'The Enemy of 40 is 30, Not 50'

The United States Supreme Court recently ruled that reverse age discrimination claims are not cognizable under the Age Discrimination in Employment Act, 29 U.S.C. ' 621 et seq. (ADEA) in General Dynamics Land Systems Inc. v. Cline, 124 S. Ct. 1236 (2/24/04). Writing for a 6-3 majority, Justice Souter concluded that “the enemy of 40 is 30, not 50.” Id. at 1243. What does this mean for employers and employees?

Background

The General Dynamics case arose in 1997 when General Dynamics and one of its unions entered into a collective bargaining agreement that eliminated the company's obligation to provide health insurance benefits during retirement to employees, except for those employees who were then at least 50 years old. A group of employees who were then at least 40 years old, and thus within the ADEA protected class, but less than 50 years old, sued. They contended that they were unlawfully deprived of retirement health insurance benefits that were available to older workers, based solely on their younger age.

After Equal Employment Opportunity Commission (EEOC) efforts at conciliation failed, the case proceeded in a federal district court in Ohio. There, it was dismissed on the grounds that “the ADEA does not protect … the younger against the older.” 98 F. Supp. 2d 846, 848 (N.D. Ohio 2000).

The Sixth Circuit then reversed, holding that the ADEA prohibition against discrimination “because of … age” ((29 U.S.C. '623(a)(i)) was “so clear on its face that if Congress had meant to limit its coverage to protect only the older worker against the younger, it would have said so.” 296 F.3d 466, 472 (6th Cir. 2002). The Sixth Circuit relied on an EEOC interpretative regulation in which the EEOC opined that if two applicants within the ADEA protected class (one age 42 and one age 52) are competing for the same job, “the employer may not lawfully turn down either one on the basis of age, but must make such decision on the basis of some other factor.”

The Sixth Circuit's decision created a conflict among the circuits as to whether “reverse age discrimination” claims, in which one or more relatively younger (but over age 40) individuals claim that they were unfavorably treated compared to their elders, are cognizable under the ADEA. The First and Seventh Circuits had previously concluded that reverse age discrimination claims were not cognizable.

The Majority's Opinion

Justice Souter, writing for the majority, again signaled the High Court's willingness to treat age discrimination claims differently in some respects from discrimination claims based on race, sex, or some other prohibited characteristic. It has long been established that reverse race discrimination claims, in which white employees or applicants contend that they were unfavorably treated compared with minorities, may be brought under Title VII, 42 U.S.C. ' 2000-e et seq. Reverse sex discrimination claims, in which male employees or applicants contend that they were unfavorably treated compared to females, are likewise cognizable under Title VII. The General Dynamics majority opinion noted, however, that “Congress chose not to include age within discrimination forbidden by Title VII … being aware that there were legitimate reasons as well as invidious ones for making employment decisions on age.” 124 S. Ct. at 1240.

The majority then delved into an extensive analysis of the legislative history of the ADEA to bolster its conclusion that, in enacting the ADEA separately from Title VII, Congress intended only to prohibit discrimination against the older, in favor of the younger. Id. at 1241-1243. The majority then reiterated its view that the ADEA protected class of those over 40 is entitled to protection only “against preference for their juniors,” and not “favoritism towards seniors.” Id. at 1243.

The EEOC had supported the plaintiff-employees who were foreclosed from receiving retirement health insurance benefits based on their age. Among other points, the EEOC relied on its regulatory guidance that neither a relatively older nor a relatively younger applicant within the ADEA protected class may be preferred against the other on the basis of age. 29 C.F.R. '1625.2(a). The majority concluded that the EEOC's view was not entitled to any degree of deference because the EEOC was “clearly wrong.” 124 S. Ct. at 1249. The majority thus rejected the EEOC's statutory interpretation in favor of its own view that the ADEA prohibition on discrimination “because of age” was “structured and manifestly intended” only to “protect the older from arbitrary favor for the younger.” Id.

In sum, the majority concluded: “We see the text, structure, purpose and history of the ADEA, along with its relationship to other federal statutes, as showing that the statute does not mean to stop an employer from favoring an older employee over a younger one.” Id. at 1249-1250.

The Dissent

Separate dissenting opinions were authored by Justice Scalia, and by Justice Thomas, joined by Justice Kennedy. Justice Scalia, in a terse opinion, would simply have deferred to the EEOC's interpretation as a reasonable construction of the ADEA. 124 S. Ct. at 1249.

Justice Thomas penned a longer dissent, in which he opined that the plain language of the ADEA's prohibition on discrimination because of age “clearly allows for suits brought by the relatively young when discriminated against in favor of the relatively old.” Id. at 1250. Justice Thomas further concluded that “in light of the Court's opinion today, it appears that this Court has been treading down the wrong path with respect to Title VII since at least 1976,” by permitting reverse sex and reverse race discrimination claims. Id. at 1254. Justice Thomas accused the majority of engaging in result-oriented jurisprudence in concluding that reverse age discrimination claims are not cognizable under the ADEA. Id. at 1249.

Effect of the Court's Ruling

So what is the result that the majority has achieved in the General Dynamics case? The most evident and immediate effect is that employers may offer special protection to older workers, even at the expense of relatively younger workers within the ADEA protected class. The genesis of this case was General Dynamics' effort to back itself out of a retirement health insurance benefits obligation that was deemed prohibitively expensive, while shielding those workers who were nearing retirement age from the consequences of its decision. Under General Dynamics, employers are now free to do exactly what the employer in that case did — to create different tiers of entitlement to employment or retirement benefits based on age, with special protection for relatively older workers. Workers over 40, many of whom may have invested many years of service with the employer, may be divested or deprived of benefits (assuming compliance with ERISA or any other applicable laws) which may become restricted only to older employees. The employer, moreover, is free to draw the line, for purposes of disparate treatment in favor of the old, wherever it wishes to — at 50, 60, or 70, for example.

In sum, a disparate treatment reverse age discrimination claim cannot be brought under the ADEA. It remains to be seen whether the federal and state courts in New York will reach a similar conclusion with respect to claims brought under the New York State Human Rights Law, N.Y. Executive Law '296 (HRL). Because HRL claims are usually analyzed in the same manner as their federal counterparts, however, this result seems likely.

A Signal on ADEA Disparate Impact Claims?

The United States Supreme Court has not yet decided whether a disparate impact claim of age discrimination may be brought under the ADEA. Unlike a disparate treatment claim, a disparate impact claim may be proven without evidence of the employer's subjective intent to discriminate. A disparate impact claim challenges a neutral employment criterion, policy or practice which has a disproportionate adverse impact on a protected class (under the ADEA, persons over 40). A disparate impact claim focuses not on the treatment of one individual, versus another, but on the adverse effect of the challenged employment criterion, practice or policy on the protected group of which the plaintiff is a member. e.g., Smith v. Xerox Corp., 196 F.3d 358, 364 (2d Cir. 1999); Lowe v. Comack Union Free School Dist, 886 F.2d 1364, 1369-70, 1373 (2d Cir. 1989), cert. denied, 494 U.S. 1026 (1990).

The circuits are divided as to whether ADEA claims may be predicated upon a disparate impact theory. The Second, Eighth, and Ninth Circuits permit ADEA suits based upon a disparate impact claim. The First, Third, Fifth, Sixth, Seventh, Tenth, and Eleventh Circuits, now comprising a majority of the circuits, hold that disparate impact claims are not cognizable under the ADEA. See, e.g., Smith v. City of Jackson, 351 F.3d 183, 187 (5th Cir. 2003) (collecting cases).

The Supreme Court had previously granted certiorari to review the Eleventh Circuit's decision on this point. Adams v. Florida Power Corp., 255 F.3d 1322 (11th Cir. 2001). After the case had been fully briefed and argued, however, the Court dismissed the case with a one-line opinion that certiorari had been “improvidently granted.” 122 S. Ct. 1290 (2002).

On that front, employment lawyers in this State continue to await the Second Circuit's decision in Meacham v. Knolls Atomic Power Laboratory, (KAPL) 185 F. Supp. 2d 193 (N.D.N.Y 2002), appeal pending. The defendant in that case has invited the Second Circuit to overrule a long line of its cases holding that disparate impact claims are available under the ADEA. The KAPL case, when decided, may potentially warrant review by the Supreme Court, thus giving the Court an opportunity to finally resolve the availability of disparate impact claims under the ADEA.

In the meantime, however, the High Court has on a number of occasions, most recently in the General Dynamics case, signaled its willingness to treat ADEA claims differently from claims of discrimination arising under Title VII. In Hazen Paper Co. v. Biggins, 507 U.S. 604, 113 S. Ct. 1701 (1993), for example, the Court concluded that the ADEA is not violated when an employee is fired because his pension is about to vest (although such an action might give rise to a cause of action under ERISA or other statutes.) The Court noted that many factors that are closely correlated with age, such as seniority or higher salaries, are “analytically distinct” from age. Id. at 611-613, 113 S. Ct. at 1706-1707. Disparate treatment based on factors such as seniority or high salary therefore will not violate the ADEA. The Court's opinion in Hazen Paper also suggests that a disparate impact claim predicated on a neutral employment criteria correlated with age (such as a layoff targeted at highly compensated employees) may not give rise to a disparate impact claim under the ADEA.

Regardless of the result under federal law, age discrimination disparate impact claims may not be available under the New York State HRL. At least one appellate court in this state has held that disparate impact age discrimination claims are not cognizable under the HRL because of the broad scope of the protected class. Bohlke v. G.E., 293 A.D.2d 198 (3d Dep't 2002); DiMascio v. G.E., 293 A.D.2d 842 (3d Dep't 2002). Unlike the ADEA, the HRL extends the protected class for purposes of an age discrimination claim to all persons over age 18. N.Y. Exec. Law '296(3-a)(a). The broad scope of the protected class under the HRL makes it impossible to present a statistical comparison of the effect of the challenged neutral employment policy, practice or criteria on those within the protected class, and those outside the protected class. This may foreclose the ability to prove a disparate impact claim under the HRL. Bohlke, 293 A.D.2d at 200.

Conclusion

In the General Dynamics case, the Court again treated ADEA claims as analytically distinct from Title VII claims, based on differences in the language and legislative history of the two statutes. If (or when) the Supreme Court is again presented with the question of whether disparate impact claims are cognizable under the ADEA, the General Dynamics case may serve as another guidepost for those advocating that such claims are not cognizable under the ADEA.

The United States Supreme Court recently ruled that reverse age discrimination claims are not cognizable under the Age Discrimination in Employment Act, 29 U.S.C. ' 621 et seq. (ADEA) in General Dynamics Land Systems Inc. v. Cline , 124 S. Ct. 1236 (2/24/04). Writing for a 6-3 majority, Justice Souter concluded that “the enemy of 40 is 30, not 50.” Id. at 1243. What does this mean for employers and employees?

Background

The General Dynamics case arose in 1997 when General Dynamics and one of its unions entered into a collective bargaining agreement that eliminated the company's obligation to provide health insurance benefits during retirement to employees, except for those employees who were then at least 50 years old. A group of employees who were then at least 40 years old, and thus within the ADEA protected class, but less than 50 years old, sued. They contended that they were unlawfully deprived of retirement health insurance benefits that were available to older workers, based solely on their younger age.

After Equal Employment Opportunity Commission (EEOC) efforts at conciliation failed, the case proceeded in a federal district court in Ohio. There, it was dismissed on the grounds that “the ADEA does not protect … the younger against the older.” 98 F. Supp. 2d 846, 848 (N.D. Ohio 2000).

The Sixth Circuit then reversed, holding that the ADEA prohibition against discrimination “because of … age” ((29 U.S.C. '623(a)(i)) was “so clear on its face that if Congress had meant to limit its coverage to protect only the older worker against the younger, it would have said so.” 296 F.3d 466, 472 (6th Cir. 2002). The Sixth Circuit relied on an EEOC interpretative regulation in which the EEOC opined that if two applicants within the ADEA protected class (one age 42 and one age 52) are competing for the same job, “the employer may not lawfully turn down either one on the basis of age, but must make such decision on the basis of some other factor.”

The Sixth Circuit's decision created a conflict among the circuits as to whether “reverse age discrimination” claims, in which one or more relatively younger (but over age 40) individuals claim that they were unfavorably treated compared to their elders, are cognizable under the ADEA. The First and Seventh Circuits had previously concluded that reverse age discrimination claims were not cognizable.

The Majority's Opinion

Justice Souter, writing for the majority, again signaled the High Court's willingness to treat age discrimination claims differently in some respects from discrimination claims based on race, sex, or some other prohibited characteristic. It has long been established that reverse race discrimination claims, in which white employees or applicants contend that they were unfavorably treated compared with minorities, may be brought under Title VII, 42 U.S.C. ' 2000-e et seq. Reverse sex discrimination claims, in which male employees or applicants contend that they were unfavorably treated compared to females, are likewise cognizable under Title VII. The General Dynamics majority opinion noted, however, that “Congress chose not to include age within discrimination forbidden by Title VII … being aware that there were legitimate reasons as well as invidious ones for making employment decisions on age.” 124 S. Ct. at 1240.

The majority then delved into an extensive analysis of the legislative history of the ADEA to bolster its conclusion that, in enacting the ADEA separately from Title VII, Congress intended only to prohibit discrimination against the older, in favor of the younger. Id. at 1241-1243. The majority then reiterated its view that the ADEA protected class of those over 40 is entitled to protection only “against preference for their juniors,” and not “favoritism towards seniors.” Id. at 1243.

The EEOC had supported the plaintiff-employees who were foreclosed from receiving retirement health insurance benefits based on their age. Among other points, the EEOC relied on its regulatory guidance that neither a relatively older nor a relatively younger applicant within the ADEA protected class may be preferred against the other on the basis of age. 29 C.F.R. '1625.2(a). The majority concluded that the EEOC's view was not entitled to any degree of deference because the EEOC was “clearly wrong.” 124 S. Ct. at 1249. The majority thus rejected the EEOC's statutory interpretation in favor of its own view that the ADEA prohibition on discrimination “because of age” was “structured and manifestly intended” only to “protect the older from arbitrary favor for the younger.” Id.

In sum, the majority concluded: “We see the text, structure, purpose and history of the ADEA, along with its relationship to other federal statutes, as showing that the statute does not mean to stop an employer from favoring an older employee over a younger one.” Id. at 1249-1250.

The Dissent

Separate dissenting opinions were authored by Justice Scalia, and by Justice Thomas, joined by Justice Kennedy. Justice Scalia, in a terse opinion, would simply have deferred to the EEOC's interpretation as a reasonable construction of the ADEA. 124 S. Ct. at 1249.

Justice Thomas penned a longer dissent, in which he opined that the plain language of the ADEA's prohibition on discrimination because of age “clearly allows for suits brought by the relatively young when discriminated against in favor of the relatively old.” Id. at 1250. Justice Thomas further concluded that “in light of the Court's opinion today, it appears that this Court has been treading down the wrong path with respect to Title VII since at least 1976,” by permitting reverse sex and reverse race discrimination claims. Id. at 1254. Justice Thomas accused the majority of engaging in result-oriented jurisprudence in concluding that reverse age discrimination claims are not cognizable under the ADEA. Id. at 1249.

Effect of the Court's Ruling

So what is the result that the majority has achieved in the General Dynamics case? The most evident and immediate effect is that employers may offer special protection to older workers, even at the expense of relatively younger workers within the ADEA protected class. The genesis of this case was General Dynamics' effort to back itself out of a retirement health insurance benefits obligation that was deemed prohibitively expensive, while shielding those workers who were nearing retirement age from the consequences of its decision. Under General Dynamics, employers are now free to do exactly what the employer in that case did — to create different tiers of entitlement to employment or retirement benefits based on age, with special protection for relatively older workers. Workers over 40, many of whom may have invested many years of service with the employer, may be divested or deprived of benefits (assuming compliance with ERISA or any other applicable laws) which may become restricted only to older employees. The employer, moreover, is free to draw the line, for purposes of disparate treatment in favor of the old, wherever it wishes to — at 50, 60, or 70, for example.

In sum, a disparate treatment reverse age discrimination claim cannot be brought under the ADEA. It remains to be seen whether the federal and state courts in New York will reach a similar conclusion with respect to claims brought under the New York State Human Rights Law, N.Y. Executive Law '296 (HRL). Because HRL claims are usually analyzed in the same manner as their federal counterparts, however, this result seems likely.

A Signal on ADEA Disparate Impact Claims?

The United States Supreme Court has not yet decided whether a disparate impact claim of age discrimination may be brought under the ADEA. Unlike a disparate treatment claim, a disparate impact claim may be proven without evidence of the employer's subjective intent to discriminate. A disparate impact claim challenges a neutral employment criterion, policy or practice which has a disproportionate adverse impact on a protected class (under the ADEA, persons over 40). A disparate impact claim focuses not on the treatment of one individual, versus another, but on the adverse effect of the challenged employment criterion, practice or policy on the protected group of which the plaintiff is a member. e.g., Smith v. Xerox Corp. , 196 F.3d 358, 364 (2d Cir. 1999); Lowe v. Comack Union Free School Dist , 886 F.2d 1364, 1369-70, 1373 (2d Cir. 1989), cert. denied, 494 U.S. 1026 (1990).

The circuits are divided as to whether ADEA claims may be predicated upon a disparate impact theory. The Second, Eighth, and Ninth Circuits permit ADEA suits based upon a disparate impact claim. The First, Third, Fifth, Sixth, Seventh, Tenth, and Eleventh Circuits, now comprising a majority of the circuits, hold that disparate impact claims are not cognizable under the ADEA. See, e.g., Smith v. City of Jackson , 351 F.3d 183, 187 (5th Cir. 2003) (collecting cases).

The Supreme Court had previously granted certiorari to review the Eleventh Circuit's decision on this point. Adams v. Florida Power Corp., 255 F.3d 1322 (11th Cir. 2001). After the case had been fully briefed and argued, however, the Court dismissed the case with a one-line opinion that certiorari had been “improvidently granted.” 122 S. Ct. 1290 (2002).

On that front, employment lawyers in this State continue to await the Second Circuit's decision in Meacham v. Knolls Atomic Power Laboratory, (KAPL) 185 F. Supp. 2d 193 (N.D.N.Y 2002), appeal pending. The defendant in that case has invited the Second Circuit to overrule a long line of its cases holding that disparate impact claims are available under the ADEA. The KAPL case, when decided, may potentially warrant review by the Supreme Court, thus giving the Court an opportunity to finally resolve the availability of disparate impact claims under the ADEA.

In the meantime, however, the High Court has on a number of occasions, most recently in the General Dynamics case, signaled its willingness to treat ADEA claims differently from claims of discrimination arising under Title VII. In Hazen Paper Co. v. Biggins , 507 U.S. 604, 113 S. Ct. 1701 (1993), for example, the Court concluded that the ADEA is not violated when an employee is fired because his pension is about to vest (although such an action might give rise to a cause of action under ERISA or other statutes.) The Court noted that many factors that are closely correlated with age, such as seniority or higher salaries, are “analytically distinct” from age. Id. at 611-613, 113 S. Ct. at 1706-1707. Disparate treatment based on factors such as seniority or high salary therefore will not violate the ADEA. The Court's opinion in Hazen Paper also suggests that a disparate impact claim predicated on a neutral employment criteria correlated with age (such as a layoff targeted at highly compensated employees) may not give rise to a disparate impact claim under the ADEA.

Regardless of the result under federal law, age discrimination disparate impact claims may not be available under the New York State HRL. At least one appellate court in this state has held that disparate impact age discrimination claims are not cognizable under the HRL because of the broad scope of the protected class. Bohlke v. G.E., 293 A.D.2d 198 (3d Dep't 2002); DiMascio v. G.E. , 293 A.D.2d 842 (3d Dep't 2002). Unlike the ADEA, the HRL extends the protected class for purposes of an age discrimination claim to all persons over age 18. N.Y. Exec. Law '296(3-a)(a). The broad scope of the protected class under the HRL makes it impossible to present a statistical comparison of the effect of the challenged neutral employment policy, practice or criteria on those within the protected class, and those outside the protected class. This may foreclose the ability to prove a disparate impact claim under the HRL. Bohlke, 293 A.D.2d at 200.

Conclusion

In the General Dynamics case, the Court again treated ADEA claims as analytically distinct from Title VII claims, based on differences in the language and legislative history of the two statutes. If (or when) the Supreme Court is again presented with the question of whether disparate impact claims are cognizable under the ADEA, the General Dynamics case may serve as another guidepost for those advocating that such claims are not cognizable under the ADEA.