The Third Circuit, declaring a split with several other courts, holds that an ADEA disparate-impact case may allege discrimination against a subset of the protected group, here employees 50 and over. Prior decisions had held that such claims could be based only on the entire protected group – age 40 and over – but the Third Circuit panel holds that “their reasoning relies primarily on policy arguments that we do not find persuasive.”
“[O]n March 31, 2009, [Pittsburgh Glass Works, or PGW] terminated the employment of approximately one hundred salaried employees in over forty locations or divisions.” Seven plaintiffs sued claiming that the process used to fire them disproportionately singled out employees 50 and over. They filed both disparate-impact and -treatment claims, the latter of which was dismissed (and not appealed here). The statistical evidence was essentially the same for both cases, based on comparisons above and below age 50:
“[P]laintiffs claim to have identified a policy that disproportionately impacted a subgroup of that population: employees older than fifty. But because the policy favored younger members of the protected class, adding those individuals to the comparison group washes out the statistical evidence of a disparity.”
The case was conditionally certified as a collective action, and eleven other employees opted-in.
Over the course of the case, the matter was transferred to a new judge, the collective action was decertified, and summary judgment was substantially granted (leaving only a retaliation claim for two plaintiffs standing). On summary judgment, the district court held that “plaintiffs’ fifty-and-older disparate-impact claim is not cognizable under the ADEA,” and that the plaintiffs’ expert testimony – after being trimmed by a Daubert ruling – failed to support a properly-constituted 40-and-over group.
The Third Circuit reverses in substantial part. After addressing a jurisdictional speed bump (the defendant challenged the form of the notice of appeal, which the panel rejects), the panel takes on the main issue of appeal, “whether so-called ‘subgroup’ disparate-impact claims are cognizable under the ADEA.”
In answering this question, the panel notes that the provision of the ADEA that provides for disparate impact “makes it unlawful for an employer ‘to adversely affect [an employee’s] status . . . because of such individual’s age.'” 29 U.S.C. § 623(a)(2). This language, the panel holds, supports the viability of subgroup claims because of “(1) the focus on age as the relevant protected trait, as interpreted by O’Connor v. Consolidated Coin Caterers Corp., 517 U.S. 308 (1996), and (2) the focus on the rights of individuals, as interpreted by Connecticut v. Teal, 457 U.S. 440 (1982).”
In particular, “evidence that a policy disfavors employees older than fifty is probative of the relevant statutory question: whether the policy creates a disparate impact ‘because of such individual[s’] age.'” Moreover, because the right not to be discriminated against on the basis of age is a personal rather than collective one, the ADEA “protects individuals who are members of a protected class, not a class itself.”
The panel also notes that age “is a continuous variable,” that “[t]he forty-and-older line established in § 631(a) does not convert age into a binary trait,” and this circumstance requires a somewhat different statistical analysis from race and sex:
“[S]tatistical techniques common in Title VII cases are not perfectly transferable to ADEA cases. If, for example, the comparison group in Teal omitted some black employees who took the written test, the statistics would likely have failed to address whether There was a disparate impact ‘because of . . . race . . . .’ 42 U.S.C. § 2000e-2(a)(2); see also id. § 2000e-2(k)(1)(A)(i). It would be unclear whether the test’s effects fell more harshly on individuals of a particular race without looking at how the test affected all members. But with the ADEA, by contrast, a comparison group that omits employees in their forties is fully capable of demonstrating disparate impact ‘because of . . . age.’ 29 U.S.C. § 623(a)(2).”
The panel bolsters its statutory construction with “the ADEA’s remedial purpose,” noting that “[r]efusing to recognize subgroup claims would deny redress for significantly discriminatory policies that affect employees most in need of the ADEA’s protection,” i.e., the relatively older employees in the protected age group. “The older the employees affected by a policy, the more confounding favoritism would be included in the rigid forty-and-older sample.” Evidence of employees suffering extreme discrimination in their seventies could be washed out by a “rigid forty-and-older sample.”
The panel concedes that the decision contradicts rulings in other circuits (Lowe v. Commack Union Free Sch. Dist., 886 F.2d 1364 (2d Cir. 1989); Smith v. Tenn. Valley Auth., 924 F.2d 1059, 1991 WL 11271 (6th Cir. 1991) (table opinion); EEOC v. McDonnell Douglas Corp., 191 F.3d 948 (8th Cir. 1999)). But those decisions are said to be based on policy considerations that do not outweigh the statutory language, remedial purpose, and relevant Supreme Court authority. Principally, the panel notes, those decisions addressed themselves to the concern that plaintiffs and counsel could simply gerrymander the most adversely affected age-cohort, making it appear to be evidence of age discrimination. But the panel replies that “evidentiary gatekeeping” is a function “capably performed by district judges who routinely apply the Federal Rules of Evidence and Daubert jurisprudence,” which washes out such cases. (The panel also observes that recognizing a “lower boundary,” such as 50-and-older, is distinguishable from setting a band – say, 50-to-55 – which would be foreclosed by Gen. Dynamics Land Sys., Inc. v. Cline, 540 U.S. 581 (2004).)
On the Daubert exclusion of plaintiffs’ statistical expert, Dr. Michael Campion, the panel holds that the district court abused its discretion by (1) citing a problem (the use of an incorrect dataset) that was in fact corrected by the plaintiffs; (2) finding that the expert “fail[ed] to perform a statistical adjustment” [the Bonferroni adjustment] that “simply diminish[ed] the weight of [the] expert’s finding,” rather than invalidate it; and (3) challenging the use of the 50-and-over subgroup, which the panel holds is acceptable.
On all other matters, the panel affirms. It upholds the district court Daubert order striking Dr. Campion’s expert testimony about alternative HR policies that PGW could have used. “When a defendant proffers a [reasonable factor other than age], the plaintiff can rebut it by showing that the factor relied upon is unreasonable, not by identifying twenty other practices that would have been reasonable instead.” It also affirms the exclusion of an “implicit bias” expert on the ground that he “lacks fit to this case because his population-wide statistics have only speculative application to PGW and its decision-makers,” and “disparate-impact claims do not inquire into the employer’s state of mind.” Finally, the panel finds no error in decertifying the collective, “determining that plaintiffs did not meet their burden to show that they are similarly situated” because plaintiffs “held seven different titles with varied job duties in two separate divisions of PGW and across five locations in which no less than six decision-makers independently included them in the RIF.”