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A subgroup of employees ages 50 and older can bring an Age Discrimination in Employment Act (ADEA) claim that they were disfavored relative to younger employees—even younger employees who were over 40 years old—the 3rd U.S. Circuit Court of Appeals has ruled.
Pittsburgh Glass Works LLC (PGW) manufactures automotive glass in Harmarville, Pa. In 2008, the automobile industry began to falter. PGW engaged in several reductions in force (RIFs) to offset deteriorating sales. One RIF occurred on March 31, 2009, and resulted in the termination of approximately 100 salaried employees. Individual unit directors had broad discretion in selecting whom to terminate. PGW did not train those directors in how to implement the RIF. Nor did PGW employ any written guidelines or policies, conduct any disparate impact analysis, review prospective RIF terminees with counsel, or document why any particular employee was selected for inclusion in the RIF.
Seven employees (Rudolph Karlo, William Cunningham, Jeffrey Marietti, David Meixelberger, Mark McLure, Benjamin Thompson and Richard Csukas) who worked in PGW's Manufacturing Technology Division were terminated as part of the March 2009 RIF by their supervisor, Gary Cannon. Each was over 50 years old at the time. In January 2010, the employees filed charges of age discrimination with the Equal Employment Opportunity Commission (EEOC). After the EEOC investigation, they filed a collective action lawsuit in federal court, claiming:
[SHRM members-only HR Q&A: What criteria should be used in selecting employees for layoff?]
The district court granted conditional certification of the collective action consisting of employees terminated by the RIF who were at least 50 years old at the time. Eleven more plaintiffs opted in to the case, of which three voluntarily dismissed their claims and four settled. The case was transferred to another district judge, and PGW filed a motion to decertify the collective action. The district court granted the motion and decided that the opt-in plaintiffs' claims were factually dissimilar from those of the named plaintiffs.
PGW then filed motions to exclude plaintiffs' experts. These experts offered opinions on statistical evidence in favor of the plaintiffs' disparate impact claim and opinions as to the reasonableness of the company's HR decisions and the alleged implicit bias of its directors. The district judge granted PGW's motions and excluded the plaintiffs' experts. PGW then moved for summary judgment on all of the plaintiffs' claims.
The district court granted summary judgment and dismissed the plaintiffs' 50-and-older disparate impact claim as not viable under the ADEA and as unsupported due to its exclusion of the statistics-related testimony. The district court also dismissed the disparate treatment claims, but allowed Karlo's and McLure's retaliation claims to continue.
The plaintiffs appealed the decisions concerning their disparate impact claims to the 3rd Circuit. On appeal, the court held that "subgroup" disparate impact claims are cognizable under the ADEA. The court found that a subgroup of the age 50-and-over employees can bring a claim if they can show that they were disproportionately impacted by an employer policy in comparison to other, younger employees.
The court reasoned that the U.S. Supreme Court has held that the ADEA prohibits discrimination based on age and not just over-40 status. If employees could prove age discrimination based only on a 40-and-older comparison group, an employer could adopt a facially neutral policy that significantly harms individuals over age 50 or 55 as long as younger employees over age 40 receive sufficiently favorable treatment.
The court noted that the 2nd Circuit, 6th Circuit and 8th Circuit rejected such "subgroup" disparate impact claims. The court ruled, however, that these circuits had not fully considered U.S. Supreme Court precedent and were overly concerned about ways in which plaintiffs could attempt to "gerrymander" illegitimate subgroup claims, which could be prevented by carefully enforcing other evidentiary requirements of the ADEA.
The court further found that the plaintiffs' expert's testimony regarding statistical evidence of a disparate impact satisfied the basic requirements of admissibility and should be further evaluated when the case was sent back to the district court. However, the court ruled that the other types of expert testimony that the plaintiffs offered were not admissible and that the claims should not proceed as a collective action.
Karlo v. Pittsburgh Glass Works LLC, 3d Cir., No. 15-3435 (Jan. 10, 2017).
Professional Pointer: The ADEA is different from other federal anti-discrimination statutes in that it does not protect fixed group identities like race and sex, as age is an ever-changing characteristic. This provides employers with certain defenses not available under other laws but also subjects them to analytically new and distinct types of claims that require careful consideration to avoid liability when making group decisions like layoffs.
Jeffrey Rhodes is an attorney with Doumar Martin in Arlington, Va.
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