Friday, April 01, 2005

ABA Journal E-Report, April 1, 2005. Friday

IMPACT OR INTENTSupreme Court Ruling Widens Path for Age Bias Suits
BY DAVID L. HUDSON JR.

Employees have a new avenue of relief for employment discrimination claims thanks to a decision handed down Wednesday by the U.S. Supreme Court. In Smith v. City of Jackson, a divided court resolved a circuit split and announced it would now allow plaintiffs to bring disparate impact causes of action under the federal Age Discrimination in Employment Act.
In employment law, disparate impact claims address employer actions that, while appearing facially neutral, result in a discriminatory impact on a protected class. An example of this would be a policy that required all employees to be a certain height or taller. While the policy might seem fair because it is evenly applied to all employees, its enforcement might discriminate against women, a legally protected class. Unlike in disparate treatment claims, an employer need not act with discriminatory animus to be liable.

Disparate impact claims have been recognized under Title VII since 1971, but the court had until this week put off deciding whether to green-light such actions under the ADEA as well.
The case before the high court involved age discrimination claims by about 30 police officers and public safety dispatchers in Jackson, Miss., who alleged the city’s performance pay plan discriminated against older workers. They advanced both disparate treatment and disparate impact claims under the ADEA. They argued that since the ADEA’s text was nearly identical with Title VII, the disparate impact claim was valid.

The city countered that the policy was not designed to discriminate on the basis of age; rather, the policy’s purpose was to bring its entry-level salaries in line with salaries offered by police departments in surrounding areas. The city also focused on a provision of the ADEA not included in Title VII that permits employers to engage in otherwise prohibited conduct if their reasons are "based on reasonable factors other than age."

Plaintiffs had lost on both claims at the federal district level. A three-judge panel of the New Orleans-based 5th U.S. Circuit Court of Appeals had reinstated the disparate treatment claim but rejected the disparate impact claim, finding such a theory inapplicable under the ADEA.
Although the high court ultimately decided against the officers, the justices voted 5-3 to allow disparate impact claims under the ADEA. (The chief justice did not participate.)
Justice John Paul Stevens, writing for the majority, seized on text in the ADEA that stated an employer may not "limit, segregate or classify his employees in any way which would ... adversely affect his status as an employee, because of such individual’s age." He emphasized the "adversely affect" phrase in his reasoning that the law allowed disparate impact claims.
The opinion rejected the city’s argument that the ADEA’s reasonable-factor-other-than-age provision shows that disparate impact claims are not allowed. Instead, Stevens determined that provision actually supported the bringing of such claims. Stevens also noted that both the Department of Labor and the EEOC followed such an interpretation, having "consistently interpreted the ADEA to authorize relief on a disparate impact theory."

Ultimately, Stevens rejected the officers’ disparate impact claims, finding that the city’s pay plan was advanced for a reasonable factor other than age–—to increase the salaries of recently hired employees to compete with surrounding areas.

Justice Antonin Scalia supported the plurality opinion’s deference to the EEOC in his concurring opinion. "This is an absolutely classic case for deference to agency interpretation," he wrote.
Although Scalia has deferred to the EEOC’s judgment before, the decision to allow these types of claims wasn’t a sure thing. "The decision is somewhat surprising based on some of the justices’ comments in the past," says employment law expert Lawrence Rosenthal, an assistant professor at Northern Kentucky University’s Salmon P. Chase College of Law. These comments, he says, "suggested that the court would come out on the other side of this issue."

Now that the court has ruled, lawyers on both sides of the aisle have to put it in the context of their practices. For Thomas C. Goldstein, the Washington D.C.-based attorney who argued the officers’ case, it’s a good thing. Having the option to file a disparate impact claim under the ADEA, he says, "is a very valuable tool for older employees, who frequently lack ‘smoking gun’ evidence of discrimination."

Michael Evan Gold, a law professor at Cornell University’s School of Industrial and Labor Relations, agrees. "It was a victory in the war for older people," says Gold, who wrote an amicus brief for Cornell’s chapter of the American Association of University Professors in support of the officers. "It is important to older workers to be able to prove that practices with a disparate impact on them are illegal."
Understandably, defense lawyers were not so enthusiastic. "The court has been reluctant to extend disparate impact beyond Title VII, and it is unfortunate that the court has chosen to do so for ADEA claims," says John H. Findley, an attorney with the Pacific Legal Foundation who filed an amicus brief supporting the city. "There are a lot of problems with extending disparate impact claims to the ADEA. The disparate impact theory is subject to abuse and can be counterproductive by encouraging employers to adopt surreptitious quotas."
"The decision will definitely have negative ramifications, including more lawsuits against employers," says Ann Elizabeth Reesman, general counsel for the Equal Employment Advisory Council, which filed an amicus brief in support of the city of Jackson.
Reesman believes employers are likely to successfully defend against these claims, just as the city of Jackson did. Nevertheless, she says, "that is cold comfort to employers who still have to defend this type of litigation."

©2005 ABA Journal