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October 3, 1984


The opinion of the court was delivered by: Aspen, District Judge:


The Equal Employment Opportunity Commission ("EEOC") brought this action against defendants MTC Gear Corporation ("MTC") and Profile Gear Corporation ("Profile"), alleging that defendants have maintained a discriminatory disability benefits policy in violation of Title VII of the Civil Rights Act of 1964. 42 U.S.C. § 2000e et seq. Profile has moved for summary judgment under Fed.R.Civ.P. 56(c). For the reasons stated below, we deny Profile's motion.

Facts and Procedural Posture

Profile's summary judgment motion raises two issues: (1) whether the Supreme Court's decision in Newport News Shipbuilding & Dry Dock Co. v. EEOC, 462 U.S. 669, 103 S.Ct. 2622, 77 L.Ed.2d 89 (1983), should be applied retroactively to the discriminatory employment practices alleged in the complaint; and (2) whether Profile can be held liable under Title VII as a corporate "successor" to MTC.

For now we will only sketch the factual background. We will develop more facts later as they become relevant to the legal arguments. The complaint alleges that both Profile and MTC manufacture gears and other parts for use in motor vehicles. The parties do not dispute that on December 19, 1983, Profile, a new corporation, bought substantially all of MTC's assets from ITT Industrial Credit Company, a secured creditor of MTC.

The substance of the complaint alleges that since 1979 MTC has violated Title VII by imposing special limitations on its coverage of the medical expenses incurred by its male employees, while imposing no such limitation on its coverage of the medical expenses incurred by its female employees for the medical expenses of their spouses. The complaint also alleges that since its birth in January 1984, Profile has continued MTC's discriminatory medical coverage policy. The parties seem to agree that this policy falls within the embrace of Newport News.*fn1 Below we will assume so, without finally deciding the issue, which we leave for a later motion for summary judgment.

The EEOC filed the complaint on May 23, 1984, following an investigation which dates back to 1981. On July 6, 1984, Profile filed its motion for summary judgment. No answer has been filed, and to our knowledge discovery has not begun. Although it is unusual for a defendant to move for summary judgment before answering the complaint (such motions are usually styled as ones to dismiss under Rule 12), we will consider Profile's motion as one under Rule 56. See Fed.R.Civ.P. 56(b) (defendant may, "at any time," move for summary judgment); generally 10 C. Wright, A. Miller & M. Kane, Federal Practice & Procedure, § 2718.

Retroactivity of Newport News

Before reaching the successorship issue, we must decide the threshold issue of whether the Newport News decision should apply retroactively to MTC's alleged disability policy.*fn2 "Generally, a decision which changes existing law or policy is given retroactive effect unless retroactive application would cause `manifest injustice.'" NLRB v. Lyon & Ryan Ford, Inc., 647 F.2d 745, 757 (7th Cir. 1981), cert. denied, 454 U.S. 894, 102 S.Ct. 391, 70 L.Ed.2d 209 (1981), quoting Chevron Oil Co. v. Huson, 404 U.S. 97, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971). The Supreme Court in Chevron created a three-part test to determine whether a civil, non-constitutional precedent should be applied prospectively only:

  (1) Does the decision establish a new principle
      of law, either by (a) overruling clear past
      precedent on which litigants may have relied,
      or (b) deciding an issue of first impression
      whose resolution was not clearly
  (2) Will retrospective application of the rule
      further or retard its operation, considering
      the history of the rule, and its purpose and
  (3) Will retroactivity create substantial
      inequities, i.e., injustice or hardship for
      one of the parties?

404 U.S. at 106-07, 92 S.Ct. at 355; Lyon & Ryan Ford, 647 F.2d at 757. All three parts of the Chevron test must be met to preclude retroactivity; moreover, the Court must presume that a decision will be applied retroactively, and the party opposing retroactivity bears the burden of overcoming the presumption. Lyon & Ryan Ford, 647 F.2d at 757; Valencia v. Anderson Bros. Ford, 617 F.2d 1278, 1288-89 (7th Cir. 1980), rev'd on other grounds, 452 U.S. 205, 101 S.Ct. 2266, 68 L.Ed.2d 783 (1981); Kumrow v. Teamsters General Local No. 200, 579 F. Supp. 393, 395 (E.D.Wis. 1983). We hold that Profile has failed to meet its burden of satisfying the requirements of Chevron, and therefore Newport News may apply retroactively to this case.

Profile argues that Newport News "overruled clear past precedent on which" the defendants "may have relied." On May 9, 1983, the Seventh Circuit decided EEOC v. Joslyn Mfg. and Supply Co., 706 F.2d 1469 (1983), which reached a conclusion opposite to the one in Newport News. The Supreme Court handed down Newport News just forty-two days later, on June 20, 1983, prompting the Seventh Circuit to vacate its earlier holding. 724 F.2d 52 (Dec. 13, 1983). Thus, if Joslyn can be considered "clear past precedent," it achieved that status for only forty-two days. The EEOC argues that Joslyn was not "clear past precedent" because the Court itself knew that the Circuits were split on the issue and the Supreme Court's decision was imminent. 706 F.2d at 1476. We need not decide whether Joslyn was clear past precedent, because even assuming that it is, Profile has failed to prove that it is one "on which the litigants may have relied." Profile concedes it did not exist when Joslyn was decided, so it clearly could not have relied on that case. And Profile has presented no evidence that MTC "may have relied" on Joslyn during the opinion's brief, forty-two day lifetime. The complaint alleges that MTC's policies have continued with no gap from 1979 — well before Joslyn — until now. No evidence suggests that during the forty-two days MTC reassessed its policy and decided to keep it in reliance on Joslyn. Even if such evidence did ...

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