American Ass'n of Retired Persons v. Farmers Group, Inc.

943 F.2d 996, 1991 WL 156898
CourtCourt of Appeals for the Ninth Circuit
DecidedAugust 20, 1991
DocketNo. 90-55872
StatusPublished
Cited by15 cases

This text of 943 F.2d 996 (American Ass'n of Retired Persons v. Farmers Group, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
American Ass'n of Retired Persons v. Farmers Group, Inc., 943 F.2d 996, 1991 WL 156898 (9th Cir. 1991).

Opinion

FERNANDEZ, Circuit Judge:

Farmers Group, Inc., its affiliated companies, its pension plan trust, and its profit sharing trust (Farmers) appeal the district court’s grant of summary judgment in favor of American Association of Retired Persons (AARP), and a number of current or former employees of Farmers, all of whom are over age 65 (individual appel-lees). The district court determined that Farmers willfully violated the Age Discrimination in Employment Act (ADEA), 29 U.S.C. § 621, et seq., because it denied profit sharing contributions and forfeiture allocations and pension plan credits to employees over the age of 65. The court also held that denying profit sharing contributions and forfeiture allocations and actuarial increases to pension plan benefits to these employees violated the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001, et seq. Farmers also challenges the district court’s denial of Farmers’ motion to dismiss the complaint as to those appellees who joined the action after the Equal Employment Opportunity Commission (EEOC) filed a complaint against Farmers challenging the profit sharing plan provisions. Further, Farmers challenges the district court’s determination of damages. We affirm.

BACKGROUND FACTS

At the time of filing the complaint, the individual appellees were former and current employees of Farmers. Each worked beyond the age of 65. They and AARP (appellees) claimed that Farmers had violat[999]*999ed the ADEA, ERISA and various state statutes because it had denied pension plan credits and profit sharing contributions and forfeiture allocations to employees over the age of 65 from January 1, 1979 and was continuing to do so.1 Farmers has had a profit sharing plan and a pension plan in place since long before the enactment of the ADEA in 1967 and ERISA in 1974. The plans have been modified a number of times since their inception. The specific amendments relevant to this action will be discussed in detail in later portions of this opinion.

Farmers’ profit sharing plan allocates company contributions to a fund in which each employee who meets the time of service and minimum age requirements set forth in the plan is permitted to participate. The plan is a defined contribution plan, rather than a defined benefit plan.2 Each employee’s individual account receives allocations based on a percentage of that person’s earnings. In addition to direct contributions, the plan provides that forfeitures3 are redistributed among vested employee accounts. Employees automatically receive a 20% distribution of their profit sharing account every year after full vesting, unless they irrevocably elect to leave the balance in their account until retirement.4 Over 90% of employees elect to receive the annual distribution, rather than defer receipt until retirement. The challenged provision of the profit sharing plan provided:

A Participant who remains on the payroll of any of the Companies after normal retirement date shall not be credited with contributions provided by Article III nor be credited for forfeitures under Article VI.

The plan also prohibited the distribution of account balances to employees aged 65 and older until actual retirement.

The plaintiffs challenged the pension plan provision which provided that employees who continued to work after reaching age 65 would not receive additional service or salary credits for purposes of calculating their monthly retirement benefit.5 An employee was not permitted to begin collecting retirement benefits until actual retirement, and no actuarial increase was provided for the period during which the employee continued to work.

Farmers sought dismissal of the claims of the 24 plaintiffs who opted into the suit after the EEOC filed an action alleging that Farmers’ profit sharing plan violated the ADEA. It also sought dismissal of the state law claims, arguing that they were preempted by ERISA. The district court denied Farmers’ motions.

All parties moved for summary judgment. On September 22, 1988, the district court granted appellees’ motion for summary judgment on liability under the ADEA and ERISA. See American Ass’n of Retired Persons v. Farmers Group, Inc., 700 F.Supp. 1052 (C.D.Cal.1988). After the Supreme Court decision in P.E.R.S. v. Betts, 492 U.S. 158, 109 S.Ct. 2854, 106 L.Ed.2d 134 (1989), the district court reconsidered its earlier rulings, issued an amended statement of uncontroverted facts and conclusions of law, and again found Farmers liable. The district court later granted [1000]*1000appellees’ motion for summary judgment on the issue of damages. Farmers timely appealed.

JURISDICTION AND STANDARD OF REVIEW

The district court had jurisdiction under 29 U.S.C. § 626(c)(1), and 29 U.S.C. § 1132(e)(1). We have jurisdiction under 28 U.S.C. § 1291.

We review the district court’s grant of summary judgment de novo. E.E.O.C. v. County of Orange, 837 F.2d 420, 421 (9th Cir.1988). “We must determine, viewing the evidence in the light most favorable to the nonmoving party ..., whether there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law.” Id.

DISCUSSION

A. The ADEA Claims.

The district court held that Farmers’ denial of contributions and forfeiture allocations with respect to the profit sharing plan, and its denial of pension plan accruals violated the ADEA. It further held that the purpose of the plan provisions was to discourage people from working past the age of 65, and that each plan was a subterfuge to evade the purposes of the ADEA. The court found that each plan discriminated against employees who continued to work past age 65 in a non-fringe benefit aspect of their employment. The court further held that the profit sharing plan was a subterfuge because it decreased the compensation of employees over age 65.

Section 4(a)(1) of the ADEA makes it illegal for an employer “to fail or refuse to hire or to discharge any [protected] individual or otherwise discriminate against any [protected] 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). However, the statute further provides in section 4(f)(2) 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 this chapter....” 29 U.S.C.

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Bluebook (online)
943 F.2d 996, 1991 WL 156898, Counsel Stack Legal Research, https://law.counselstack.com/opinion/american-assn-of-retired-persons-v-farmers-group-inc-ca9-1991.