Appeals Court Upholds Dismissal of ADEA Disparate-Impact Claim

Takeaway: A policy that affords a worker in violation of company regulations a last chance to keep their job is not necessarily targeting older workers. In this case, the employee failed to provide a factual basis for demonstrating that any statistical disparities in workers’ treatment were due to age discrimination.

The 3rd U.S. Circuit Court of Appeals affirmed a judgment in favor of a Pennsylvania-based railroad company on an age discrimination claim under the Age Discrimination in Employment Act (ADEA) made by an employee who worked for the company eight years before he was terminated.

The 41-year-old worker alleged he was targeted by his supervisor under a company plan to cut costs that, in part, discriminated against older employees by imposing “sham workplace violations” and then pressuring them to sign last-chance agreements.

In exchange for continued employment during a probationary period, a last-chance agreement requires an employee to waive formal disciplinary proceedings.

The 3rd Circuit took up the worker’s appeal from the district court’s dismissal in favor of his employer. The lower court cited a failure to allege facts of an employer policy that surreptitiously promoted age discrimination or disparately impacted workers over the age of 40.

In 2016, after calling his supervisor a “jagoff,” the plaintiff signed a last-chance agreement to keep his job rather than face a hearing and immediately be fired for insubordination. The terms—in effect for three years—included probation and an assessment of 60 demerits.

Subsequently, the employee claimed, his supervisor retaliated against him with micromanagement, surveillance, short-staffing him on shifts, missed meal periods and lack of headlamp batteries. Yet younger employees in similar circumstances did not face such hardships, according to the worker.

In 2018, the employee—while still on probation—worked on a train crewed by a younger driver that erroneously ran through a switch. While the driver merely received demerits and kept his job, the older worker was charged with multiple violations and terminated. The employer justified this decision under the terms of his pre-existing last-chance agreement.

The fired worker sued the company, alleging that his termination was unlawfully discriminatory because of his age.

The lower court found in favor of the company by dismissing the railroad worker’s claims under the ADEA because no factual allegations appeared in support of the disparate-impact complaint.

Before addressing the merits of the worker’s claims under the ADEA, the 3rd Circuit first determined whether the Railway Labor Act’s (RLA) mandatory arbitral mechanism for a “minor dispute” under the respective collective bargaining agreement (CBA) precluded that statutory application.

The circuit court held that because the worker’s claims arose under a federal statute—the ADEA—and a decision could be based on “purely factual allegations about the employee’s actions and the railroad’s conduct,” an interpretation of the CBA was not needed to decide the merits of the case.

Therefore, the claims were not precluded by the RLA for consideration under the ADEA.

Next, the circuit court turned to the age discrimination claim. Under the ADEA, an employer is acting unlawfully if it discharges or otherwise discriminates “against any individual with respect to his compensation, terms, conditions or privileges of employment, because of such individual’s age.”

A case of disparate-impact age discrimination under the ADEA must be established by: 1) identifying a specific, facially neutral policy, and 2) providing statistical evidence that the policy caused a significant age-based disparity in its application.

Although the worker’s complaint alleged a “statistically significant impact” of any disparities in terms of his employer’s treatment of workers, this statement was not supported with facts in evidence and, thus, was conclusory and properly discounted, the circuit court affirmed.

The 3rd Circuit also held that the lower court’s citation of cases decided at the summary judgment stage did not misapply the motion-to-dismiss standard when it properly looked to cases decided on a different procedural posture for guidance.

Finally, because the plaintiff had amended his complaint twice with no effort to correct it yet again, the district court did not abuse its discretion by dismissing the complaint with prejudice.

Stouffer v. Union Railroad Co., 3rd Cir., No. 22-1680 (Oct. 26, 2023).

Anne Woodworth, J.D., is a freelance writer in Laurel, Md.