Ruling May Increase Age Bias Suits

Although a 5-3 majority answered the question in favor of alleged victims of age discrimination, civil rights groups, the AARP and others, the victory in Smith was a Pyrrhic one, said some lawyers for employees and employers.

“I think this is a ghastly and sad decision,” said employees' attorney Debra Katz of Washington's Bernabei & Katz. Based on the High Court's reasoning, she added, “I don't see how a plaintiff can prevail on a disparate impact theory.” While he wouldn't say plaintiffs could never win, management attorney Vincent Alfieri of Bryan Cave's New York office, and head of the firm's labor and employment practice, said: “On the one hand, it is important the Court has said plaintiffs in age discrimination cases may use the disparate impact theory. On the other hand, the Court was very careful to recognize significant relief for employers.”

The Case

In Smith, police officers and public safety dispatchers sued Jackson, MS, charging that a pay plan discriminated against older workers by giving substantially larger salary increases to officers with 5 or fewer years of service. Writing for the majority, Justice John Paul Stevens said that except for substitution of the word “age” for “race, color, religion, sex or national origin,” the language of the bar against discrimination in the ADEA is identical to the bar in Title VII of the Civil Rights Act of 1964.

“In determining whether the ADEA authorizes disparate-impact claims, we begin with the premise that when Congress uses the same language in two statutes having similar purposes, particularly when one is enacted shortly after the other, it is appropriate to presume that Congress intended that text to have the same meaning in both statutes,” he wrote.

He then found a “precedent of compelling importance” in Griggs v. Duke Power Co., 401 U.S. 424 (1971), in which the High Court first recognized the disparate impact theory when interpreting Title VII. But the majority said the scope of the disparate impact liability is not as broad under the ADEA as it is under Title VII — the source of plaintiffs' lawyers' unhappiness with the ruling and management lawyers' contentment. First, the statute's language, Stevens explained, permits discrimination when the “differentiation” is based on “reasonable factors other than age.”

And second, in 1991, when Congress amended the 1964 Civil Rights Act to overturn a series of Supreme Court employment law rulings in 1989 adverse to employees, Congress amended only Title VII, not the ADEA, to reverse the effect of Wards Cove Packing Co. v. Atonio, 490 U.S. 642.

“Even if [there are] disparate impact-bad numbers, Wards Cove said the plaintiff had to show what caused the numbers,” said management attorney Lawrence Lorber of Proskauer Rose's Washington office. “And for employers, Wards Cove said they no longer had to prove their action was a business necessity, only that it was reasonable,” he added. “That's a huge difference in the standard for employers' defense — a difference you can drive a Humvee through.”

But before the High Court ruling, plaintiffs had “nothing,” said Laurie McCann, a staff attorney with AARP. “In our favor, the Court recognized the sky was not going to fall,” she said. “When there is a legitimate and good disparate impact case, plaintiffs will no longer have to look to state law or give up their claim knowing it is futile. They can bring it to federal court and face an uphill battle, but the door is open.”

Federal courts most likely will see an increase in age discrimination cases with so-called disparate impact claims, but employers will be able defend themselves successfully in many of them as a result of a recent U.S. Supreme Court decision. The High Court on March 30 held that disparate impact claims — those that allege that a facially neutral policy adversely affects a protected class — can be brought under the federal Age Discrimination in Employment Act (ADEA). Smith v. City of Jackson, No. 03-1160.

The issue of whether the ADEA encompassed disparate impact claims had split the federal circuits badly since the justices suggested in a footnote in a 1993 decision that it was still an open question under the age law, unlike most civil rights laws. Hazen Paper Co. v. Biggins , 507 U.S. 604.

A Pyrrhic Victory?

Although a 5-3 majority answered the question in favor of alleged victims of age discrimination, civil rights groups, the AARP and others, the victory in Smith was a Pyrrhic one, said some lawyers for employees and employers.

“I think this is a ghastly and sad decision,” said employees' attorney Debra Katz of Washington's Bernabei & Katz. Based on the High Court's reasoning, she added, “I don't see how a plaintiff can prevail on a disparate impact theory.” While he wouldn't say plaintiffs could never win, management attorney Vincent Alfieri of Bryan Cave's New York office, and head of the firm's labor and employment practice, said: “On the one hand, it is important the Court has said plaintiffs in age discrimination cases may use the disparate impact theory. On the other hand, the Court was very careful to recognize significant relief for employers.”

The Case

In Smith, police officers and public safety dispatchers sued Jackson, MS, charging that a pay plan discriminated against older workers by giving substantially larger salary increases to officers with 5 or fewer years of service. Writing for the majority, Justice John Paul Stevens said that except for substitution of the word “age” for “race, color, religion, sex or national origin,” the language of the bar against discrimination in the ADEA is identical to the bar in Title VII of the Civil Rights Act of 1964.

“In determining whether the ADEA authorizes disparate-impact claims, we begin with the premise that when Congress uses the same language in two statutes having similar purposes, particularly when one is enacted shortly after the other, it is appropriate to presume that Congress intended that text to have the same meaning in both statutes,” he wrote.

He then found a “precedent of compelling importance” in Griggs v. Duke Power Co. , 401 U.S. 424 (1971), in which the High Court first recognized the disparate impact theory when interpreting Title VII. But the majority said the scope of the disparate impact liability is not as broad under the ADEA as it is under Title VII — the source of plaintiffs' lawyers' unhappiness with the ruling and management lawyers' contentment. First, the statute's language, Stevens explained, permits discrimination when the “differentiation” is based on “reasonable factors other than age.”

And second, in 1991, when Congress amended the 1964 Civil Rights Act to overturn a series of Supreme Court employment law rulings in 1989 adverse to employees, Congress amended only Title VII, not the ADEA, to reverse the effect of Wards Cove Packing Co. v. Atonio , 490 U.S. 642.

“Even if [there are] disparate impact-bad numbers, Wards Cove said the plaintiff had to show what caused the numbers,” said management attorney Lawrence Lorber of Proskauer Rose's Washington office. “And for employers, Wards Cove said they no longer had to prove their action was a business necessity, only that it was reasonable,” he added. “That's a huge difference in the standard for employers' defense — a difference you can drive a Humvee through.”

But before the High Court ruling, plaintiffs had “nothing,” said Laurie McCann, a staff attorney with AARP. “In our favor, the Court recognized the sky was not going to fall,” she said. “When there is a legitimate and good disparate impact case, plaintiffs will no longer have to look to state law or give up their claim knowing it is futile. They can bring it to federal court and face an uphill battle, but the door is open.”