_______________________________________________________ No. 09-1688 _______________________________________________________ IN THE UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT _______________________________________________________ Equal Employment Opportunity Commission, Plaintiff – Appellant, v. Baltimore County, et al., Defendants – Appellees. _______________________________________________________ On Appeal from the United States District Court for the District of Maryland _______________________________________________________ BRIEF OF THE EQUAL EMPLOYMENT OPPORTUNITY COMMISSION AS APPELLANT _______________________________________________________ JAMES L. LEE Acting General Counsel CAROLYN L. WHEELER Acting Associate General Counsel VINCENT J. BLACKWOOD Assistant General Counsel PAUL D. RAMSHAW Attorney EQUAL EMPLOYMENT OPPORTUNITY COMMISSION Office of General Counsel 131 M St., NE, Room 5SW18K Washington, DC 20507 (202) 663-4737 Paul.Ramshaw@eeoc.gov TABLE OF CONTENTS JURISDICTIONAL STATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . .1 STATEMENT OF THE ISSUE . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 STATEMENT OF THE CASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 STATEMENT OF FACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 SUMMARY OF ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 STANDARDS OF REVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 I. Baltimore County's Express Policy of Paying Employees Who Were Older at Enrollment Less, Based on Their Age, Than Employees Who Were Younger at Enrollment Constitutes Age Discrimination in Compensation Within the Meaning of § 4(a) of the ADEA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13 II. The District Court Did Not Abuse its Discretion in Denying the County's Laches Defense . . . . . . . . . . . . . . . . . . . . . 30 CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 REQUEST FOR ORAL ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . 33 CERTIFICATE OF COMPLIANCE . . . . . . . . . . . . . . . . . . . . . . . . . .35 RULE 28(f) ADDENDUM (containing relevant portions of Baltimore County Code) CERTIFICATE OF SERVICE TABLE OF AUTHORITIES CASES adidas-America, Inc. v. Payless Shoesource, Inc., 546 F. Supp. 2d 1029 (D. Or. 2008). . . . . . . . . . . . . . . . . 32–33 Arizona Governing Committee v. Norris, 463 U.S. 1073 (1983). . . . . . . . . . 9 Bass v. E.I. DuPont de Nemours & Co., 324 F.3d 761 (4th Cir. 2003) . . . . . .12 City of Los Angeles, Department of Water and Power v. Manhart, 435 U.S. 702 (1978) . . . . . . . . . . . . . . . . . . . . . . 9, 14, 29 Cleary v. United States Lines, Inc., 728 F.2d 607 (3d Cir. 1984) . . . . . . .17 EEOC v. American National Bank, 574 F.2d 1173 (4th Cir. 1978). . . . . . . . .31 EEOC v. Chesapeake & Ohio Railway Co., 577 F.2d 229 (4th Cir. 1978). . . . . .31 EEOC v. Great Atlantic & Pacific Tea Co., 735 F.2d 69 (3d Cir. 1984) . . . . .32 EEOC v. Navy Federal Credit Union, 424 F.3d 397 (4th Cir. 2005). . . . . . . .12 Erie County Retirees Association v. County of Erie, Pa., 220 F.3d 193 (3d Cir. 2000) . . . . . . . . . . . . . . . . . . 17, 29–30 Havens Realty Corp. v. Coleman, 455 U.S. 363 (1982). . . . . . . . . . . . . .30 Hazen Paper Co. v. Biggins, 507 U.S. 604 (1993). . . . . . . . . . . . . . . .19 Hutchinson v. Pfeil, 105 F.3d 562 (10th Cir. 1997) . . . . . . . . . . . . . .30 Independence News, Inc. v. City of Charlotte, 568 F.3d 148 (4th Cir. 2009). . . . . . . . . . . . . . . . . . . . . . 12 Kautz v. Met-Pro Corp., 412 F.3d 463 (3d Cir. 2005). . . . . . . . . . . . . . 1 Kentucky Retirement Systems v. EEOC, 128 S. Ct. 2361 (2008). . . . . . . .passim Lorillard v. Pons, 434 U.S. 575 (1978) . . . . . . . . . . . . . . . . . . 16–17 Mistretta v. Sandia Corp., 639 F.2d 588 (10th Cir. 1980) . . . . . . . . . . .13 Mona Shores Board of Education v. Mona Shores Teachers Education Association, No. 271592, 2008 Westlaw 3009890 (Mich. App. Aug. 5, 2008). . . . . . . . . . . . . .20 Moore v. City of Asheville, N.C., 396 F.3d 385 (4th Cir. 2005) . . . . . . . . 1 Newport News Shipbuilding & Dry Dock Co. v. Parker, 935 F.2d 20 (4th Cir. 1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Occidental Life Ins. Co. v. EEOC, 432 U.S. 355 (1977). . . . . . . . . . . . .31 Phillips v. Martin Marietta Corp., 400 U.S. 542 (1971) (per curiam). . . . . .29 Quinones v. City of Evanston, Ill., 58 F.3d 275 (7th Cir. 1995). . . . . . . 27 Vineberg v. Bissonnette, 548 F.3d 50 (1st Cir. 2008) . . . . . . . . . . . . .32 White v. Daniel, 909 F.2d 99 (4th Cir. 1990) . . . . . . . . . . . . . . . 30–31 STATUTES 28 U.S.C. § 1291. . . . . . . . . . . . . . . . . . . . . . . . . . .1 § 1331. . . . . . . . . . . . . . . . . . . . . . . . . . .1 § 1343(a)(4). . . . . . . . . . . . . . . . . . . . . . . .1 § 1345. . . . . . . . . . . . . . . . . . . . . . . . . . .1 29 U.S.C. § 213(f). . . . . . . . . . . . . . . . . . . . . . . . . 17 § 216(b). . . . . . . . . . . . . . . . . . . . . . . . . 17 § 216(d). . . . . . . . . . . . . . . . . . . . . . . . . 17 § 623(a). . . . . . . . . . . . . . . . . . . . . . . .2, 13 § 623(f). . . . . . . . . . . . . . . . . . . .15–18, 22, 28 § 623(i). . . . . . . . . . . . . . . . . . . . .2, 9–10, 27 § 623(l). . . . . . . . . . . . . . . . . . . . . . . . . 22 § 626(b). . . . . . . . . . . . . . . . . . . . . . . . . 16 Age Discrimination in Employment Act, 29 U.S.C. §§ 621 et seq.. . . . . . . . . . . . . . . passim Older Americans Act Amendments of 1984, Pub. L. 98-459, 98 Stat. 1767 (1984). . . . . . . . . . . . . . . . . . . 17 Older Workers Benefit Protection Act of 1990, Pub. L. 101-433, 104 Stat. 978 (1990). . . . . . . . . . . . . . . . . .16–17 Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e et seq.. . . . . . . . . . . . 14, 28–29 REGULATIONS AND RULES 29 C.F.R. § 1625.10 . . . . . . . . . . . . . . . . . . .11, 16, 28–30 § 1625.10(a). . . . . . . . . . . . . . . . . . . . . . . 17 § 1625.10(b). . . . . . . . . . . . . . . . . . . .17–18, 28 § 1625.10(d). . . . . . . . . . . . . . . . . . . .14–17, 28 Federal Rules of Appellate Procedure Rule 4(a) . . . . . . . . . . . . . . . . . . . . . . . . .1 Rule 28(f). . . . . . . . . . . . . . . . . . . . Addendum 1 OTHER Brian W. Berglund, The Nuts and Bolts of Discrimination Testing, SP046 ALI-ABA 245 (Mar. 2009) . . . . . . . . . . . . . . 27 JURISDICTIONAL STATEMENT This is a public enforcement action alleging a violation of the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. §§ 621 et seq., and the district court accordingly had subject matter jurisdiction under 28 U.S.C. §§ 1331 (federal question), 1343(a)(4) (statutory civil rights claim), and 1345 (U.S. as plaintiff). See, e.g., Kautz v. Met-Pro Corp., 412 F.3d 463, 466 (3d Cir. 2005) (district court had subject matter jurisdiction over ADEA action pursuant to 28 U.S.C. § 1331). This Court has jurisdiction over this appeal under 28 U.S.C. § 1291 because it is a timely appeal from a final judgment that disposed of all claims with respect to all parties. See Moore v. City of Asheville, N.C., 396 F.3d 385, 390 (4th Cir. 2005). The district court entered an order granting Baltimore County summary judgment on January 21, 2009. R-101. The EEOC filed a timely motion for reconsideration on February 2. R-102. The district court entered an order on April 23 denying that motion. R-105. The Commission filed a timely notice of appeal on June 17. R-106; Fed. R. App. P. 4(a)(1)(B). STATEMENT OF THE ISSUE Whether an employment policy that expressly increases deductions from employees' paychecks based on their ages constitutes age discrimination in employment within the meaning of § 4(a) of the ADEA. STATEMENT OF THE CASE This is an appeal from a final judgment entered by the United States District Court for the District of Maryland (Legg, C.J.). The complaint alleges that the defendant violates §§ 4(a) and 4(i) of the ADEA, 29 U.S.C. §§ 623(a) & 623(i), by giving employees who were older at enrollment in its retirement system less take- home pay than employees who were younger at enrollment. Joint Appendix 14–15 ("JA-14–15") (R-50-3). The district court denied the defendant's motion to dismiss on July 24, 2008. JA-124–32 (R-78–79). The parties filed cross-motions for summary judgment, and on January 21, 2009, the court granted the defendant's motion for summary judgment, dismissing all claims. JA-133–43 (R-100–01). The plaintiff's timely motion for reconsideration was denied on April 23. JA- 144–45 (R-105). The plaintiff filed a notice of appeal on June 17. JA-146–47 (R- 106). STATEMENT OF FACTS Baltimore County deducts a percentage of gross salary from the paycheck of each employee and uses the money withheld to help fund the county's mandatory retirement plan, the Employees' Retirement System of Baltimore County ("ERS"). JA-106–07 (Homan Decl.), JA-30–31 (plan pamphlet). For employees hired before July 1, 2007,<1> the percentage deducted varies directly with how old the employee was when he enrolled in the ERS. The older an employee was when he enrolled in the ERS, the higher the percentage of his salary that is deducted as his member contribution, and the lower his take-home pay. Baltimore County Code ("BCC") § 5-1-203(1), Addendum p. 8 ("Add-8")<2> ("The rate of contribution of the employee shall be determined by the employee's age at the time the employee actually joins the system . . . ."); JA-106–07 (Homan Decl., ¶¶ 8 & 11); JA-30–31 (plan pamphlet). For example, the county deducts 4.42% from each paycheck issued to an employee who enrolled in the system at age 20, but 7.23% (or 63.6% more) from each paycheck if he enrolled at age 55. JA-65 (8/00 letter from plan actuaries to plan officer). The ERS is a defined-benefit pension plan that almost all of the county's employees are required to join.<3> JA-24 (plan pamphlet); BCC § 5-1-203(1) & (4), Add-8–9. Public-safety employees—i.e., members of the police, fire and corrections departments—are required to enroll in the ERS when they are hired, and the county's other employees (its "regular" employees) are required to enroll within two years of when they are hired. BCC § 5-1-203(1) & (4), Add-8–9. Regular employees could retire with a normal retirement benefit at age 60 or after 30 years of service, BCC § 5-1-213, Add-15;<4> public-safety employees could retire with a normal retirement benefit after 20 years of service, BCC § 5-1-218(b), Add-18. The benefits that county employees receive when they retire do not vary by their age at enrollment. The normal retirement benefit for regular employees was 1/55 times their average final compensation times their years of service. BCC § 214(a)(1)(ii), Add-16. The normal retirement benefit for public safety employees was 50% of their average final compensation, plus 1% of their average final compensation for each year of service beyond 20. BCC § 5-1-218(b), Add- 18. The ERS is also funded in part by contributions made by Baltimore County. BCC § 5-1-254(b)–(e), Add-21–22. The record contains no evidence showing how much money the county contributes to the ERS, whether the county contributes more or less than the members collectively contribute, or whether the county's contributions are allocated in any fashion on behalf of individual members. Correctional officers Richard Bosse and Wayne Lee each filed a charge with the EEOC (Bosse in April 1999 and Lee in January 2000) alleging that the ERS discriminates against him on the basis of his age. JA-36 & 46. The Commission investigated these charges, asking Baltimore County to respond to the charges and seeking additional information about the ERS. JA-43–45 & 59–61 (1/00 & 7/00 letters). The county provided information to the EEOC a number of times during 1999 and 2000. JA-41–42, 48–55, 56–58, 63–68. In March 2006, the Commission issued its determinations finding an ADEA violation against the class of employees who were 40 or older when they enrolled. JA-69–72. Conciliation proved unsuccessful, and the EEOC filed this lawsuit in September 2007. R-1; see JA-10–17 (R-50-3, EEOC's amended complaint). The county offered evidence that the EEOC's delay in suing prejudiced the county by damaging its ability to defend itself against the Commission's claims and its ability to pursue any third- party claim it might bring against the ERS's actuary. Specifically, County Administrative Officer Fred Holman stated in an affidavit that the actuary's previous legal counsel had retired, and that "[m]any of the persons who could be witnesses to the establishment [in 1944–1945] and early history of the Retirement System are deceased." JA-109 (Homan Decl. ¶¶ 18–19) (reference to years added). Also, the "workpapers" that the actuary created in 1977 when setting the current membership-contribution rates may no longer be available. JA-65 (8/00 letter from plan actuaries to plan officer).<5> In May 2007, Baltimore County changed the challenged rule. For employees hired after July 1, 2007, the percentage deducted from members' salaries is the same regardless of their age at enrollment.<6> This plan amendment does not, however, affect the percentages deducted from the salaries of the members hired before that date. The record contains no evidence showing whether the county's average contribution on behalf of members who were hired after July 2007 differs from its average contribution on behalf of members who were hired before then, or whether the county's average contribution on behalf of employees who were older at enrollment and who were hired after July 2007 differs from its average contribution on behalf of members who were older at enrollment and hired before then. The District Court's Decisions 1. The district court denied the county's motion to dismiss in July 2008, ruling that the county failed to show sufficient prejudice to justify dismissing the EEOC's claims on the ground of laches. JA-132. The county argued that "certain witnesses and documents may be unavailable," but the court ruled that those "obstacles, if demonstrated, do not rise to the level of the prejudice that would justify dismissal of the EEOC's claims." Id. n.9. The county also relied on the increased financial exposure it faced due to the EEOC's delay, but the court ruled that this factor was "premature at this stage of the litigation. The amount of any damages to be assessed against Baltimore County, and any amount to be disallowed due to the EEOC's delay in filing suit, is to be determined if the EEOC prevails on its claims after the development of a full factual record." JA-132. 2. In granting the county's motion for summary judgment, the district court acknowledged that, under Baltimore County's policy, "[f]or individuals hired prior to July 1, 2007, the percentage employees are required to contribute . . . is determined by a worker's age at the time of enrollment." JA-134. Nonetheless, the court concluded that, under Kentucky Retirement Systems v. EEOC, 128 S. Ct. 2361 (2008), the county "was actually motivated not by age, but by the pension status—i.e. the number of years until retirement eligibility—of older new-hires." JA-140. The Kentucky Retirement Court listed six "factors" that it considered in concluding that the challenged provisions of Kentucky's disability-retirement plan were not actually motivated by age. 128 S. Ct. at 2367–69. The district court found that all six of these factors support finding no violation in this case as well. JA-137–39. First, the court stated, pension status is here, as in Kentucky Retirement, "analytically distinct" from age. According to the court, the county has an economic justification for the varying contribution rates—that older new-hires have fewer years in which "to accumulate a sufficient reserve to fund [their] life annuit[ies]"—and it is therefore "of no legal consequence . . . that the ERS's member contribution rates are correlated with age." JA-138. Second, the court stated that the provision challenged here is, as it was in Kentucky Retirement, "part of a set of complex systemwide rules that involve pensions, not wages," and it should therefore "be treated more leniently than a policy driven by age-based considerations." Id. Third, the county's rationale for the challenged provision is that "older new- hires have less time to accrue earnings on their contributions, [and] it is [therefore] necessary to have them contribute more towards their retirement benefits." Id. This rationale, the court ruled, is "wholly unrelated to employees' age," as it was in Kentucky Retirement. Id. Fourth, the district court stated that the county's plan, like Kentucky's, sometimes works to the advantage of members older at enrollment, because "they ultimately receive the same benefits as younger new- hires while contributing a smaller net-amount towards their retirement." JA-139. Fifth, the court stated, the challenged provision "is not grounded in any of the stereotypical assumptions that the ADEA sought to eradicate." Id. Sixth, the court reasoned that, although the county was able to devise a practice that eliminates the age-based disparity in deductions prospectively in its 2007 plan amendment, the new plan thwarts the county's "legitimate objective of making relatively equal contributions on behalf of all plan members" because it "requires the County to fund a significantly larger portion of benefits for older employees." Id. The district court rejected the EEOC's reliance on the Supreme Court's decisions in Arizona Governing Committee v. Norris, 463 U.S. 1073 (1983), and City of Los Angeles, Department of Water and Power v. Manhart, 435 U.S. 702 (1978), for the proposition that an employer's practice of making larger deductions from the salaries of one class of employees in order to fund equal pension benefits is unlawful discrimination in compensation even if it is based on valid actuarial considerations. According to the Court, "What distinguishes the instant case from Manhart and Norris is that those decisions involved situations where an employer facially discriminated against its employees on the basis of sex, a protected category. In contrast, Baltimore County's system is based not on age—a protected category—but on the number of years an employee has until reaching retirement age." JA-140. The court also dismissed the claim that the county violated section 4(i) of the ADEA, 29 U.S.C. § 623(i), which prohibits reducing the "rate of benefit accrual" in retirement plans because of age. The court rejected the EEOC's argument that requiring members older at enrollment to contribute at higher rates to get the same benefits received by members younger at enrollment is equivalent to reducing the rate of benefit accrual of the former because of their age. R-93 at 25–31. The district court ruled that "the phrase ‘rate of an employee's benefit accrual' plainly refers to the rate at which a participant's benefits increase," and found that "the rate of accrual [under the ERS] for older new-hires is [in fact] greater than for younger new-hires" because older new-hires receive the same retirement benefits as similarly situated younger new-hires after working fewer years. JA-141. The EEOC filed a motion to reconsider, arguing that the county had not submitted evidence that supported the district court's findings in connection with the fourth and sixth factors that the county "contributes more towards the relative cost of funding retirement benefits for older new-hires than for younger new- hires," and that the 2007 amendment requires the county to "fund a significantly larger portion of benefits for older employees." R-102. The district court denied this motion, stating that it still would find no violation even if the fourth and sixth factors did not support that finding. JA-144–45. SUMMARY OF ARGUMENT It is undisputed that Baltimore County deducts a higher percentage of salary from employees who were older at enrollment and therefore gives them less take- home pay than it gives employees who were younger at enrollment but are otherwise similarly situated. It is also undisputed that the plan provision creating this disparity in compensation bases the disparity directly and expressly on "the employee's age at the time the employee actually joins the system." Add-8. The county is therefore violating § 4(a) of the ADEA, which prohibits age discrimination in compensation, and 29 C.F.R. § 1625.10, which bars employers from requiring older employees "to make greater contributions than a younger employee in support of an employee benefit plan." Notwithstanding the county's admitted reliance on age to pay lower wages to employees who were older when they began their employment, the district court dismissed the EEOC's lawsuit, ruling that this case is controlled by Kentucky Retirement Systems v. EEOC, 128 S. Ct. 2361 (2008). But there are two reasons why Kentucky Retirement does not govern this case. First, the rule challenged here is based directly and explicitly on age, while the rule challenged in Kentucky Retirement was based instead on eligibility for normal, service-based retirement benefits. Second, Kentucky Retirement addressed discrimination in the retirees' pension benefits, while the EEOC here challenges discrimination in the employees' current compensation, a distinction that the Kentucky Retirement Court itself recognized as fundamental. Moreover, even if Kentucky Retirement were applicable, the district court erred in dismissing this action because five of the six factors relied on in Kentucky Retirement support finding a violation here. If the county renews its laches defense on appeal, this Court should affirm the district court's rejection of that defense as a decision well within the district court's discretion. The Commission is challenging a current, ongoing violation, so its claim cannot be stale. In addition, the county has failed to establish the type and degree of prejudice that it is required to prove. ARGUMENT STANDARDS OF REVIEW The issue of whether Baltimore County is violating the ADEA is reviewed de novo because it is a legal issue decided in a summary judgment order, and this Court reviews such issues and orders de novo. Independence News, Inc. v. City of Charlotte, 568 F.3d 148, 154 (4th Cir. 2009) (order granting summary judgment reviewed de novo); Bass v. E.I. DuPont de Nemours & Co., 324 F.3d 761, 764 (4th Cir. 2003) (legal issues reviewed de novo). Baltimore County asked the district court to dismiss this case under the laches doctrine, and the district court rejected that argument. This Court reviews district court resolutions of laches claims for abuse of discretion. EEOC v. Navy Federal Credit Union, 424 F.3d 397, 405 (4th Cir. 2005) ("Because the equitable balancing required in a laches determination is committed to the discretion of the district court, we may reverse such a ruling only if such discretion was abused."). I. Baltimore County's Express Policy of Paying Employees Who Were Older at Enrollment Less, Based on Their Age, Than Employees Who Were Younger at Enrollment Constitutes Age Discrimination in Compensation Within the Meaning of § 4(a) of the ADEA. Section 4(a) of the ADEA prohibits an employer from "discriminat[ing] against any individual with respect to his compensation . . . because of such individual's age." 29 U.S.C. § 623(a)(1). Baltimore County violates this provision because the ERS expressly bases the deduction from an employee's paycheck on the employee's age. Accordingly, the county pays employees who were older when they enrolled less than it pays employees who were younger when they enrolled but are otherwise similarly situated. For example, assume that employees A and B have the same position, perform the same duties, and receive the same gross salary: $50,000. Employee A enrolled in the ERS when he was 20, and employee B enrolled when he was 55. The county deducts 4.42% of employee A's salary, or $2,210, leaving him with a net salary, before withholding and other deductions, of $47,790. The county deducts 7.23% of employee B's salary, or $3,615. His net salary is therefore only $46,385. The employee older at enrollment is therefore being paid $1,405 less than the employee younger at enrollment for doing the same job solely because of his age. Paying an employee less for doing a job solely because of his age violates § 4(a). See, e.g., Mistretta v. Sandia Corp., 639 F.2d 588, 596 (10th Cir. 1980) (district court properly awarded damages under the ADEA based on employer's policy requiring older employees to wait longer between raises than younger employees); cf. City of Los Angeles, Dep't of Water & Power v. Manhart, 435 U.S. 702, 705-09 (1978) (where employer required female employees to make higher contributions to pension plan than male employees, resulting in lower take-home pay for female employees, employer violated § 703(a) of Title VII, even though the higher contributions were based on accurate actuarial considerations); id. at 709 ("[A] statute that was designed to make race irrelevant in the employment market . . . could not reasonably be construed to permit a take-home-pay differential based on a racial classification."). Giving employees older at enrollment less take-home pay is, moreover, expressly prohibited by the EEOC's ADEA regulations, which state that "[a]n older employee within the protected age group may not be required as a condition of employment to make greater contributions than a younger employee in support of an employee benefit plan." 29 C.F.R. § 1625.10(d)(4)(i). The regulation adds: "Such a requirement would be in effect a mandatory reduction in take-home pay, which is never authorized by section 4(f)(2), and would impose an impediment to employment in violation of the specific restrictions in section 4(f)(2)." It is undisputed that Baltimore County is doing precisely what this regulation prohibits. The regulation was originally adopted in this form in 1979, after notice and comment. 44 Fed. Reg. 30,648, 30,658–62 (May 25, 1979). It has not been amended since then. More importantly, in 1990 Congress expressly endorsed this regulation as the authoritative interpretation of the types of age-based disparities permissible and prohibited under § 4(f)(2) of the ADEA: Section 4(f)(2) allows employers to provide lower benefits to older employees in their employee benefit plans, but only if they comply with the equal-cost defense "as permissible under section 1625.10, title 29, Code of Federal Regulations (as in effect on June 22, 1989)." 29 U.S.C. § 623(f)(2)(B)(i).<7> Baltimore County argued in the district court that this portion of § 1625.10 is invalid for several reasons: First, according to the county, § 1625.10(d), as its first sentence indicates, applies only to employee benefit plans that "prescribe[ ] lower benefits for older employees on account of age," and the ERS is not such a system. Second, § 1625.10(d), as its title demonstrates, is devoted to defining the term "subterfuge," and that term has been removed from § 4(f)(2). Third, § 1625.10(d)(4) is purportedly invalid for the additional reason that it exceeds the EEOC's authority because, the county maintains, § 4(f)(2)(B)(i) regulates only contributions to benefit funds by employers and in no way regulates, or gives the Commission authority to regulate, contributions by employees. The short answer to these arguments is that the very same section of the Older Workers Benefit Protection Act ("OWBPA") that eliminated the term "subterfuge" from § 4(f)(2) also incorporated § 1625.10 as the authoritative interpretation of § 4(f)(2)'s equal-cost defense. Pub. L. 101-433, § 103, 104 Stat. 978, 978-79 (1990), codified at 29 U.S.C. § 623(f)(2). If Congress believed that any portions of § 1625.10 interpreted that defense improperly or exceeded the EEOC's authority, Congress would not have endorsed those portions of the regulation. Congress could easily have excepted portions of the regulation when it incorporated it into the statute, as it did, for example, when it incorporated into the ADEA portions of the Fair Labor Standards Act. See 29 U.S.C. § 626(b) ("The provisions of this chapter shall be enforced in accordance with the powers, remedies, and procedures provided in section[ ] . . . 216 (except for subsection (a) thereof) . . . ."). But in enacting OWBPA, Congress endorsed the entire regulation as the authoritative interpretation of the equal-cost defense, and Baltimore County is therefore bound by the entire regulation. Cf. Lorillard v. Pons, 434 U.S. 575, 580–81 (1978) (since § 626(b) of the ADEA incorporated the remedies provided in § 216(b) of the FLSA, and the courts had held that employees bringing FLSA actions under § 216(b) had the right to a jury trial, Congress presumably intended ADEA plaintiffs to have the same right); Cleary v. United States Lines, Inc., 728 F.2d 607, 608-09 (3d Cir. 1984) (since § 626(b) incorporated § 216(d), and § 216(d) in turn incorporated § 213(f), which exempts from FLSA protection employees working abroad, the ADEA does not protect employees working abroad either), superseded by statute, Older Americans Act Amendments of 1984, Pub. L. 98-459, § 802, 98 Stat. 1767, 1792 (1984). Moreover, all of the county's arguments challenging § 1625.10(d)(4)(i) rest on its location in subsection (d). Even if this Court were to credit the county's challenges to subsection (d)—which we believe should be rejected in light of Congress's express adoption of the entire regulation—the county still violates the regulation because it violates subsection (b) as well. Section 4(f)(2) of the act allows employers to have "age-based reductions in employee benefit plans" only where such reductions "are justified by significant cost considerations." Erie County Retirees Ass'n v. County of Erie, Pa., 220 F.3d 193, 204 (3d Cir. 2000), citing OWBPA, Pub. L. 101-433, § 101, 104 Stat. 978 (1990) (codified at 29 U.S.C. § 621 note); 29 C.F.R. § 1625.10(a)(1). Subsection (b) defines "employee benefit plan" to mean "a plan, such as a retirement, pension, or insurance plan, which provides employees with what are frequently referred to as ‘fringe benefits.'" 29 C.F.R. § 1625.10(b). The subsection continues: "The term does not refer to wages or salary in cash; neither section 4(f)(2) nor any other section of the Act excuses the payment of lower wages or salary to older employees on account of age." Id. Thus Baltimore County violates not only subsection (d) of the regulation, but subsection (b) as well. Despite the clear prohibitions in the statute and the relevant regulation against providing lower wages based on age, the district court found no violation here because it believed that this case is governed by Kentucky Retirement Systems v. EEOC, 128 S. Ct. 2361 (2008). In Kentucky Retirement the EEOC challenged a provision in Kentucky's retirement policies that disqualified employees from receiving disability-retirement benefits if they were eligible for a service pension. The EEOC argued that, because eligibility for a service pension is based, at least in part, on the employee's age, this provision constituted age discrimination. Id. at 2365. The Supreme Court held that Kentucky's retirement system does not violate the ADEA because the challenged disability-retirement rules were based on "pension status" not on age. According to the Court, although eligibility for disability benefits was related to age under the state's system, the circumstances surrounding the rules demonstrated that the rules were not actually motivated by age, but rather were designed to compensate for the fact that younger disabled employees need sufficient money to live on but are not yet eligible for normal retirement. Id. at 2367–68. Kentucky Retirement is not applicable to this case for two fundamental reasons. First, unlike the provision challenged in Kentucky Retirement, which based adverse treatment on pension eligibility, the challenged provision in this case is expressly and directly based on an employee's age. Secondly, Kentucky Retirement addressed discrimination in pension benefits, but the EEOC here is challenging discrimination in wages, not pension benefits. In explaining why the challenged provision in Kentucky Retirement did not constitute age discrimination, the Supreme Court observed that the plan discriminated on the basis of "pension status," not age, and age and pension status are, "as a matter of pure logic, . . . ‘analytically distinct' concepts." 128 S. Ct. at 2367 (relying in part on the ruling in Hazen Paper Co. v. Biggins, 507 U.S. 604, 611 (1993), that years of service are analytically distinct from age). The district court ruled that this case is similar because the pay disparity here turns on pension status and not age. JA-138, 140. The challenged provision, however, does not discriminate on the basis of pension status; it expressly bases the amount of the deduction from an employee's paycheck on his age: "The rate of contribution of the employee shall be determined by the employee's age at the time the employee actually joins the system . . . ." BCC § 5-1-203(1), Add-8. By contrast, in Kentucky Retirement the EEOC challenged a provision that excluded employees from the state's disability pension benefit if they were "eligible for normal retirement." 128 S. Ct. at 2365. The EEOC argued that, although the plan's terms did not expressly base eligibility for a disability pension on an employee's age, the plan still constituted age discrimination because the factor on which eligibility turned—pension status—was itself based, at least in part, on age. Id. While the Court rejected this argument, it took pains to point out that the rule it announced applies only to "the quite special case of differential treatment based on pension status, where pension status—with the explicit blessing of the ADEA—itself turns, in part, on age." Id. at 2369-70 (emphasis in original). The Court emphasized that its opinion "in no way unsettles the rule that a statute or policy that facially discriminates based on age suffices to show disparate treatment under the ADEA." Id. at 2369. Because the challenged policy in this case "facially discriminates based on age," it constitutes disparate treatment notwithstanding Kentucky Retirement. See Mona Shores Bd. of Educ. v. Mona Shores Teachers Educ. Ass'n, No. 271592, 2008 Westlaw 3009890, at *4–5 (Mich. App. Aug. 5, 2008) (even after Kentucky Retirement, collective bargaining agreement's early-retirement provision violated ADEA, because disparity in benefits was directly and expressly based on age). The district court's assertion that the county's policy discriminates on the basis of pension status is based not on the terms of the challenged policy, but on the county's explanation for why it adopted a policy that facially discriminates on the basis of age. Furthermore, the district court defined the term "pension status" differently than the Kentucky Retirement Court did. In Kentucky Retirement, "pension status" meant pension eligibility, i.e., whether an employee was eligible for normal retirement benefits. 128 S. Ct. at 2367 (using the terms "pension status" and "pension eligibility" interchangeably). And in Kentucky Retirement pension status always depended, according to the Court, at least in part on years of service and never depended solely on age. Id. ("Kentucky's Plan turns normal pension eligibility either upon the employee's having attained 20 years of service alone or upon the [employee's] having attained 5 years of service and reached the age of 55.") (emphasis in original). In this case, however, the district court used the term "pension status" to refer to the number of years between enrollment and eligibility for normal retirement at age 60. JA-140. Defined this way, pension status is not analytically distinct from age, because it is the arithmetical reciprocal of age: the two figures—the employee's age at enrollment and the number of years between his age at enrollment and normal retirement—always add up to 60. For example, the pension status of an employee enrolled at age 20 is 40 (60 – 20) and the pension status of an employee enrolled at age 55 is 5 (60 – 55). Kentucky Retirement is also inapplicable because this case does not involve discrimination in the provision of retirement benefits, but rather discrimination in the payment of wages. The Kentucky Retirement Court itself acknowledged that this is a fundamental distinction. The Court noted that it was addressing "a set of complex systemwide rules [that] involve, not wages, but pensions," and it pointed out that the ADEA treats pensions "somewhat more flexibly and leniently" than it treats wages. 128 S. Ct. at 2367. For example, the ADEA allows employers to use age in determining eligibility for retirement benefits and give older employees lower health benefits if they establish an equal-cost defense. 29 U.S.C. §§ 623(f)(2)(B)(i), 623(l)(1)(A)(i). But the ADEA has no similar provision condoning age discrimination in wages. The Kentucky Retirement Court found that Kentucky's disability-retirement rules affected older employees differently only because the rules governing normal retirement relied in part on age, a reliance that the ADEA expressly allows. Id. at 2367–68 (citing 29 U.S.C. § 623(l)(1)(A)(i)). Here, however, the challenged discrimination in take-home pay is explicitly prohibited both by the ADEA and the relevant regulation, as stated above. The district court gave no justification for expanding Kentucky Retirement's rule permitting the use of age in determining retirement benefits to permitting the use of age in determining wages, and this Court should not condone such an expansion. Interpreting Kentucky Retirement to cover discrimination in wages would allow employers to engage in overt age discrimination in compensation as long as they describe the disparity as based on pension status instead of age. Under the district court's interpretation, an employer with a retirement system in which eligibility for normal retirement turns solely on age could lawfully reduce the salary of every employee above that age by merely characterizing the reduction as based on pension status instead of age. There is nothing in Kentucky Retirement to suggest that the Supreme Court meant to condone this type of age discrimination in compensation. Even if the general principles expressed in Kentucky Retirement were applicable to this case, the district court erred in finding no violation here because the district court's application of Kentucky Retirement's six factors is flawed. The Kentucky Retirement Court listed six factors that, taken together, led the Court to conclude that the disparities in treatment in that particular case "were not ‘actually motivated' by age." Id. at 2367. The district court found that all six of these factors support finding no violation here. In fact, five of the factors support the EEOC in this case. As discussed above, the first factor cuts strongly against the county because the challenged policy is expressly based on age, and not on pension status, or some other factor that is "analytically distinct from age." See supra pp. 19–21. The second Kentucky Retirement factor also favors the EEOC's position. In discussing that factor, the Court considered two "background circumstances" that showed that pension status was not serving as a proxy for age in that case. First, the challenged plan was "part of a set of complex systemwide rules [that] involve[d], not wages, but pensions—a benefit that the ADEA treats somewhat more flexibly and leniently in respect to age." 128 S. Ct. at 2367. Moreover, the specific benefit being challenged was one that was "offered to all hazardous position workers on the same nondiscriminatory terms ex ante." Id. The provision being challenged in this case reduces the amount of take-home pay an employee receives based on his age; it does not affect the amount of pension benefits he will receive. It therefore addresses wages, not pensions. In addition, the lower deductions from wages afforded to younger employees when they enroll are not a benefit that was offered to all employees ex ante; employees older at enrollment were never offered those more favorable rates. The third factor also supports the EEOC's position. The Kentucky Retirement Court ruled that Kentucky had "a clear non-age-related rationale for the [challenged] disparity"—its desire "to treat a disabled worker as though he had become disabled after, rather than before, he had become eligible for normal retirement benefits." 128 S. Ct. at 2368. The district court here reasoned that Baltimore County also has a non-age-related rationale: "Because older new-hires have less time to accrue earnings on their contributions, it is necessary to have them contribute more towards their retirement benefits." JA-138. But this rationale is not non-age-related. The district court necessarily referred to the employees' age in stating the rationale (describing the affected new-hires as the "older" new-hires), thereby demonstrating that it is age-related. The fourth Kentucky Retirement factor was that although the challenged plan sometimes harmed older workers, it also sometimes helped them. 128 S. Ct. at 2369. The district court found this factor favorable to Baltimore County, stating that "while older new-hires are required to make larger per-paycheck contributions, they ultimately receive the same benefits as younger new-hires while contributing a smaller net-amount towards their retirement." JA-139. But this statement is simply not correct. Since an employee older at enrollment makes larger contributions per paycheck, the only way he could contribute "a smaller net- amount" toward his retirement would be to work significantly fewer years before retiring than his younger comparator. But if he works significantly fewer years before retiring, he will not receive "the same benefits," because his retirement benefits are determined by his years of service. See formula set forth supra p. 4. Kentucky Retirement's sixth factor was the difficulty of finding a remedy that would correct the challenged disparity but still allow the plan to achieve its legitimate objective—in that case, "providing each disabled worker with a sufficient retirement benefit." 128 S. Ct. at 2369. The district court ruled that this factor favors the county because, although the county's new uniform-percentage- rate system corrects the disparity challenged here, it "requires the County to fund a significantly larger portion of benefits for older employees," and therefore thwarts the county's "legitimate objective of making relatively equal contributions on behalf of all plan members." JA-139. But the district court's factual finding lacks any basis in the record, and its application of the factor is therefore erroneous. When the court stated that the new system "requires the County to fund a significantly larger portion of benefits for older employees," it presumably meant to compare the county's average contribution on behalf of older employees in the new system with its average contribution on behalf of employees older at enrollment in the older system.<8> But the record contains no evidence showing how much the county contributes on behalf of older employees in the new system, and no evidence showing that the county's average contribution on behalf of older employees in the new system is greater than its average contribution on behalf of employees older at enrollment in the older system. Furthermore, the district court erred in assuming that the county's objective is "legitimate" or lawful. If the county can meet its objective of "making relatively equal contributions on behalf of all plan members" only by requiring employees older at enrollment—or older employees—to contribute a higher percentage of their salary for the same benefits, then it is not a "legitimate" objective, because the statute and the relevant regulation forbid the resulting discrimination in wages, as pointed out supra pp. 13–15. If equalizing the contributions it makes on behalf of all plan members is very important to the county, the county may do so—consistent with its obligation to comply with the ADEA—(1) by requiring all employees to contribute at a high-enough uniform rate to eliminate any need on the county's part to contribute more on behalf of the older new-hires, (2) by switching to a pension plan, such as a cash-balance pension plan, that complies with 29 U.S.C. § 623(i)(10), or (3) by switching to a defined-contribution plan, see Quinones v. City of Evanston, Ill., 58 F.3d 275, 279 (7th Cir. 1995) (employer that makes equal contributions on behalf of all workers to defined-contribution plan would not violate the ADEA); Brian W. Berglund, The Nuts and Bolts of Discrimination Testing, SP046 ALI-ABA 245, 269 (Mar. 2009) (employer that allocates the same percentage of salary to each employee's account satisfies a safe harbor for a defined-contribution plan). Accordingly, even if this Court were to apply the Kentucky Retirement factors in this case, the district court's summary judgment order should be reversed, because five of the six factors support a finding that Baltimore County was "actually motivated" by age and therefore violated section 4(a) of the ADEA. Baltimore County argued in the district court that, even if the ERS violates § 4(a), the county is not liable under the ADEA because it has established an equal-cost defense under § 4(f)(2). R-59 at 16. But under 29 C.F.R. § 1625.10 the equal-cost defense is not available to Baltimore County. First, § 1625.10 states that § 4(f)(2) provides a defense only for "employee benefit plans," and that term refers to plans providing fringe benefits, like retirement benefits. As noted supra pp. 17–18, the regulation expressly provides that the term "employee benefit plan . . . does not refer to wages or salary in cash; neither section 4(f)(2) nor any other section of the Act excuses the payment of lower wages or salary to older employees on account of age." 29 C.F.R. § 1625.10(b). Baltimore County is paying lower wages to older employees on account of their age, and § 1625.10(b) states plainly that a § 4(f)(2) equal-cost defense is not available for that type of § 4(a) violation. Moreover, as pointed out supra pp. 14–15, § 1625.10(d) specifically prohibits requiring an older employee to "make greater contributions than a younger employee in support of an employee benefit plan." Id. § 1625.10(d)(4)(i). Finally, the EEOC in the district court relied in part on City of Los Angeles, Department of Water and Power v. Manhart, 435 U.S. 702 (1978), which held that the defendant violated Title VII by making higher deductions from the paychecks of female employees to help fund their pensions than it made from the paychecks of male employees, even though the larger deductions for female employees had a legitimate actuarial justification. JA-139–40. The district court distinguished Manhart because in that case the disparity harmed all of the female employees, while the disparity challenged here does not harm all the older employees. JA-140 & n.3. But Manhart did not turn on the fact that the challenged provision affected all the female employees instead of just some of them. Disparate treatment on the basis of a prohibited factor is unlawful even if it injures only one—or only some—of the members of the protected class. Phillips v. Martin Marietta Corp., 400 U.S. 542, 544 (1971) (per curiam) (defendant's policy violated Title VII even if it injured only some of the female applicants—those with school-age children—and not all of them). The real distinction between Manhart and this case is that Title VII provides no cost-based defense, while the ADEA does. Compare Manhart, 400 U.S. at 716–17 (Title VII contains no cost-justification defense) with Erie County Retirees, 220 F.3d at 213–15 (defendant county could offer retirees lower health benefits if it satisfied ADEA's "equal benefit or equal cost principle"). But the ADEA's cost-based defense, as already discussed, is limited to disparities in the benefits provided under an employee benefit plan, and employers seeking to avail themselves of the defense must comply with § 1625.10, as the statute itself states. See supra pp. 15–18 & n.7. II. The District Court Did Not Abuse its Discretion in Denying the County's Laches Defense. The district court correctly rejected the county's laches defense. The principal purpose of the laches doctrine is to avoid the prosecution of stale claims. Newport News Shipbuilding & Dry Dock Co. v. Parker, 935 F.2d 20, 27 (4th Cir. 1991) ("The equitable doctrine of laches precludes the prosecution of stale causes of action … ."); Hutchinson v. Pfeil, 105 F.3d 562, 565 (10th Cir. 1997) (laches is a "defense[ ] designed to bar stale claims"). The Commission is challenging here a current, ongoing violation of the ADEA, and its claim is therefore clearly not stale. Havens Realty Corp. v. Coleman, 455 U.S. 363, 380 (1982) ("Where the challenged violation is a continuing one, the staleness concern disappears."). Even if the defense of laches were potentially applicable to the claim in this case, the district court correctly ruled that the county failed to establish the elements of a laches defense. In order to establish laches, a defendant must prove that it was prejudiced by the other party's lack of diligence. White v. Daniel, 909 F.2d 99, 102 (4th Cir. 1990). To show prejudice, the county relied in part on the increased exposure it may face due to the EEOC's delay in suing. The district court properly ruled that this argument is "premature at this stage of the litigation." JA-132. An employer's claim of exposure prejudice should not normally be resolved by dismissing the EEOC's claims; rather, it should be addressed, as the district court stated, id., when that court determines what relief it will grant the Commission, and thus it need be addressed only if the agency prevails on the merits. EEOC v. Chesapeake & Ohio Ry. Co., 577 F.2d 229, 233-34 (4th Cir. 1978) (where the EEOC sought back pay on behalf of a number of employees, the district court erred in dismissing a group of claims on laches grounds; prejudice should be assessed separately "with respect to each back pay claim, and . . . only after the circumstances surrounding each claim have been fully explored"); EEOC v. American Nat'l Bank, 574 F.2d 1173, 1175-76 (4th Cir. 1978) ("Whether the commission's delays caused prejudice that will justify a limitation of the relief which the district court should decree can best be considered after the facts have been fully developed, if the commission ultimately prevails.") (relying on Occidental Life Ins. Co. v. EEOC, 432 U.S. 355, 373 (1977)). The county also claimed prejudice based on its assertion that many "witnesses to the [1945] establishment and early history" of the ERS have died; that the actuary's previous legal counsel has retired; and that the "workpapers" that the actuary created in setting the current member contribution rates (in 1977) have not been preserved. The district court acted within its discretion in ruling that the various types of evidence that the county alleges are unavailable or difficult to procure are either irrelevant or unimportant to the county's defenses, or not identified and discussed in sufficient detail to establish prejudice. The EEOC is challenging the varying deduction rates that have been in effect since 1996 and that continue to affect the majority of the county's employees today and in the future. The Commission is not challenging the accuracy of the calculations that the county's actuary made in 1977, let alone in 1945. The issue is whether it is lawful for the county to rely on any actuarial considerations to justify its decision to deduct higher percentages from the salaries of employees older at enrollment. Accordingly, much of the evidence that the county is concerned about is irrelevant. See Vineberg v. Bissonnette, 548 F.3d 50, 58 (1st Cir. 2008) ("[A] laches defense . . . premised on an evidence-based predicate [has been allowed only where] that evidence would have been relevant to one or more essential issues in dispute between the parties."). Additionally, several of the county's claims of evidentiary prejudice fail to establish specific and substantial prejudice to the county's ability to defend against the EEOC's claims. See, e.g., EEOC v. Great Atl. & Pac. Tea Co., 735 F.2d 69, 84 (3d Cir. 1984) (fact that potential witnesses are no longer employed by defendant "does not establish their unavailability"); adidas-America, Inc. v. Payless Shoesource, Inc., 546 F. Supp. 2d 1029, 1072-73 (D. Or. 2008) (general reference to unavailability of "key witnesses" is insufficient to establish prejudice; defendant must identify specific witnesses and show that these witnesses would have been important to defendant's defense). CONCLUSION For the reasons stated above, this Court should affirm the district court's laches ruling because the Commission is alleging a current violation of the ADEA. The Court should reverse the district court's judgment insofar as it grants summary judgment for the defendant and remand this case to the district court for further proceedings. REQUEST FOR ORAL ARGUMENT This appeal raises an issue of first impression in this Court—and indeed in any federal court of appeals: whether facial discrimination in take-home pay on the basis of age that is caused by varying pension contributions still violates the ADEA after Kentucky Retirement. We therefore believe that oral argument would assist the Court. Respectfully submitted, JAMES L. LEE Acting General Counsel CAROLYN L. WHEELER Acting Associate General Counsel VINCENT J. BLACKWOOD Assistant General Counsel /s/ Paul D. Ramshaw PAUL D. RAMSHAW Attorney EQUAL EMPLOYMENT OPPORTUNITY COMMISSION Office of General Counsel 131 M St., NE, Room 5SW18K Washington, DC 20507 (202) 663-4737 Paul.Ramshaw@eeoc.gov UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 09-1688 EEOC v. Baltimore County, et al. CERTIFICATE OF COMPLIANCE WITH RULE 32(a) I certify that this brief complies with the type-volume limitation of Fed. R. App. P. 32(a)(7)(B) because it contains 7,919 words (as counted by MS Word 2003), excluding the parts of the brief exempted by Rule 32(a)(7)(B)(iii). The brief complies with the typeface requirements of Rule 32(a)(5) because it has been prepared in a proportionally spaced typeface using MS Word 2003 in Times New Roman 14-point type. /s/ Paul D. Ramshaw Paul D. Ramshaw August 17, 2009 CERTIFICATE OF SERVICE I certify that this brief will be served today by means of this Court's CM/ECF filing system on the following counsel, each of whom has consented to electronic service: James J. Nolan, Jr. Baltimore County Office Of Law Old Courthouse 400 Washington Ave., 2d floor Towson, MD 21204 jnolan@baltimorecountymd.gov Linda D McKeegan Kahn Smith and Collins PA 201 N Charles St 10th Fl Baltimore , MD 21201 mckeegan@kahnsmith.com John West Jennifer Hunter Bredhoff and Kaiser PLLC 805 15th St NW Ste 1000 Washington , DC 20005 jwest@bredhoff.com jhunter@bredhoff.com Bernard Ilkhanoff Ilkhanoff and Silverstein PC 249 S Main St Shrewsbury , PA 17361 bernard@islawyers.com /s/ Paul D. Ramshaw Paul D. Ramshaw August 17, 2009 *********************************************************************** <> <1> As discussed infra p. 6, the Baltimore County Council amended the relevant regulations in May 2007 to change the rules governing member contributions for employees hired after July 1, 2007. Except where noted, this brief addresses the rules that govern employees hired before that date, including most of the county’s current employees. <2> The relevant sections of the version of the Baltimore County Code that was in effect before the 2007 amendment are attached as an addendum to this brief. <3> Part-time employees and employees who were 59 or older when hired had the option of not joining the system. BCC § 5-1-203(1) & (6)(i), Add-8 & 11. Other employees did not have that option. BCC § 5 1-203(1) & (4), Add-8–9. <4> Section 5-1-213 applies to “members of Group 3.” Group 3 consists of regular (non-public-safety) employees who enrolled after September 1959. BCC § 5-1-204(a)(1), Add-13. <5> This allegation appears in a letter from the ERS’s actuary to the ERS. JA-65. There is no sworn testimony establishing this allegation. <6> Bill No. 42-07, Baltimore County Council (enacted May 7, 2007) (available at http://www.baltimorecountymd.gov/countycouncil/legislation/07bills.html), codified at § 5 1 203(9) (available at http://www.amlegal.com/baltimoreco_md). <7> The relevant portion of § 4(f)(2) states: It shall not be unlawful for an employer, employment agency, or labor organization – (2) to take any action otherwise prohibited under subsection (a), (b), (c), or (e) of this section – (B) to observe the terms of a bona fide employee benefit plan – (i) where, for each benefit or benefit package, the actual amount of payment made or cost incurred on behalf of an older worker is no less than that made or incurred on behalf of a younger worker, as permissible under section 1625.10, title 29, Code of Federal Regulations (as in effect on June 22, 1989) . . . . 29 U.S.C. § 623(f)(2). <8> The other possible interpretation is that the county’s average contribution on behalf of older employees in the new system is greater than its average contribution on behalf of younger employees in the new system. But according to the county, that is true in the older system too. R-92 (county’s motion for summary judgment) at 9–10. The county’s objective (of making relatively equal contributions) would therefore be thwarted (or more thwarted) by the new system only if this disparity in the new system is greater than it was in the older system, and the record contains no evidence showing this.