Employment-First Circuit Rules That Firing Is Permitted By Collective Bargaining Agreement

In Cameron v. Idearc Media Corp., No. 11-2186 (1st Cir. 2012), the plaintiffs are former directory-advertising sales representatives in the Premise Sales unit of defendant, Idearc Media Corporation (“Idearc “). Each was discharged in July 2007. Idearc says they were let go for poor performance. The plaintiffs allege that the terminations were motivated by age discrimination in violation of the ADEA and a desire to negate pension benefits in violation of section 510 of ERISA. The plaintiffs also advance a retaliation claim under section 510 of ERISA. The district court rejected all of the plaintiffs’ claims. The plaintiffs appealed to the Sixth Circuit Court of Appeals (the “Court”). The Court upheld the district court’s ruling.

In this case, the applicable collective bargaining agreement (the “CBA”) authorized Idearc to terminate under-performing employees. Under the CBA, employees were divided into three “channels”–Premise Sales, Senior Telephone Sales, and Telephone Sales–which were subdivided into seven “peer groups.” Employees in each peer group were ranked within six-month periods by “percent net gain”–which was calculated by comparing a salesperson’s revenues against the revenue produced by his accounts in the previous year. Until January 2005, the bottom 30th percentile of each peer group in any semester “failed” that semester unless the employee met an alternative company-set net gain objective. In January 2005, Idearc raised the “failing” figure to the 70th percentile and also lowered the alternative net gain objective target, making the latter figure much more important. The CBA allowed Idearc to terminate employees failing 4 out of 7 consecutive semesters.

The plaintiffs each qualified for termination under the CBA, as of the end of the first semester in 2007. Each plaintiff was over 40 years old at the time of termination, and each had between 18 and 28 years of service at Idearc. Two of the plaintiffs were about two years away from qualifying for service pensions that respectively vested after 20 and 30 years of service; a third was about 4.5 years from his service pension; and a fourth was 7 years from his service pension and less than 2 years from his deferred vested pension.

The Court found that the under-performing test in the CBA, which gave Idearc the grounds for terminating the plaintiffs, showed a legitimate business reason for the terminations. As such, the Court concluded that the plaintiffs’ claims fail.