Opinion
Civil Action No. 03-CV-3140.
March 14, 2004
MEMORANDUM AND ORDER
Plaintiff Louis Orsine ("Plaintiff") commenced this action against the Borough of Folcroft ("Defendant") under the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq. (the "ADEA"), the Pennsylvania Human Relations Act, 43 Pa. Cons. Stat. § 951 et seq. (the "PHRA"), and the Pennsylvania common law of contract and pensions. Now before the Court is Defendant's Motion to Dismiss, Or, In the Alternative, For Summary Judgment. For the reasons stated below, the Court will grant in part and deny in part Defendant's Motion to Dismiss and will deny without prejudice Defendant's Motion for Summary Judgment.
I. Background
Construed in the light most favorable to Plaintiff, the facts are as follows. Plaintiff was hired on November 1, 1976 by Defendant as a full-time police officer. Compl. at ¶ 11. In 1980, Plaintiff's union entered into an agreement with Defendant regarding wages and benefits, which provided in relevant part:
If a police officer is permanently and totally disabled from performing his work for the Borough as a result of a service-connected disability, he shall receive a pension at the rate of eighty-five percent (85%) of his base annual wage at the time of this determination, plus the cost of living payment earned to that date which shall continue until his death.
Compl. Ex. A ("1980 Agreement") at p. 7.
Under a 1984 binding Arbitration Award, an officer with a service-connected disability "shall receive one hundred percent (100%) of his annual base salary, plus the cost-of-living adjustment earned to that date until the officer returns to work or until reaching what would have been his normal retirement date, when the percentage shall be reduced to fifty percent (50%)." Compl. Ex. B ("Arbitration Award") at pp. 4-5.
"Normal retirement date" is defined as the date on which a police officer has at least 25 years of service and is 50 years of age or older. Motion to Dismiss ("Motion") at p. 7. Accordingly, under the Arbitration Award, officers over the age of 50 may receive less disability benefits than similarly situated younger officers. For example, an officer with 25 years of service who is 49 years old when he becomes disabled would receive 100% of his salary that year, while an officer with the same number of years of service but who has passed his fiftieth birthday would receive only 50% of his salary.
Plaintiff's employment with Defendant continued until August 12, 1994, when he suffered a service-connected injury and was permanently and totally disabled. Compl. at ¶ 13. On March 13, 1995, the parties entered into a written agreement regarding Plaintiff's disability benefits. Compl. Ex. C ("1995 Agreement"). They disagreed, however, about whether the 1980 Agreement or the Arbitration Award would govern. According to Plaintiff, the 1980 Agreement governs his benefits because his right to a permanent disability pension at 85% of his salary had vested prior to the Arbitration Award. Compl. at ¶¶ 32-35. Defendant claims that the Arbitration Award applies and provides for a 50% reduction in Plaintiff's benefits once he reaches his "normal retirement date." Motion at pp. 12-13. The 1995 Agreement reflects this dispute and reserves to Plaintiff the right to challenge the applicability of the Arbitration Award to his benefits. 1995 Agreement, at p. 2.
Plaintiff turned fifty on March 12, 2001. See Compl. at ¶ 4. If he had not been disabled, he would have completed twenty-five years of service on November 1, 2001, making that date his "normal retirement date." See id. at ¶ 11. In September 2001, Defendant informed Plaintiff by letter that starting in November his monthly disability benefits would be reduced to fifty percent. Id. Ex. D. Plaintiff contends that the reduction in his benefits violated the ADEA and the PHRA and constituted a breach of the 1995 Agreement. Compl. ¶¶ 23, 29, 37.
II. Legal Standard
Defendant brings a Motion to Dismiss, Or, In the Alternative, For Summary Judgment. When deciding a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), the Court may look only to the facts alleged in the complaint and its attachments, as well as any attachments to the motion to dismiss that are both integral to the complaint and undisputably authentic. Jordan v. Fox, Rothschild, O'Brien Frankel, 20 F.3d 1250, 1261 (3d Cir. 1994); In re Rockefeller Center Properties, Inc., 184 F.3d 280, 287 (3d Cir. 1999). The Court must accept as true all well-pleaded allegations in the Complaint and view them in the light most favorable to the plaintiff. Angelastro v. Prudential-Bache Sec., Inc., 764 F.2d 939, 944 (3d Cir. 1985). A Rule 12(b)(6) motion will be granted only when it is certain that no relief could be granted under any set of facts that could be proved by the plaintiff. Ransom v. Marrazzo, 848 F.2d 398, 401 (3d Cir. 1988).
All but one of the attachments to Defendant's Motion were provided by Plaintiff as attachments to the Complaint. Defendant also provides the municipal ordinance setting forth its pension plan. This ordinance may be considered on a motion to dismiss because it is an undisputably authentic document and because the pension plan is integral to the Complaint itself. See Rockefeller Center Properties, 184 F.3d at 287.
In deciding a motion for summary judgment pursuant to Fed.R.Civ.P. 56, the test is "whether there is a genuine issue of material fact and, if not, whether the moving party is entitled to judgment as a matter of law." Medical Protective Co. v. Watkins, 198 F.3d 100, 103 (3d Cir. 1999) (quoting Armbruster v. Unisys Corp., 32 F.3d 768, 777 (3d Cir. 1994)). "[S]ummary judgment will not lie if the dispute about a material fact is `genuine,' that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The Court must examine the evidence in the light most favorable to the non-moving party and resolve all reasonable inferences in that party's favor. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). However, "there can be `no genuine issue as to any material fact' . . . [where the non-moving party's] complete failure of proof concerning an essential element of [its] case necessarily renders all other facts immaterial." Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).
III. Motion to Dismiss
A. Counts I and II: ADEA and PHRA Claims
To state a claim under the ADEA, Plaintiff must show that Defendant discriminated against "any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's age." 29 U.S.C. § 623(a)(1). The phrase "terms, conditions, or privileges of employment" is defined in the ADEA to include "all employee benefits." 29 U.S.C. § 630(1). The Third Circuit has held that the term "employee benefit" covers not just benefits for current employees, but also "health coverage and other benefits which a retired person receives from his or her former employer." Erie County Retirees Ass'n v. County of Erie, 220 F.3d 193, 209 (3d Cir. 2000).
Plaintiff argues that Defendant's benefits plan violates the ADEA because it reduces benefits on the basis of age. Compl. at ¶¶ 23, 25. He also states that the plan violates the ADEA by deeming disabled employees retired (at least in part) because of their age. Id. at ¶ 24.
See definition of "normal retirement date" supra at p. 2.
Plaintiff thus sufficiently alleges a violation of the ADEA to survive this Motion to Dismiss. The parties do not dispute the fact that, under Defendant's disability benefits plan, an employee with twenty-five years of service who becomes disabled at the age of 49 would receive 100% of his salary, while an employee with the same number of years of service who becomes disabled after turning 50 would receive only 50%. Defendant contends that the plan did not force Plaintiff to retire because he stopped working on account of his disability. Motion at p. 11. Plaintiff, however, has sufficiently pleaded that the benefits plan involuntarily deemed him to be retired by pleading that his benefits were reduced when he reached his "normal retirement date." Accordingly, Count I will not be dismissed.
Defendant contends that Plaintiff's claim should be dismissed because he has not shown that the plan treats individuals over 40 differently from other individuals. Motion at p. 6. This misconstrues the law, however. Discrimination against people under forty is not actionable under the ADEA, but the discrimination need not be against people over forty versus people under forty. 29 U.S.C. § 631(a); see, e.g., Erie County Retirees Ass'n, 220 F.3d at 196 (benefits plan was facially discriminatory because it treated employees over 65 differently from employees under 65).
In Count II, Plaintiff brings a claim under the PHRA. Defendant contends that Count II should be dismissed because Plaintiff cannot demonstrate either that his benefits were reduced because of his age or that the benefits plan forced him to retire. Motion at pp. 11-12.
The PHRA states in relevant part:
It shall be an unlawful discriminatory practice . . . [f]or any employer because of the . . . age . . . of any individual or independent contractor, to refuse to hire or employ or contract with, or to bar or to discharge from employment such individual or independent contractor, or to otherwise discriminate against such individual or independent contractor with respect to compensation, hire, tenure, terms, conditions or privileges of employment or contract, if the individual or independent contractor is the best able and most competent to perform the services required. The provision of this paragraph shall not apply, to (1) operation of the terms or conditions of any bona fide retirement or pension plan which have the effect of a minimum service requirement.
43 Pa. Cons. Stat. § 955. When reviewing PHRA age discrimination claims, Pennsylvania courts rely on federal court interpretations of parallel provisions in the ADEA. Stultz v. Reese Brothers, Inc., 835 A.2d 754, 759 (Pa.Super. 2003). Accordingly, Defendant suggests that the PHRA claim should be dismissed for the same reasons that it contends the ADEA claim should be dismissed. Motion at pp. 11-12.
Although the parties disagree about whether the Arbitration Award applies to Plaintiff, they agree that if it did apply, the 50% benefits reduction would be triggered when Plaintiff reached his "normal retirement date," controlled at least in part by age. This is sufficient to plead a claim for age discrimination under the PHRA. Accordingly, the Motion will be denied with respect to Count II.
B. Count III: Deprivation of Vested Benefits Claim
Plaintiff argues that his benefit rights under the 1980 Agreement had vested before the Arbitration Award and could not be affected by that Award. Compl. at ¶¶ 31-35. Defendant contends that Plaintiff voluntarily entered into the 1995 Agreement, which incorporated the Arbitration Award and provided that his benefits be reduced by 50% upon reaching his normal retirement date. Motion at pp. 12-13.
In addition, Defendant construes Plaintiff's claim as an attempt to reopen the Arbitration Award and contends that the statute of limitations has run for such a challenge. Def. Reply at 5. The Court need not reach this issue, however, because there is a genuine issue of material fact as to whether the Arbitration Award affects Plaintiff's allegedly vested benefits.
In Pennsylvania, pension rights are considered vested "when the employee, having made all required contributions, has completed the number of years of service required for eligibility." Police Pension Fund Ass'n Board v. Hess, 562 A.2d 391, 395 ( Pa. Commw. 1989). Once rights have vested, they may not be reduced except by the parties' mutual consent. Id. at 395-96. The Pennsylvania Commonwealth Court has found that when a negotiating impasse between an employer and a union leads to binding arbitration, the resulting award will not be construed as a mutual agreement that alters vested pension rights. Id. at 507-8.
The Complaint alleges that Plaintiff's pension rights under the 1980 Agreement vested prior to the Arbitration Award. However, neither party cites any provision of any agreement, the pension plan or the Arbitration Award that addresses the conditions for vesting. Thus, the record is not sufficient at this time to decide this issue.
Defendant's argument that Plaintiff waived the right to contest the 50% reduction by entering into the 1995 Agreement is unavailing. That Agreement expressly reserves Plaintiff's right to challenge the application of the Arbitration Award to his benefits. Accordingly, the deprivation of vested benefits claim will not be dismissed.
C. Count IV: Breach of Contract Claim
To plead breach of contract, Plaintiff must allege (1) the existence of a contract, including its essential terms, (2) a breach, and (3) damages resulting therefrom. Corestates Bank, N.A. v. Cutillo, 723 A.2d 1053, 1058 (Pa.Super. 1999). Plaintiff claims that Defendant breached the 1995 Agreement "[b]y failing to pay disability benefits to Orsine as required" and asks Defendant to "restore [his] benefits to 100% of his base salary plus cost of living adjustment." Compl. at ¶¶ 36-37. Defendant, however, contends that the 1995 Agreement incorporated the Arbitration Award, permitting a 50% reduction in Plaintiff's benefits after November 1, 2001. Motion at pp. 13-14.
Plaintiff's argument that he is entitled to 100% of his base salary for life, without the corresponding 50% reduction, is untenable. The 1995 Agreement clearly contemplated a reduction in Orsine's benefits when he reached his "normal retirement date." The Agreement provides,
The parties acknowledge that while this agreement provides that Orsine shall receive one hundred (100%) percent of base salary plus cost of living adjustment, the [Arbitration Award] provides that upon reaching normal retirement date, the amount of pension being received shall be reduced by fifty (50%) percent, which amount shall thereafter be subject to cost of living increases. Nothing in that agreement or this agreement shall be construed, however, to prevent, waive, estop or otherwise deprive Orsine of the right to legally challenge the provision of the [Arbitration Award], the parties hereto being in agreement that any such cause of action shall not accrue until such time as the Borough attempts to reduce Orsine's pension by reliance upon such provision.
1995 Agreement at 2-3.
There is no set of facts under which the 1995 Agreement can be interpreted to entitle Plaintiff to 100% of his benefits for life. The 1995 Agreement simply reserved to Plaintiff the right to challenge the provision of the Arbitration Award providing for a reduction in benefits if and when Defendant attempted to reduce his pension. In other words, the 1995 Agreement assured Plaintiff that, by accepting 100% of his salary until Defendant attempted to reduce his pension payments, he was not waiving his argument that he had a vested right to 85% for life. This provision would be extraneous if there had been an agreement to pay 100% of his salary on a permanent basis. "[N]o word in a contract is to be treated as surplusage or redundant if any reasonable meaning consistent with the other parts can be given it." General Mills, Inc. v. Snavely, 199 A.2d 540, 544 (Pa.Super. 1964). Thus, it is clear from the face of the 1995 Agreement that Defendant is not in breach. Accordingly, Plaintiff has failed to state a claim for breach of contract, and Count IV will be dismissed.
IV. Motion for Summary Judgment
In the alternative to its Rule 12(b)(6) Motion, Defendant seeks summary judgment. That alternative Motion is inappropriate at this time because there are material issues of fact that must be resolved. For example, it cannot be determined at this stage of the proceedings whether Plaintiff's rights under the 1980 Agreement vested prior to the Arbitration Award. Accordingly, summary judgment will be denied without prejudice.
V. Conclusion
For the reasons stated above, the Motion to Dismiss will be granted as to Count IV and denied with respect to all other claims. The Motion for Summary Judgment will be denied without prejudice. An appropriate Order follows.
ORDER
AND NOW, this ____ day of March, 2004, upon consideration of Defendant's Motion to Dismiss, Or, In the Alternative, For Summary Judgment (docket no. 3), Plaintiff's response thereto (docket no. 4), Defendant's Reply Brief (docket no. 7), and Plaintiff's Sur Reply Brief (docket no. 8) it is ORDERED that the Motion to Dismiss is GRANTED IN PART AND DENIED IN PART. Accordingly, Count IV of the Complaint is dismissed. The Motion to Dismiss is denied with respect to all other claims.It is FURTHER ORDERED that Defendant's Motion for Summary Judgment is DENIED without prejudice. Defendant is given leave to re-file for summary judgment after discovery is complete.