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LABOR & EMPLOYMENT LAW — 4/30/08

High Court hears arguments on ADEA burden of proof as to "reasonable factor other than age"

The US Supreme Court recently heard arguments regarding whether an employee alleging a claim under the Age Discrimination in Employment Act (ADEA) will have to bear the burden of persuasion as to his/her employer's defense that an employment practice with a disparate impact on older workers is permissibly based on a "reasonable factor other than age." In the case, Meacham v Knolls Atomic Power Lab, (dkt no 06-1505), 28 discharged employees sued claiming their employer designed and implemented its reduction-in-force (RIF) process to eliminate older employees and that, regardless of intent, the process had a discriminatory impact on ADEA-protected employees. The Court heard arguments in case on April 23, 2008. Justice Stephen G. Breyer did not participate in the arguments.

Plaintiffs' argue "reasonable factors other than age" is an affirmative defense. The employees' lawyer, Kevin K. Russell, argued that the "reasonable factors other than age" provision in the ADEA was intended by Congress to be an affirmative defense that the employer has the burden to prove. That is a sensible approach, Russell said, because employers possess and have access to the information needed to prove their actions were reasonable. Additionally, Russell urged the court to defer to the longstanding position of the Equal Employment Opportunity Commission that employers bear the burden of proving that they relied on a reasonable factor other than age.

The US government also presented arguments in favor of the plaintiff employees. Congress enacted the ADEA against the backdrop that "defendants bear the burden of persuasion on affirmative defenses," Daryl Joseffer, assistant solicitor general, told the court. And Congress made it clear that the statute's provision on reasonable factors other than age is an affirmative defense.

Joseffer advocated a simple two-part test: First, the employee must establish an adverse impact. Second, to avoid liability, the employer must show its business practices were based on reasonable factors other than age, which Joseffer argued is not a high standard to meet.

As a policy matter, Joseffer commented, one could place the burden of persuasion on either party. "The sky is not going to fall either way."

Employer's attorney asserts burden on employees. On behalf of the employer, Seth Waxman advocated the position that employees should bear the burden to prove that an employer's actions were unreasonable (as the court ruled in its 1989 decision in Ward's Cove Packing Co v Atonio (50 EPD ¶39,021). After an employee shows disparate impact, the burden then shifts to the employer to present a business justification for its actions. At that point, Waxman said, the burden should shift to the employee to prove that the employer's actions were not based on reasonable factors other than age.

Background. At trial, a jury found in favor of the employees under the disparate impact theory of liability. The Second Circuit affirmed (85 EPD ¶41,753), finding the employees had established a prima facie case under the ADEA by showing that the subjective decisionmaking involved in the RIF created a disparate impact on ADEA-protected workers, and, notwithstanding the employer's facially legitimate business justification, there was sufficient evidence of an equally effective alternative to the subjective components of the RIF to support ADEA liability.

The Supreme Court vacated the Second Circuit's decision and remanded the case for consideration in light of the Court's March 2005 decision in Smith v City of Jackson (86 EPD ¶41,882). In City of Jackson, the Court held that disparate impact claims are cognizable under the ADEA. However, the scope of ADEA disparate impact claims is narrower than that of Title VII disparate impact claims. Under the Title VII, an employer practice resulting in a disparate impact is permissible only if that practice is job-related and consistent with business necessity (the "business necessity" test). In contrast, under the ADEA, an employer practice resulting in a disparate impact is permissible where the differentiation is based on reasonable factors other than age.

The Second Circuit noted on remand of the Meacham case (88 EPD ¶42,476) that in light of City of Jackson, the analysis in it's earlier holding was "untenable" because "the Supreme Court held that the 'business necessity' test is not applicable in the ADEA context; rather, the appropriate test is for 'reasonableness,' such that the employer is not liable under the ADEA so long as the challenged employment action, in relying on specific non-age factors, constitutes a reasonable means to the employer's legitimate goals."

Rejecting the argument that the "reasonable factors other than age" criteria constitutes an affirmative defense for which the employer should bear the burden of proof, the Second Circuit found that the employer's burden was merely that of producing evidence that the challenged actions were motivated by a legitimate business reason. Accordingly, the Second Circuit held that it is the plaintiff's burden to prove that the factors identified by the employer were not reasonable.

Applying this standard to the case, the Second Circuit found the employer satisfied its burden of producing evidence suggesting that a legitimate business justification motivated its use of subjective assessments in the RIF because these features were routinely used components of personal decisionmaking in general and were appropriate to the circumstances that provoked the RIF. The employees, however, failed to carry their burden of proving unreasonableness because the employer implemented measures to prevent arbitrary decisionmaking by individual managers and to ensure the layoffs satisfied business needs. Thus, the Second Circuit vacated the district court's judgment in favor of the employees and remanded the case with instructions to enter judgment as a matter of law in favor of the employer.

Question presented. The Supreme Court granted certiorari in the case on January 15, 2008, limiting its review to the first question presented in the petition: Whether an employee alleging disparate impact under the ADEA bears the burden of persuasion on the "reasonable factors other than age" defense, as held by the Second Circuit in this case in conflict with the decisions of other circuits and a regulation of the Equal Employment Opportunity Commission.

For more information on this and other topics, consult CCH Employment Practices Guide or CCH Labor Relations.

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