The opinion of the court was delivered by: GREENE
The complaint alleges that the Equal Employment Opportunity Commission (EEOC) has been deliberately neglectful in the discharge of its duties under the Age Discrimination in Employment Act (ADEA) by failing for seven years and still refusing to require employers to make pension contributions for the benefit of those of their employees who continue to work after they reach what is called "normal" retirement age, generally age 65.
For the reasons developed below, the Court agrees with plaintiffs' claims. Although it is among the Commission's duties under law to eradicate age discrimination in the workplace and to protect older workers against discrimination, that agency has at best been slothful, at worst deceptive to the public, in the discharge of these responsibilities. These Commission derelictions are estimated to affect hundreds of thousands of older Americans, and to cost these individuals in lost pension benefits as much as $450 million every year.
In the present action, plaintiffs
allege that the EEOC has failed to implement a lawful policy on pension contributions and benefits for employees who work past "normal" retirement age. By way of a motion for summary judgment, they contend more specifically that the EEOC has unlawfully delayed rulemaking on pensions for these older workers, and that it has improperly failed to rescind an "Interpretative Bulletin" that, contrary to law, supports the refusal of employers to make pension contributions for employee service that occurs after the "normal" retirement age. According to plaintiffs, the EEOC's inaction has allowed employers to withhold pension contributions, crediting, and accruals, in violation of the Age Discrimination in Employment Act of 1967, 29 U.S.C. §§ 621 et seq. (1986) (sometimes referred to herein as the ADEA). Plaintiffs request the Court to order the EEOC to publish proposed rules in the Federal Register, to rescind the Interpretative Bulletin, and to announce that employers may not rely upon that Bulletin as a good-faith defense to lawsuits for failure to fulfill their pension obligations.
This lawsuit represents the culmination of a long history of administrative action and inaction that began in 1967, with the enactment by the Congress of the Age Discrimination in Employment Act.
It is the purpose of the ADEA, as stated in the statute itself, "to promote employment in older persons based on their ability rather than age; to prohibit arbitrary age discrimination in employment; [and] to help employers and workers find ways of meeting problems arising from the impact of age on employment." 29 U.S.C. § 621. In order to advance these goals, Congress prohibited discrimination "against any individual with respect to his compensation, terms, conditions or privileges of employment, because of such individual's age." Id. § 623(a)(1).
There was one exception to this ban on discrimination, and it concerned employee benefit plans. Because it would cost employers more to provide certain benefits to older than to younger workers, Congress concluded that a requirement of equal benefits for all workers, regardless of age, might discourage the employment of older workers and thus undermine the very purposes of the Act. See S. Rep. No. 723, 90th Cong., 1st Sess. 14 (1967). Accordingly, section 4(f)(2) of the statute provides that:
It shall not be unlawful for an employer . . . to observe the terms of . . . any bona fide employee benefit plan such as a retirement, pension or insurance plan, which is not a subterfuge to evade the purposes of [the Act] . . . .
Two amendments to the ADEA enacted in 1978 raised questions about the scope of the benefits exemption and the equal cost rule. The first of these, now codified at 29 U.S.C. § 631(a), extended the statute's coverage to workers between the ages of 65 and 70. The second amendment, now codified at 29 U.S.C. § 623(f)(2), prohibited benefit plans from requiring the involuntary retirement of any individual because of his or her age.
Together, it was the effect of these amendments to extend the protection of the Age Discrimination in Employment Act to those individuals who continued to be engaged in gainful employment past the age that for many benefit plans would be considered the "normal" retirement age. However, the precise benefit rights of these workers, and the obligations of their employers, were not specified, and several members of Congress called on the Department of Labor to provide prompt guidance in the form of regulations. See 124 Cong. Rec. 8219 (1978) (statement of Senator Javits) (Labor Department "intends to promulgate comprehensive regulations . . . [and] is urged to act as soon as possible").
The Department of Labor responded on May 25, 1979, not by promulgating regulations, but by issuing an interpretation -- the "Interpretative Bulletin" that provides much of the background for this lawsuit. 44 Fed. Reg. 30,648 (1979) (codified at 29 C.F.R. § 860.120(f)(iv)(B) (1986)). The Interpretative Bulletin
takes the position that employers are free to cut off both their own contributions and the accrual of benefits for employees as of the time these workers reach a plan's "normal" retirement age -- even if they continue to work past that age to age 70.
That is where the matter stood when the Department of Labor relinquished jurisdiction over this subject.
On July 1, 1979, one month after the Department of Labor promulgated the Bulletin, the EEOC took over administration and enforcement of the Act. Reorg. Plan No. 1 of 1978, 43 Fed. Reg. 19,807 (1978). The Commission had previously indicated that it would undertake a complete review of all Department of Labor interpretations, including the Interpretative Bulletin in question here, 44 Fed. Reg. 37,974 (1979), and it did, in fact, begin such review. However, the Commission accompanied the start of the review process with two rulings which, as will be seen, were to have far-reaching consequences. First, the Commission stated that, pending completion of the review, all Labor Department interpretations would remain in effect, and second, that employers would be entitled to rely upon these interpretations as a good-faith defense to charges of age discrimination.
These rulings, of course, placed a premium on a rapid conclusion of the review process: without speedy review action, erroneous interpretations of the law would be perpetuated for extended periods of time, and they would continue to serve as "good faith" defenses for employers during those periods. That, as the subsequent history shows, is precisely what occurred in this instance.
In August of 1979 the EEOC's General Counsel advised his Commission that the Interpretative Bulletin was "incorrect and that the Commission should therefore undertake a further amendment" to it. Memorandum from Leroy D. Clark to EEOC Commissioners, Aug. 20, 1979.
During the months that followed, EEOC staff submitted alternate approaches to the Bulletin and solicited comments on these approaches, pursuant to Executive Order 12067. After revision, draft regulations were formally sent to other agencies for comment on April 22, 1980, and on May 2, 1980, EEOC Chairperson Eleanor Holmes Norton stated in an affidavit filed in another court action that, "after receipt and review of these comments, the Commission will publish its proposed modification in the Federal Register for notice and comment by the public."
Proposed final regulations were submitted to the EEOC Commissioners on September 3, 1980,
with a vote on their adoption set for October 22. However, on October 20, two days before the date scheduled for the final vote, the proposal was removed from the agenda. The only explanation that appears ever to have been offered for this extraordinary action was that of Clarence Thomas, current Chairman of the EEOC, who has since informed a Senate committee that the proposed regulations had been "deep-sixed."
U.S. Senate Committee on Labor and Human Resources, Nomination Hearing, July 23, 1986.
Nothing further of significance was done with regard to this matter for the next three years.
Ultimately, on September 15, 1983, the Commission revived the matter by once again asking for public comment, in order to "assist the Commission in analyzing the effects of these interpretive provisions and in order that the Commission will be fully apprised of the consequences of any modifications to these provisions." 48 Fed. Reg. 41,437. In June of 1984, the Commission voted for proposed rules (see Plaintiffs' Exhibit 5 at 1) and to rescind the Interpretative Bulletin and to replace it with its opposite: a requirement of post-normal retirement age contributions and credits. Then, in March of 1985, it voted once more to approve the proposed rules.
Chairman Thomas informed the Congress at that time that, among other things, the Interpretative Bulletin was "not consistent with the stated purposes of the ADEA" (Hearings before the Senate Subcommittee on Aging, Oct. 17, 1985),
and that it was "facially inconsistent with the [Labor] Department's own long-standing administrative interpretation of of the requirements of the ADEA's benefit provisions." Id. at 4. Despite these assertions, however, the proposed pension rule proceeded no further along the bureaucratic path: it was not published in the Federal Register for notice and comment; no "regulatory impact analysis" was submitted to coordinating agencies pursuant to Executive Order 12291;
and the rule was not issued in final form.
On October 10, 1985, the American Association of Retired Persons filed a petition for rulemaking with the EEOC, asking for essentially the same relief it seeks in the instant action. Over eight months later, the EEOC rejected this petition citing the need -- ironically, in view of all that had gone on before -- to allow public comment, to prepare a regulatory impact analysis, and to obtain review by the Office of Management and Budget before initiating rulemaking. The following year,
on November 10, 1986, the Commission retrogressed even further; it voted to terminate the rulemaking and not to rescind the Interpretative Bulletin.
On June 23, 1986, plaintiffs filed their complaint in this Court.
The first question is whether the Court has jurisdiction to review plaintiffs' claims. The EEOC argues that whether, and when, it should proceed with rulemaking under the ADEA is a matter committed by law to its discretion, and that because of that fact its decision with respect thereto is not reviewable in court.