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October 9, 1985


The opinion of the court was delivered by: HUYETT



 Presently before me is plaintiff's motion for partial summary judgment and defendants' motions for summary judgment. For the reasons set forth below, defendants' motions will be granted and plaintiff's motion will be denied. *fn1"


 Plaintiff Equal Employment Opportunity Commission ("EEOC") is challenging the salary system and pay raises negotiated between the Governor Mifflin School District ("GMSD") and Governor Mifflin Education Association ("GMEA") over the years 1981 through 1984. The facts appear to be largely undisputed although they are somewhat complicated.

 Before 1974, the GMSD had a fifteen-step salary system. Under that system, teachers entered at step one and progressed year-by-year to step fifteen. Once they attained step fifteen, that is after they had amassed fifteen years seniority, there was no further step-by-step advancement. Each step increase equated with an increase in salary. In addition, all teachers in the system received a yearly salary increase. Thus, a teacher moving from step five to step six received an increase equivalent to the difference between the new step six salary and the old step five salary. Teachers at the highest step did not get a step increase. They did, however, receive a salary increase each year.

 Beginning in 1974, this system changed. From that point until the 1983-1984 academic year, additional steps were added to the top end of the salary ladder each year. As a result, the number of steps increased from fifteen to twenty-eight. No teacher during this period ever reached the top step of the system because the top step slipped upward each year. Between 1974 and 1981, each teacher received a yearly salary increase of a set dollar amount. This amount was identical for all teachers in the district.

 Beginning in 1981, a new method of distributing salary increases was instituted. From that year until the 1983-1984 academic year, each teacher received a raise equal to a set dollar amount plus a percentage of his or her yearly salary. Thus, all teachers would, for example, receive $1,000 plus five percent of their salary as a yearly increase. The result of this was that the highest paid teachers (those with the most seniority at the high end of the salary system) received the largest raises. Thus, the disparity between the highest paid teachers and the lowest paid teachers grew each year.

 In 1983, the GMEA proposed a new system. Under this proposal, the number of steps were to be cut and the number of steps fixed. A teacher would advance step-by-step until he or she reached the top step. Each year until then, the teacher would receive a set "step increase." In addition, there would be an overall raise given to all teachers. This proposal was adopted by the GMSD.

 The new system had a number of practical effects. Of primary importance to this suit is that the existing step system was compacted. In 1983, there were twenty-eight steps. Under the "compaction plan" the number of steps was reduced to twenty-four. All teachers received a raise of $1,288. With this raise, the salary for those teachers at step twenty-eight became $27,360. This salary became the top salary for the district and all those who were to be at step twenty-four or above had their salaries adjusted upward to this amount. In addition, all those teachers below step twenty-three received $1,288 plus a $400 step increase. As a result of this compaction, teachers below step twenty-three received a raise of $1,688; those at step twenty-three received $1,738; those at steps twenty-four and twenty-five received $1,513; those at steps twenty-six and twenty-seven received $1,401 and those at step twenty-eight received the flat $1,288.

 The EEOC claims that the salary increase for the years 1981-1982 and 1982-1983 discriminated against older teachers in violation of the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. § 621 et seq. In addition, the EEOC claims that the salary adjustments made pursuant to the compaction plan also violated the ADEA. The basis for these claims is that older employees in 1981 and 1982 received less of an effective salary increase than did younger employees because the increases in those years included a fixed amount in addition to the percentage increase. In 1983-1984, the EEOC argues, employees at steps twenty-four through step twenty-eight received a lower increase than did younger teachers. The EEOC admitted at oral argument that the only method of distributing pay increases that comported with its interpretation of the ADEA would be a simple percentage increase made across-the-board.

 Presently before me is the EEOC's motion for partial summary judgment on liability and defendants' motions for summary judgment. The parties have raised a number of difficult legal issues some of which involve unsettled areas of the law.


 Summary judgment may be granted when it has been established that there are no issues of material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Small v. Seldows Stationery, 617 F.2d 992 (3d Cir. 1980). The court does not decide issues of fact, but merely determines if there is an issue of fact to be tried. Ettinger v. Johnson, 556 F.2d 692 (3d Cir. 1977). The facts must be viewed in the light most favorable to the non-moving party and any reasonable doubt regarding the existence of a genuine issue of material fact is to be resolved against the moving party. Continental Ins. Co. v. Bodie, 682 F.2d 436 (3d Cir. 1982). The resolution of the pending motions is made easier by the fact that the parties do not seem to dispute the relevant facts.

 Defendants have attacked the EEOC's case in a number of ways. As a threshold matter, they contend that claims concerning the 1981-1982 and 1982-1983 academic years are barred by the statute of limitations. They also claim that the EEOC cannot proceed under a disparate impact theory under the ADEA; that the disparate impact approach cannot be applied in a case involving compensation systems; that there was no disparate impact even if that theory is available to the EEOC, and that there were "reasonable factors other than age" which justified the disparate impact, if any does exist. After a careful review of the memoranda of law submitted by the parties, I have concluded that the EEOC's claims concerning the 1981-1982 and 1982-1983 academic years are time-barred and that even if a disparate impact theory is available in an ADEA case challenging a compensation system, the EEOC has not made out a prima facie case of discrimination and that the defendants have demonstrated that their decisions were made based on "reasonable factors other than age."

 1. The Statute of Limitations

 Section 4(a) of the ADEA provides:

(a) It shall be unlawful for an employer --
(1) to fail or refuse to hire or 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; [or]
(2) to limit, segregate, or classify his employees in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual's age;

 29 U.S.C. § 623(a).

 The rights created by this section are "enforced in accordance with the powers, remedies, and procedures" of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 626(b). The FLSA establishes that an action will normally be barred by the statute of limitations if brought more than two years after the discriminatory event took place. An exception is made for "willful" violations which may be challenged up to three years after the event took place. See 29 U.S.C. § 255. (The Portal-to-Portal Act established a statute of limitations for actions brought under the FLSA.)

 The EEOC filed this action on January 16, 1985. Thus, unless the three-year limit applies, all causes of action which accrued before January 16, 1983 are time-barred. Because the negotiations for, and the adoption of, the collective bargaining agreements for the 1981-1982 and 1982-1983 academic years occurred before that date, unless the three-year statute of limitations applies, the EEOC's claims with regard to those years are time-barred.

 "Willful" is not defined in either the FLSA or the ADEA. This "unfortunate" term, see Wehr v. Burroughs Corp., 619 F.2d 276, 281 (3d Cir. 1980), is capable of a myriad of meanings principally because it has a long history as a term of art in the criminal law. In Trans World Airlines v. Thurston, 469 U.S. 111, 53 U.S.L.W. 4024, 83 L. Ed. 2d 523, 105 S. Ct. 613 (1985), the Supreme Court interpreted the term "willful" in the context of the ADEA for the first time. Unfortunately, Thurston arose from the parallel usage of the term in the liquidated ...

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