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RONALD E. RESSLER AND FRED V. HERTWIG v. JONES MOTOR CO. (01/18/85)

filed: January 18, 1985.

RONALD E. RESSLER AND FRED V. HERTWIG, JR., APPELLANTS,
v.
JONES MOTOR CO., INC., APPELLEE



No. 310 Harrisburg, 1983, Appeal from Judgment entered July 27, 1983, Court of Common Pleas, Lebanon County, Civil Division at No. 1366, Year 1982.

COUNSEL

Thomas A. Ehrgood, Lebanon, for appellants.

Michael J. Ossip, Philadelphia, for appellee.

Wickersham, Johnson and Hoffman, JJ.

Author: Johnson

[ 337 Pa. Super. Page 604]

Appellants Ressler and Hertwig brought suit on behalf of themselves and a class of non-union employees of appellee Jones Motor Company's now defunct General Commodities Division ("GCD"), seeking recovery of sums withheld from their wages as "contributions" to an Earnings Participation Plan ("EPP" or "Plan"). The Plan placed salaries on a sliding scale varying as a function of the employer's profit or loss ratio, and was instituted by Jones Motor during a period of significant financial hardship. The trial court found no violation of the Commonwealth's Wage Payment and Collection Law ("WPCL"),*fn1 and granted summary judgment on behalf of Jones Motor upon a determination that the "contributions" to the Plan were wage reductions. Appellants' motion for certification of a class action under Pa.R.C.P. 1707 was also denied without discussion. Because we find sufficient evidence in the record to establish that the sums withheld were "deductions" from pay, we reverse the trial court's order granting summary judgment to the employer.

[ 337 Pa. Super. Page 605]

Our survey of the statutes and case law of this Commonwealth uncovers no definition of the term "deduction" as set forth in the WPCL beyond a group of specified "authorized deductions." [See infra at 606-609]. Therefore, a clear recitation of the events giving rise to this controversy is in order to establish precisely what type of salary adjustment we are here deeming to be a "deduction" from pay.

In 1979, the GCD began to suffer serious financial losses, which continued through 1980 and into 1981. In a desperate effort to reduce these losses, the EPP was instituted, which placed salaries on a sliding scale varying according to the GCD's ratio of total expenses to total revenues. According to the Plan proposal, when this ratio equals 95%, employees would draw their regular salaries. If the ratio is 96% or above, employees would "contribute" to the Plan based upon a figure related to the ratio and their wage brackets, with the amount withheld varying at each expense ratio. The proposal indicates further that if the expense ratio falls below 100%, "a lump sum adjustment payment will be made to plan participants." Even where the expense ratio falls to 94% or below, all employees, regardless of wage bracket, receive the same percentage bonus, calculated at each expense ratio.

Prior to implementation of the Plan, Jones Motor's management, including the named appellants, met with employees and explained the EPP, promoting it in terms of the company's ultimate survival. A key to the Plan's effectiveness was obtaining 100% participation by all employees, union and non-union alike. Approximately 97% of the GCD employees signed authorization forms agreeing to participate and stating they would be legally bound to "make contributions or receive benefits under the Plan." The EPP was implemented on June 14, 1981, at which time the expense ratio was 112%, resulting in smaller paychecks for all employees.

After approximately three months, a Delaware Teamster's Union local filed a grievance claiming the Plan violated their collective bargaining agreement. Jones Motor

[ 337 Pa. Super. Page 606]

    agreed to discontinue the Plan for its union employees, and paid back the "contributions" they had already made.

Jones Motor continued the EPP with its non-union employees, but it proved to be an insufficient cost-cutting mechanism, and the GCD ceased operations on October 29, 1982. Appellants brought suit in the Court of Common Pleas of Lebanon County on behalf of themselves and a group of non-union employees for recovery of their "contributions," claiming they were withheld in violation of the WPCL. The amended complaint alleged breach of ...


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