EEOC v. Commonwealth of MA ( 1996 )

USCA1 Opinion

                            UNITED STATES COURT OF APPEALS

                                FOR THE FIRST CIRCUIT

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        No. 95-2092



                       EQUAL EMPLOYMENT OPPORTUNITY COMMISSION,



                                 Plaintiff, Appellee,



                                          v.



                        COMMONWEALTH OF MASSACHUSETTS, ET AL.,



                               Defendants, Appellants.



                                 ____________________



                     APPEAL FROM THE UNITED STATES DISTRICT COURT



                          FOR THE DISTRICT OF MASSACHUSETTS



                       [Hon. Rya W. Zobel, U.S. District Judge]
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                                 ____________________



                                        Before



                                Selya, Cyr and Boudin,



                                   Circuit Judges.
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                                 ____________________



            Pierce  O'Cray,  Assistant  Attorney General,  Government  Bureau,
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        with  whom Scott  Harshbarger,  Attorney General,  was  on briefs  for
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        appellants.

            Samuel  A.  Marcosson,  with  whom  C.  Gregory  Stewart,  General
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        Counsel, Gwendolyn Young Reams, Associate General Counsel, and Vincent
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        J. Blackwood, Assistant General Counsel, were on brief for appellee.
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                                 ____________________



                                    March 11, 1996

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                 Per Curiam.   Chapter  32 of  the Massachusetts  General
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            Laws  establishes  the  Commonwealth's  statutory  retirement



            benefit plan  for its  state  and local  employees.   Section



            3(2)(f) of that chapter provides that "[n]o person who enters



            or who re-enters  the service of any governmental  unit as an



            employee after attaining  age sixty-five, and after  the date



            when  a  system  becomes operative  therein,  shall  become a



            member except  as otherwise  provided for  in this  section."



            This provision generally  prevents state and local  employees



            hired  after age 65 from participating in any public employee



            retirement system in  Massachusetts.  Francis C.  Coolidge, a



            part-time employee of  the Town of  Tewksbury who was  denied



            membership in the Middlesex  County Retirement System,  filed



            charges  challenging   section  3(2)(f)   before  the   Equal



            Employment Opportunity Commission ("EEOC").



                 In due course the EEOC itself sued  the Commonwealth and



            the Middlesex County Retirement System in the district court,



            claiming  that section 3(2)(f)  violates and is  preempted by



            the  Age Discrimination in Employment Act ("ADEA"), 29 U.S.C.



               623(a)(1) et. seq.  Both sides moved for summary judgment;
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            the district  court granted  the EEOC's  motion, ruling  that



            section 3(2)(f)  ran afoul  of 29  U.S.C.    623(a)(1), which



            makes it illegal for an employer to "discriminate against any



            individual   with   respect  to   his   compensation,  terms,



            conditions,  or privileges  of  employment, because  of  such







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            individual's age."       The   Commonwealth    now   appeals.



            Although the state statute plainly discriminates on the basis



            of age  regarding  benefits of  employment, the  Commonwealth



            argues  that  the  Massachusetts statute  is  shielded  by 29



            U.S.C.     623(f)(2)(B)(i),  which  permits  an  employer  to



            differentiate on the basis of  age "where for each benefit or



            benefit  package, the actual  amount of payment  made or cost



            incurred on  behalf of an older  worker is no less  than that



            made or incurred on behalf of a younger worker as permissible



            under  section 1625.10, title 29, Code of Federal Regulations



            (as in effect June 22,  1989)."  The Commonwealth claims that



            this provision effectively codifies a subsection of the cited



            regulation, 29  C.F.R.   1625.10(f)(1)(iii)(A)  (1989), which



            allowed  an employer  to  exclude from  a retirement  plan an



            employee who begins work after normal retirement age.



                 As a matter of ordinary grammar, the statutory exception



            relied  on by  the  Commonwealth  does  not  protect  section



            3(2)(f) because  the Commonwealth concededly  does not  incur



            costs on behalf  of workers excluded from the  pension system



            at least  equal to  the costs incurred  on behalf  of younger



            workers.  The plain language of section 623(f)(2)(B)(i) makes



            clear that it  incorporates only those elements  of the cited



            regulation  that  conform to  this  equal  cost/equal benefit



            principle.   The Commonwealth's  argument that  the statutory



            provision   incorporates  the   regulation  wholesale,   even







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            portions of it--like 29 C.F.R.   16256.10(f)(1)(iii)(a)--that



            are plainly inconsistent  with the  equal cost/equal  benefit



            principle,  simply  cannot  be  squared  with  the  statutory



            language.



                 If legislative history is consulted, it too supports the



            EEOC  and  not the  Commonwealth.    As  the  district  court



            observed,  Congress enacted  the current  version of  section



            623(f) in  response to the Supreme Court's decision in Public
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            Employees  Retirement Sys.  v. Betts,  492  U.S. 158  (1989),
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            which  determined  that the  ADEA  did  not  apply to  fringe



            benefits.  Congress then amended the statute to reinstate the



            equal  cost/equal benefit  rule and to  ensure that  the ADEA



            applied to  age-based discrimination  in benefit  plans.   S.



            Rep. No. 263,  101st Cong., 2d Sess. 18  (1990), reprinted in
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            1990  U.S.C.C.A.N. 1509,  1523.    This  Senate  report  said



            explicitly that Congress  intended to incorporate only  those



            portions  of  the  regulation  consistent  with  the  amended



            statute.  Id.
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                 The Commonwealth argues that because the ADEA here would



            preempt a  state statute, we  must apply a  "clear statement"



            rule of interpretation,  e.g., Gregory v. Ashcroft,  501 U.S.
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            452  (1991), and  resolve in  favor of  the Commonwealth  any



            doubts  about  whether Congress  intended  to  incorporate 29



            C.F.R.   1625.10(f)(1)(iii)(a).  The EEOC  plausibly responds



            that  the clear  statement  rule  applies  only  in  deciding







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            whether  the  state  is  governed  by the  ADEA  and  not  to



            questions  concerning  the  substantive  reach of  the  ADEA,



            questions  whose answer affects  public and private employers



            alike.   Although  this precise  question may  not have  been



            decided,  we have  been  very  hesitant  in  closely  related



            contexts  to extend the clear  statement rule beyond its core



            application.   See Gately v. Commonwealth of Massachusetts, 2
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            F.3d 1221, 1230 (1st Cir.  1993); see EEOC v. Commonwealth of
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            Massachusetts, 987 F.2d 64, 68-70 (1st Cir. 1993).
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                 In all events, the meaning of the provision in this case



            is clear enough once the  technical jargon is unraveled.  The
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            statute   adopts  an   equal  cost/equal  benefit   test  for



            differentiations "as permissible" under the cited regulation,



            and  no one claims that the  Commonwealth's flat bar conforms



            to any  equal  cost/equal  benefit test.    Thus,  whether  a
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            particular  equal cost/equal  benefit  differential would  be



            "permissible" under  the regulation does not even arise.  The



            subject  matter  is complex  but complexity  is not  the same



            thing as ambiguity.      Affirmed.
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