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Breaking out the over-50 crowd sets up Supreme Court showdown

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The issue of whether “subgroups” of workers who claim discrimination under the Age Discrimination in Employment Act can successfully file suit, even if other, younger workers over 40 — who are also protected by the law — are not charging discrimination, is an issue likely to eventually be heard by the U.S. Supreme Court because of a split among appellate courts.

Creating that split is a ruling last week from the 3rd U.S. Circuit Court of Appeals in Philadelphia, which held in Rudolph A. Karlo et a. v. Pittsburgh Glass Works L.L.C. that worker subgroups can sue under these circumstances.

The ruling disagrees with previous rulings by the 2nd, 6th and 8th Circuits in New York, Cincinnati and St. Louis respectively, which makes a Supreme Court hearing on the issue possible, say experts.

In the Pittsburgh Glass case, a unanimous three-judge appeals court overturned a district court ruling that held a 50-and-older disparate impact claim was not viable.

The case involved a group of workers over age 50 who were among more than 100 salaried employees in more than 40 locations who were subjected to a March, 2009 reduction in force at Harmaville, Pennsylvania-based Pittsburgh Glassworks.  

“The plain text of the statute dictates our decision as interpreted by the Supreme Court. The ADEA prohibits disparate impacts based on age, not forty-and older identity,” said the ruling.

“A rule that disallowed subgroups would ignore genuine statistical disparities that could otherwise be actionable through application of the plain text of the statue.”

Among the cases cited by the panel in its ruling is a 1996 decision by the U.S. Supreme Court in O’Connor v. Consolidated in which the court ruled in favor of a 56-year-old who was fired and replaced by a younger worker who was over 40.

The O’Connor case “answers the question before us. A specific, facially neutral policy that significantly disfavors employees over fifty years old supports a claim of disparate impact under the plain text of (the ADEA). Although the employer’s policy might favor younger members of the forty-and over cohort, that is an ‘utterly irrelevant factor,’” said the ruling, in quoting the O’Connor decision.

Pointing to the appeals courts that ruled differently, the 3rd Circuit ruling said, “Those decisions have primarily relied on policy considerations that we do not find persuasive.” 

“I could see why a group of older workers” 55 and older “could be discriminated against in favor of bringing in younger replacements. In many ways that’s classic age discrimination,” said Paul Starkman, a member of law firm Clark Hill P.C. in Chicago. “To me, there needs to be some decisive decision by the Supreme Court as to how significant the age differences need to be.”

Gerald L. Maatman Jr., a partner at Seyfarth Shaw L.L.P. in Chicago, said, “Now that there’s a very, very distinct circuit split that has real-world implications” on a “meat-and-potatoes issue that will impact American business,” he would expect to see numerous parties “lining up on both sides of the issue” trying to get a U.S. Supreme Court review of the case. “I would not be surprised if the case was accepted for review,” he said. 

Even if this case does not make it up to the Supreme Court, there is certain to be another case that will, because there is a circuit split, said Shannon D. Farmer, a partner with Ballard Spahr L.L.P. in Philadelphia. “It’s a big issue, and it will become bigger when there’s another recession,” she said. 

More immediately, the ruling creates problems for employers within the 3rd Circuit, which has jurisdiction over courts in Delaware, New Jersey and Pennsylvania, say experts.

Mr. Maatman said until now, employers only had to look at groups that are over and under 40 in doing statistical analyses when conducting a reduction in force. 

Now, the ruling says if you are an employer in the 3rd Circuit conducting a reduction in force, “you have to cut the numbers multiple times in multiple ways” into different segments. “It makes conducting a reduction in force very, very complicated and almost impossible to do without a statistician or a consultant.”

It will also make summary judgment in these cases more difficult, because a plaintiff attorney can use an expert who will “gin up the numbers” to support his case, said Mr. Maatman.

“You’re going to have to get far down the road into litigation and pay experts to show why the statistical analysis of the plaintiffs may be faulty, so it’s going to be very expensive and time-consuming,” and creates a situation where the judges will let the jury decide on the “battle of experts,” said Ms. Farmer. Once a case goes to a jury, “you don’t know what happens,” she said.

Jonathan A. Segal, a partner with Duane Morris L.L.P. in Philadelphia, said when working with employers who plan to conduct a reduction in force, he always recommends they do an over-40 then an over-50, 60 and 70 analysis of its impact to avoid bias and its perception. “Maybe this will encourage employers to do what they need to do anyway,” he said.