_______________________________________________________ IN THE UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT _______________________________________________________ No. 07-1559 _______________________________________________________ EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Respondent, v. ALLSTATE INSURANCE CO., Defendant-Petitioner. _______________________________________________________ On Appeal from the United States District Court for the Eastern District of Missouri _______________________________________________________ THE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION'S RESPONSE TO ALLSTATE'S PETITION FOR REHEARING _______________________________________________________ RONALD S. COOPER General Counsel LORRAINE C. DAVIS Acting Associate General Counsel VINCENT J. BLACKWOOD Assistant General Counsel JULIE L. GANTZ Attorney U.S. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION Office of General Counsel 1801 L Street, N.W. Washington, D.C. 20507 (202) 663-4718 TABLE OF CONTENTS TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . ii INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ARGUMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1. The Panel Majority's Factual Conclusion That the Moratorium Was An Integral Part of the Reorganization Program Is Not Appropriate for En Banc Review. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2. The Panel's Ruling That a Rehiring Moratorium That Was An Integral Part of An Employment Program and Was Applied to the Claimants Based on Their Employment With the Defendant is Subject to Challenge Under § 623(a)(2) Is Not Appropriate for En Banc Rehearing. . . . . . . . . . . . . . .5 3. The Panel's Holding That the Moratorium Had a Disparate Impact on Allstate Employees Over Forty Does Not Warrant Rehearing En Banc. . . 7 CONCLUSION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 CERTIFICATE OF SERVICE TABLE OF AUTHORITIES CASES Brown v. Sites Concrete, 994 F.2d 553 (8th Cir. 1993). . . . . . . . . 2 Frank v. United Airlines, Inc., 216 F.3d 845 (9th Cir. 2000). . . . . . 9 Leftwich v. Harris Stowe State College, 702 F.2d 686 (8th Cir. 1983). . . 6 McDonnell Douglas v. Green, 411 U.S. 792 (1973). . . . . . . . . . . . . . 6 Watson v. Fort Worth Bank and Trust, 487 U.S. 977 (1988). . . . . . . . 6, 8 STATUTES Age Discrimination in Employment Act 29 U.S.C. § 623(a)(2). . . . . . . . . . . . . . . . . . . . . . . . passim INTRODUCTION Allstate has filed a petition for rehearing en banc seeking further review of the panel's decision in this case. In that decision, a divided panel of this Court affirmed the district court's decision holding that the company's moratorium on rehire of former employee-agents who were terminated in conjunction with Allstate's Preparing for the Future Reorganization Program was subject to challenge under § 4(a)(2) of the ADEA, and that the evidence established that the moratorium had a disparate impact based on age. In its petition, Allstate once again argues, as it did before the district court and the panel, that the moratorium was a hiring policy, separate and distinct from the Reorganization Program that caused the termination of the employee-agents, and, as such, it was not subject to challenge under § 4(a)(2), which applies only to practices that adversely affect "employees." Both the district court and the panel majority have considered and rejected Allstate's factual argument. See slip op. at 9 (notwithstanding the company's assertion to the contrary, "the rehire policy was inextricably linked to and implemented as part of an employment policy, i.e., the Reorganization Program . . ."); Memorandum and Order at 13 ("the most logical approach is to treat the rehire policy as part of the Reorganization Plan which affected all employee-agents"). The company is not entitled to yet another opportunity to advance its factual argument. "Rehearing en banc is appropriate 'only when the attention of the entire court must be directed to an issue of grave constitutional dimension or exceptional public importance, or to an opinion that directly conflicts with Supreme Court or Eighth Circuit precedent.'" Brown v. Sites Concrete, 994 F.2d 553, 557 (8th Cir. 1993) (quoting 8th Cir. R. 35A(a)). Allstate's disagreement with the panel majority's factual conclusion regarding the relationship between the moratorium and the reorganization clearly does not meet this standard. As we explain below, the company's assertion that rehearing is warranted is based on its twice-rejected-and incorrect-version of the facts. ARGUMENT 1. The Panel Majority's Factual Conclusion That the Moratorium Was An Integral Part of the Reorganization Program Is Not Appropriate for En Banc Review. In 2000, Allstate terminated all of its employee-agents and classified the terminated agents as temporarily ineligible for rehire into other positions with the company. The hiring moratorium precluded all 6,300 terminated employee- agents from employment in non-agent positions with the company for up to two years. The employees affected by the termination and rehiring ban were almost all over forty years of age, and were, as a group, significantly older than the rest of Allstate's workforce. The Commission alleges that the moratorium on rehiring terminated agents violated the ADEA because it had a disparate impact based on age and was not based on a reasonable factor other than age. The district court ruled that the Commission's claim was cognizable under a disparate impact theory and that the statistical evidence established that the policy had a disparate impact. In reaching this conclusion, the court rejected Allstate's contention that the moratorium was a hiring policy separate from the reorganization program. Mem. and Order at 13. The court certified two questions for interlocutory appeal pursuant to 28 U.S.C. § 1292(b): (1) whether a claim that a policy has a disparate impact on former employees based on age is cognizable under § 4(a)(2) of the ADEA; and (2) whether the method of determining a disparate impact used by the Commission and adopted by the district court is inadequate "as a matter of law" to establish a disparate impact. This Court granted Allstate's petition for interlocutory review of these questions. In a two-to-one decision, a panel of this Court affirmed the district court's decision as to both questions. The panel held that: "(1) Allstate's rehire policy is an employment policy under § 623(a)(2) and therefore can be challenged under a disparate-impact theory, and (2) the Commission established a prima facie case of disparate-impact by demonstrating that the rehire policy served to deprive more older workers than younger workers of employment opportunities with Allstate." Slip op. at 16. Both of these rulings flow from and are dependent upon the panel's determination that, based on the evidence in the record, the moratorium was an integral part of the company's reorganization program affecting employee-agents, rather than a hiring policy. Like the district court, the panel found Allstate's rehire policy "inextricably linked to and implemented as part of the employment policy." Id. The panel majority stressed that the rehire policy was entitled "'Preparing for the Future Reorganization Program (Clarification of Re-Hire Policy)," and thus, by its very terms, was a part of the Reorganization Program. Id. (emphasis in original). The court went on to note that the rehire policy applied only to the former employee- agents who had been discharged, and that the drafter of the policy testified that the rehire ban was implemented in part to encourage employee-agents to be part of the exclusive agent program. Id. at 10. The Court thus concluded that "the rehire policy is an employment policy because it was implemented as part of an employment policy, i.e., the Reorganization Program." Id. at 10. Although Allstate challenges this factual determination in its petition (see Pet. at 8), it offers no explanation as to how the panel's resolution of this factual dispute meets the criteria for rehearing en banc. It manifestly does not. Accordingly, this Court's consideration of Allstate's petition, as well as other courts' consideration of the panel's decision in future cases, must take account of the unusual factual context of this case as found by the district court and the panel majority. When viewed in this light, the panel's ruling in this case is not appropriate for en banc review. 2. The Panel's Ruling That a Rehiring Moratorium That Was An Integral Part of An Employment Program and Was Applied to the Claimants Based on Their Employment With the Defendant is Subject to Challenge Under § 623(a)(2) Is Not Appropriate for En Banc Rehearing. Allstate argues that this case presents a "question of exceptional importance," viz., whether "a challenge to a rehire policy under the ADEA falls under 29 U.S.C. § 623(a)(2)." Pet. at 2. This mischaracterizes the scope of the panel's decision. The panel ruled only that Allstate's policy, which it found to be an integral part of a program that adversely affected recently terminated employee-agents precisely because they were recently terminated employee- agents, falls within the scope of that provision. The panel did not purport to rule on whether a rehire policy that is unrelated to any employment policy is subject to challenge under § 4(a)(2). This limited legal holding is fully consistent with the language of § 4(a)(2), which makes it unlawful to classify "employees" in a way that may limit their employment opportunities based on their ages. More importantly, for purposes of Allstate's petition, it resolves a question relating to the unusual circumstances of this case, and does not address, let alone resolve, the question of "exceptional public importance" posited by Allstate. Furthermore, contrary to Allstate's view, the fact that the panel deemed this case "close and difficult" does not supply a basis for rehearing. The panel was clearly referring to the unusual factual circumstances of this case that do not fit neatly into a more typical disparate impact model. While this may have made the resolution of the appeal challenging, it does not mean that it is appropriate for en banc rehearing. If anything, it suggests that the decision is not of great public importance because it involves unusual facts. Similarly, in arguing that the panel's decision conflicts with other appellate decisions, Allstate relies on its discredited factual scenario of a stand-alone restriction on rehiring. Pet. at 8. In addition, a number of the purported "conflicts" stem from the company's erroneous conviction that a given employment action can be challenged only under § 4(a)(1) or § 4(a)(2) but not both. The two provisions, however, are not mutually exclusive. See, e.g., Watson v. Fort Worth Bank and Trust, 487 U.S. 977, 983-84 (1988) (plaintiff challenged failure to promote because of race under both disparate treatment and disparate impact theories). Thus, for example, because the plaintiffs in Leftwich v. Harris Stowe State College, 702 F.2d 686, 691 (8th Cir. 1983), chose to challenge their employer's rehire policy only under § 4(a)(1), this Court had no reason to decide whether a disparate impact challenge to the defendant's faculty selection system could be brought under § 4(a)(2). Consequently, nothing in the panel decision in this case is inconsistent with Leftwich. See also McDonnell Douglas v. Green, 411 U.S. 792, 797 (1973) (deciding a challenge to a refusal to hire brought under § 703(a)(1) of Title VII alleging disparate treatment based on race, not disparate impact). Allstate cites no cases-and we are aware of none-that conflict with the panel majority's narrow holding that the challenge to the moratorium was cognizable under § 4(a)(2) because that policy was implemented as part of the Reorganization Program that terminated the agents' employment, and burdened those individuals precisely because of their employment relationship with Allstate. 3. The Panel's Holding That the Moratorium Had a Disparate Impact on Allstate Employees Over Forty Does Not Warrant Rehearing En Banc. Given the panel's factual conclusion that the moratorium was not a stand- alone hiring policy, its ruling that it had a disparate impact based on age was clearly correct.<1> It is undisputed that, at the time the Reorganization and rehire ban were implemented, nearly all the employee-agents were over forty and significantly older than Allstate's other employees, who generally remained eligible for rehire in the event of termination. Allstate's argument throughout this litigation has been that, because the moratorium was a "hiring" policy, disparate impact could only be shown by the method used in a typical "hiring" case, i.e., by showing a disparity based on applicant flow or labor market statistics. However, the panel rejected the factual premise of that argument when it ruled that the moratorium was simply an aspect of the Reorganization Program, which first targeted employee-agents for termination and then restricted their opportunity to be hired into another job with Allstate. When the policy is viewed as a part of an employment program applied to former employee-agents based on their employment with Allstate, it is manifest that it had a disparate impact on Allstate's older employees. In any event, the panel's ruling that the statistical evidence in this case was sufficient to establish a disparate impact does not, as Allstate argues, establish a general rule for showing a disparate impact in rehiring cases. Instead, the decision merely endorses the use of a RIF analysis rather than a hiring analysis given the facts of this case. As the Supreme Court has explained, statistical evidence should be evaluated on a case-by-case basis given the factual context of the case rather than "framed in terms of any rigid mathematical formula." Watson, 487 U.S. at 995. Accordingly, the panel's rejection of Allstate's argument that the district court was required to follow the analysis applied in typical hiring cases notwithstanding the unusual circumstances of this case does not merit further review. Allstate criticizes the panel's reliance on evidence that 90% of the terminated agents were over forty, and protests that, under the majority's analysis, there is no facially neutral policy that could be applied to the agents that would not result in a disparate impact on account of age. Pet. at 3. That is correct but unremarkable. It should not be surprising that an employer's decision to single out a job category predominantly composed of members of a protected class for adverse treatment will have a disparate impact on that group. For example, if an employer applied a weight standard only to flight attendants who were predominantly female, it is to be expected that the employer's decision would have a disparate impact based on sex. Cf. Frank v. United Airlines, Inc., 216 F.3d 845, 854 n.9 (9th Cir. 2000) (noting that plaintiffs alleged that the decision to apply weight limits only to predominantly female job of flight attendant had a disparate impact; the court did not reach this claim).<2> Because the majority correctly decided that Allstate's rehire bar was properly challenged under § 4(a)(2) and that the policy had a disparate impact on the older agents adversely affected, this Court should deny the petition for rehearing. CONCLUSION For the foregoing reasons, Allstate's petition for rehearing en banc should be denied. Respectfully submitted, RONALD S. COOPER General Counsel LORRAINE C. DAVIS Acting Associate General Counsel VINCENT J. BLACKWOOD Assistant General Counsel s/ Julie Gantz ______________________________ JULIE L. GANTZ U.S. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION 1801 L Street, N.W. Washington, D.C. 20507 (202) 663-4718 CERTIFICATE OF SERVICE I hereby certify that on August 7, 2008, I electronically filed the foregoing with the Clerk of the Court for the United States Court of Appeals for the Eighth Circuit by using the CM/ECF system. I certify that all participants in the case are registered CM/ECF users and that service will be accomplished by the CM/ECF system. s/ Julie Gantz Julie L. Gantz Attorney U.S. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION Office of General Counsel 1801 L Street, N.W. Washington, D.C. 20507 *********************************************************************** <> <1> Judge Shepherd's dissent does not address this issue. <2> Despite having a disparate impact, a policy applied only to a job populated predominantly by older employees may be manifestly reasonable, and hence lawful, if it is tied to some aspect of that job. However, where, as here, an employer applies an unfavorable policy to a particular job that has no apparent relationship to the job, the policy may be found to violate the ADEA. As the district court determined, the reasonableness of the policy at issue in this case must be determined by a jury.