Ganey, Van Dusen and Aldisert, Circuit Judges.
These diversity appeals, which challenge the validity of a termination clause in a pension plan, require that we predict, in the absence of holdings directly on point, a choice of law ruling by the Pennsylvania Supreme Court and a substantive law determination by the state to which we are referred.
In 1943, Lee Rubber and Tire Corporation*fn1 executed an agreement of trust which established a non-contributory pension plan for certain of its salaried officers and employees in Ohio and Pennsylvania. Benefits payable to each participant after retirement were to be funded by the purchase of individual insurance contracts, with monies payable by Lee to the Chase National Bank of New York as trustee. The plan was amended in 1956*fn2 to liberalize pension benefits for Lee employees. The mode of payment of these increases, however, differed for employees over and those under age 51 at the time of the amendment. For the younger group, Lee purchased a group annuity contract; upon retirement the older employees were to receive direct payments from the company on a "pay as you go" basis.*fn3
In 1962, following the installation of a new management group, Lee terminated the plan.*fn4 In so doing, it also terminated the direct payments to the older employees. Thus, while all employees continued to receive their funded pensions, those to whom the increased benefits were to be paid directly never received the benefits which accrued after the 1956 Amendment.
Two diversity suits were instituted by these employees against Lee and were tried simultaneously in the district court. One action, brought by those who had retired prior to the termination, was tried to a jury. The other, involving those retired subsequent to Lee's cancellation of the plan, was submitted for a non-jury trial. Giving effect to a specific choice of law provision contained in the Agreement,*fn5 stating that the provisions shall be construed according to New York law, the district court in both cases applied the substantive law of New York under which it found the termination article valid. In addition, the court found there was insufficient evidence to submit to the jury on the issue of promissory estoppel. Accordingly, Lee was successful in obtaining a directed verdict in the jury case, Boase appeal No. 18,707, and a dismissal in its favor in the bench trial, Howley appeal No. 18,708. Plaintiffs in both actions have appealed.
Because these diversity actions were instituted in a federal court in Pennsylvania, the choice-of-law rules of that state must determine the appropriate body of substantive law. Klaxon Co. v. Stentor Mfg. Co., 313 U.S. 487, 61 S. Ct. 1020, 85 L. Ed. 1477 (1941).
Conflict of laws principles generally are not offended by the application of a contractual choice of law provision, see Bouton v. Litton Industries, Inc., 423 F.2d 643 (3 Cir. 1970); Lebeck v. William A. Jarvis, Inc., 145 F. Supp. 706, 727 n. 67 (E.D.Pa.1956), and our research has disclosed no Pennsylvania policy to the contrary. Indeed, a district court in Pennsylvania unhesitatingly recognized the validity of such a provision in a recent diversity pension plan case. Genevese v. Martin-Marietta Corp., 312 F. Supp. 1186 (E.D.Pa.1969). Nevertheless, appellants urge that we decline to give effect to the provision here.
Appellants contend that Pennsylvania has embraced the "grouping of contacts" principle as its choice-of-law rule in contract actions. They press the application of Griffith v. United Air Lines, Inc., 416 Pa. 1, 203 A.2d 796 (1964), which provided that in tort actions Pennsylvania courts will apply the substantive law of the state most intimately concerned with the outcome of the litigation. Appellants note that Griffith cites with approval the New York case of Auten v. Auten, 308 N.Y. 155, 124 N.E.2d 99 (1954), in which Judge (now Chief Judge) Fuld rejected the inflexibility of the traditional lex loci contractus rules and adopted instead the "grouping of contacts" theory as the controlling choice of law rule in New York contract actions.
It is significant that the separation agreement in Auten, unlike the pension plan before us, did not contain a contractual choice of law provision. Even putting this consideration aside, however, and with no intent to deprecate the interest-oriented approach, we conclude that Pennsylvania would not extend the grouping of contacts rule to the facts before us.
In the six years since Griffith was decided, the Pennsylvania Supreme Court has not applied its rule in a contract case.*fn6 That state's intermediate appellate court, in the post- Griffith case of Crawford v. Manhattan Life Ins. Co., 208 Pa.Super. 150, 221 A.2d 877 (1966), explicitly grounded its decision on the traditional conflict of laws rule: "Under the traditional Pennsylvania rule, the construction of a contract is governed by the law of the state where the contract was made." Id. at 880. It made only supplemental reference to the newer grouping-of-contacts theory: "The result would be the same even if the standards enunciated in Griffith * * are applied in this case." Id. at 881. (emphasis supplied).*fn7
Our court's decisions in Mannke v. Benjamin Moore & Co., 375 F.2d 281 (3 Cir. 1967) and Goulding v. Sands, 355 F.2d 230 (3 Cir. 1966) do not, as appellants insist, indicate the adoption of the grouping of contacts theory in Pennsylvania contract actions. Because Mannke and Goulding arose from tort actions involving automobile collisions, the evaluations of the state interests described in Griffith were entirely appropriate for the purpose of applying a proper conflict of laws rule. Moreover, in Goulding we explicitly refused ...