Alaska Employment Law

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Introduction

The United States Supreme Court issued an opinion yesterday, June 19, 2008, in Meacham v. Knolls Atomic Power Laboratory addressing the burden of proof on establishing reasonable factors other than age (”RFOA”) in Age Discrimination in Employment (”ADEA”) cases. This summary briefly reviews the case and its significance.

The Case

This is actually the second time that this case made its way to the U.S. Supreme Court. Knolls Atomic Power Laboratory (”KAPL”) laid off thirty-one employees, thirty of whom were over the age of 40. The overall workforce was around 60% over the age of 40. Plaintiffs filed suit alleging disparate impact. KAPL argued that it relied upon business necessities, a defense available under Title VII claims that some courts had previously used in ADEA claims too, and “reasonable factors other than age” (”RFOA”), a defense available under the ADEA. The jury returned a verdict in plaintiffs’ favor.

On initial appeal, the Second Circuit affirmed. The court concluded that KAPL’s reasons for the layoffs did not meet the business necessity defense because there were other suitable alternatives that were available that could have been used without costing more money and without having a disparate impact on the protected group of older workers.

KAPL sought review with the U.S. Supreme Court, which granted review during the time that the Smith v. City of Jackson case (another disparate impact ADEA case) was pending before the U.S. Supreme Court. In City of Jackson, the Court recognized ADEA disparate impact claims, and held inter alia that the business necessity defense was not an appropriate defense to use in ADEA disparate impact cases. Instead of having to establish a business necessity defense, the Court held that employers could rely on the RFOA defense, an arguably easier defense to establish because it does not require any analysis of other suitable alternatives. Instead, it provides a defense so long as the employer’s justification is a reasonable justification relying on factors other than age. The Court remanded Meacham to the Second Circuit.

On remand, the Second Circuit reversed the district court by a 2-1 split, and ordered that judgment be entered in favor of KAPL. The majority held that the plaintiffs had the burden to prove that the employer’s avowed justification was unreasonable, and that they had failed to do so. The dissent believed that the RFOA defense was an affirmative defense that was the employer’s responsibility to prove.

The employees sought review with the U.S. Supreme Court. The Court issued certiorari, and the parties returned to D.C. to argue the case on the merits.

The Opinion

The Court vacated and remanded, holding that RFOA was an affirmative defense for which the employer had the burden of proof and production. Justice Souter wrote for a nearly unanimous Bench. The Court observed that the RFOA exemption was included in the same provision as the bona fide occupational qualification (”BFOQ”) exemption that has already been characterized as affirmative defense. Moreover, the RFOA and BFOQ exemptions were preceded by a clause specifying that it was not a violation for employers to take action “otherwise prohibited” if they did so on the basis of an RFOA or BFOQ exemption. This classic formulation of an affirmative defense persuaded the Court that the RFOA should also be classified as an affirmative defense.

Justice Breyer did not participate in the case. Justice Scalia concurred in the judgment. Justice Thomas concurred and dissented, noting that he continued to hold the view that disparate impact claims were not cognizable under the ADEA. However, he agreed that RFOA was an affirmative defense in disparate treatment cases.

Significance

The result here offered no surprises. Certiorari issued for this case after my annual preview was prepared and so Meacham was not included. However, when the Court accepted review, most students of the Court concluded that reversal was likely because of the ADEA’s structure. Indeed, several circuits, including the Ninth Circuit, previously held that the RFOA defense was an affirmative defense for which the defendant-employer bore the burden of proof. The result validated those courts.

There are numerous wrinkles in the Court’s opinion clarifying or discussing prior cases that counsel may wish to further analyze. However, in practical terms, arguments addressing whether elements of a claim are defenses or part of the plaintiff’s case in chief are seldom as significant as believed because trials are not bifurcated for this purpose. Instead, a jury will hear all of the evidence and arguments at the same time. Special verdict forms may attempt to guide the jury’s deliberations, but when everything is said and done the law is still the law and the facts are still the facts. The only time such arguments gain much traction is in situations such as this one where a trial or appellate court will examine the record. Here, of course, the lower court’s decision was something of an accident in time, being sandwiched between different U.S. Supreme Court opinions.

No pun intended, but old advice is often the best advice. Employers making any decision that affects their employees should “audit” the decision to be sure that it is reasonable, reasonably related to a legitimate business justification, and based on objectively verifiable evidence. It is critical for employers to remember that employees may often fall into one or more protected classifications, and may avail themselves of different theories or claims if suit is filed. Consequently, from a legal and a risk management perspective, it makes better sense to adopt the most rigorous standard for employment-related decisions. This being the case, employers would never go wrong by considering potential alternatives even if the business necessity defense has no utility in ADEA disparate impact claims.

Conclusion

This legal summary is for informational purposes and is not intended as legal advice. Employers with questions or seeking additional information should confer with counsel.