Case Name: EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellant, v. FRANCIS W. PARKER SCHOOL, Defendant-Appellee
Court: United States Court of Appeals for the Seventh Circuit
Jurisdiction: United States
Decision Date: 1994-10-21
Citations: 41 F.3d 1073
Docket Number: No. 93-3395
Parties: EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellant, v. FRANCIS W. PARKER SCHOOL, Defendant-Appellee.
Judges: Before BAUER, and CUDAHY, Circuit Judges, and GRANT, District Judge.
Reporter: Federal Reporter 3d Series
Volume: 41
Pages: 1073–1081

Head Matter:
EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellant, v. FRANCIS W. PARKER SCHOOL, Defendant-Appellee.
No. 93-3395.
United States Court of Appeals, Seventh Circuit.
Argued April 20, 1994.
Decided Oct. 21, 1994.
Rehearing and Suggestion for Rehearing En Banc Denied Nov. 18, 1994.
Gail S. Coleman (argued), E.E.O.C., Office of Gen. Counsel, Washington, DC, Sharon A. Seeley, John C. Hendrickson, Gordon Wal-dron, E.E.O.C., Chicago, IL, for plaintiff-appellant.
Don Sampen (argued), Gayle M. Meadors, Charles L. Miehod, Jr., Martin, Craig, Chester & Sonnenschein, Chicago, IL, for defendant-appellee.
Steven S. Zaleznick, Cathy Ventrell-Mon-sees, Thomas W. Osborne, American Ass’n of Retired Persons, Washington, DC, for American Ass’n of Retired Persons, amicus curiae.
Before BAUER, and CUDAHY, Circuit Judges, and GRANT, District Judge.
The Honorable Joel M. Flaum and the Honorable llana D. Rovner took no part in the consideration of this petition,
The Honorable Robert A. Grant, United States District Judge for the Northern District of Indiana, is sitting by designation.

Opinion:
BAUER, Circuit Judge.
The United States Equal Employment Opportunity Commission ("EEOC") brought an action against the Francis W. Parker School ("Parker") alleging that in its 1989 hiring of a drama teacher, the school violated the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. § 621-634. The district court granted summary judgment in favor of Parker. We affirm.
I.
Parker is a private primary and secondary school located in Chicago's Lincoln Park area. The principal of the school has ultimate authority as to decisions on hiring and firing of teachers. Incumbent teachers' salaries are determined by a twenty-two-step system which links salary to work experience. As a matter of policy, Parker has also used the step system to determine the salaries it will pay new teachers by crediting them for prior teaching experience they have had elsewhere.
When a teacher left Parker's drama department in the fall of 1988, Paul Druzinsky, the head of the department, was asked to search for a replacement. Because of fiscal constraints, Parker's principal, John Cotton, told Druzinsky that the position would pay an annual salary of no more than $28,000. The list of candidates was narrowed to three, all of whom were interviewed between March 14 and March 24 of 1989. On March 27, Parker hired Nancy Bishop as the school's new full-time drama teacher. Bishop had at the time a year of experience and was to start at an annual salary of $22,000.
In the meantime, on March 13, after Druz-insky had announced the three finalists for the position, one of Parker's music teachers asked Druzinsky if he would review the resume of a drama teacher named Harold Johnson. Johnson was sixty-three years old and claimed to have thirty years of experience. Druzinsky called Johnson a week later to inform him that he would not be hired. One of the reasons given for the decision was that Johnson qualified for a salary higher than Parker could afford.. Druzinsky claims that he also told Johnson that he was not considered for the position because Druzin-sky had received Johnson's resume after the search process was over and the final candidates had been chosen. Johnson denies that Druzinsky ever mentioned this.
On Johnson's behalf, the EEOC filed this lawsuit alleging that Parker's conduct constituted disparate treatment and disparate impact in violation of the ADEA. Parker's first motion for summary judgment was denied on August 27, 1992. In light of the Supreme Court's decision in Hazen Paper Co. v. Biggins, — U.S. —, 113 S.Ct. 1701, 123 L.Ed.2d 338 (1993), Parker requested that the court reconsider its ruling. The court granted the request, and on June 14, 1993, granted Parker's motion for summary judgment on the EEOC's disparate treatment claim. Parker followed up with a motion for summary judgment on the EEOC's disparate impact claim, and again relying on Hazen Paper, the court granted this motion. The EEOC appeals only the decision on its claim of disparate impact.
II.
We review a decision granting summary judgment de novo. Doe v. Allied Sig nal Inc., 925 F.2d 1007, 1008 (7th Cir.1991). Summary judgment is appropriate when the record, viewed in a light most favorable to the nonmoving party, reveals that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c).
Drafters of the ADEA relied to a large extent on the language of Title VII of the CM Rights Act of 1964. 42 U.S.C. § 2000e. As a result, "disparate treatment" and "disparate impact," terms traditionally used to describe theories of relief under Title VII have been incorporated into the ADEA lexicon. The theories can briefly be described as follows.
Disparate treatment occurs when an employee is treated less favorably simply because of race, color, sex, national origin, or in our ease, age. This is the most obvious form of discrimination. To be successful on this type of claim, proof of discriminatory motive is critical. International Bhd. of Teamsters v. United States, 431 U.S. 324, 335 n. 15, 97 S.Ct. 1843, 1854 n. 15, 52 L.Ed.2d 396 (1977).
Disparate impact is the result of more subtle practices, which on their face are neutral in their treatment of different groups but which in fact fall more harshly on one group than another. No proof of discriminatory motive is necessary, but if the practice is found to be justified by business necessity, the claim will fail. The EEOC claims that due to the statistically significant relationship between age and work experience, by setting a low maximum salary limit, Parker excluded a disproportionate percentage of applicants over the age of forty from consideration for the teaching position. Because no business justification was offered in defense of this policy, the EEOC concludes that Parker's process in hiring a new drama teacher violated the dictates of the ADEA.
We begin our analysis with a brief discussion of the Supreme Court's decision in Hazen Paper. Walter Biggins, a sixty-two year old technical director for the Hazen Paper Company was fired from his position in 1986. Hazen Paper's pension liability vested after an employée completed ten years of service. Biggins's pension benefits would have vested had he worked a few more weeks. As an alternative to his release, Hazen Paper offered to retain Biggins as a consultant, a position which would not have allowed Big-* gins's pension benefits to vest. Biggins brought an ERISA and ADEA claim against Hazen Paper. The jury held in his favor on both counts, and the Court of Appeals affirmed both findings of liability. The Supreme Court granted certiorari to decide whether discharge of an employee motivated by the employer's desire to avoid the vesting of pension benefits is sufficient to state a disparate treatment claim under the ADEA. Hazen Paper, — U.S. at —, 113 S.Ct. at 1704. Because the evidence did not show that Hazen Paper's decision was based on Biggins's age, the Court held that his disparate treatment claim was deficient. Id. at —, 113 S.Ct. at 1708.
Hazen Paper was, by its own terms, a disparate treatment case only. Id. at —, 113 S.Ct. at 1706. Nevertheless, the Court's examination of the ADEA is instructive here. Critical to the Court's analysis was its belief that inaccurate stereotyping of the elderly was, "the essence of what Congress sought to prohibit in the ADEA." Id. The ADEA "requires the employer to ignore an employee's age . it does not specify further characteristics that an employer must also ignore." Id. at-, 113 S.Ct. at 1707. Hence, when an employer denies a worker an employment opportunity based on the belief that older employees are less efficient or less productive, the ADEA provides the worker with a cause of action. On the other hand, "[w]hen the employer's decision is wholly motivated by factors other than age, the problem of inaccurate and stigmatizing stereotypes disappears. This is true even if the motivating factor is correlated with age, as pension status typically is." Id. at -, 113 S.Ct. at 1706. Nevertheless, "[bjecause age and years of service are ana lytically distinct, an employer can take account of one while ignoring the other, and thus it is incorrect to say that a decision based on years of service is necessarily 'age-based.'" Id. at —, 113 S.Ct. at 1707.
Because the decision to fire Biggins was not based on misperceptions about the competence of older workers, Hazen Paper did not violate the ADEA. The Court's discussion makes clear that the ADEA prevents employers from using age as a criterion for employment decisions. On the other hand, decisions based on criteria which merely tend to affect workers over the age of forty more adversely than workers under forty are not prohibited. Anderson v. Baxter Healthcare Corp., 13 F.3d 1120 (7th Cir.1993).
Our reading of Hazen Paper and the ADEA is supported by subsection (f) which reads:
It shall not be unlawful for an employer, employment agency or labor organization—
(1) to take any action otherwise prohibited under subsection [ ] (a), . of this section where age is a bona fide occupational qualification reasonably necessary to the normal operation of the particular business, or where the differentiation is based on reasonable factors other than age.
29 U.S.C. § 623(f).
The exception for differentiation based on "reasonable factors other than age" is particularly noteworthy. It suggests that decisions which are made for reasons independent of age but which happen to correlate with age are not actionable under the ADEA. Anderson v. Baxter Healthcare Corp., 13 F.3d 1120 (7th Cir.1993); Metz v. Transit Mix, Inc., 828 F.2d 1202, 1220 (7th Cir.1987) (Easterbrook, J., dissenting). A similar provision in the Equal Pay Act which permits discrepancies in wages paid to male and female workers for "factors other than sex," has been construed to preclude disparate impact claims. County of Washington v. Gunther, 452 U.S. 161, 170-71, 101 S.Ct. 2242, 2248-49, 68 L.Ed.2d 751 (1981). A sensible interpretation of this provision is that it is further evidence of the ADEA's focus on eliminating decisions made based on stereotypes about age.
Our dissenting colleague insists that the EEOC's claim can be reconciled with the Court's decision in Hazen Paper. In his view, disparate impact theory is designed to bring scrutiny on actions which, although not invidiously discriminatory, might perhaps be the product of unconscious or lingering stereotypes. In this case, however, this approach is of limited applicability.
Perhaps most problematic is Judge Cu-dahy's reliance on Title VII jurisprudence which, though not unprecedented, see, e.g., Geller v. Markham, 635 F.2d 1027 (2d Cir. 1980); Leftwich v. Harris-Stowe State College, 702 F.2d 686 (8th Cir.1983); E.E.O.C. v. Borden's, Inc., 724 F.2d 1390 (9th Cir.1984), seems inappropriate on the facts of this case. He concludes that because Title VII's prohibitions mirror those of the ADEA and Title VII permits disparate impact relief, "similar acceptance in ADEA eases" is required.
In the relevant statutory provisions, however, Title VII and the ADEA differ in a significant way. Subsection (2) of Title VH's prohibitions, which was the basis for the Supreme Court's holding in Griggs v. Duke Power Co., 401 U.S. 424, 91 S.Ct. 849, 28 L.Ed.2d 158 (1971) (holding that Title VII allows claims based on disparate impact), proscribes any actions by employers which "limit, segregate, or classify [their] employees or applicants for employment in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual's race, color, religion, sex, or national origin." 42 U.S.C. § 2000e-2(a)(2) (emphasis added). The "mirror" provision in the ADEA omits from its coverage, "applicants for employment." In light of the ADEA's nearly ver batim adoption of Title VII language, the exclusion of job applicants from subsection (2) of the ADEA is noteworthy. Hence, while the dissent may find our decision creates a "practical difficulty," it is a result dictated by the statute itself.
Moreover, disparate impact theory does not reheve the EEOC of its obligation to prove the error of the employer's ways. Parker's policy of linking wages to experience is an economically defensible and reasonable means of determining salaries. This is borne out by the ADEA's "safe harbor" provision which permits an employer to "observe the terms of a bona fide seniority system . which is not a subterfuge to evade the purposes of [the ADEA's prohibitions]." 29 U.S.C. § 623(f)(2). Though years of service may be age-correlative, Hazen Paper holds that "it is incorrect to say that a decision based on years of service is necessarily age-based," unless the plaintiff can demonstrate that the reason given was a pretext for a stereo-type-based rationale. Hazen Paper, — U.S. at —, 113 S.Ct. at 1707.
Ultimately, the EEOC must show that Parker's rationale is pretextual and that the salary system is predicated on some stereotype, conscious or unconscious. Otherwise, summary judgment in favor of Parker is proper. Anderson v. Baxter Healthcare Corp, 13 F.3d 1120, 1126 (7th Cir.1994). The EEOC has not alleged how Parker's salary system might be a subterfuge for the belief that older teachers are less effective than younger teachers. The EEOC contends only that Parker's system disproportionately affects older applicants. As the district court held, this statistical correlation alone is insufficient to sustain a finding of ADEA liability. For these reasons, the decision of the lower court granting summary judgment in favor of Parker is
Affirmed.
. In the words of the EEOC's expert, Dr. Marc Bendick, Jr., "job applicants age 40 and older would be precluded from hiring at a rate 4.2 times the rate applicable to counterpart applicants aged less than 40."
. The ADEA provision reads in relevant part:
It shall be unlawful for an employer— *
(2) to limit, segregate, or classify employees in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual's age.
29 U.S.C. § 623(a).