related to length of service solely because of layoff bars eligibility for early or selected retirement, and ties in with the basic collective bargaining agreement insofar as the existence of contractual employment rights at another Company location, or the offering of employment at another Company location, bars retirement eligibility.
These, and other interlocking provisions as well as the recitals at the start of the Pension and Insurance Agreement, emphasize the fact that the content and terms of the basic collective bargaining agreement as well as of the Pension and Insurance Agreement (including the LIB plan) and the various plans, such as the pension plan, are not unilaterally determined by the employer but are the consequence of collective bargaining. For that reason, the various interlocking terms are not only to be read together but are to be afforded the deference due to such agreements in the interests of labor peace, the polestar of federal labor law as developed by the federal courts.
In related contexts the Supreme Court has taken pains to emphasize the considerable weight to be given to the substantive terms of a collective bargaining agreement. In United Mine etc. Funds v. Robinson, 455 U.S. 562, 71 L Ed 2d 419, 102 S. Ct. 1226 (1982), it rejected a challenge to the terms of alterations in eligibility and benefit levels for health coverage under trusteed employee benefit plans where those terms were fixed by a collective bargaining agreement to which the trustees were obliged to adhere. [Challenge to terms based on alleged violation of § 302(c) (5) of the Labor Management Relations Act of 1947, 29 U.S.C. § 186(c), which forbids transfers between employers and employee representatives, with an exception for payments to a trust fund established by the representative "for the sole and exclusive benefit of employees", etc.].
Similarly, in American Tobacco Co. v. Patterson, 456 U.S. 63, 71 L Ed 2d 748, 102 S. Ct. 1534 (1982), the court rejected a contention that seniority systems adopted or modified after the enactment of Title VII of the Civil Rights Act of 1964, 42 USC § 2000e, et seq., were not protected by the provisions of § 703 (h) of the Act, 42 USC § 2000e-2(h). It noted that its earlier rulings in Teamsters v. U.S., 431 U.S. 324, 52 L. Ed. 2d 396, 97 S. Ct. 1843 (1977), in Trans World Airlines v. Hardison, 432 U.S. 63, 53 L. Ed. 2d 113, 97 S. Ct. 2264 (1977) and in United Air Lines v. Evans, 431 U.S. 553, 52 L. Ed. 2d 571, 97 S. Ct. 1885 (1977) established that § 703 (h) on its face immunizes all bona fide seniority systems, with no distinction between those adopted before or after its effective date. It observed that seniority provisions are universally included in collective bargaining contracts, and that the collective bargaining process "lies at the core of our national labor policy." It noted that Congress was well aware in 1964 that the purposes of Title VII inevitably would, on occasion, conflict with the policy favoring minimal supervision by courts and other governmental agencies over "the substantive terms of collective bargaining agreements," and that Congress struck a balance between those policies in enacting § 703(h). The Court declined to upset that balance.
3. The pertinent ADEA provisions.
The prohibitory provision of ADEA involved in this case declares that:
"It shall be unlawful for an employer . . . 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;" 29 USC § 623(a)(1) (1967).
The same section, as part of the definition of forbidden conduct, also provided that:
"It shall not be unlawful for an employer . . . (1) to take any action otherwise prohibited . . . where the differentiation is based on reasonable factors other than age; (2) to observe the terms of a bona fide employee benefit plan, such as a retirement, pension, or insurance plan which is not a subterfuge to evade the purposes of this Act . . ." 29 USC § 623(f)(1967).
It should be observed that at the time (1967), the only significant federal statute dealing with employee benefit plans (other than provisions of the Internal Revenue Code dealing with whether any such plan was "qualified" for income tax purposes) was The Welfare and Pension Plan Disclosure Act (1958) (WPPDA), which divided employee benefit plans into two classes: welfare benefit plans and pension benefit plans. See 29 USC § 302(a)(1) and (2), repealed. Pension plans were defined as those providing retirement benefits, including profit-sharing plans providing benefits at or after retirement. Welfare plans were defined as those providing medical, surgical, or hospital care or benefits, or benefits in the event of sickness, disability, death or unemployment.
WPPDA was merely a reporting and disclosure Act; it did not purport otherwise to regulate any employee benefit plan. That change occurred with ERISA, 29 USC § 1001 et seq., P.L. 93-406, September 2, 1974. Its definitions are much the same, see 29 USC § 1002(1), (2) and (3).
Both the LIB plan and the Westinghouse Pension Plan are employee benefit plans, the first being a welfare benefit plan since it provides insurance for unemployment, and the other being a pension benefit plan. Both are within § 623(f).
The interplay between § 623(a)(1) and § 623(f) was considered by the Supreme Court of the United States in the first case involving the Act that came before it, United Air Lines v. McMann, 434 U.S. 192, 54 L. Ed. 2d 402, 98 S. Ct. 444 (1977).
The majority opinion in that case held that on its face, and without need to look to legislative history, the Act did not forbid the involuntary retirement of an employee who reached his 60th birthday when that requirement was in accordance with a retirement plan. The plan was regarded as bona fide in that it actually existed and paid pension benefits, and the court held it could not be claimed to be a plan adopted as a "subterfuge" when it had been established in 1941, long before the 1967 enactment. It rejected any per se rule requiring an employer to show an economic or business purpose in order to satisfy the "subterfuge" language of the Act.
Justice Stewart concurred in the judgment on the ground that since the plan was bona fide, it was not possible for it to be a subterfuge when adopted long before the 1967 act was even contemplated, and would address no other questions discussed in the majority opinion.
Justice White concurred in the judgment and with Justice Stewart. He differed to the extent that he felt that the question of "subterfuge" should be examined in terms of the maintenance of the plan after the 1968 effective date of the Act. He, too, found no support for any requirement that the employer be called upon to show "some economic or business purpose". He read the intent to be to exempt all retirement plans -- including those whose only purpose is to terminate the services of older workers -- as long as the benefits they pay are not so unreasonably small as to make the "retirements" nothing short of discharges. He regarded the no-subterfuge requirement as merely a restatement of the bona fide requirement.
He pointed out that all retirement plans necessarily make distinctions because of age, and so felt that the subterfuge language could not have been intended to impose a condition which almost no retirement plan could meet. He would have regarded the exception as protecting action taken pursuant to a retirement plan which is designed to pay substantial benefits, without regard to its adoption before the Act.
Two members of the Court dissented in an opinion by Justice Marshall. They regarded the exemption as capable of supporting two interpretations: one, to allow involuntary retirements (as held by the majority) and two, to allow different treatment of older employees only with respect to the benefits paid or available under employee benefit plans, including pension and retirement plans.
This court, of course, is obliged to follow the law as laid down by the majority in that case.
4. The LIB and Pension Plans.
The issue in the present case arises out of the fact that among the various employee benefit plans provided for Westinghouse employees, there is an insurance plan to supplement unemployment compensation, and it is interrelated in some respects with recall rights and service credits (seniority) under the basic collective bargaining agreement, and with the pension plan as well.
This insurance plan to supplement unemployment compensation is rather complex and will be reviewed in some detail later. For present purposes it is sufficient to note that it establishes a credit, called a "Total Maximum Sum," for each employee, equal to one week's pay (as defined) for each full year of service with the Company. That credit is made available for receiving "Layoff Income and Benefits", according to which of a number of options is selected by the employee, if he is "eligible" to receive them.
At the time of the pertinent events here, an "eligible employee" was defined as an employee
. . . with two (2) or more full years of such service
. . . who is not entitled to early retirement, as specified in the Westinghouse Pension Plan, and