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Nolan v. Otis Elevator Co.

Decided: December 22, 1983.

FRED S. NOLAN, RALPH R. BATISTA, CHARLES W. CLEARLY, JOSEPH A. DAVIS, WILLIAM J. DAVITT, JR., ANTHONY G. GOMES, JAMES HALLECK, DONALD C. HALLIWELL, PHYLLIS J. GORLEY KERKAWICH, JOSEPH M. KARKOSKY, JR., CHARLES KERR, PATRICK J. LARGEY, JR., ARMAND MACHADO, EDWARD M. MCBRIDE, THOMAS P. NUGENT, PETER J. REILLY, HERMAN J. RUSSOMANNO, EUGENE A. SCANNEPICO, RAYMOND J. SMITH, JOHN T. STARR, HAROLD C. STOLL, LOUIS C. TREMBLE, JAMES VAN BRAMER, WALTER WARD AND DANIEL M. WATSON, PLAINTIFFS,
v.
OTIS ELEVATOR COMPANY, A CORPORATION ORGANIZED AND EXISTING UNDER THE LAWS OF THE STATE OF NEW JERSEY, DEFENDANT



Castano, J.s.c.

Castano

The impact of two federal statutes upon the New Jersey Law Against Discrimination, N.J.S.A. 10:5-1 et seq, when the legality of a retirement benefit plan is challenged because of alleged age discrimination is the issue in this case. The federal laws involved are the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq, and the Age Discrimination in Employment Act of 1967 (ADEA), 29 U.S.C. § 621 et seq.

Twenty-five former employees charge that a plan adopted by Otis Elevator Company (Otis) discriminates because of age, but their complaint frames the cause of action only in terms of a violation of the New Jersey statute. No breach of a federal statute is pleaded.*fn1

Otis contends that when a challenge to an ERISA plan is based on age discrimination, the New Jersey statute is preempted and that, therefore, a cause of action based upon N.J.S.A. 10:5-1 et seq, is not viable. I agree and grant the motion of Otis for summary judgment on that basis.

I

The disputed plan was adopted in May of 1980 when Otis shut down its Harrison plant.

Termination benefits were provided for a group of non-union, salaried, managerial employees who had at least 25 years of service, but two separate categories of benefits were set up within the group. One category applied to those workers who were 55 years or older at the time of termination and the other to those who had not yet attained age 55 at that time.

Employees in both categories received medical and life insurance options, vacation pay and a limited bonus for the final weeks of service.

Those under 55 also received severance pay, calculated at the rate of one week's pay per year of employment.

Those in the 55 and older category*fn2 did not receive severance pay. Instead, they became eligible immediately for benefits under a plan denominated the Harrison Special Supplemental Retirement Plan (HSSRP).

Under HSSRP, those over 55 receive 90 per cent of their final average annual earnings for a four-year period or until they attain the age of 62, whichever period is the longest for each individual employee. An especially attractive feature of the plan is that the 90 per cent benefit is calculated on the basis of income from all sources, including that derived from social security and from benefits payable under Otis' basic retirement plan. The basic plan remains in effect for members of both categories pursuant to vested rights they have in it.

The 25 plaintiffs all fall into the under-55 category. They contend they would have received benefits substantially in excess of the value of those actually received upon termination if they had ...


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