UNITED AIR LINES, INC. v. MCMANN
Legal provision: Age Discrimination in Employment (ADEA)
Argument of Arnold T. Aikens
Chief Justice Warren E. Burger: We will hear arguments next in 76-906 United Air Lines against McMann.
I think you may proceed whenever you are ready Mr. Aikens.
Mr. Arnold T. Aikens: Mr. Chief Justice may it please the court.
This matter is before the court on petition of certiorari to the Fourth Circuit Court of Appeals.
The case arises under the Age Discrimination Act and presents a very narrow issue.
That is whether an involuntary retirement of a person under age 65 pursuant to a bona fide pension plan, adopted many years before the Act is permissible without further justification.
A stipulation in this case has been entered in to as to the facts and they maybe very briefly stated.
The respondent McMann began his employment with United Air lines in 1944 and during the course of his career, he held several positions.
He was retired at the age of 60 in 1973 and at that time held the position of technical specialist aircraft systems, which is a flight management position.
At the time, respondent began his employment with United.
The United had a pension plan in existence, its membership was voluntary.
Respondent did not elect to join that plan until several years later in 1964.
At the time, he joined the plan his application card indicated that the normal retirement age was 60 years, thereafter he received annual reports from the company describing the benefits he had accrued and on the face of each of these reports the normal retirement age was stated as 60.
Prior to his retirement in 1973, respondent notified the Secretary of Labor that he intended to sue on the ground that his retirement violated the Age Discrimination Act.
The Labor Department responded that United's plan was a bona fide plan, and in as much as it had been adopted many, many years before the Act that it did not appear to be a subterfuge.
Respondent, then filed his action in the Eastern District of Virgina, the case was submitted on cross motions for summary judgment and summary judgment was granted in favor of United.
He appealed to the Fourth Circuit, claiming that his retirement violated the Discrimination Act.
United contended that an expressed exception.
Section 4(b)2, 4(f)2 expressly provided that involuntary retirement was authorized pursuant to a bona fide plan that was not a subterfuge to evade the purposes of the Act.
United relied upon then the only appellate decision Brennan v. Taft Broadcasting, and said that in as much is its plan had preexisted the Act by some 26 years.
That it therefore could not be a subterfuge which was the holding in the Taft case.
The Fourth Circuit reversed.
The substance of its holding was that any involuntary retirement is presumed to be a subterfuge to evade the purposes of the Act.
Looking to the history, the legislative history of the Act, the court said that in order to avoid the condemnation of subterfuge, the employer must prove that the retirement related to either an economic or a business purpose and not simply age.
In this decision, the Fourth Circuit stands alone, the Second , Third, Fifth and Ninth are now in conflict.
Two sections of the Act are pertinent to this case.
Section 4(a) provides that it should be unlawful for an employer to fail or refuse to hire or to discharge any individual or otherwise discriminate against individual with respect his compensation, terms, conditions or privileges of employment because of the individual's age.
Unknown Speaker: Mr. Aikens, I am curious about one fact, does the record show that everybody under this plan was discharged at age 60 by United?
Mr. Arnold T. Aikens: Yes the record does show.
It is revealed in a system board decision, Professor Cox wrote which indicates that the normal retirement plan is followed for everyone at United.
The Fourth Circuit's decision recognizes the fact that United has uniformly applied --
Unknown Speaker: No exceptions whatsoever.
Mr. Arnold T. Aikens: No exception within United Airlines.
Unknown Speaker: What happens if a person is retired in other section and then applies for reemployment?
Mr. Arnold T. Aikens: We do not think, even if you are retired on one day and applied for reemployment, the following day Your Honor, we do not think that it is possible under the Act realizing the Act as to somewhat inconsistent phrases --
Unknown Speaker: What do you mean possible -- what would you say to – what would United say to the person applied?
Mr. Arnold T. Aikens: United would have to say Your Honor that the Act does not ban a retirement program, that he has been retired and at the kind of employment the Act speaks of is those persons who have not been retired and are receiving pensions.
Unknown Speaker: Would not the company at least have to say we will reemploy you but you will have give up your pensions?
Mr. Arnold T. Aikens: I suspect that the company would, although this would inconsistent with its --
Unknown Speaker: Or the reason -- you are suggesting the reason that they would refuse to reemploy him as he is retired pensioner not that he is too old.
Mr. Arnold T. Aikens: That is correct.
Unknown Speaker: So this is a logical extension of his election to be on the pension plan.
Mr. Arnold T. Aikens: His election to be in the pension plan and the uniform practice definitely.
Unknown Speaker: Well, I have to interrupt that -- were there cases in the other circuits -- did the cases in the other circuits involve pension plans where people had the option to elect in or out?
Mr. Arnold T. Aikens: I believe --
Unknown Speaker: Did any of them involve situations where once you are employed, you are under the plan willy-nilly and there is no way out of it?
Mr. Arnold T. Aikens: Your Honor I believe each of the case involves a plan in which the employer could retain the employee after the age 60 or whatever it happened to be under the plan.
Unknown Speaker: I do not understand that.
Mr. Arnold T. Aikens: The other cases where involved plans in which a retirement was not mandatory at a certain age, the employee could be retained after 60 or whatever the age happened to be if the employer chose to do so.
Unknown Speaker: That just sounds like there was not mandatory retirement at all.
Mr. Arnold T. Aikens: That is correct, it is optional in the part of the company in most of those cases.
Unknown Speaker: It was not much of a conflict.
There is nothing --
Mr. Arnold T. Aikens: Not a conflict within the plan is there.
There has been a conflict with in the application of the statute.
Chief Justice Warren E. Burger: You said that when he first became employed back in the 40s that he did not go on to the plan by what process or steps did he move to get on to the plan, did he apply to go under it?
Mr. Arnold T. Aikens: Yes Your Honor in 1964 he apparently made the determination to join the plan and did so, it is a voluntary election on his part.
Chief Justice Warren E. Burger: Do you argue that, that is a contract?
I do not observe in your brief anywhere that you argue that that constitutes a contractual undertaking between himself, voluntary contractual undertaking between himself and United?
Mr. Arnold T. Aikens: It is a Your Honor, we deem it to be a contract, the retirement plan is --
Chief Justice Warren E. Burger: Does the contract clause enter in to this in anyway?
The subsequent Legislation and the Court probably would have saught to be invalidated the contract, if there was a contract.
Mr. Arnold T. Aikens: We do not think that the Legislation Your Honor has invalidated.
Chief Justice Warren E. Burger: Well, but that is the position of the Court.
Is it not?
Mr. Arnold T. Aikens: That was the position of the Fourth Circuit yes Your Honor.
Chief Justice Warren E. Burger: Does that invoke do you think the contract clause?
Mr. Arnold T. Aikens: We do not believe so, Your Honor, the plan is.
Chief Justice Warren E. Burger: But if it is a contract the Statue that has construed has some tendency to inherit does it not?
Mr. Arnold T. Aikens: According to the Fourth Circuit and according to all other circuits, no.
Chief Justice Warren E. Burger: Well, it is under review here.
Is it not?
Mr. Arnold T. Aikens: Yes.
A Section 4(F)2 of the Statue provides that it shall not be unlawful for an employer to observe the terms of a Bona fide Seniority System or any Bona fide Employee Benefit Plan such as a retirement,pension or insurance plan which is not subterfuge to evade the purposes of the Act, except that no such employee benefit plan shall excuse the failure to hire any individual.
Three cases essentially have focused on this exception.
The first of this being the Taft case from the Fifth Circuit and it should be noted and I think that while it is alleged that the language of this provision is not plain, both Brennan and McMann have both stated that the language is unambiguous, the problem has been in the difficulty.
The difficulty with applying the terms subterfuge.
In Taft, the Court applied dictionary definitions saying that the bona fide plan was a genuine authentic good faith plan.
It defined subterfuge as deception by artifice or stratagem thus applying a state of mind concept to the definition.
The Court in Taft held that since the plan, it was involved in there preceded the Act by some six years.
It obviously could not have been subterfuge to evade the purposes of the Act.
United agreed with the holding of that case and relied upon at in McMann in.
And as much as its plan was conceded to be bona fide paying reasonable benefits and had existed some 26 years before the Act.
The McMann case rejected that definition and presumed any early retirement or the retirement before the age of 65 to be unlawful.
It said that one must look to a reason unrelated to age to justify an involuntary retirement, and accordingly the Court said that that reason should be a business or an economic reason.
The Court said that this conclusion was justified by its review of the history and the history that it looked to, was a single reference related to the 4F2 exception, that history provided that this section of the Act does apply to new and existing plans.
That the exception emphasizes the primary purpose of the bill which is hiring and it said that Congress's purpose was to remove plans as a barrier to hiring persons within the protected age group.
The history that the Court relies upon is really limited to the last phrase of section 4(F)2.
This is sometimes been referred towards the Javits Amendment
Senator Javits was extremely concerned that corporations would not hire persons within the protected age group simply because of the high cost of putting them into pension or benefit plans for a very limited number of years.
He sought therefore to eliminate that as a barrier which of course that exemption has done.
That exemption however addresses itself to another condition as well as this.
Nevertheless it appears that what the Fourth Circuit has done is to say that if there is an economic factor to be considered in connection with the hiring of an individual, then there should be an economic factor considered with respect to involuntary retirement and so the Court imposed that as a criteria.
The distinction however is that the Congress imposed the economic factor with respect to that portion of the exemption covering hiring.
It did not do so as to involuntary retirement.
Unknown Speaker: The First Circuit rule in Taft Broadcasting, any good faith retirement plan that was established prior to the enactment of this Statute of 1967, would permit in your submission, the involuntary retirement of any employee at whatever age that plan provides -- It could not be a subterfuge that is your submission is. that right?
Mr. Arnold T. Aikens: The Court did not looked beyond that, however it is interesting that in its definition of bona fide, the Taft case did consider, not just a plan but a plan that provides reasonable reasonable benefits.
Unknown Speaker: No, good faith is the English translation of bonne foi.
Mr. Arnold T. Aikens: Yeah , That is correct.
Chief Justice Warren E. Burger: The Third Circuit took a different view on that point that the Fifth Circuit, is it not?
Mr. Arnold T. Aikens: The Third Circuit did Your Honor in the Zinger case and the Third Circuit said that it would not look at the term subterfuge in terms of the a mental concept or a state of the mind concept.
It distinguished -- it looked to the purposes of the Act and it said that the Act is primarily aimed at prohibiting discrimination in hiring practices and in discharging and that the Act was intended to preserve the retirement plan.
It did not ban them.
It then made a distinction between a person who is retired and receiving reasonable benefits and the person who is totally discharged or who is retired but does not receive any benefits and it said this is the subterfuge, that person who is harmed because he does not have benefits and this is what that prohibition is aimed at.
It therefore concluded that the subterfuge as used in Section 4(f)2 means a shame plan or one that does not provide reasonable benefits to the retire age.
Unknown Speaker: Were retirement plan without any benefits, there is no difference than a discharge.
Mr. Arnold T. Aikens: That is precisely the Court equated the two.
Unknown Speaker: On what point would the amount of benefits distinguish between what is bona fide and what is not?
Mr. Arnold T. Aikens: No Court- no court, Your Honor to our knowledge has ever said what is reasonable and what is unreasonable.
Unknown Speaker: But the Statute does not use the word reasonable.
Mr. Arnold T. Aikens: And the the Statute does not use the term reasonable.
No the Statute addresses itself simply to --
Unknown Speaker: Whether or not it is bona fide and whether or not it is subterfuge.
Mr. Arnold T. Aikens: That is correct Your Honor.
Chief Justice Warren E. Burger: Well if it provided 10$ a month, that might cast some doubt on its good faith or it is just a subterfuge, would it not?
Mr. Arnold T. Aikens: It would indeed Your Honor.
Unknown Speaker: Well, I thought that was your submission, Mr. Aikens that no plan that has been added in to prior to the enactment of this Act, it would possibly be a subterfuge.
Mr. Arnold T. Aikens: No plan that is a bona fide plan Your Honor.
Unknown Speaker: It might or might not be bona fide -- the Statute sets up two criteria, does it not?
It has to be both bona fide and not a subterfuge.
Is that not right?
Mr. Arnold T. Aikens: Correct, that is correct Your Honor.
Unknown Speaker: And I thought it was your submission that no plan that antedated the enactment of this Legislation could possibly be a subterfuge.
It might not be bona fide but it could not be the subterfuge.
Is that your submission?
Mr. Arnold T. Aikens: The United's position was consistent with the Taft position that if it is bona fide plan and did pre-exist the Act, then it would not be a subterfuge.
Unknown Speaker: That could not be.
Mr. Arnold T. Aikens: That is right.
Unknown Speaker: How could a post- Act bona fide plan be a subterfuge?
Mr. Arnold T. Aikens: A post Act plan coder could not be.
Unknown Speaker: Post Act bona fide plan, how could that be a subterfuge?
Are those words mutually inconsistent?
Mr. Arnold T. Aikens: Some Courts have held that something that is bona fide cannot be subterfuge.
Unknown Speaker: Then is the statute redundant?
Mr. Arnold T. Aikens: It could be said that it is, if one were to look at subterfuge and define and not as or look to its application, could a plan be genuine but it could it have been put into effect with provocation of circumventing something, it might be a subterfuge.
Unknown Speaker: Mr. Aikens, I suppose there is also a theory which is suggested although not completely explicit in the Third Circuit opinion that when there are adequate pension benefits as opposed to a case in which there is a discharge with no pension, you really do not have a discharge within the meaning of the Act.
Mr. Arnold T. Aikens: That is correct Your Honor.
Unknown Speaker: Do you take that position or do rely exclusively on 4(f)(2)?
Mr. Arnold T. Aikens: No Your Honor, we rely both upon Taft and say the Taft was correct as far as it went and we also rely upon the Zinger case, the Third Circuit and these two decisions are not that far apart, they do not really reach different results, the distinguishing difference, I think between the two cases is that Taft concludes that a bona fide plan is one which provides reasonable benefits.
The Zinger Third Circuit decision uses reasonable benefits to define the term subterfuge.
And really they arrive at the same result but reasonable benefits is defined in two different words.
We believe that the Zinger case too supports the position of our case and in that case the Court looked to the Legislative history.
Unknown Speaker: What were in fact the benefits received by Mr. McMann under this plan, he did not elect to go under it until his 51st birthday.
Mr. Arnold T. Aikens: That is correct.
Unknown Speaker: Then he had only nine years of employment before his retirement and what were his benefits in terms of a percentage of his average wages or highest three year wages or whatever.
Mr. Arnold T. Aikens: There are two parts to plan Your Honor, there is a fixed and there is a variable part.
The fixed part in this case derives from the contribution of the employee, however because this was a pilot's plan subject to negotiation and collective bargaining.
Mr. McMann only paid one year under the fixed part, United pays the complete contribution for the fixed part of the portion and the variable part he made contribution--
Unknown Speaker: Part of the collective bargaining agreement with AOPA, was it not?
Mr. Arnold T. Aikens: Yes that is correct.
The sum that he received from the plan is reduced by two factors.
Number one, the fact that he was a member for a very short time and then secondly at the time of his retirement, he elected to accept a ten year option, that is a guaranteed payment for ten years which further reduced to -- this would have amounted in dollars and cents to some thing like $450 in that area.
Unknown Speaker: A month?
Mr. Arnold T. Aikens: That is correct.
Unknown Speaker: And what was his salary at the time of his retirement approximately?
Mr. Arnold T. Aikens: I do not know Your Honor.
Unknown Speaker: You do not know what percentage this was of his salary or?
Mr. Arnold T. Aikens: No I do not know, but United in view of the fact that this sum was not a very high sum and certainly not equivalent to one who would have been member of the plan for 20 or 30 years, he made a voluntary contribution which exceeds what he gets and actually the benefits that he now receives, they are approximately $850 a month and this is not the contribution that he receives of course he is not out of the pension plan it is United's contribution to him.
Unknown Speaker: Well does United do that for everybody or who has just been in plan nine years?
Mr. Arnold T. Aikens: No Your Honor we believe that this is unique.
There has been a change in circumstances at the time that Mr. McMann joined the company and he was a pilot.
It was membership and the plan was by election.
Now we do not have that problem because the pilots are automatically enrolled in the plan, so that I think Mr. McMann is unique in the company in receiving this additional contribution.
Unknown Speaker: Do they say they paid after this lawsuit or before it?
Mr. Arnold T. Aikens: No, it was at the time of his retirement.
Chief Justice Warren E. Burger: Just to get the arithmetic correct.
The full answer to Justice Stewart's question is that he is getting $850 a month, $450 on the pension on, 400 supplemented by the voluntary contributions of United.
Mr. Arnold T. Aikens: That is correct Your Honor and those figures are average figures, I do not mean to be specific about that.
Unknown Speaker: Before his retirement he had been in touch with the Labor Department indicating his intention to proceed out of this tax --
Mr. Arnold T. Aikens: Yes he had.
Unknown Speaker: Did – I suppose United knew about that?
Mr. Arnold T. Aikens: Yes it did and it received the response of the labor department, a copy of it.
In the Zinger case that Court went to a great deal of difficulty to trace the history of this Act.
The legislative history and to clearly demonstrate that Congress intended to protect the pension plan or the retirement plan in 4(f)(2) and that it did create an expressed exemption allowing for involuntary retirements pursuant to that, that body of history, the Fourth Circuit has for some reason chosen to ignore, but the History briefly stated is that this was an Administration Bill and the President in submitting the bill to Congress expressly provided for an exception for those persons retiring under pension plans.
Senator Javits' who was most active in the Court before the committees in advocating the plan, recognized also that the administration's plan which permits involuntary retirement under a bona fide plan meets only part of the problem he said, obviously then he recognized this is a valid part of 4(f)(2), he then went on to propose his amendment which is now the last phrase of 4(f)(2).
Unknown Speaker: Just as so I got it straight.
In order for us to agree with you but we have to reach the question and deal with it as to whether the statute, whether 4(f) or whatever the exemption is, covers a plan that is obligatory on the employee but optional on the employer, your plan United could have under the terms of the plan retained any employee beyond 60.
Mr. Arnold T. Aikens: That is correct Your Honor.
Unknown Speaker: You said that they never had--
Mr. Arnold T. Aikens: In practice it never he has but it could --
Unknown Speaker: Certainly there was a strong dissent in the Fifth Circuit on Judge Tuttle saying that the exemption was not even meant to cover a plan that was optional on the employee.
Now that Fourth Circuit put that issue aside because it decided against you an another ground, but do we have to, what do we about that question, do we have to deal with it here?
Assume we agreed with you otherwise --
Mr. Arnold T. Aikens: In the factual context of our case it does not have to be dealt with sense we have uniformly, United has uniformly applied --
Unknown Speaker: Well, I know but that is the argument is, the company still has the option -- that Congress only intended to permit the company to or to exempt a plan that was obligatory both ways.
That was the argument in the Fifth Circuit.
Mr. Arnold T. Aikens: Yes but we think that the history belies this that Congress did not speak--
Unknown Speaker: Well that maybe so but do we have to reach it, if we hold for you?
And not to decide it.
Mr. Arnold T. Aikens: I do not believe that the Court would have to decide it in this case Your Honor.
Unknown Speaker: I thought your submission was that, while normal, and may not have dictionary meaning of mandatory, that in fact it was equivalent to mandatory under your plan and that has been historically administered and that is what Professor Cox found in the arbitration.
Mr. Arnold T. Aikens: That is what Professor Cox found and that is what Fourth Circuit conceded that United is not (Inaudible) normal in this case means mandatory.
Unknown Speaker: Now that means mandatory in fact.
As a matter of the historic administration of this plan.
Mr. Arnold T. Aikens: Yes.
Unknown Speaker: And that was a unanimous decision of the arbitration panel was it not?
Mr. Arnold T. Aikens: Yes it was Your Honor.
Unknown Speaker: Mr. Aikens, am I correct there are not some legislation pending in the Congress today that ties right in to this problem.
Mr. Arnold T. Aikens: There is and it is my understanding Your Honor, that the house has passed a bill and a bill pending in the Senate.
Unknown Speaker: Does it have bearing on this case?
Mr. Arnold T. Aikens: It does not have any bearing on this case.
Mr. McMann of course is affected by this and any new bill will not be retroactive.
Others who have been retired pursuant to involuntarily retired, pursuant to plans are also affected by the ruling of this case.
Unknown Speaker: You realized, of course, that large majority of this Court is beyond the age of 60 and do you think that we should all (Inaudible) ourselves and that you go else where.
Mr. Arnold T. Aikens: No your honor no I do not.
Chief Justice Warren E. Burger: The rule of necessity would take care of that, would it not?
Mr. Arnold T. Aikens: Your Honor we respectfully submit that the Fourth Circuit's decision is an error and it should be reversed and that the court should follow the rulings of Taft and Zinger Mr. Chief Justice may I reserve my time --
Unknown Speaker: Mr. Aikens, may I just ask says one other question?
On the question of the amount of benefits for your adversary, stipulation Exhibit 3 does give dollar figures, $420 and $840 was his first check.
Is there any thing else in the record that gives a precise dollars or we are just giving?
Mr. Arnold T. Aikens: No your honor there is nothing in the record that gives us those figures.
Chief Justice Warren E. Burger: Mr. McBride you may proceed whenever you are ready.
Argument of Francis G. Mcbride
Mr. Francis G. Mcbride: Mr. Chief Justice and may it please the court.
This is a case of first impression.
It is very first case this court has ever considered under the age discrimination and Employment Act of 1967.
The kind of determination that the court will have to make has been made many times before by this court specifically this court must decide what the import of the language used by Congress is and it must also examine what Congress intended to do when it passed the legislation.
The language of statute which is involved particularly Section 4(f)(2) requires that in order to come under that exception, a pension plan must be both bona fide and not a subterfuge to evade purposes of the Act.
The purposes of the Act are set out in Section 2 of the Act.
Clearly Congress stated them explicitly as possible they are to allow older workers to obtain and to retain employment.
Chief Justice Warren E. Burger: Do you distinguish between the purposes of the Act and language of the Act in any way?
Mr. Francis G. Mcbride: No I think the language of the Act is clear Section 4(f)(2) incorporates by reference basically, the provisions of Section 2 which state the purposes.
The purposes, I think are essential to this court consideration of the question.
Also Section 4(a) of the Act where the actual prohibitions of age discrimination are enumerated provides that there can be no discrimination in employment when sole criteria for that whatever action is the age of the person involved.
Chief Justice Warren E. Burger: Do you accept the Fourth Circuit's characterization of the plan as being a bona fide plan?
Mr. Francis G. Mcbride: The question down there was presented to me, and I said I agreed with them that it was bona fide in the sense that it does pay substantial benefits.
I agree generally that the plan is bona fide, United's plan is bona fide, yes.
However the question before the court primarily is whether or not the plan is subterfuge to evade the purpose of the Act.
I think it is very important for the court to be aware that the purposes are as I stated to let older workers be employed.
Unknown Speaker: Or younger workers, it is equally violation of the Act to discriminate against somebody because it was youth is it not?
Mr. Francis G. Mcbride: The Act itself only applies between the ages of 40 and 65 your honor.
Unknown Speaker: Well you discriminate against somebody because he is only 40.
Mr. Francis G. Mcbride: That is correct because he has been 40.
I do not think that was discriminating because of youth, I do not think because --
Unknown Speaker: I mean it was not on the mind of Congress but that what is the language of the statute says.
Mr. Francis G. Mcbride: The language does in fact have that import yes.
Chief Justice Warren E. Burger: Would it violate the Act in your view if the company refused to permit a man 41 years old to begin pilot training and apply for pilot's job?
If he had no previous flying experience.
Mr. Francis G. Mcbride: That would be a very difficult question your honor.
Primarily because of the necessary extent and expense of training someone to become a pilot.
But in that case if that kind of discriminatory result was allowed, it would not be allowed because the man was 41, it would be allowed because of a business reason In other words, the company would not be able to realistically finance that kind of training necessary for a person to become a pilot.
So that would fit in with what the Fourth Circuit had in mind when it said a business or economic reason.
Unknown Speaker: That is covered by the BFOQ language of the statutes is it not?
Mr. Francis G. Mcbride: No that would not be BFOQ language.
Unknown Speaker: It might also should then recovered by the FAA regulations and perhaps also by the agreement between the company and the AOPA.
Mr. Francis G. Mcbride: Even if it was, the FAA regulation has no minimum entry age but if it was within the scope of the contract, for example, if a contract said we will not hire anyone over the age of 40 to become a pilot, that would be similar to the present case and whether that provision would be allowed to stand in the contract, would become a question of whether it was permissible under the Act.
The Act would have clear priority over that kind of question.
Unknown Speaker: Since I have already interrupted you, am I correct in my understanding that in your answer to the Chief Justice's question you made clear that in your view at least whether something is bona fide is quite a different question from whether or not it is a subterfuge, by something I mean a pension plan.
Mr. Francis G. Mcbride: Definitely.
Unknown Speaker: That there are two separate and quite distinct tests.
Mr. Francis G. Mcbride: Yes Congress used both terms and --
Unknown Speaker: Alright.
And that we have to assume that they meant different things they were not indulging in totality.
And your understanding of the meaning bona fide is that it provides reasonable benefits that the plan provides reasonable benefits--
Mr. Francis G. Mcbride: That is the working definition that every court which has considered a question has used whether or not that is a precise--
Unknown Speaker: Or whether it is complete.
Mr. Francis G. Mcbride: Or complete is not really been a issue.
Unknown Speaker: But at least that is one criteria and if whether or not it provides -- the plan provides the reasonable benefits.
Mr. Francis G. Mcbride: That is correct.
Unknown Speaker: Retirement benefits.
What is the test in your submission, what is the meaning of -- in your submission of whether or not a plan is a subterfuge?
Mr. Francis G. Mcbride: The primary--
Unknown Speaker: It has not to do with reasonable benefits.
Mr. Francis G. Mcbride: No, it has nothing to do with reasonable benefits.
The primary test becomes question of whether or not the criteria used is the criteria which is prohibited by the Act.
In other words, if age is sole reason for an action a Discriminatory Action then that becomes --.
Unknown Speaker: Let us not, if you can to use polar words.
If it is a sole reason for mandatory retirement under 65, is that what you mean?
Mr. Francis G. Mcbride: Well yes, it becomes a subterfuge because the purpose of the Act and the prohibitions of the Act is against determinations based solely upon age.
Unknown Speaker: Well then pension plan, that even though it provided reasonable benefits was there for bona fide would nonetheless be a subterfuge and not covered by this exception to the general provision of the Act, if it in fact provided for mandatory retirement under 65, unless there were some but other reason?
Mr. Francis G. Mcbride: Unless there were some other reason yes.
Unknown Speaker: And whether that other reason had to be some economic --
Mr. Francis G. Mcbride: It could be economic or business reason or it could be an outside ruling by the federal government, such as if a person is a fire fighter and the Congress decides that fire fighters should be exempt from or involuntary retirement of fire fighter should be allowed or even though --
Unknown Speaker: Is it like a policeman or something like that?
Mr. Francis G. Mcbride: That may not be a bona fide occupational qualification, if there is this type of ruling that would allow the involuntary retirement.
Unknown Speaker: Mr. McBride, I would think the dictionary definition of a subterfuge is something that says one thing and means another.
It is something that purports to be okay but really is not and by your interpretation, if a contract that says in so many words, we are going to retire you at 65 or 60 and give you these pension benefits, that makes it perfectly clear and does not dissemble it at all.
It is nonetheless a subterfuge.
Mr. Francis G. Mcbride: Yes Your Honor, I think that the -- what should we say sinister action type of definition of subterfuge is not applicable in this case.
Unknown Speaker: Well it has to be a subterfuge to evade the purposes of this Act.
Mr. Francis G. Mcbride: That is true.
Unknown Speaker: In order to be a subterfuge to evade the purposes of the Act it has to be a subterfuge to start out with I take it.
Mr. Francis G. Mcbride: But I do not think that subterfuge, the term subterfuge implies any malicious intent or any deliberate going around the Act.
In fact, the result may be a subterfuge although the attempt may not necessarily be that to get around the Act and also again the purposes of the Act which are important in this case.
Chief Justice Warren E. Burger: Prior to the passage of the Act to was it in any sense a subterfuge?
Mr. Francis G. Mcbride: I do not think, I can really answer the question because prior to the passage of the Act there was no legislative purpose that would be avoided by the subterfuge.
Before the Act was passed, the plan would have been bona fide but as far as the question of whether it was a subterfuge or not, I do not believe would really have any relevance because there was nothing to evade it to.
Unknown Speaker: In order for you to prevail, do you think you have to show that this plan was a subterfuge as that term is used in the Act?
Mr. Francis G. Mcbride: No I think the--
Unknown Speaker: What other grounds could you prevail on?
Mr. Francis G. Mcbride: Well I think that we could prevail upon the terms of the Act or terms of the pension plan itself.
The pension plan states that the normal retirement date shall be the 60th birthday of the participant.
The United Airlines plan which is involved here, did have a provision for superannuated employment of someone beyond that normal retirement date.
The Fourth Circuit in that reached the question and it was not necessary to reach that question under the grounds for the decision of the Fourth Circuit.
They took a rather broader approach to the problem and therefore did not get involved in the question of whether or not the plan itself would have been adequate presuming they had agreed with United's interpretation of the statute to involuntarily retire Mr McMann.
Justice Thurgood Marshall: Mr. McBride to what extent is collective bargaining got to do with this?
Mr. Francis G. Mcbride: With the retirement age.
Justice Thurgood Marshall: But it was a broader collective bargaining was not it?
Mr. Francis G. Mcbride: The retirement age was never a part of the --
Justice Thurgood Marshall: The retirement plan?
Mr. Francis G. Mcbride: Well, the retirement plan, it is an unusual situation.
As I understand that only portions of the pension plan have been bargained for.
The original United Airlines pension plan was established in 1941.
At that time the retirement date for pilots was 60.
That date has maintained itself throughout all of the alterations to the plan including the most current edition.
Justice Thurgood Marshall: Its change in the plan was not negotiated with the union?
Mr. Francis G. Mcbride: It was partially negotiated with the union.
The relevant portions of the plan which we are concerned with were never a subject of collective bargaining.
Unknown Speaker: Could they have been?
Mr. Francis G. Mcbride: I believe they probably could have been but as a practical matter, I do not believe that any result would have come of that for several reasons primarily, the company has always maintained the age 60 date was necessary and the Airline Pilots Association has never agreed with that and I would think it highly unlikely that any meaningful result would have come of putting that on the bargaining table.
Unknown Speaker: Would it have made any difference had it been the product of collective bargaining?
Mr. Francis G. Mcbride: I so not think so, no, I think it would be the same situation that we have here now.
Unknown Speaker: It is a statute regardless of --.
Mr. Francis G. Mcbride: The statue regardless of the contract, I do not think there is any problem with the preexisting plan question.
The legislative history made it quite clear that Congress intended the Act to apply to both existing and new plans and there are many decision primarily in Circuit courts.
Justice Thurgood Marshall: I have great difficulty in how you can say that this was meant to apply to plans previously adopted, the following language, a subterfuge to evade the purpose of this chapter.
I do not see how that could apply to plan that was adopted before, unless they had a crystal ball.
Mr. Francis G. Mcbride: Again it is a question of subterfuge to evade the purposes of the Act.
The subterfuge can come into being when a plan is operated so that age is the basis for the decision.
Justice Thurgood Marshall: After the Act.
Mr. Francis G. Mcbride: After the Act then it becomes the subterfuge to away the purposes of the Act.
Unknown Speaker: That is what the Fourth Circuit in effect held.
Mr. Francis G. Mcbride: That is what the Fourth Circuit in effect held, right.
Chief Justice Warren E. Burger: The day before the Act became effective it was not a subterfuge you say because there was no yard stick by which to measure, let us say after the effective date of the Act.
It automatically became a subterfuge.
Mr. Francis G. Mcbride: Yes.
Chief Justice Warren E. Burger: To evade the Act.
Mr. Francis G. Mcbride: The purposes of the Act, yes.
Chief Justice Warren E. Burger: Well, I thought you said there is no difference between the purposes of the Act and the Act.
Mr. Francis G. Mcbride: Well the statute speaks in terms of the purposes the act.
Chief Justice Warren E. Burger: Did not you indicate that the words, the purposes are far redundant and the result would be the same if it said the Act or the chapter.
Mr. Francis G. Mcbride: Well I think the phrase 'purposes of the act' makes it much clear specially in light of the way the act has been interpreted by some Courts.
Some Courts, Zinger and Taft, they have obviously considered the act rather than the purposes.
I do not think there is any difference but and they said there it appears to some question about it.
Unknown Speaker: Mr. McBride, may I ask you.
Do I correctly understand you, few moments ago to say that you so not have to urge affirmance on the subterfuge arguments but may do so on the basis of the plan and indeed does not mandate retirement age 60.
Mr. Francis G. Mcbride: That is correct.
Unknown Speaker: Even though the Fourth Circuit expressly said that it concludes for the purposes of this decision, that the plan should be required as one mandating retirement.
Now you did not cross petition but you nevertheless argue it either that your liberty to ask affirmance on the basis that the Court of Appeals was wrong in the respect.
Mr. Francis G. Mcbride: That is correct Your Honor, yes.
Unknown Speaker: Mr. McBride do you have any comment on the pending legislations of the Congress?
Mr. Francis G. Mcbride: Yes I do Your Honor.
I have several comments on the pending legislations.
The pending legislations which has been approved by the House of Representatives by vote of 459:4 or 359:4 specifically, pertains to section 4(f)2.
The language of -- one particular portion of the language which is being added is that it adds to Section 4(f)(2), the phrase and except the involuntary retirement of any employee shall not be required or permitted by any such seniority system or any such employee benefit plan because of the age of the employee.
There has been considerable legislative history so far on these Amendments.
The House report number 95-527 speaks of this particular amendment as being one to clarify the Act because of the varying judicial interpretation.
Unknown Speaker: Mr. McBride what is left in the exception?
If that is enacted, what is left in the exception?
Mr. Francis G. Mcbride: Well if this was enacted, you still have the problem of whether or not there can be a discrimination not so much on involuntary retirement grounds but as we submit the purpose of the Act is now whether you can discriminate for example with regard to a Health Insurance Program because of the prohibitive cost.
Unknown Speaker: Could you read that language again, if you do not mind?
Mr. Francis G. Mcbride: Okay.
Unknown Speaker: Now this is an addition to two.
Mr. Francis G. Mcbride: This an addition to Section 4(f)(2).
Unknown Speaker: Is this the only addition to two?
Mr. Francis G. Mcbride: Yes Your Honor and except that the involuntary retirement of any employee shall not be required or permitted by any such seniority system or any such employee benefit plan because of the age of the employee.
Unknown Speaker: Is the discussion over there made clear whether or not that would apply to previously negotiated plans?
Which operate in (Inaudible).
Mr. Francis G. Mcbride: I think the discussion during the original Act made that clear, Your Honor that it was intended to apply to present plans and also that this would apply to present plans as well.
Unknown Speaker: There have been amendments to that, have there not, some committee exempting teachers and professors, we really do not know what shape the thing might come out --
Mr. Francis G. Mcbride: That is the Senate Committee, Your Honor.
Unknown Speaker: And this is.
Mr. Francis G. Mcbride: This was the Bill as it was passed by the House.
Unknown Speaker: Passed by one House.
By the House of Representatives?
Mr. Francis G. Mcbride: Right.
The Senate did add various and incendiary (ph) exceptions and it came out of committee, I believe last Friday.
Unknown Speaker: Your client is seeking damages as well as reinstatement, is he not?
Mr. Francis G. Mcbride: Yes he is.
Unknown Speaker: So the case would not be moot?
Mr. Francis G. Mcbride: No, it would not.
Also Your Honor, there has been considerable legislative history in the House and in the Senate regarding this and they make it quite clear that the Fourth Circuit position is in line with what the original intent of Congress was.
Unknown Speaker: It is in 1967?
That is when the Act was passed.
Mr. Francis G. Mcbride: I realize that.
There is language both in 1967 and in 1977.
When dealing with the 1977 Amendments which have been proposed, Congress has been aware of the varying interpretations of the provision by the different Circuits and they have specifically mentioned in some cases, in some instances this particular case.
Senator Javit's for example, when he was introducing the Amendment in the Senate, stated that the purpose of this Amendment was to facilitate the hiring of older employees by permitting their employment without necessarily providing equal benefits under employee benefit plan.
Unknown Speaker: Now you are back in 1967?
Mr. Francis G. Mcbride: No this is in 1977.
Unknown Speaker: Oh he said a similar thing back in 1967?
Mr. Francis G. Mcbride: He said similar things in 1967 but he also added before the Supreme Court considers the arguments about what the Congress has intended by Section 4 f)(2), I think it is incumbent that the Congress made clear that this provision was never intended to permit the wholesale evasion of the ADEA's protections.
Also Senator Williams on the Senate For, stated that the new bill, the 1977 Bill makes it clear that the Fourth Circuit correctly interpreted the the will of Congress.
Chief Justice Warren E. Burger: Are Senator Javit's remarks some sort of exposed facto legislative history of the earlier Act?
Mr. Francis G. Mcbride: Not really Your Honor, they are, to a degree they are but they are very consistent with what he said in 1967.
They are more a re-affirmance than something completely new.
Unknown Speaker: We have said things alright about it.
Mr. Francis G. Mcbride: Pardon me Your Honor.
Unknown Speaker: I think we have said on many occasions that we look rather scamps at post.
Mr. Francis G. Mcbride: I realize that, I realize that Your Honor.
Chief Justice Warren E. Burger: We will resume at 1 o'clock and you have five minutes left.
You may continue Mr. McBride.
Mr. Francis G. Mcbride: There are a few more points I would like to clarify Your Honor.
First of all, I think the position of that Department has been mentioned by Mr. Aikens, of the Department of Labor, although there was an initial determination by person in a the field, it has never been the official position of the Department of Labor.
In fact the department did to file an Amicus brief in the fourth Circuit and they have assisted in the preparation of my case.
Unknown Speaker: But they have not filed an Amicus Brief here.
Mr. Francis G. Mcbride: No they have not Your Honor.
Unknown Speaker: Is there any significance in that?
Mr. Francis G. Mcbride: No and their position has not changed.
I believe at one time they were planning file an Amicus brief and I am certain there would be happy to if the Court were to request Solicitor General to file one.
Unknown Speaker: They should file on their own.
Mr. Francis G. Mcbride: Pardon me Your Honor.
Unknown Speaker: So they frequently do it on their own and --
Mr. Francis G. Mcbride: I realize that the --
Unknown Speaker: I wonder whether there was some significance in the absence of such a brief.
Mr. Francis G. Mcbride: No there is no significance Sir.
Their position is the same.
Chief Justice Warren E. Burger: I suppose you might suggest it is one of benevolent neutrality.
Mr. Francis G. Mcbride: No I would suggest, that they are actively in our behalf, in fact to a large extent, the decision of the Fourth Circuit was based on their Amicus Brief.
Unknown Speaker: Mr. McBride, I do not like to press this again but I would like to be very clear.
You are arguing to us that you are entirely on affirmance on one of two grounds.
Either that 4 (f) 2 is not applicable at all because this is not a mandatory retirement plan or even if 4(f) 2 is applicable, its conditions have not been satisfied by the United.
Is that right?
Mr. Francis G. Mcbride: That is correct.
Unknown Speaker: On either ground.
Mr. Francis G. Mcbride: On the either ground yes Sir
Unknown Speaker: Mr. McBride did has the department ever withdrawn its earlier interpreted bulletins?
Mr. Francis G. Mcbride: The published interpreted bulletins have never been withdrawn.
Unknown Speaker: Are they contrary to your present view.
Mr. Francis G. Mcbride: No they are not.
What the interpreted bulletin does is it incorporates by reference or requirements of section 4(f)2.
Unknown Speaker: Do you think the department of Labor if it was here and standing where and it representing and was standing where you are would suggest that their position in their amicus brief is not different form the interpreted bulletin?
Mr. Francis G. Mcbride: That is correct Your Honor.
Basically the position of the Department of Labor.
Unknown Speaker: Did they argue -- does they have brief argue that their position has always been the same?
Mr. Francis G. Mcbride: With respect to you the requirements with respect to there being some other outside requirement.
Unknown Speaker: Yes.
Mr. Francis G. Mcbride: As the matter of fact, during the original hearings on the 1967 although United and the Chamber of Commerce quoted Secretary of labor works.
He also stated in the house hearings that the bill does recognize on the one hand, his plans specifically recognizes those plans that are worked out for rational reasons so long as they do not result in differentiation just on the basis of age itself.
Where there is no justification in fact.
Which is precisely a situations which we have here.
The legislative history which has been presented to the court is not complete and I would urge that the court study the legislative history in its entirety.
The position of the department as indicated by the remark, I just quoted by a Secretary Wirtz has always been that there must be something other than just age, and they have not changed this position.
The one other factual thing which I think that should clear up.
Unknown Speaker: Do you think interpreted bulletin -- well I will put it this way.
Does the department agree with you on your alternate suggestions that the exemption does not apply at all if the company may itself permit a person to stay beyond the retirement age?
Mr. Francis G. Mcbride: I am not certain of that I think --
Unknown Speaker: Let me read it the interpret bulletin.
The fact that an employer may decide where in certain employers to continue working beyond the age stipulated in the formal retirement program does not in and of itself render an otherwise bona fide plan invalid.
Now that is -- is that vague or is that --
Mr. Francis G. Mcbride: No I do not believe that this is vague --
Unknown Speaker: Well if the interpreted bulletin seems contrary to your alternate positions.
Mr. Francis G. Mcbride: That may be I --
Unknown Speaker: Well does it – again, do you think that the department stands by its interpreted bulletin in that respect?
Mr. Francis G. Mcbride: I really could not say.
I believe that they would urge that the decision be affirmed on the alternate ground and I really cannot speak with certainly about the position of the department.
I am at particular aspect of the case Your Honor.
Unknown Speaker: So you think that the, they would have abandoned their interpreted bulletin?
Mr. Francis G. Mcbride: I do not think that they necessarily would have been abandoned it, I think that they probably would take the position that it was --
Unknown Speaker: Wrong.
Mr. Francis G. Mcbride: Not wrong, not artfully done for the first time around and that --
Unknown Speaker: Seems pretty square down there.
Mr. Francis G. Mcbride: If they had another chance at it they would perhaps used different language.
Chief Justice Warren E. Burger: Of course the Department of Labor had no barriers to presenting its views to this court and departments of the government frequently do.
Mr. Francis G. Mcbride: I am aware that Your Honor I think the, they did not in fact plan do it but there was a -- I understand the time problem in the Solicitors General's office which was a reason for it not being filed.
Chief Justice Warren E. Burger: Very well, thank you gentlemen.
The case is submitted.