Finnegan v. Trans World Airlines, Inc.

967 F.2d 1161, 1992 WL 161052
CourtCourt of Appeals for the Seventh Circuit
DecidedJuly 14, 1992
DocketNo. 91-2150
StatusPublished
Cited by26 cases

This text of 967 F.2d 1161 (Finnegan v. Trans World Airlines, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Finnegan v. Trans World Airlines, Inc., 967 F.2d 1161, 1992 WL 161052 (7th Cir. 1992).

Opinion

POSNER, Circuit Judge.

In the fall of 1985, after years of heavy losses, TWA decided that it had to reduce its labor costs or go under. (TWA finally declared bankruptcy during the pendency of this appeal, but the bankruptcy judge lifted the automatic stay to permit the appeal to be argued and decided.) The measures it took included a 14 percent cut in the wages of its nonunionized employees and a reduction in those employees’ fringe benefits. The reduction included capping paid vacations at 4 weeks a year. Previously, all employees who had more than 16 years of service with the company had been entitled to even more paid vacation — workers who had at least 30 years of service to 7 weeks. We do not understand this to have been a contractual entitlement. It was a practice that the company was free as a matter of contract law to change at any time, provided that the change was prospective — that is, that it did not take away vacation rights that the worker had accrued by working during the period in which the previous policy was in effect. If a worker who under the previous policy was entitled to 1 week’s vacation for every 7 weeks that he worked had worked 35 weeks and thus had earned 5 weeks of vacation that he had not taken when the new policy was announced, the company could not confiscate a week of his vacation. Illinois Wage Payment and Collection Act, Ill.Rev.Stat. ch. 48, M 39m-l et seq.; National Metalcrafters v. McNeil, 784 F.2d 817 (7th Cir.1986). For the future, however, his vacation entitlements would accrue at a slower rate.

Most workers having more than 16 years of service with the same company, and all workers with 30 years or more, are at least 40 years old. So the brunt of the vacation cap inevitably fell mainly on workers within the class protected by the Age Discrimination in Employment Act, 29 U.S.C. §§ 621 et seq., precipitating this suit by members of the protected class whose vacation rights were curtailed by the 1985 cost-cutting program. The district judge granted summary judgment for TWA on the grounds that the plaintiffs had presented no evidence of intentional discrimination (“disparate treatment”) and that their disparate-impact claim was barred by section 4(f)(2) of the Act, which allows an employer “to observe the terms of a bona fide seniority system ... which is not a subterfuge to evade the purposes of this [Act].” 29 U.S.C. § 623(f)(2). 767 F.Supp. 867 (N.D.Ill.1991). TWA defends the district court’s reasoning but adds that the plaintiffs haven’t made out even a prima facie claim of age discrimination.

We have our doubts, unnecessary to resolve, whether the seniority provision is applicable here. The provision was modeled on a provision in Title VII, 42 U.S.C. § 2000e-2(h), where its function is plain— to protect workers’ seniority rights notwithstanding that black and other minority workers will often have been hired more recently than white workers and hence may be disadvantaged by strict adherence to seniority in determining layoffs and rehires. International Brotherhood of Teamsters v. United States, 431 U.S. 324, 349-53, 97 S.Ct. 1843, 1861-64, 52 L.Ed.2d 396 (1977). The provision thus operates as an exemption, a safe harbor. Its function in the age discrimination setting is less clear. The strong positive correlation between seniority and age means that seniority systems usually benefit the class protected by the age discrimination law, in contrast to the tendency of such systems to harm the intended beneficiaries of Title VII. We can, though, imagine a case in which an older worker who had been hired recently was laid off before a younger one because the latter had greater seniority, and in such a case the seniority provision of the statute would protect the younger worker. That hypothetical case is remote from our case. The vacation benefits that TWA curtailed had been keyed to seniority, but by being so keyed they benefited older workers at the expense of younger ones. So TWA cannot argue that when it curtailed those benefits it hurt older workers for the sake of preserving the seniority of younger ones. There is no competing interest of senior workers in this case; the senior, the protected, and the injured are one and the same, as the plaintiffs are at [1163]*1163pains to argue because it is the core of their disparate-impact case.

Section 4(f)(2) also provides protection for “bona fide employee benefit plan[s],” and here the function of the exemption (which has no counterpart in Title VII) is clearer. It allows the employer to take account of, and reflect in the compensation package that he offers his employees, the higher costs of certain fringe benefits, such as life and medical insurance, for older workers. Public Employees Retirement System v. Betts, 492 U.S. 158, 109 S.Ct. 2854, 106 L.Ed.2d 134 (1989); Metz v. Transit Mix, Inc., 828 F.2d 1202, 1219-20 (7th Cir.1987) (dissenting opinion). We do not understand TWA to be arguing that a schedule of paid vacations can be regarded in that light.

But even if section 4(f)(2) does not shield TWA from liability for curtailing benefits, the company’s alternative ground — that the plaintiffs have not made out even a prima facie case of disparate impact — is solid. We need not speculate on how much of the theory of disparate impact, viewed as a judicial doctrine of general applicability to discrimination cases, survives Wards Cove Packing Co. v. Atonio, 490 U.S. 642, 109 S.Ct. 2115, 104 L.Ed.2d 733 (1989) (a question we discussed in Allen v. Seidman, 881 F.2d 375 (7th Cir.1989); Ortega v. Safeway Stores, Inc., 943 F.2d 1230, 1244-45 (10th Cir.1991), and Newark Branch v. Town of Harrison, 940 F.2d 792, 803-04 (3d Cir.1991)); or what, if any, bearing section 105 of the Civil Rights Act of 1991, affirming disparate impact, has on that question; or whether the new civil rights act has any possible bearing on an age discrimination suit, cf. Tyler v. Bethlehem Steel Corp., 958 F.2d 1176, 1181-82 (2d Cir.1992), since it does not amend the Age Discrimination in Employment Act (save for an irrelevant modification of the limitation period); or whether disparate impact has ever been a viable theory of age discrimination, as questioned in Davidson v. Board of Governors, 920 F.2d 441, 444 (7th Cir.1990), and Metz v. Transit Mix, Inc., supra, 828 F.2d at 1220 (dissenting opinion), and in a student-written Note, “Age Discrimination and the Disparate Impact Doctrine,” 34 Stan.L.Rev.

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Bluebook (online)
967 F.2d 1161, 1992 WL 161052, Counsel Stack Legal Research, https://law.counselstack.com/opinion/finnegan-v-trans-world-airlines-inc-ca7-1992.