Opinion ID: 4305333
Heading Depth: 2
Heading Rank: 2

Heading: Evidence of Disparate Impact

Text: Caterpillar also argues that the plaintiffs have failed to demonstrate that the liquidation plan has an age-related disparate impact. A disparate-impact claim involves “employment practices that are facially neutral in their treatment of different groups but that in fact fall more harshly on one group than another.” Hazen Paper Co. v. Biggins, 507 U.S. 604, 609 (1993) (quotation marks omitted). The plaintiffs must demonstrate a “significant” age-based disparity to establish a prima facie case. Karlo v. Pittsburgh Glass Works, LLC, 849 F.3d 61, 69 (3d Cir. 2017). Under the pension plan, retirement eligibility depends on a combination of age and a factor correlated with age (credited service). By definition, therefore, the terms of the liquidation plan have a disparate impact on older workers. This is borne out by the statistics: the mean age of the retirement-eligible employees is 61.57 compared with a mean age of 47.81 for those ineligible to retire. The liquidation plan has an especially severe impact on employees aged 55 and older. Only 1.4% of employees under the age of 55 were eligible for 10 No. 17-2956 retirement compared with 93.4% of those 55 and older. In light of the substantial statistical disparities between the ages of retirement-eligible and nonretirement-eligible employees, the plaintiffs have established a prima facie disparate-impact case. Caterpillar responds that the disparate-impact analysis is not so simple, and that the ADEA does not extend to “subgroup” claims and thus the relevant statistical comparison should be between employees 40 years and older and employees under 40. Caterpillar also argues that retirement-eligible employees are not similarly situated to those who are not eligible to retire. Finally, Caterpillar asserts that the plaintiffs cannot maintain an ADEA claim where the disparate impact resulted from “the valid criterion of retirement eligibility.” These arguments are flawed for reasons we discuss below.
To prove a disparate-impact claim, the plaintiffs must show that Caterpillar’s liquidation plan has a disparate impact on them “because of” their membership in a protected group. Watson v. Fort Worth Bank & Tr., 487 U.S. 977, 994 (1988) (discussing a Title VII disparate-impact claim). Under the ADEA, the protected group includes “individuals who are at least 40 years of age.” 29 U.S.C. § 631(a). Caterpillar makes a perfunctory argument that the proper statistical comparison is between those who are in the statutorily protected group (i.e., employees 40 years and older) and those who are not. O’Connor v. Consolidated Coin Caterers Corp., 517 U.S. 308 (1996), forecloses this argument. In O’Connor a 56-year-old employee brought a disparate-treatment claim when he was No. 17-2956 11 replaced by a 40-year-old. Id. at 309–10. The Court found his claim cognizable, reasoning that the ADEA’s language does not ban discrimination against employees because they are aged 40 or older; it bans discrimination against employees because of their age, but limits the protected class to those who are 40 or older. The fact that one per- son in the protected class has lost out to another person in the protected class is thus irrelevant[] so long as he has lost out because of his age. Id. at 312. The disparate-treatment and disparate-impact provisions are identically phrased with each requiring discrimination “because of such individual’s age.” See 29 U.S.C. § 623(a)(1) (disparate treatment); id. § 623(a)(2) (disparate impact). The Court’s reasoning therefore applies with equal force to disparate-impact claims. See Karlo, 849 F.3d at 71 (reaching the same conclusion).
Caterpillar next argues that statistical comparisons between dissimilar groups cannot support a prima facie disparate-impact claim. For support Caterpillar cites Wards Cove where the Court rejected a comparison between the racial composition of a fish company’s skilled workers—including accountants, doctors, and engineers—and its unskilled cannery laborers. 490 U.S. at 651–52. The Court called the comparison “nonsensical” given the differently constituted labor pools. Id. at 615. Caterpillar asserts that this case is analogous: only retirement-eligible workers are susceptible to retirement 12 No. 17-2956 incentives, so it wouldn’t make sense to compare them to employees who are ineligible to retire. But Caterpillar overlooks stark differences between this case and Wards Cove. There are no inherent differences between the unemployment-plan participants who were eligible to retire and those who were not. They occupied the same factory jobs, were subject to the same compensation plan, and were entitled to the same benefits. Caterpillar simply offered a worse deal to a similarly situated group of employees.
Caterpillar asserts that the Supreme Court has expressly approved of classifications based on pension status. For support it cites two ADEA disparate-treatment cases. See Hazen Paper, 507 U.S. at 611 (holding that an employer permissibly terminated a 62-year-old to avoid paying pension benefits that would have vested six months later); Ky. Ret. Sys. v. EEOC, 554 U.S. 135, 143 (2008) (holding that disability benefits that turned on pension eligibility were permissible). Caterpillar explains that an action based purely on pension status is not taken “because of such individual’s age,” so liability exists only where “pension status serve[s] as a proxy for age.” Ky. Ret. Sys., 554 U.S. at 142 (internal quotation marks omitted). But these disparate-treatment cases shed no light on the scope of disparate-impact liability. The plaintiff in a disparate-treatment case must prove that age “actually motivated the employer’s decision.” Id. at 141 (quotation marks omitted). Because age and pension status are “analytically distinct,” an employer may “take account of one while ignoring the other.” Hazen Paper, 507 U.S. at 611. In contrast, a disparate-impact No. 17-2956 13 claim necessarily involves a policy—e.g., conditioning benefits on pension status—that is motivated by a factor other than age. As the Court explained in Meacham v. Knolls Atomic Power Laboratory: The [reasonable factor other than age] defense in a disparate-impact case … is not focused on the asserted fact that a non-age factor was at work; we assume it was. The focus of the de- fense is that the factor relied upon was a “rea- sonable” one for the employer to be using. 554 U.S. 84, 96 (2008). We therefore turn to Caterpillar’s affirmative defense. 1