18, 1981, CRC acquired 26 Isaly delicatessens and 2 Sweet William restaurants from Isaly, which was then a subsidiary of the Clabir Corporation. Later, in May 1982, CRC acquired an additional 16 Sweet William restaurants from Isaly. CMC maintains that subsequent to its acquisition of the delicatessens and restaurants in October 1981, it intended to operate CRC as an independent corporation from its parent, CMC. Thus CMC established a completely separate management, accounting, and operational work-force for CRC.
Five of the six Plaintiffs, including Donohue, Scheib, Smola, DiIanni and Hunter, were hired by CRC on October 19, 1981, in connection with the initial restaurant acquisition. The sixth Plaintiff, Jones, was hired by CRC in May 1982, at the time of the second restaurant acquisition. All of the Plaintiffs had been employees of Isaly and were hired by CRC to assist in the management and operation of the newly-acquired restaurants. It is undisputed by Plaintiffs that at the time Isaly sold the delicatessens and restaurants to CRC, their jobs with Isaly had been eliminated and they had not been offered alternate employment with either Isaly or its parent corporation. It is also undisputed that CRC had no obligation whatsoever to hire Plaintiffs.
Unfortunately, during the first 6-8 months of its existence, CRC lost vast amounts of money in connection with the operation of the Isaly and Sweet William establishments. In the fiscal year ending June 30, 1982, CRC sustained a loss of $415,587, before payment of income taxes and intercompany management fees. By August 1982, CRC had lost nearly $700,000, a staggering amount given the fact that the restaurants acquired in 1981, had been purchased for their $1.7 million book value and a $887,000 note guaranteed by CMC. Defendants maintain that these mounting losses had escalated to a level at which they threatened the economic existence of both CRC and CMC.
By January 1983, the losses sustained by CRC continued to grow, and the CRC operation showed no signs of a "turn-around" toward profitability. Therefore, a decision was made to eliminate all CRC line management positions and to transfer the CRC management functions to CMC management employees in an effort to eliminate some of the losses associated with CRC operation. All of the line management positions in CRC above the unit manager level were eliminated and the personnel holding those positions were terminated. This included the Director of Operations position held by Plaintiff Jack Donohue; the Senior District Manager position held by Plaintiff Walter Jones; and the District Manager positions held by Plaintiffs Benjamin Scheib, Joseph Smola, and Anthony DiIanni.
Thus, on January 11, 1983, Plaintiffs were informed that their jobs were being eliminated, and that effective that date their employment with CRC was terminated. After January 11, 1983, the duties previously performed by these Plaintiffs were assumed and spread among at least nine (9) different CMC management employees, all of whom had been employed by CMC long before the October 1981 Isaly Acquisition. Of those assuming the CRC duties, four (4) were 40 years of age or older, and all had substantial experience in CMC's primary business of industrial food and environmental management.
A. Age Discrimination Employment Act Claim
In deciding Defendants' Motion for Summary Judgment, the Court must resolve any doubts as to the existence of genuine issues of fact against the moving party and must view all reasonable inferences in the light most favorable to the party opposing the motion. U.S. v. Diebold, Inc., 369 U.S. 654, 655, 82 S. Ct. 993, 994, 8 L. Ed. 2d 176 (1962); Hollinger v. Wagner Mining Equipment Co., 667 F.2d 402, 405 (3d Cir. 1981); Ness v. Marshall, 660 F.2d 517, 519 (3d Cir. 1981); Goodman v. Mead Johnson & Co., 534 F.2d 566, 573 (3d Cir. 1976), Cert. Denied, 429 U.S. 1038, 97 S. Ct. 732, 50 L. Ed. 2d 748 (1977). Although the Third Circuit has emphasized that summary judgment is a drastic remedy, see Hollinger, 667 F.2d at 405, courts must grant the motion where there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Fed. R.Civ P. 56(c). The establishment of a prima facie case of age discrimination does not necessarily defeat a motion for summary judgment. Doby v. Jones & Laughlin Steel, Inc., 624 F. Supp 874 (W.D. Pa) (Simmons, J.); Graham v. F.B. Leopold Company, Inc., 602 F. Supp. 1423 (W.D. Pa. 1985); Pierce v. New Process Co., 580 F. Supp. 1543 (W.D. Pa.), aff'd Mem., 749 F.2d 27 (3d Cir. 1984); Keller v. Bluemle, 571 F. Supp 364 (E.D. Pa. 1983), aff'd without opinion, 735 F.2d 1349 (3d Cir. 1984); Fick v. Canterbury Coal Co., 568 F. Supp. 927 (W.D. Pa. 1983).
The Defendants' burden in seeking summary judgment must be considered in light of the intermediate and ultimate burdens of proof provided for under the ADEA. The Act bars employers from discharging or otherwise discriminating against any individual, age forty to seventy, because of his age, but provides that it is not unlawful to discharge or otherwise discipline an individual for good cause. 29 U.S.C. §§ 623(a)(1), 623(f)(3).
Because of the similarity in language and purpose between the ADEA and Title VII, Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. employees (or former employees, as in the present action) alleging age discrimination are generally held to the same requirements for burden and allocation of proof as those alleging race or sex discrimination. See Texas Department of Community Affairs v. Burdine, 450 U.S. 248, 101 S. Ct. 1089, 67 L. Ed. 2d 207 (1981); Massarsky v. General Motors Corp., 706 F.2d 111 (3d Cir.); cert. denied, 464 U.S. 937, 104 S. Ct. 348, 78 L. Ed. 2d 314 (1983); Smithers v. Bailar, 629 F.2d 892 (3d Cir. 1980). Therefore, in accordance with McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S. Ct. 1817, 36 L. Ed. 2d 668 (1973), the order of proof in this ADEA case requires that Plaintiffs establish a prima facie case of age discrimination by proving that: 1) he is within the protected age group of 40 - 70 years; 2) he was subject to adverse employment action; 3) he was qualified for the positions in question; and 4) younger employees were treated more favorably. Proof of these facts raises a rebuttable presumption of discrimination which Defendants may counter by presenting a legitimate, non-discriminatory reason for the employment action. Burdine, 450 U.S. at 254, 101 S. Ct. at 1094. Accord Duffy v. Wheeling Pittsburgh Steel Corp., 738 F.2d 1393 (3d Cir.), cert. denied, 469 U.S. 1087, 105 S. Ct 592, 83 L. Ed. 2d 702 (1984); Bower v. State Equipment Division, F. Supp. , 31 BNA FEP cases 825 (W.D. Pa. 1983).
In cases (such as the instant action) involving reductions-in-force as opposed to individual discharges, courts have modified the Burdine/McDonnell Douglas analysis to address the fact that in most cases, a laid-off employee is not necessarily replaced, but rather his duties are either subsumed in the job responsibilities of other employees or are not performed at all. In these instances, the courts have generally required the Plaintiff, in order to establish a prima facie case, to show that he is in the protected age group and was laid off while younger employees working in similar jobs were retained. See, e.g., Duffy v. Wheeling-Pittsburgh Steel Corp., 738 F.2d at 1395 n.3; Douglas v. Anderson, 656 F.2d 528 (9th Cir. 1981).
In the present case, it is undisputed that Plaintiffs were members of the protected class and were subjected to adverse action. While there is some dispute about Plaintiffs' qualifications for the positions at issue, for purposes of this Motion, this Court concludes that Plaintiffs have adduced sufficient evidence to permit a trier of fact to determine if, in fact, Plaintiffs were qualified. However, Plaintiffs have not established a prima facie case of age discrimination because they have clearly failed to establish that "younger employees were treated more favorably", Burdine, 450 U.S. at 254, 101 S. Ct. at 1094, Massarsky, 706 F.2d at 118; Duffy, 738 F.2d at 1395, either through proffering evidence "that their position was ultimately filled by someone younger than them," Bower, 31 FEP cases at 826, or that they were discharged while younger employees working in similar jobs were retained. Plaintiffs need not prove that age was the employees sole or exclusive consideration "but must prove that age made a difference in the decision to terminate Plaintiffs". Duffy, 738 F.2d at 1395, quoting, Smithers v. Bailar, 629 F.2d at 898. (emphasis added) Accord, Doby, supra.
Contrary to Plaintiffs' position (see Plaintiff's Mem. at 5-6), it is settled law under the ADEA that a Plaintiff seeking to establish a prima facie case must satisfy the four elements set forth in Burdine. Duffy, supra; Massarsky, supra; Smithers, supra; Doby, Supra; Bower, Supra. The fourth element in particular is unquestionably necessary because it is the fourth element alone that gives rise to the inference that the employer has "dealt discriminatorily with otherwise similarly situated employees" based on age. Grecco v. Spang & Co., 527 F. Supp. 978, 980 (W.D. Pa. 1981).
In the instant action, Plaintiffs have failed to satisfy the fourth requirement for a prima facie case of age discrimination because the evidence is undisputed that all of the CRC line management positions which they held were eliminated in connection with the termination of their employment on January 11, 1983. In other words, CRC did not retain any employees - younger or older than Plaintiffs -- in the job positions previously held by them. Instead, the management duties of these eliminated job positions were allocated as additional job responsibilities among at least nine different Custom Management Corporation ("CMC") employees, all of whom had been employed by CMC before Plaintiffs even began their employment with CRC in October 1981.
These CMC employees cannot be considered to be "similarly situated" to Plaintiffs because their primary job responsibilities, both before and after the termination of Plaintiffs' employment, lay in CMC's institutional contract management business, a field in which none of the Plaintiffs had any experience. Thus, Defendants did not accord more favorable treatment to any similarly situated younger employee.
Even if, in arguendo, Plaintiffs could establish a prima facie case of age discrimination, the Defendants could dispel the adverse inference by articulating "some legitimate, non-discriminatory reason" for the employment decision or action. Burdine, 450 U.S. at 254, 101 S. Ct. at 1094; Massarsky v. Gm, 706 F.2d at 118. Smithers, 629 F.2d at 895. The test for this intermediate burden of production is whether the employer sets forth admissible evidence permitting the trier of fact rationally to conclude that the employment decision was not motivated by discrimination. Burdine, 450 U.S. at 257, 101 S. Ct. at 1095.
This Court finds that Defendant-Employer has presented undisputed, clear, legitimate, non-discriminatory reasons for the termination of Plaintiffs. It is undisputed that CRC was operating at a substantial loss. As CMC president John Metz testified, "We just could not make it any longer. It was a matter of going out of business or closing the office." (Metz Depo. at 96).
Because of the staggering losses incurred by CRC which threatened the economic viability of both CMC and CRC, the decision was made to cut some of the CRC losses by eliminating management positions and reducing some of the overhead associated with the CRC operation. Once the decision was made, all the line management positions in CRC were eliminated, including Plaintiffs' positions.
Defendants have unequivocally rebutted any presumption of discrimination and Plaintiffs would therefore be required (if they could establish a prima facie case) to show that Defendants' reason for the termination is a pretext, or that evidence exists proving Defendants' discriminatory intent. Graham v. F.B. Leopold Co., Inc., 602 F. Supp. at 1425; McClain v. Mack Trucks, Inc., 532 F. Supp. 486, 489 (E.D. Pa. 1982). See also Nicholson v. Western Electric Co., 555 F. Supp. 3, 8 (M.D.N.C. 1982), aff'd without op., 701 F.2d 167 (4th Cir. 1983). ("The Defendant has met its burden of articulation. In order for the Plaintiff to survive a motion for summary judgment, he must produce some evidence which would support his claim that Defendants' stated reasons are pretexts and that the actual intent of the Defendant is to discriminate against him because of his age, race or sex "). (Emphasis in original)
Plaintiffs' intermediate burden to prove pretext merges with their ultimate burden to persuade the court "but for" the employer's unlawful discrimination, they would not have been discharged. See Burdine, 450 U.S. at 256, 101 S. Ct. at 1095, Keller v. Bluemle, 571 F. Supp. at 369; Doby, 642 F. Supp at 878.
Plaintiffs must only introduce sufficient evidence to create a genuine factual issue concerning the existence of a legitimate justification for the action. Massarsky, 706 F.2d at 118. In Keller v. Bluemle, 571 F. Supp at 369, the court delineated the process by which a Plaintiff shows pretext:
In order to avoid summary judgment, Plaintiff must adduce facts raising a genuine issue for trial whether Defendants proffered reasons for his dismissal were pretexts for age discrimination . . . . Plaintiff may carry his burden directly by adducing evidence such as age-biased statements by his superiors which might persuade the court that a discriminatory purpose more than likely motivated his employer. See United States Postal Service Bd. of Governors v. Aikens,  U.S. , 103 S. Ct. 1478, 1482, 75 L. Ed. 2d 403, quoting Burdine 450 U.S. at 256, 101 S. Ct. at 1095. He may carry this burden indirectly by showing that the employer's proffered explanation for his dismissal should not be believed. Burdine at 256, 101 S. Ct. at 1095.
Plaintiffs have presented no such direct or circumstantial evidence, nor any other evidence which challenges in any way Defendants' evidence. Rather, Plaintiffs assert that notwithstanding the fact that they were hired as CRC employees and always worked at CRC employees, they should have been given the opportunity to "bump" CMC employees (all of whom were on board prior to the 1981 hiring of Plaintiffs) out of their CMC jobs because Plaintiffs' CRC jobs were eliminated. Plaintiffs' ADEA claims thus merely challenge the Defendants' January 1983 business decision to eliminate the CRC line management positions and to transfer those job duties to CMC.
This is clearly insufficient to establish that Defendants' legitimate nondiscriminatory reason was a pretext, or that Defendants had a discriminatory intent in laying off the Plaintiffs. Plaintiffs "may not rest on the allegations of their pleadings or upon bare assertions, conclusory allegations, suspicions or doubts, but must, by affidavit or otherwise set forth specific facts showing that there is a genuine issue for trial." Graham v. F.B. Leopold Co., Inc., 602 F. Supp. at 1426 (emphasis in original), quoting Ness v. Marshall, 660 F.2d 517, 519 (3d Cir. 1981). See also Nash v. Jacqueline Cochran, Inc., 548 F. Supp 676 at 680 (1982). "There must be some basic evidentiary fact to permit the trier of fact to draw a reasonable inference of intent to discriminate". Id.
Thus, not only have Plaintiffs proffered a clearly erroneous tri-partite test
and hence failed to establish a prima facie case of age discrimination, but Defendants have articulated with undisputed evidence a legitimate, non-discriminatory reason for Plaintiffs' discharge. The record is devoid of any evidence from which the trier of fact could reasonably conclude that Plaintiffs were terminated from their line management positions because they were over 40 years of age.
While Plaintiffs are "entitled to every favorable inference," they are not entitled to build a case on the "gossamer threads of whimsey, speculation and conjecture." Keller v. Bluemle, 571 F. Supp at 371, quoting Manganaro v. Delaval Separator Co., 309 F.2d 389, 393 (1st Cir. 1962). Accordingly, Plaintiffs ADEA claims shall be dismissed.
B. Erisa Claim
In Count II of their Complaint, Plaintiffs allege that the termination of their employment violated Section 510 of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1140. Section 510 provides in pertinent part:
It shall be unlawful for any person to discharge, fine, suspend, expel, discipline or discriminate against a participant or beneficiary . . . for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan, his subchapter, or the Welfare and Pension Plans Disclosure Act. (Emphasis added.)
Plaintiffs must therefore plead and prove that the motive for the termination of their employment was to interfere with the attainment of vested pension benefits. See, e.g. Ursic v. Bethlehem Mines, 556 F. Supp. 571, 575 (W.D. Pa.), aff'd in pertinent part, 719 F.2d 670 (3d Cir. 1983) ("true purpose" behind discharge of Plaintiff employed by Defendant for more than 29 years was to prevent attainment of impending 30-year service pension). To the contrary, at the time their employment was terminated on January 11, 1983, all of the Plaintiffs were already fully vested participants in the CRC Retirement Income Plan ("Plan"), which had been established concurrently with the formation of CRC. (Evans Affidavit at Para. 3). Thus, Plaintiffs' claims are not within the legislative purpose of Section 510 of ERISA, which was "aimed primarily at preventing unscrupulous employers from discharging or harassing their employees in order to keep them from obtaining vested pension rights." West v. Butler, 621 F.2d 240, 245 (6th Cir. 1980).
More importantly, Plaintiffs cannot point to any evidence which would support a conclusion that the decision to terminate their employment was motivated by any consideration of their pension benefits. The undisputed facts demonstrate that Plaintiffs' employment was terminated when increasing economic losses forced the elimination of Plaintiffs' jobs and the transfer of their duties to existing CMC personnel.
Plaintiffs "Exhibit 81", ("Ex.A" of the Hirsch Affidavit) which purported to show the savings realized by Defendants from the discontinuance of further contributions to the CRC Pension Plan on behalf of Plaintiffs, is insufficient to establish the requisite intent. It is obvious that an ERISA violation (§ 510) requires more than a showing that the termination of Plaintiffs' employment "meant a monetary savings to Defendants" (Plaintiffs' Mem. at 17), for otherwise an ERISA violation would automatically occur every time an employer terminated a fully-vested employee (participant), such as Plaintiffs herein, who were covered by a pension plan.
Even if, in arguendo, Plaintiffs could proffer sufficient evidence from which the trier of fact could reasonably find "unlawful motivation" on the part of Defendants, Plaintiffs' failure to exhaust internal administrative remedies under the CRC Pension Plan warrants dismissal of their ERISA claims.
The well-established federal policy, and supporting case law, strongly favors exhaustion of administrative remedies prior to bringing an ERISA-based lawsuit in Federal Court. See, e.g., DeLisi v. United Parcel Service, Inc., 580 F. Supp 1572, 1575 (W.D. Pa. 1984) ("A Plaintiff alleging wrongful discharge to prevent attainment of pension rights who fails to exhaust administrative remedies available under the pension plan will find his suit barred."); Challenger v. Local Union No. 1 of Intern. Bridge, 619 F.2d 645, 649 (7th Cir. 1980) ("We note that Congress intended fund trustees to have primary responsibility for claim processing . . . . To make every claim dispute into a federal case would undermind the claim procedure contemplated by the Act.") See also Kross v. Western Elec. Co., Inc., 701 F.2d 1238 (7th Cir. 1983); Lucas v. Warner & Swasey Co., 475 F. Supp. 1071 (E.D. Pa. 1979).
The compelling policy considerations which require an ERISA claimant, in most instances, to exhaust administrative remedies before bringing suit in Federal Court are persuasively set forth in Amato v. Bernard, 618 F.2d 559, 567-68 (9th Cir. 1980):
"The institution of . . . administrative claim-resolution procedures was apparently intended by Congress to help reduce the number of frivolous lawsuits under ERISA; to promote the consistent treatment of claims for benefits; to provide a nonadversarial method of claims settlement; and to minimize the cost of claims settlement for all concerned. It would certainly be anomalous if the same good reasons that presumably led Congress and the Secretary to require covered plans to provide administrative remedies for aggrieved claimants did not lead the courts to see that those remedies are regularly used. Moreover, the trustees of covered benefit plans are granted broad fiduciary rights and responsibilities under ERISA, sections 401 through 414, 29 U.S.C. §§ 1101-1114, and implementation of the exhaustion requirement will enhance their ability to expertly and efficiently manage their funds by preventing premature judicial intervention in their decision-making processes. The text of ERISA and the policies underlying that text, far from suggesting that Congress intended to abrogate the exhaustion requirement in the case of suits under ERISA or that sound policy would counsel its abrogation by the courts, suggest just the opposite.