Equal Employment Opportunity Commission v. American Telephone and Telegraph Company Local 4354 98-4348 IN THE UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT No. 98-4348 EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellant, v. AMERICAN TELEPHONE AND TELEGRAPH COMPANY; COMMUNICATIONS WORKERS OF AMERICA; COMMUNICATIONS WORKERS OF AMERICA, LOCAL 4354, Defendants-Appellees. On Appeal from the United States District Court for the Southern District of Ohio PETITION OF THE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION FOR PANEL REHEARING C. GREGORY STEWART General Counsel PHILIP B. SKLOVER Associate General Counsel LORRAINE C. DAVIS Assistant General Counsel ROBERT J. GREGORY Senior Attorney EQUAL EMPLOYMENT OPPORTUNITY COMMISSION 1801 L Street, N.W. Washington, D.C. 20507 (202) 663-4059 INTRODUCTION In an unpublished per curiam opinion dated March 22, 2000, a divided panel of this Court affirmed the district court's grant of summary judgment in favor of the Defendants, American Telephone & Telegraph Company ("AT&T") and the Communication Workers of America/Communication Workers of America, Local 4354 ("CWA"). The panel majority specifically ruled that there was no evidence to show that "AT&T chose to discriminate or that it inadvertently discriminated against other employees on the basis of age." Slip op. at 10. The Commission's principal argument before the panel was that the Defendants engaged in age discrimination as a matter of law, thus entitling the Commission to summary judgment.<1> The panel majority plainly rejected this contention. We respectfully disagree with the panel majority but are not challenging that aspect of the panel's decision. Instead, we believe that the panel made two discrete errors in its assessment of the Commission's case. First, the panel erroneously concluded that the Commission had abandoned its disparate impact claim on appeal. Second, the panel erroneously faulted the Commission for a failure of proof on its disparate treatment claim in a case in which the Commission was not given the opportunity for discovery in the district court. Because of the case-specific nature of these points, this petition for rehearing is directed solely to the panel. ARGUMENT I. THE COMMISSION HAS NOT ABANDONED ITS DISPARATE IMPACT THEORY. The first point on which we seek rehearing concerns the panel's disposition of the Commission's disparate impact claim. The panel acknowledged that "the original complaint" in this case "alleged both disparate treatment and disparate impact as causes of action." Slip op. at 5. The panel determined, however, that because "the disparate impact claim has been abandoned on appeal," the panel was "left to review only the disparate treatment claim." Id. In fact, the Commission has not abandoned its disparate impact claim in this appeal. In the district court, the Commission advanced both disparate treatment and disparate impact theories. In its initial motion for summary judgment, dated October 30, 1997, AT&T focused exclusively on the Commission's disparate impact theory, arguing that such a theory is not available in cases brought under the Age Discrimination in Employment Act of 1967, 29 U.S.C. § 621 et seq. ("ADEA"). (R.25 Defendant AT&T's motion for summary judgment, pg. 1, Apx. pg. 97). CWA echoed this argument in its motion for summary judgment. (R.26 Memorandum of law in support of CWA's motion to dismiss and for summary judgment, pgs. 23-25, Apx. pgs. 238-240). The Commission responded to these contentions at some length, arguing that the disparate impact theory was legally cognizable under the ADEA. (R.33 Plaintiff EEOC's memorandum in opposition to Defendant AT&T's motion for summary judgment, pgs. 4-14, Apx. pgs. 251-61). In granting summary judgment, the district court focused solely on the disparate treatment theory. The court said nothing, one way or the other, on the viability of the Commission's claim under a disparate impact theory. On appeal, the Commission made clear that it was still pursuing a disparate impact claim, notwithstanding the district court's silence. In its main brief, the Commission made the following statement: The Commission is also pursuing its claim under a disparate impact theory. Although not addressed by the district court, the Defendants moved for summary judgment on this theory. The Defendants did not argue that the disparate impact theory failed as a factual matter. The Defendants argued, instead, that such a theory is not legally cognizable under the ADEA. EEOC Br. at 42-43. The Commission went on to argue that this Court "has long recognized that the disparate impact theory applies under the ADEA." Id. at 43 (citing Lyon v. Ohio Educ. Ass'n & Prof'l Staff, 53 F.3d 135, 139-40 n.5 (6th Cir. 1995); Wooden v. Board of Educ. of Jefferson County, Kentucky, 931 F.2d 376, 379-80 (6th Cir. 1991); Abbott v. Federal Forge, Inc., 912 F.2d 867, 872 (6th Cir. 1990)). The Commission pointed out that this Court "continues to adhere to the view that a 'disparate-impact theory of age discrimination may be possible.'" EEOC Br. at 43 (quoting Gantt v. Wilson Sporting Goods Co., 143 F.3d 1042, 1048 (6th Cir. 1998)). The Commission urged that it was entitled to a remand on the disparate impact claim, there being "no basis for determining, on this record, whether the Commission's claim is sustainable under a disparate impact theory." EEOC Br. at 43. In its responsive brief, AT&T chose not to address the viability of the Commission's case under a disparate impact theory, thus waiving any argument with respect to the continued viability of the disparate impact theory in ADEA cases. CWA, however, took up the banner for the Defendants. CWA acknowledged that the Commission "argued below . . . and argues here (EEOC Brief, pp. 41-42) that it was entitled to judgment based on a disparate impact theory."<2> CWA Br. at 39. CWA reiterated its argument, from the district court, that "the existence of a disparate impact claim under the ADEA [is] very much in doubt."<3> Id. It is clear from the briefing in this appeal that the Commission never abandoned its disparate impact theory. That theory, to be sure, was not the principal focus of the Commission's brief. There were two reasons for this. The district court did not address the issue in its opinion. The Defendants' argument that this Court has rejected the use of the disparate impact theory in ADEA cases was so plainly wrong that there was little need for extensive briefing on the issue. Indeed, AT&T implicitly conceded as much by not raising the point in its responsive brief. The panel should grant rehearing on this point, apply the settled case law in this Circuit concerning the continued viability of the disparate impact theory in ADEA cases, and order a remand for further proceedings. II. THE COMMISSION IS ENTITLED TO A REMAND TO DEVELOP THE RECORD FURTHER ON ITS DISPARATE TREATMENT CLAIM. The second point on which we seek rehearing concerns the Commission's disparate treatment claim. This appeal has a unique procedural history. The Defendants moved for summary judgment on a limited factual record. The Defendants attacked the legal viability of the Commission's claim, urging that when pension status is used to determine eligibility for a post-termination benefit, there can never be age-based disparate treatment discrimination. The Defendants moved for summary judgment on the theory that the Commission could not possibly prevail on its ADEA claim, even with the benefit of additional discovery. The district court admonished the parties to limit their dispositive motions to legal grounds that do not "require discovery for [their] resolution," (R.31 Order, pg. 1, Apx. pg. 245), acknowledging that if summary judgment could not be granted on these legal grounds, "much" additional discovery would be required. (R.80 Order, pg. 2, Apx. pg. 674). In granting summary judgment, the court accepted the Defendants' argument that there was no possible set of facts under which the Commission could prevail under a disparate treatment theory. (R.82 Opinion and order, pg. 13, Apx. pg. 47 [rejecting the Commission's argument that "additional facts in this case" could prove "that the use of pension eligibility was a proxy for age discrimination"]). The panel majority did not adopt the district court's extreme view that a party can never prevail in a case in which benefit distinctions are made on the basis of an age-defined factor such as pension eligibility. Instead, the panel decided the case as if there had been a full opportunity for discovery in the district court. The panel ruled that the Defendants limited the non-return incentive to non-pension-eligible workers because these individuals "were less likely to be financially able to cease employment;" that the "differing treatment of employees was . . . based upon legitimate business considerations, not upon age or other improper factors;" and that "the EEOC was unable to establish that any employee's age, rather than his or her pension eligibility and geographical location, played any role in determining whether a non-return incentive should be offered."<4> Slip op. at 8-9. These rulings assume the very issue in dispute, i.e., whether the Defendants' actions were the product of intentional discrimination, an issue for which there has been no opportunity for discovery. It is entirely possible that the Defendants relied upon invidious age-based stereotypes in denying the non-return incentive to pension-eligible individuals. The decision-makers may have assumed that most pension-eligible individuals were old and lazy and, thus, not in need of an additional incentive not to return to work. The decision-makers may have assumed that most of the pension-eligible individuals were older workers who were better off financially than their younger, more deserving counterparts. These are precisely the types of stigmatizing stereotypes that the ADEA is designed to prohibit. Further factual development could very well reveal a more sinister bent to the motivations of the Defendants and their decision-makers.<5> In Hazen Paper Co. v. Biggins, 507 U.S. 604, 613 (1993), the Supreme Court rejected the argument that 10-year pension vesting is a proxy for age "in the sense that the ADEA makes the two factors equivalent." The Court made clear, however, that pension status "may be a proxy for age" in the sense "that the employer may suppose a correlation between the two factors and act accordingly." Id. The Court did not "preclude the possibility that an employer who targets employees with a particular pension status on the assumption that these employees are likely to be older thereby engages in age discrimination." Id. at 612-13. The Court acknowledged that the plaintiff in that case might be able to prove unlawful discrimination on the basis of "additional" evidence of disparate treatment. Id. at 613. The Court remanded the case for further proceedings, directing the lower court to consider whether the plaintiff's evidence was sufficient "to find an ADEA violation." Id. at 614. The Commission is entitled to the same opportunity here. Quite candidly, the Commission would prefer to litigate this case under the straightforward legal theory that an employer engages in age discrimination as a matter of law when it makes distinctions in employee benefits on the basis of a factor that is, in part, explicitly age-defined, a theory that has substantial statutory and case law support. The panel majority, however, has taken a different view of the law, a view that we do not challenge in this petition. The Commission's burden is made more difficult if it is forced, in a case of this nature, to produce independent evidence of discriminatory intent. Difficult or not, the Commission should be given a chance to prove its case. CONCLUSION The panel should grant rehearing, vacate its decision of March 22, 2000, and remand the case for further factual development on the disparate impact and disparate treatment theories advanced by the Commission. Respectfully Submitted, C. GREGORY STEWART General Counsel PHILIP B. SKLOVER Associate General Counsel LORRAINE C. DAVIS Assistant General Counsel ROBERT J. GREGORY Senior Attorney EQUAL EMPLOYMENT OPPORTUNITY COMMISSION 1801 L Street, N.W. Washington, D.C. 20507 May 2, 2000 (202) 663-4059 1 Alternatively, the Commission argued that the district court erred in granting summary judgment in the Defendants' favor. The Commission pointed out that the district court granted summary judgment on an incomplete record, having restricted discovery (at the urging of the Defendants) and limited the summary judgment briefing to legal arguments. 2 Actually, the Commission did not argue that it was "entitled to judgment based on a disparate impact theory." The Commission argued that it was error to grant summary judgment in the Defendants' favor on that theory. In either case, the point is the same -- the Commission advanced the disparate impact theory in its brief on appeal, as CWA recognized in its brief. 3 CWA also argued that the Commission's disparate impact claim failed, "[i]n any event," on factual grounds. CWA Br. at 40. That argument is premature. The sole issue raised in the district court was whether the disparate impact claim was legally viable under the ADEA. 4 The panel appeared to accept the Defendants' argument that its non-return incentive policy was nothing more than a benign "incentiv[e] to induce voluntary reductions in the labor force." Slip op. at 8-9. In fact, there is evidence that the Defendants imposed a steep financial penalty upon those claimants who chose to return to work. John Dudas, for example, the Commission's lead claimant, "was required to repay AT&T approximately $68,000" for the privilege of returning to work. (R.58 Reply of the Plaintiff EEOC to AT&T's combined memorandum in support of cross-motion for summary judgment and memorandum in opposition to Plaintiff EEOC's revised motion for summary judgment, pg. 3, Apx. pg. 654). Another worker, Carl Olson, was required to pay AT&T "over $60,000 to return to work." (Id.) This is a far cry from the type of "voluntary" early retirement incentive program, offered to existing employees, that might pass muster under the ADEA. 5 The panel seemed impressed with the Defendants' statistical evidence concerning the numbers of individuals, over the age of 40, who were offered the non-return incentive. See Slip op. at 8-9 n.3. In fact, the Defendants' own evidence shows that, of the 122 individuals offered the non-return incentive, 96 were under the age-47 cutoff for pension eligibility, a fact that strongly supports the Commission's theory of the case. See EEOC Reply Br. at 8 n.2.