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2001 Term, Number 4 / December 3, 2001

Today the Supreme Court granted certiorari in one case of potential interest to the business community. Amicus briefs in support of the petitioners are due on Thursday, January 17, 2002, and amicus briefs in support of the respondents are due on Tuesday, February 19, 2002. Any questions about these cases should be directed to Eileen Penner (202-263-3242) in our Washington office.

Age Discrimination in Employment Act — Disparate Impact Claims. The Supreme Court granted certiorari today in Adams v. Florida Power Corporation, No. 01-584, to decide a question left open in Hazen Paper Co. v. Biggins, 507 U.S. 604 (1993): whether a disparate impact theory of liability is available to plaintiffs suing for age discrimination under the Age Discrimination in Employment Act of 1967 ("ADEA" or "the Act"), 29 U.S.C. § 621 et seq. A disparate impact claim challenges "employment practices that are facially neutral in their treatment of different groups but that in fact fall more harshly on one group than another and cannot be justified by business necessity." Hazen Paper, 507 U.S. at 609. 

In 1995, Wanda Adams and fourteen other plaintiffs filed a putative class action complaint against the Florida Power Corporation ("FPC") and its corporate parent, alleging that the plaintiffs and other former FPC employees had been fired unlawfully because of their age during a series of corporate reorganizations undertaken by FPC between 1992 and 1996. Noting that more than 70 percent of the terminated employees were at least forty years old, the plaintiffs alleged, among other theories, that the reorganizations disparately impacted older employees. FPC maintained that the reorganizations were necessary to maintain its competitiveness in the newly deregulated market for electricity. 

In 1996, the district court conditionally certified a class of former FPC employees claiming age discrimination. In August 1999, however, in an unpublished decision, the district court decertified that class, ruling that as a matter of law a disparate impact theory of liability is not available to plaintiffs suing under the ADEA. On interlocutory appeal pursuant to 28 U.S.C. § 1292(b), the United States Court of Appeals for the Eleventh Circuit affirmed. 255 F.3d 1322 (2001).

The Eleventh Circuit reasoned that the language and legislative history of the ADEA distinguish it from Title VII of the Civil Rights Act of 1964, which the Supreme Court has held encompasses a disparate impact cause of action for employment discrimination. First, the court found, by permitting an employer to "‘take any action otherwise prohibited * * * where the differentiation is based on reasonable factors other than age,'" Section 623(f)(1) of the ADEA specifically precludes a disparate impact claim. Id. at 1325 (quoting 29 U.S.C. § 623(f)(1)) (emphasis added). In support of that conclusion, the Court of Appeals noted that the Supreme Court has interpreted "similar" language in Section 201(d)(1) of the Equal Pay Act — which prohibits gender-based wage discrimination unless the wage "‘differential [is] based on any other factor other than sex'" — to preclude disparate impact claims. Ibid. (quoting 29 U.S.C. § 206(d)(1)(iv)) (emphasis added).

Second, the ADEA was enacted after the Secretary of Labor issued a report on age discrimination recommending that Congress "ban arbitrary discrimination, such as disparate treatment based on stereotypical perceptions of the elderly, but that factors affecting older workers, such as policies with disparate impact, be addressed in alternative ways." Ibid. In contrast, the Court of Appeals noted, the Supreme Court concluded that the legislative history of Title VII supported finding a cause of action for disparate impact under that statutory scheme. See ibid. 

Finally, the Eleventh Circuit opined that the Supreme Court's statement in Hazen Paper that "‘[d]isparate treatment * * * captures the essence of what Congress sought to prohibit in the ADEA,'" suggests that the ADEA does not permit disparate impact claims. Id. at 1326 (quoting Hazen Paper, 507 U.S. at 610). The Eleventh Circuit also pointed out that, in Hazen Paper, the Supreme Court had "reiterated that, in making employment decisions, the use of factors correlated with age, such as pension status, did not rely on ‘inaccurate and stigmatizing stereotypes' and was acceptable." Ibid. (quoting Hazen Paper, 507 U.S. at 611).

In holding that the ADEA does not permit disparate impact claims, the Eleventh Circuit joins the First, Seventh and Tenth Circuits. See Mullin v. Raytheon Co., 164 F.3d 696, 700-701 (1st Cir.), cert. denied, 528 U.S. 811 (1999); E.E.O.C. v. Francis W. Parker School, 41 F.3d 1073, 1076-1077 (7th Cir. 1994); Ellis v. United Airlines, Inc., 73 F.3d 999, 1006-1007 (10th Cir. 1996). The Third and Sixth Circuits have expressed their doubts as to the viability of disparate impact claims under the ADEA. See DiBiase v. SmithKline Beecham Corp., 48 F.3d 719, 732-734 (3d Cir. 1995); Lyon v. Ohio Educ. Ass'n & Professional Staff Union, 53 F.3d 135, 139 n.5 (6th Cir. 1995). The Second, Eighth and Ninth Circuits, however, have allowed disparate impact claims under the ADEA, noting that the language of the Act parallels that in Title VII. See Geller v. Markham, 635 F.2d 1027, 1032 (2d Cir. 1980); Smith v. City of Des Moines, 99 F.3d 1466, 1469-1470 (8th Cir. 1996); E.E.O.C. v. Borden's, Inc., 724 F.2d 1390, 1394-1395 (9th Cir. 1984). 

This case is of interest to all members of the business community who are subject to the ADEA. The Court's decision will determine whether employees claiming age discrimination must show that they were subjected to disparate treatment on account of their age, or whether it is sufficient to show that a practice has a disparate impact on older employees.

This Mayer, Brown, Rowe & Maw Supreme Court Docket Report provides information and comments on legal issues and developments of interest to our clients and friends. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

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