Jakimas v. Hoffmann - La Roche , 485 F.3d 770 ( 2007 )

Opinions of the United
2007 Decisions States Court of Appeals
for the Third Circuit
5-14-2007
Jakimas v. Hoffmann - La Roche
Precedential or Non-Precedential: Precedential
Docket No. 06-2399
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PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 06-2399
RICHARD JAKIMAS; DIANNE FLYNN,
Association Member;
LOUIS RISTAGNO, Association Member;
ALL OTHER ASSOCIATION MEMBERS;
JOHN M. ADAIR; JOHN J. ADZIMA; BRUCE J. AIELLO;
THOMAS AIELLO; JACK BAILEY;
GERALD A. BARRETT; WALTER BENIUK;
BRUCE BLANCHARD; RENE REIS BRAGA;
TEDEUSZ BUKOWSKI; EDWARD CABRAL;
ANGELO CAPALBO; RICHARD CARLSON;
RALPH CASO; JAMES CASTELLI;
SAMUEL CASTRONOVO, JR.; PETER CHAPMAN;
PAUL D. CIUPPA; GARY COCOZZO; LAURA CARBO;
ALAN L. CURTIS; PAUL DAY; CHARLES DELORENZI;
PETER DEMODICA, III; JOSEPH DIGIACOMO;
STEFAN DZIABA; WALTER DZIABA;
MICHAEL FARON; RAMOND J. FEINER;
ANDREW FERACO; PAUL FRANEK;
LAWRENCE GELOK; ROBERT L. GLOVER;
RAYMOND GOETZ; JOSEPH GOMES;
ANTHONY GRECO; DANIEL GREEN;
JOHNNY HADDLEY; WILLIAM J. HAHN;
RICHARD HALL; DAVID HANRAHAN;
DEBORAH HELFRICH; RONALD JONES;
ALOJZY KALATA; JAMES F. KANE;
JOSEPH M. KAPROWSKI; BERNARD KAPUSCINSKI;
JAN KASPROWICZ; MICHAEL KENNEDY;
ROBERT J. KOHLER; EDWARD KWASNIK;
FLAVIO LABAGNARA; ROSA LABAGNARA;
ROBERT J. LENIK; WOJCIECH LEOZENIA;
JOSEPH MACDIARMID; JAMES F. MADIGAN;
WILLIAM R. MALLOY, SR.; ALBERT A. MARCHIONE;
ANTHONY MARIANO; EDWARD B. MAYO;
HENRY M. MCAULIFFE; MIKE MEECHAN;
STEPHEN E. MELLINGER; LAWRENCE MEMICE;
DONALD A. MEYER; ROBERT P. MUNDT;
NICK NARDONE; CHERYL NEGRON;
JOSEPH M. OROLEN; EDWARD PAJAK;
ROBERT PAVONE; ROGER M. PERRI;
FRANK J. PETRASEK; WILLIAM PITT;
PETER PLAFTA; JULIAN POKRYWA;
RONALD POKRYWA; ROQUE N. RIVERA;
ANTONIO RIZZI; BARBARA ROBINSON;
SAMUEL ROSAMILIA; ROGER ROTONDI;
CHUCK L. RUTAN; ALBERT RYBACKI;
ANDREW J. SACCOCCIA; JAN SERAFIN;
ROBERT SHALLCROSS; MARTHA X. SKINNER;
DONALD D. SMITH; ANTHONY SPAGNUOLO;
ANTHONY J. SPANO; SARA SPANO;
ANTHONY SPERA; NATALE TURANO;
STEPHEN R. TYBURCZY; ROBERT J. VELEBER, JR.;
WILLIAM VILLINO; MICHAEL A. VOCATURO;
MARIAN WOJCIECHOWSKI; LEONARD A. ZUMMO;
RICKI BLOHM; FRANK CAVALIERE;
CHARLENE JOHNSON; DONALD BREEN;
2
JOHN TOMASKOVIC,
Appellants
v.
HOFFMANN-LA ROCHE, INC.;*
JOHNSON CONTROLS WORLD SERVICES, INC.
(*Amended per Clerk's order of June 6, 2006)
On Appeal from the United States District Court
for the District of New Jersey
(D.C. No. 99-cv-05126)
District Judge: Honorable Jose L. Linares
Argued February 15, 2007
Before: SMITH and FISHER, Circuit Judges,
and DOWD,* District Judge.
(Filed: May 14, 2007)
*
The Honorable David D. Dowd, Jr., United States
District Judge for the Northern District of Ohio, sitting by
designation.
3
Charles J. Sciarra (Argued)
Sciarra & Catrambrone
1130 Clifton Avenue
Clifton, NJ 07013
Attorney for Appellants
John A. Ridley (Argued)
Drinker, Biddle & Reath
500 Campus Drive
Florham Park, NJ 07932
Attorney for Appellee,
Hoffman-La Roche, Inc.
Dabney D. Ware
Allan P. Clark (Argued)
Foley & Lardner
200 Laura Street
The Greenleaf Building
Jacksonville, FL 32202-0204
Attorneys for Appellee,
Johnson Controls World Service, Inc.
OPINION OF THE COURT
4
FISHER, Circuit Judge.
The Appellants, former employees of Hoffman-La Roche
Inc. (“Roche”), appeal the District Court’s grant of summary
judgment in favor of Roche and Johnson Controls World
Services, Inc. (“JCI”) (collectively “Appellees”),1 regarding
their claims under the Employee Retirement Income Security
Act (“ERISA”) and the New Jersey Law Against Discrimination
(“NJLAD”). Roche asserts the affirmative defenses of a release
and tender back/ratification, which were rejected by the District
Court, as alternative grounds upon which to affirm the District
Court. For the reasons that follow, we will affirm.
I.
A.
Roche is a prescription drug manufacturer, and JCI is
engaged in the business of integrated facility management. The
Appellants are approximately ninety-six former employees of
Roche who were terminated on November 3, 1997. The
Appellants were terminated after Roche decided to outsource
some functions of its Technical Services Division to JCI. JCI
began managing the outsourced services on November 4, 1997.
The majority of the Appellants were hired by JCI in the same
position that they held at Roche.
1
Johnson Controls World Services, Inc. was a subsidiary
of Johnson Controls, Inc. The parties and the District Court
referred to Johnson Controls World Services, Inc. as “JCI” and
we use the same acronym.
5
The circumstances surrounding Roche’s decision to
outsource are the basis for the Appellants’ claims. After
becoming Vice President of Roche’s Technical Services
Division in the summer of 1996, Ray Scherzer (“Scherzer”)
determined that there were infrastructure problems, and that the
practices and processes of the Division were outdated. In late
1996, he contacted JCI and inquired about JCI’s facilities
management services. JCI first provided Scherzer with a
preliminary assessment, which was an overview of how JCI
could improve Roche’s facilities management operations.
JCI offered to provide a more detailed analysis, which
included a six-week on-site assessment of Roche’s facilities.
This assessment was conducted during June and August of
1997. The findings, recommendations, proposed budget, and
information about the proposed outsourcing were provided to
Roche in late August and early September of 1997. JCI also
submitted a proposed Facilities Management Agreement
(“Agreement”) to Roche in late September, and Scherzer
presented this information to Roche executives on October 15,
1997. Scherzer recommended that Roche accept the Agreement,
which would outsource most of the functions of the Technical
Services Division to JCI. The Roche executives agreed. Under
the Agreement, JCI supplied facilities management services, and
Roche reimbursed JCI for its services. Roche agreed to
reimburse JCI for labor related costs, other direct costs, and to
pay an annual general and administrative fee. JCI also agreed
to hire most of the employees Roche terminated due to the
outsourcing.
6
On October 20, 1997, Roche held a meeting, at which it
informed employees of its decision to outsource some technical
services to JCI.2 Scherzer made the announcement on behalf of
Roche, and explained that Roche had decided to outsource the
positions in its Technical Services Division to JCI. He stated
that JCI would begin managing maintenance on November 4,
1997. Scherzer claims it was made clear that the Appellants’
and others’ jobs would be terminated on November 3, 1997.
The presentation allegedly explained that Roche would be
providing severance packages to the affected employees, and
that the affected employees would be eligible to work for JCI,
with compensation and benefits packages comparable to what
they received at Roche. Additionally, Scherzer claims that he
informed the audience that the affected employees would remain
Roche employees until November 3, but during that time JCI
would be interviewing each employee. After Scherzer spoke, a
representative from Roche’s Human Resources Department
spoke, as did representatives from JCI.
A formal written notice was sent company-wide by
Scherzer on October 21, 1997, confirming the outsourcing. The
letter was addressed to all Roche employees, and explained that
Roche had decided to outsource various groups. The letter listed
the specific departments being outsourced. It also explained that
beginning November 4, 1997, JCI would assume control of
those groups, and that JCI had agreed to consider employing all
of the current Roche employees in those groups. Further, it
explained that until November 3, 1997, the affected employees
2
A separate meeting was held for supervisors and
managers.
7
would continue to be employed by Roche, but that JCI would be
on-site to interview them.
The following week, JCI began to interview and make
employment offers to the affected Roche employees. As a
condition of employment, the prospective JCI employees were
required to sign several documents, including (1) an offer letter
which stated that the employee accepted employment with JCI
commencing on November 4, 1997, (2) an authorization form
providing that Roche could release personnel information to JCI,
(3) a “Conditions of Employment” pamphlet, (4) a form
indicating that the employee received and understood JCI’s
Employee Safety Guide, (5) a form indicating that the employee
was aware of and understood JCI’s drug-free workplace policy,
and (6) a W-4 form.
Roche provided individual notices to the affected
employees on November 3 that stated “[t]his will confirm that
the official notification and effective date of the termination of
your employment is November 3, 1997.” They also received
information about Roche’s severance package. The severance
package provided the affected employees with two options.
Option II was an enhanced package, if the employee was willing
to sign a release. The release included a covenant not to sue
Roche for claims relating to ERISA, state employment
discrimination laws, and employment contracts.3 Even if the
3
Roche provided the affected employees with forty-five
days to decide whether to execute the release under Option II,
and an additional seven days in which they could revoke their
acceptance.
8
affected employees chose not to sign the release, they were still
entitled to the benefits offered in Option I. Only one of the
Appellants, Martha Skinner, did not sign the release. All of the
Appellants that did sign the release received the benefits to
which they were entitled under Option II.
On November 4, 1997, most of the Appellants began
working for JCI.4 The Appellants’ jobs were exactly the same
at both employers, as were their job titles. The only change,
other than that they no longer received pension benefits, was
their employer.5 JCI generally offered its employees 401(k)
plans, but an employee was only eligible for such a plan after
five years of service. Because the Agreement was only for three
4
At the time the Appellants were terminated by Roche,
sixty of them were over age forty-five. Forty-seven of them had
between twenty and twenty-four years of service, and fifteen
had between fifteen and twenty years of service with Roche.
5
Roche had both defined benefit and defined contribution
plans. The Roche Retirement Plan is a defined benefit plan, to
which all contributions were made by Roche. For an employee
to be vested under the Roche Plan, they needed five years of
service. In order to receive full retirement benefits, the
employee needed to reach a set age and have a set number of
years of service. If the employee was hired before April 1,
1985, and she/he had ten or more years of service, the employee
was eligible for retirement at age fifty. If the employee was
hired after April 1, 1985, she/he was eligible for retirement at
age fifty-five if she/he had ten or more years of service. Roche
also offered its employees 401(k) plans.
9
years, the former Roche employees were not eligible to
participate in a 401(k) at JCI.
B.
The Appellants filed their Complaint on November 1,
1999, in which the November Third Termination Association
and three individuals were named as plaintiffs.6 The Appellees
made a motion to strike the Association as a party, and a motion
to dismiss the Association’s claims because it lacked standing.
The District Court granted the motions. The magistrate judge
allowed the Appellants to amend their Complaint and add
additional individual plaintiffs. However, he did not allow
David Swidrak (“Swidrak”) to be named as a plaintiff because
the judge determined that his claim was time-barred. The
determination was based on the fact that Swidrak admitted that
he knew of his pending termination on October 20, 1997, as
evidenced in a letter he wrote to Roche’s Human Resources
Department.
The Appellants appealed the magistrate’s determination
regarding Swidrak to the District Court. They argued that the
date of termination, rather than the date of notice began the
running of the limitations period. The District Court held that
the date of notice is when the statute of limitation begins to run.
6
In their original Complaint, the Appellants claimed that
they received notice of their terminations on October 21, 1997,
which was the basis for the motion to dismiss. When the
Appellants amended their Complaint, they deleted this portion
of the original Complaint.
10
Its decision was based on Delaware State College v. Ricks, 449
U.S. 250 (1980), and Chardon v. Fernandez, 454 U.S. 6 (1981)
(per curiam). Because the District Court determined that
Swidrak received actual notice of his pending termination on
October 20, 1997, it affirmed the magistrate’s determination that
Swidrak’s claim was time-barred as the Complaint was not filed
until November 1, 1999. Additionally, the District Court
refused the Appellants’ request that its decision regarding
accrual of the claim apply prospectively only.7
All of the parties moved for summary judgment in 2005.
Roche moved for summary judgment on the Appellants’ ERISA
and state law claims, and on its affirmative defenses.8 JCI
moved for summary judgment on the ERISA claim, which was
the only claim against JCI. The Appellants also moved for
summary judgment on the substantive claims, as well as on
Roche’s affirmative defenses.
7
The Appellants appealed the District Court’s
determination regarding Swidrak to this Court, and we held that
the claim was unripe.
8
The affirmative defenses were (1) knowing and
voluntary waiver by signing the releases, (2) ratification of the
releases by failing to return the benefits received, and (3) statute
of limitations grounds.
11
The District Court first considered the statute of
limitations question.9 Because the parties did not dispute that a
two-year statute of limitations applied, the District Court was
required to determine when the claim began to accrue. If the
statute began to run before November 1, 1997, the claim was
time-barred. The District Court reaffirmed its prior holding that
the rule of Ricks applies in the context of a § 510 ERISA claim,
and therefore the claim accrued when the Appellants received
notice of their termination.
The District Court next determined when the Appellants
received such notice. The Appellees served the Appellants with
Requests for Admissions in which thirty-seven of the Appellants
admitted that they had notice of their termination prior to
November 1, 1997. Two additional Appellants admitted notice
prior to November 1, 1997, in correspondence with Roche. The
District Court also determined that sufficient notice was
provided at the October 20, 1997 meeting. Forty-seven of the
Appellants admitted attending the meeting by Requests for
Admissions, and two Appellants admitted attendance during
depositions. The District Court held that even if the Appellants
did not attend the meeting, the October 21, 1997 letter to all
employees constituted actual notice of termination.
Additionally, JCI began interviewing and offering jobs to Roche
9
Even though it had already decided the question, the
District Court determined that the law of the case doctrine did
not prevent reconsideration of the question because there was
new evidence uncovered through discovery. See, e.g., Pub.
Interest Research Group of N.J., Inc. v. Magnesium Elektron,
Inc., 123 F.3d 111, 116-17 (3d Cir. 1997).
12
employees. Nine of the ten remaining Appellants admit that
they applied for employment with JCI before November 1,
1997, and delivered their acceptance letters to JCI before that
date. The District Court determined that the remaining
Appellant, Michael Meechan,10 did not receive notice of his
pending termination because he was on disability leave at the
time notice was provided. Accordingly, the District Court
granted summary judgment in favor of the Appellees on the
statute of limitations defense as to all of the Appellants, except
for Meechan.
Because Meechan’s claims were not time-barred, the
District Court also considered Roche’s other affirmative
defenses of the release, and tender back/ratification. Appellant
Meechan signed the release, and did not return the consideration
Roche provided. The District Court held that genuine issues of
material fact existed as to the validity of the release because it
was not clear whether Meechan knew that his 401(k) funds were
not transferrable when he signed the release.11 Additionally, the
10
The District Court refers to this Appellant as Michael
Meecham, but the parties refer to him as Michael Meechan. We
use the parties’ spelling of the last name.
11
Meechan and the other Appellants could not roll over
their 401(k) plans with Roche to an outside investment company
without serious tax consequences because of an Internal
Revenue Code rule. The rule requires a separation from service
in order for an individual to be able to transfer his or her 401(k).
It treats the type of transition in this case under the “same desk
rule,” meaning that there is no separation from service, because
13
District Court determined that Meechan did not have to tender
back the consideration for the release in order to bring claims
against Roche.
The District Court then reached the claim that Roche and
JCI entered into the Agreement in order to interfere with
pension benefits in violation of § 510 of ERISA. It held that
Meechan failed to prove a prima facie case of specific intent to
interfere with pension benefits. Regardless, the District Court
determined that Roche articulated legitimate non-discriminatory
reasons for its decisions ! technical and financial reasons.
Meechan failed to prove that these reasons were pretext, and
therefore the Appellees’ motion for summary judgment on the
merits of the ERISA claim was granted.12 Finally, the District
Court also granted summary judgment in favor of Roche as to
the state law discrimination claim.13 It held that there was
simply insufficient evidence to prove that Roche terminated
Meechan on the basis of age.
The Appellants brought this timely appeal.
the Appellants continued to perform substantially the same job
at substantially the same salary.
12
The District Court did not reach JCI’s argument that it
is not a proper party in a § 510 of ERISA claim because the
alleged conspiracy claim is not cognizable under the law.
13
The District Court did not reach Roche’s argument that
the state law claim was preempted by ERISA.
14
II.
We have jurisdiction over this appeal pursuant to 28
U.S.C. § 1291. Our review of a district court’s grant of
summary judgment is plenary. NBT Bank Nat’l Ass’n v. First
Nat’l Cmty. Bank, 393 F.3d 404, 409 (3d Cir. 2004). We apply
the same standard employed by a district court, and view the
facts in the light most favorable to the non-moving party.
Moore v. City of Philadelphia, 461 F.3d 331, 340 (3d Cir. 2006).
However, the non-moving party must present more than a mere
scintilla of evidence; “there must be evidence on which the jury
could reasonably find for the [non-movant].” Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). If the non-
moving party “fails to make a showing sufficient to establish the
existence of an element essential to [the non-movant’s] case, and
on which [the non-movant] will bear the burden of proof at
trial,” summary judgment is proper as such a failure “necessarily
renders all other facts immaterial.” Celotex Corp. v. Catrett,
477 U.S. 317, 322-23 (1986).
III.
The Appellants claim that the District Court erred by
(1) determining that the statute of limitations was triggered
when the Appellants received notice of their pending
termination, (2) granting summary judgment in favor of Roche
and JCI on the § 510 ERISA claim, and (3) granting summary
judgment in favor of Roche and JCI on the state law
discrimination claim. Roche offers other affirmative defenses,
release and tender back/ratification, as alternative bases for
affirming the grant of summary judgment. JCI claims that § 510
15
does not allow a conspiracy cause of action, as an alternative
theory for the grant of summary judgment. Additionally, Roche
also claims that the state law claim was preempted by ERISA.
A.
The first issue we must address is whether a claim for
termination in violation of § 510 of ERISA accrues when the
employee is given actual notice of the pending termination or
when the employee is actually terminated. As § 510 does not
provide a statute of limitations, the statute of limitations is
borrowed from state law. Gavalik v. Cont’l Can Co., 812 F.2d
834, 843 (3d Cir. 1987). In this case, the parties agree that the
applicable statute of limitations under New Jersey law is two
years. The question of when the statute began to run, however,
is governed by federal common law. Romero v. Allstate Corp.,
404 F.3d 212, 221 (3d Cir. 2005). When a claim accrues in the
context of a § 510 unlawful termination is a question of first
impression for this Court.
In Tolle v. Carroll Touch, Inc., 977 F.2d 1129 (7th Cir.
1992), the United States Court of Appeals for the Seventh
Circuit addressed this issue. Tolle was informed orally on
September 19, 1984, that she would be terminated on
October 19, 1984. Id. at 1132. A written confirmation of this
information was provided to Tolle on September 24, 1984. The
court of appeals was asked to consider when Tolle’s claim
accrued. Id. at 1138. The district court determined that the
claim arose on September 19 or 24, 1984, when Tolle was
informed that she would be terminated. However, Tolle argued
that the claim should not accrue until a claim for benefits was
16
denied. Id. at 1139. The court of appeals explained that it had
to first determine what the alleged unlawful conduct was and
when it happened. The next step was to determine when Tolle
learned of the injury that resulted from the unlawful act.
The court of appeals in Tolle explained that the purpose
of § 510 of ERISA was to prevent individuals or entities from
interfering with a plan participant’s ability to collect benefits to
which he or she is entitled or from interfering with such a
participant’s ability to collect benefits to which he or she may
become entitled. Therefore, under § 510, a defendant “can be
liable for unlawful interference before the participant becomes
entitled to benefits under the terms of the plan.” Id. (emphasis
in original). Tolle claimed that her termination was the unlawful
conduct because it was allegedly done to avoid paying her
benefits, and the court agreed. Id. at 1140. The court next
considered when the claim accrued. It looked to the Supreme
Court’s decision in Ricks for guidance. The court explained that
in Ricks, the Supreme Court held that a Title VII claim accrues
at the time the employment decision was made, not at the time
the injury or consequences of that decision are felt. Id. The
court of appeals analogized the § 510 claim to intentional
employment discrimination cases ! it explained that the purpose
of § 510, like employment discrimination statutes, is to prevent
actions that are taken for an illegal purpose.14 “[I]t is the illegal
decision and the participant’s discovery of this decision that
dictates accrual.” Id. at 1140-41. In other words, Tolle’s claim
14
It also noted that most courts of appeals apply state
employment discrimination or wrongful termination statutes of
limitations to § 510 claims for the same reason. Id. at 1137-38.
17
accrued when the employer made its decision and
communicated the decision to Tolle. Id. Therefore, the court of
appeals held that Tolle’s claim accrued at the latest on
September 24, 1984, when she received the formal notice of her
termination. Id. at 1141.
We agree with the Seventh Circuit that the accrual rule
from Ricks should determine accrual in the context of a § 510
claim. See also Edes v. Verizon Commc’ns, Inc., 417 F.3d 133,
139 (1st Cir. 2005) (adopting Tolle accrual rule for § 510
termination claims).15 We are further persuaded that this is the
proper time of accrual because of the Supreme Court’s decision
in Chardon. 454 U.S. 6. In Chardon, the plaintiffs were
“nontenured administrators in the Puerto Rico Department of
Education during the 1976-1977 school year.” Id. at 6-7.
Before June 18, 1977, each of the plaintiffs was sent a letter that
he would be terminated on a specific date between June 30 and
August 8, 1977. The plaintiffs filed their complaint on June 19,
15
There are cases that seem to use the date of termination
as the date that the claim accrued; however, such cases are not
clear as to whether notice of the pending termination was
provided. See, e.g., Anderson v. Consol. Rail Corp., 297 F.3d
242, 251 (3d Cir. 2002) (stating parties agreed that plaintiffs
were involuntarily terminated in July of 1995); Musick v.
Goodyear Tire & Rubber Co., 81 F.3d 136, 137 (11th Cir. 1996)
(holding plaintiff’s claim was time-barred and apparently using
date of layoff as date of accrual); Heideman v. PFL, Inc., 904
F.2d 1262, 1267-68 (8th Cir. 1990) (stating that plaintiffs’
claims accrued at the time of termination). Therefore, these
cases do not offer much guidance on the issue before us.
18
1978, claiming that their terminations violated § 1983. If Ricks
applied, the one-year statute of limitations began to run when
the plaintiffs received their letters, and therefore their claims
were time-barred. The United States Court of Appeals for the
First Circuit held that Ricks did not apply because the unlawful
action in Ricks was the denial of tenure while the unlawful
action in Chardon was termination. Id. at 7-8. The Supreme
Court reversed the court of appeals and explained that Ricks was
indistinguishable. It explained that in both cases, the decision
was made and the plaintiffs were provided with notice of their
eventual termination. Id. at 8. The Court explained that
advance notice of termination “is a customary and reasonable
employment practice which affords the employee an opportunity
to find another job.” Id. n.2. It also reiterated its analysis in
Ricks that the focus is on the discriminatory act, not when the
effects of the act are felt. Id. at 8.
The fact of termination is not itself an illegal act.
In Ricks, the alleged illegal act was racial
discrimination in the tenure decision. Here,
[plaintiffs] allege that the decision to terminate
was made solely for political reasons, violative of
First Amendment rights. There were no other
allegations, either in Ricks or in these cases, of
illegal acts subsequent to the date on which the
decisions to terminate were made. As we noted in
Ricks, “[m]ere continuity of employment, without
more, is insufficient to prolong the life of a cause
of action for employment discrimination.” In the
cases at bar, [plaintiffs] were notified, when they
received their letters, that a final decision had
19
been made to terminate their appointments. The
fact that they were afforded reasonable notice
cannot extend the period within which suit must
be filed.
Id. (internal citations omitted).
Based on our adoption of this accrual rule for § 510
claims, we must first determine what constituted the allegedly
unlawful conduct in this case. Although it could be argued that
the termination is the allegedly illegal act in this case, it is
actually true that the termination itself was not illegal. Rather,
it is termination with the intent to deprive the Appellants of
future benefit rights that is the allegedly illegal conduct. There
is no evidence that suggests there was illegal conduct after
Roche made the decision to outsource. The fact that the
termination was not immediate should not prevent the claim
from accruing. As the Supreme Court explained in Chardon,
employers often provide notice prior to termination. Such
notice provides an affected employee with the opportunity to
find another job. This advance notice, which arguably was for
the benefit of the Appellants, should not extend the limitations
period in this case. Therefore, we hold that when an employee
is terminated in violation of § 510 of ERISA the claim accrues
when the decision to terminate is made and the employee is
informed of the pending termination.16
16
The Appellants assert that a holding that notice, rather
than termination, triggers the statute of limitations ignores the
fact that plaintiffs in this situation could not bring a claim until
they were actually terminated. However, this argument is
20
The second-step of the analysis is determining when
notice was provided. In this case, the Appellants do not dispute
the District Court’s findings as to when each of the Appellants
received notice. Rather, the Appellants argue that the notice
Roche provided was insufficient. As the statute of limitations
is two years in this case, and the Complaint was not filed until
November 1, 1999, if the Appellants received proper notice
prior to November 1, 1997, of their pending terminations, their
claims are time-barred. Therefore, we must consider whether
Roche provided the Appellants actual notice of their pending
terminations.17
simply wrong. Section 502(a) of ERISA is the vehicle by which
a plaintiff may bring suit for a violation of § 510. See Ingersoll-
Rand Co. v. McClendon, 498 U.S. 133, 143 (1990). Under
§ 502(a) a plan participant may “enjoin any act or practice
which violates any provision . . . .” 29 U.S.C. § 1132(a)(3).
Therefore, once an affected employee receives notice that he or
she will be terminated, the participant can file for an injunction
to prevent the termination if it is due to illegal motives.
17
In its opinion, the District Court used the language of
the discovery rule ! whether the Appellants knew or should
have known that Roche was terminating them. Although we
reach the same result as the District Court, we are not convinced
that the use of the discovery rule is appropriate in this context.
As discussed above, both Ricks and Tolle suggest that a claim
accrues when the employer decides to terminate the employee
and notifies the employee of the decision. These cases could be
interpreted as requiring that the employer provide the employee
with actual notice of termination. As this question is not
21
Some of the Appellants admitted either in the Appellees’
Requests for Admissions or in correspondence with Roche that
they had actual knowledge prior to November 1, 1997, of
Roche’s decision to terminate their positions. It is clear that
such Appellants had actual knowledge of Roche’s decision to
terminate them. By their own admission, these Appellants’
claims are time-barred.
The next group of Appellants are those who attended
Roche’s October 20, 1997 meeting where the decision to
outsource was announced. Some of the remaining Appellants
admitted in the Request for Admissions that they attended the
meeting and that the decision to outsource the functions of their
departments was announced. Other Appellants admitted only
that they attended the meeting. The record demonstrates that
Scherzer informed the audience that Roche was outsourcing the
functions of certain departments to JCI, that he informed the
audience that they would remain as Roche employees until
November 3, 1997, that they would be eligible for employment
with JCI, and that JCI would interview potential employees in
the following weeks. A representative from JCI also spoke at
the meeting.
Additionally, Roche sent a letter to all employees
announcing the outsourcing on October 21, 1997. The letter
included all of the departments that would be outsourced, that
the affected employees would remain Roche employees until
necessary to our holding, we will assume, without resolving the
question, that an employer must provide actual notice to
employees to constitute accrual of an ERISA claim.
22
November 3, 1997, that the affected employees would be
eligible for a new position at JCI, and that JCI would be
conducting interviews on-site during the following weeks. The
letter clearly indicated that employees in the listed departments
were losing their jobs with Roche. We find that the information
provided at the meeting and the company-wide letter provided
actual notice to the Appellants of Roche’s decision to terminate
their positions.
Another group of Appellants admitted that they applied
for employment with JCI, received offer letters from JCI, and
signed and delivered the letters to JCI, all prior to November 1,
1997. We also find that this group of Appellants had actual
notice prior to November 1, 1997, that their positions at Roche
were being terminated.
The only Appellant who did not receive some form of
notice is Appellant Meechan. Meechan was on disability leave
during the relevant time period and the Appellees concede that
he did not receive any form of notice regarding his pending
termination until after November 1, 1997. Therefore, all of the
Appellants’ claims are time-barred, except for Meechan’s
claims.18
18
The Appellants also claim that a rule that notice triggers
the statute of limitations in the context of a § 510 termination
case should be applied prospectively only. We see no reason in
this case to depart from the general rule of retroactive
application. See, e.g., Harper v. Va. Dep’t of Taxation, 509 U.S.
86, 95-98 (1993).
23
B.
The next issue on appeal is whether Roche’s other
affirmative defenses of the release and tender back/ratification
prevent Meechan from bringing his claims. Meechan signed the
release and accepted the additional benefits Roche offered under
Option II. Therefore, we must determine whether his signing of
the release or his failure to return the consideration Roche
provided bars him from bringing this suit. The District Court
rejected these defenses and we agree.19
As to the release, the District Court found that genuine
issues of material fact existed as to whether the Appellants knew
when they signed the releases that their 401(k) funds were not
transferrable. On appeal, Roche does not claim that there are no
genuine issues of material fact. In fact, Roche admits that “at
the very least, an issue of fact [exists] as to when Appellants
first learned of the issue (i.e., before or after they executed the
releases and/or the revocation period expired).” Rather, Roche
argues that not a single Appellant has explained whether
information about the tax consequences would have changed his
decision to sign the release. Therefore, Roche claims that this
19
The Appellants claim that we cannot consider these
affirmative defenses because Roche did not cross-appeal the
District Court’s rejection of the defenses. We disagree. It is not
necessary for the prevailing party to file a cross-appeal in order
to raise arguments to support a district court’s judgment on any
ground, even one rejected by the district court. See, e.g., Rite
Aid of Pa. v. Houstoun, 171 F.3d 842, 853 (3d Cir. 1999);
Cospito v. Heckler, 742 F.2d 72, 79 n.8 (3d Cir. 1984).
24
is an immaterial issue and we should enforce the releases and
dismiss the Appellants’ claims.
A release must be made knowingly and voluntarily, see,
e.g., Coventry v. U.S. Steel Corp., 856 F.2d 514, 522 (3d Cir.
1988), and although a totality of the circumstances test is used
to determine the validity of a release, we also consider “whether
there is evidence of fraud or undue influence, or whether
enforcement of the agreement would be against the public
interest.” Id. at 522-23. Genuine issues of material fact exist as
to whether and when the Appellants, specifically Meechan, were
informed or misinformed about their ability to roll-over their
401(k)s. Meechan, and all of the Appellants, assert that they
would have acted differently had they known of the tax
consequences. Therefore, Roche’s claim that there is no
evidence that the Appellants would have acted differently is
without merit. The burden is on Roche, as the party seeking
summary judgment, to prove that no genuine issues of material
fact exist, and Roche has not met this burden because it admits
that such issues exist. Additionally, as the issue of the release
is an affirmative defense the burden of proving that it was
knowingly accepted is on Roche. See Fed. R. Civ. P. 8(c).
Roche has failed to meet its burdens and therefore summary
judgment was properly denied on this affirmative defense.
Roche asserts that even if we find that the release was
invalid, the doctrine of tender back/ratification bars Meechan’s
claims. The theory of ratification is that a promise can be
enforced even though the underlying contract is voidable if it is
ratified by the promisor. See Wasley v. Champlin Refining &
Chems., 11 F.3d 534, 538 (5th Cir. 1993). This means that the
25
promisor has the power to avoid the contract or to ratify it by
making a new one. Id. at 538-39. Tender back is a related
concept, which provides that if the promisor does not return the
consideration received under the contract this is effectively
ratification. See Raczak v. Ameritech Corp., 103 F.3d 1257,
1265 (6th Cir. 1997). As noted above, it is undisputed that
Meechan has not returned the consideration that he received as
severance benefits under Option II. Therefore, we must
determine whether the common law principles of tender
back/ratification apply to this case. This is an issue of first
impression for this Court.
In Hogue v. Southern R. Co., 390 U.S. 516 (1968) (per
curiam), the Supreme Court refused to apply the tender back
doctrine to a case under the Federal Employees Liability Act
(“FELA”). The plaintiff was injured on the job, and signed a
release which gave him $105 for his injury. Id. at 517. The
plaintiff did not return the money before he brought suit. The
Court explained that whether tendering back of the
consideration before bringing suit was required is a question of
federal law. Id. The requirement of tendering back
consideration is excusable in multiple situations, such as when
there is fraud or mutual mistake. The Court reached its decision
because it explained that “a rule which required a refund as a
prerequisite to institution of suit would be ‘wholly incongruous
with the general policy of the Act to give railroad employees the
right to recover just compensation for injuries negligently
inflicted by their employers.’” Id. (internal citation omitted).
The Court determined that a holding that the consideration paid
will be deducted from any award to the injured party was more
consistent with the purpose of the Act.
26
In Long v. Sears Roebuck & Co., 105 F.3d 1529 (3d Cir.
1997), we considered tender back and ratification in the context
of the Age Discrimination in Employment Act (“ADEA”). Id.
at 1539-40. Although part of our discussion was based on the
Older Workers Benefit Protection Act (“OWBPA”), which
amended the ADEA, we also addressed more general issues
which are relevant in the context of ERISA. We looked to the
decision in Hogue for guidance. Id. at 1540-41. We noted that
“courts have regularly applied the analysis in Hogue to reject
tender requirements in lawsuits brought under a variety of
federal remedial statutes.” Id. at 1541 (citing cases applying
Hogue to Title VII, antitrust law, Jones Act, and Sherman Act).
We then explained that the ADEA was clearly a “federal
remedial statute.” Id. Because of the purpose of the ADEA !
to provide redress for discrimination ! we held that the tender
back rule should be rejected in suits under the ADEA, as it was
for suits under the FELA. We explained that the FELA and the
ADEA did not have to be identical in order for the rule in Hogue
to be extended to the ADEA. “The mandate in Hogue is that
tender back requirements imposed in connection with the release
of federal rights be evaluated in light of the general policy of the
statute in question.” Id.
Additionally, we explained that the Hogue Court’s
concern that a tender back requirement would deter meritorious
challenges to releases was also a factor in ADEA claims.
Further, decisions enforcing the tender back doctrine have
focused on what we called an “incomplete analysis of the
equities involved in allowing an employee to retain severance
benefits while pursuing ADEA claims.” Id. at 1542-43. The
argument was that allowing an employee to retain the
27
consideration that was tendered to avoid litigation and bring suit
would place the employer in litigation against opponents who
may use the consideration to fund the litigation. We recognized
the merit of this argument, but rejected it because it ignored the
economic reality for most older workers. Congressional
findings suggested that many employees needed severance
benefits to cover their living expenses, and could not afford to
spend it on legal expenses. Further, this was evidence that an
employee who has a meritless claim has a “strong financial
incentive[] to keep the severance payments rather than risk them
in prolonged litigation.” Id. Rejecting ratification and tender
back did not mean that employees would receive a double
recovery ! severance plus judgment. Rather, if the employer is
found liable, the severance benefits will be deducted from any
award. Id. A requirement that an employee tender back the
consideration prior to suit would make it difficult to put the
employee in a pre-release position.
The final factor in our decision was the challenges
involved in calculating a tender back requirement.
A tender requirement in such cases would create
a conundrum as to how much [consideration]
should be tendered to restore the pre-release status
quo. There is no available method of forcing the
parties to agree on what an appropriate amount
would be, since typically the employer does not
specify how much of the consideration paid to the
employee is for the retirement and how much is
for the release.
28
Id. at 1543-44 (quoting Isaacs v. Caterpillar, Inc., 765 F. Supp.
1359, 1368 (C.D. Ill. 1991)). This confusion as to the amount
of consideration to be returned would require “an employee to
return a sum that typically incorporates consideration for
multiple factors not challenged in an age case: waivers for other
violation of law or contract, rolled-in vacation and sick time,
and a public relations benefit to the employer that itself may
deter other litigation.” Long, 105 F.2d at 1544. Such an
approach, we determined, appears to put the employer in a better
position yet leaves the employee in a worse position than they
were in under the status quo. Therefore, we determined that it
would best serve the purposes of the ADEA to reject the tender
requirement.
In Oubre v. Energy Operations, Inc., 522 U.S. 422
(1998), the Supreme Court confirmed that OWBPA displaces
the common law doctrine of ratification. Although the case is
limited to OWBPA and claims under the ADEA, it offers some
guidance for this case. First, the Court rejected the employer’s
claim that the general rule in contract law is that a plaintiff must
tender back benefits received under a contract before bringing
suit. Id. at 426. There are cases to the contrary, and in equity “a
person suing to rescind a contract, as a rule, is not required to
restore the consideration at the very outset of the litigation.” Id.
(internal citations omitted). Although the Court determined that
OWBPA by its terms indicates that ratification does not apply
to ADEA claims, it also noted the effect of ratification on the
practical operation of OWBPA. Id. at 427. “In many instances
a discharged employee likely will have spent the moneys
received and will lack the means to tender their return. These
realities might tempt employers to risk noncompliance with the
29
OWBPA’s waiver provisions, knowing it will be difficult to
repay the moneys and relying on ratification.” Id.
We recognize that other courts have applied the common
law doctrine of ratification to ERISA claims. See, e.g., Deren
v. Digital Equip. Co., 61 F.3d 1 (1st Cir. 1995); Wittorf v. Shell
Oil Co., 37 F.3d 1151 (5th Cir. 1994). However, it does not
appear that any courts of appeals have considered the
applicability of Hogue to ERISA claims. See Deren, 61 F.3d at
2 (reserving question of applicability of Hogue for another day).
We are persuaded the rationales of Hogue and Long should be
applied to ERISA cases.
Hogue and Long provide strong arguments for the
extension of their rule to § 510 of ERISA. ERISA, like the
ADEA and the FELA, is a “federal remedial statute.” It was
“designed to promote the interests of employees and their
beneficiaries in employee benefit plans.” DeWitt, 106 F.3d at
529. The same deterrence concerns exist in this context as well.
A plaintiff should not be deterred from bringing a meritorious
claim. Additionally, pensions are major assets for most
Americans. As Congress recognized “the continued well-being
and security of millions of employees and their dependents are
directly affected by [pension] plans.” 29 U.S.C. § 1001.
Therefore, as in Long, it is unlikely that an employee would
engage in lengthy litigation of a meritless claim which would
waste his benefits or severance pay. Additionally, as the Court
explained in Oubre the application of the doctrine of ratification
to ERISA claims may frustrate the practical operation of the
protections ERISA affords. It is likely that many employees
discharged in violation of § 510 may have spent the moneys
30
they received as severance pay. Employers could risk
noncompliance with the requirement that a release must be made
knowingly and voluntarily and simply rely on ratification.
The same issues we addressed in Long regarding the
amount of money to be tendered back also exist here. In this
severance package, the employees were provided with severance
as well as pay for unused vacation time. Therefore, a
determination of exactly what Meechan would have been
required to tender back is unclear and debatable. The pertinent
justifications for rejecting the application of ratification stated
in Hogue, Long, and Oubre, convince us that tender
back/ratification should also be rejected in the context of § 510.
Therefore, we will affirm the District Court’s denial of summary
judgment as to the affirmative defense of tender
back/ratification.
C.
As Meechan’s § 510 claim is still viable, we now reach
the substance of that claim. Section 510 of ERISA provides in
pertinent part that
[i]t shall be unlawful for any person to discharge,
fine, suspend, expel, discipline, or discriminate
against a participant or beneficiary for exercising
any right to which he is entitled under the
provisions of an employee benefit plan, . . ., or for
the purpose of interfering with the attainment of
any right to which such participant may become
entitled under the plan . . . .
31
29 U.S.C. § 1140. The law in this area is well-settled.
In Gavalik v. Continental Can Co., 812 F.2d 834 (3d Cir.
1987), we outlined the elements of a § 510 claim.20 We
explained that a plaintiff does not have to prove that the only
reason that he or she was terminated was an intent to interfere
with pension benefits. Id. at 851. However, a plaintiff must
“demonstrate that the defendant had the ‘specific intent’ to
violate ERISA.” Id. (quoting Watkinson v. Great Atl. & Pac.
Tea Co., Inc., 585 F. Supp. 879, 893 (E.D. Pa. 1984)).21 A
plaintiff must show that “the employer made a conscious
decision to interfere with the employee’s attainment of pension
eligibility or additional benefits.” DiFederico v. Rolm Co., 201
F.3d 200, 205 (3d Cir. 2000) (internal quotation marks and
20
In Gavalik, the employer created a liability avoidance
program in which it monitored which employees had vested, and
laid off employees who had not vested in an attempt to save
money. Id. at 840-41. We reversed the district court’s grant of
summary judgment in favor of the employer because it was clear
from the record (through direct evidence) that the employer
intended to interfere with the plaintiffs attainment of future
benefits. Id. at 857.
21
At the same time, actual injury is not required because
the employer does not have to achieve its goals in order to be
liable. Id. at 856. “Proof of specific intent to interfere with the
attainment of pension eligibility, then, ‘regardless of whether the
participant would actually have received the benefits absent the
interference . . .,’ will ordinarily constitute a violation of § 510
of ERISA.” Gavalik, 812 F.2d at 852 (internal citation omitted).
32
citation omitted). Proof that the plaintiff lost benefits because
of termination alone is not enough. Gavalik, 812 F.2d at 851.
Proof that the termination prevented the employee from accruing
additional benefits through more years of service alone is not
probative of intent. See Turner v. Schering-Plough Corp., 901
F.2d 335, 348 (3d Cir. 1990). “Where this is the only
deprivation, a prima facie case requires some additional
evidence suggesting that pension interference might have been
the motivating factor. In this connection, we note that the
savings to the employer resulting from the [employee’s]
termination [must be] of sufficient size that they may be
realistically viewed as a motivating factor.” Id. Such proof can
be demonstrated through direct or circumstantial evidence,
because the “smoking gun” evidence may be rare. Gavalik, 812
F.2d at 852.
When there is no direct evidence, courts use a McDonnell
Douglas-Burdine type of burden shifting scheme to determine
whether the plaintiffs have proved their case. DiFederico, 201
F.3d at 205. Plaintiffs must first prove their prima facie case by
showing “‘(1) the employer committed prohibited conduct
(2) that was taken for the purpose of interfering (3) with the
attainment of any right to which the employee may become
entitled.’” Id. (quoting Gavalik, 812 F.2d at 852).
If the plaintiffs establish their prima facie case, the
burden shifts to the defendant to “articulate a legitimate,
nondiscriminatory reason for the prohibited conduct.” Id. If the
employer satisfies its burden, then the plaintiffs must prove by
a preponderance of the evidence that the reason articulated by
the defendant is merely pretextual. Id. Once the defendant
33
articulates such a reason, the plaintiffs must meet their “ultimate
burden of persuasion.” Id. at 206 (internal quotation marks and
citation omitted). In order to meet this burden, plaintiffs must
“either directly . . . persuad[e] the court that the discriminatory
reason more likely motivated the employer or indirectly
[persuade the court] by showing that the employer’s proffered
explanation is unworthy of credence.” Id. (internal quotation
marks and citation omitted). The pretext analysis focuses the
court’s attention on whether the defendant’s proffered reason
was the real reason for its decision. Id.
In this case, Meechan asserts that direct and
circumstantial evidence exists. We will first consider the direct
evidence. Direct evidence in this context must demonstrate that
“decision makers placed substantial negative reliance on an
illegitimate criterion in reaching their decision.” See Anderson
v. Consol. Rail Corp., 297 F.3d 242, 248 (3d Cir. 2002) (internal
quotation marks and citation omitted). We have said that this is
a “high hurdle” for plaintiffs because direct evidence “must
reveal a sufficient discriminatory [or illegal] animus making it
unnecessary to rely on any presumption from the prima facie
case to shift the burden of production.” Id. (internal citation
omitted).
The direct evidence asserted by Meechan is that (1) there
is conflicting testimony by Scherzer regarding the reasons
behind the decision to outsource (efficiency vs. savings);
(2) there are inconsistencies between the testimony by Scherzer
and notes by JCI about whether savings were a consideration in
Roche’s decision to outsource; (3) there is a note by a JCI
employee implying that fringe benefits were an area where
34
money could be saved; and, (4) there is an email from JCI to
Roche explaining that savings can be achieved by slashing
headcount.
This is simply not direct evidence that the Appellees
specifically intended to interfere with pension benefits. There
is no “smoking gun” in this case. See Gavalik, 812 F.2d at 851.
This evidence, even without considering that some of it is taken
out of context, does not reveal the requisite intent to engage in
proscribed activity such that “it is unnecessary to rely on any
presumption from the prima facie case to shift the burden of
production.” Anderson, 297 F.3d at 248 (internal citation
omitted). This is generalized evidence and it lacks probative
value from which to draw an illegal motive behind Roche’s
decision to outsource. See, e.g., id. “Only the most blatant
remarks whose intent could be nothing other than to
discriminate constitute direct evidence.” Clark v. Coats &
Clark, Inc., 990 F.2d 1217, 1223 (11th Cir. 1992). Meechan has
not met this high hurdle of proving specific intent to violate
§ 510 with direct evidence.
However, as noted above, Meechan also asserts
circumstantial evidence, and therefore the burden-shifting
analysis applies. Some of the evidence sheds absolutely no light
on the question of specific intent. For example, the fact that
Scherzer had previously worked with employees of JCI on
projects unrelated to outsourcing or the fact that he began
thinking about outsourcing shortly after he was hired at Roche
are not relevant evidence of specific intent to interfere with
pension benefits.
35
Additionally, Meechan relies on his expert’s testimony
that the outsourcing saved Roche over $22 million in costs for
pension and other retiree benefits. The District Court rejected
this testimony because it was flawed. In reaching this
determination, the expert failed to consider any costs that Roche
incurred by outsourcing, namely the millions that Roche paid to
JCI under the outsourcing Agreement. Although evidence of
substantial cost savings to an employer is persuasive evidence
of specific intent, there must be evidence of actual savings. See,
e.g., Turner, 901 F.2d at 348. Absent the inclusion of the costs
to Roche in the calculation, at least in regard to the cost for the
Agreement, this is incomplete evidence of the economic
consequences to Roche. Although Roche may have incurred
substantial savings as a result of the outsourcing, there is no
evidence in the record that demonstrates such savings.
Therefore, we agree with the District Court’s rejection of the
evidence regarding savings in this context.
However, Meechan has presented other evidence that
suggests that Roche had the specific intent to interfere with
pension benefits. The fact that Meechan, and the other
Appellants, held the same positions and were paid the same
salaries by their new employer, but were no longer entitled to
pension benefits, lends support to Meechan’s claims that the
Appellees intended to avoid the payment of future pension
benefits. This fact alone would not be sufficient to establish a
prima facie case, but there is additional evidence. The record
includes some testimony that Roche and JCI discussed pensions
and that Roche executives discussed pensions in regard to the
outsourcing. Additionally, the initial draft of the Agreement
between Roche and JCI included employee pensions as an
36
expense for JCI, while the final Agreement did not include that
provision. This further suggests that there was some dialogue
or negotiation regarding pension benefits between JCI and
Roche. Therefore, there is some evidence that the Appellees
were aware that the outsourcing would interfere with Meechan’s
pension benefits.
“The burden of establishing a prima facie case is not
onerous.” Clark, 990 F.2d at 1223 (citing Tx. Dep’t of Cmty.
Affairs v. Burdine, 450 U.S. 248, 253 (1973)). This case falls
somewhere between our decisions in Turner and Eichorn.22 The
22
In Turner, the plaintiff was discharged two and a half
years before he would have been eligible for full retirement
benefits, and the employer was aware of this effect. Id. at 340.
Although we found that the plaintiff proved that he was in the
protected class and that he was qualified for the position, we
determined that there was no evidence that he was discharged in
violation of ERISA. Id. at 348. The fact that he would be
deprived of additional benefits was not sufficient to prove
specific intent, especially because the amount of savings to his
employer was not of sufficient size to “realistically [be] viewed
as a motivating factor.” Id. We determined that there was no
evidence of any economic consequences to the employer due to
the termination.
However, in Eichorn v. AT&T Corp., 248 F.3d 131, 150
(3d Cir. 2001), we found that evidence that the employer’s
policy of not re-hiring for eight months which was very close to
the six-month vesting period provided circumstantial evidence
that the avoidance of benefits was a motivating factor. There
was also a confidential memo from the employer that recognized
37
evidence includes more than just a showing that the plaintiff was
deprived of future pension benefits, but there is no evidence as
to the savings to the employer. Since the burden is not onerous,
and we must draw all reasonable inferences in favor of
Meechan, we hold that Meechan has proved a prima facie case.
Therefore, we disagree with the District Court’s conclusion to
the contrary.
Our analysis does not end, however, as the District Court
concluded that even if Meechan proved a prima facie case, the
Appellees articulated legitimate nondiscriminatory reasons for
the decision, and Meechan failed to prove pretext. We agree
with the District Court that the Appellees met their burden of
production. Roche’s reason for its decision was to improve the
quality of the services provided by the Technical Services
Division or, as the District Court stated, there was evidence that
Roche had strong technical and financial reasons for
outsourcing. JCI wanted to obtain the contract with Roche. As
this is only a burden of production, the Appellees have met their
burden.
The burden shifts back to Meechan. He has to prove by
a preponderance of the evidence that the reasons articulated by
the Appellees are not credible or that pension avoidance was the
the practical effect of the no hire policy on pension rights.
Additionally, there were economic benefits because the
defendant was not required to pay for pension benefits.
Therefore, we reversed the district court’s grant of summary
judgment in favor of the employer because we held that the
plaintiffs did establish a prima facie case.
38
real motivating or determinative factor. See DiFederico, 201
F.3d at 206-07. At a minimum, Meechan “must put forward
enough evidence to create a genuine issue of material fact as to
whether” the proffered reasons were pretextual. Kowalski v. L
& F Prods., 82 F.3d 1283, 1289 (3d Cir. 1996). This requires
Meechan to “demonstrate such weaknesses, implausibilities,
inconsistencies, incoherences, or contradictions in the
employer’s proffered legitimate reasons for its action . . . .” Id.
Nothing in the record proves by a preponderance of the
evidence that the Appellees’ reasons are not credible, nor that
the intention to interfere with pension benefits was more likely
what motivated the decision to outsource. Based on the record
as it stands, especially without any evidence as to savings to
Roche, Meechan has not met his burden. “A court, like the
district court in this case, simply cannot make the unfounded
inference that an employer acted with the specific intent to
interfere with the plaintiff's attainment of benefits.” DiFederico,
201 F.3d at 207. Therefore, we will affirm the District Court’s
determination that Meechan failed to prove pretext making
summary judgment proper in this case.23
D.
The final issue that we must decide on appeal is whether
the District Court properly granted summary judgment on
Meechan’s state law claim under the NJLAD. The claim is that
23
Our determination that Meechan failed to prove pretext
makes it unnecessary for us to decide JCI’s claim that § 510
does not allow a conspiracy cause of action.
39
Roche discriminated on the basis of age in making its decision
to outsource. The District Court held that Meechan failed to
prove a prima facie case under the NJLAD and we agree.
Under the New Jersey anti-discrimination law, an
employer cannot discharge an employee because of the
employee’s age unless the decision is justified by other lawful
considerations. See Murray v. Newark Hous. Auth., 709 A.2d
340, 344 (N.J. Super. 1998) (quoting N.J.S.A. 10:5-12). New
Jersey uses the McDonnell Douglas-Burdine burden-shifting
scheme for discrimination cases. Additionally, the standards
applied to ADEA cases are applied to age claims under the
NJLAD unless there is divergent language between the statutes.
See Monaco v. American Gen. Assurance Co., 359 F.3d 296,
305 (3d Cir. 2004).
In the context of a reduction in force, which is a similar
context to this case, the elements of a prima facie case are
(1) the plaintiff is a member of the protected class, (2) the
plaintiff was laid off from a job that he was qualified for, and (3)
“other, younger, workers were treated more favorably.”
Murray, 709 A.2d 340 at 344 (internal citations omitted); see
also Monaco, 359 F.3d at 304-05.24 Direct or circumstantial
24
The District Court applied an improper prima facie case
standard because it used the prima facie case for a termination
when the position remains open or is filled by someone outside
of the protected class. Because this case deals with outsourcing,
which is essentially the same as a reduction in force, an
employee would never be able to prove that they were replaced
or that the position remained open. Therefore, the prima facie
40
evidence may be used. See Bergen Comm. Bank v. Sisler, 723
A.2d 944, 953 (N.J. 1999) (citations omitted). If a plaintiff
establishes a prima facie case, there is an inference of
discrimination. Then steps two and three are considered.
Ultimately, a plaintiff must prove that age was a determinative
factor in the adverse employment decision. Id.
In Hazen Paper Co. v. Biggins, 507 U.S. 604 (1993), the
Supreme Court held that there is a difference between
discrimination on the basis of age, and an employer’s decision
to terminate an employee to prevent the employee from accruing
pension benefits. Id. at 612. Age and years of service are
“analytically distinct, [and] an employer can take account of one
while ignoring the other, and thus it is incorrect to say that a
decision based on years of service is necessarily ‘age based.’”
Id. However, a decision based both on age and pension status
could violate both the ADEA and ERISA. Id. at 612-13. As
there is no divergent statutory language, this standard applies to
the NJLAD age claim as well.
Meechan has failed to establish his prima facie case.
There is no evidence that Roche treated younger employees
better than older employees ! everyone in the Technical
Services Division lost their jobs at Roche. There is no evidence
that employees in the Technical Services Division were
disproportionately older than employees in other divisions, and
therefore more older workers were terminated because of the
outsourcing. There is also no evidence that open positions at
case for a reduction in force is the proper standard for this type
of case.
41
Roche were provided only to younger employees. Meechan
bases his claim on essentially the same evidence that he used for
the ERISA claim ! he claims that Roche considered his years of
service. But, even if Roche terminated the Appellants,
specifically Meechan, to avoid paying future pension benefits,
under Hazen Paper this does not prove that age was a
determinative factor in Roche’s decision. Absent proof that
younger employees were treated more favorably, Meechan has
not proved his prima facie case. Therefore, the District Court
properly granted summary judgment in favor of Roche.25
IV.
For the reasons stated above, we will affirm the
judgment of the District Court.
25
Our determination that Meechan has failed to prove a
prima facie case under the NJLAD makes it unnecessary for us
to decide whether this claim was preempted by ERISA.
42