Court Opinion

ID: 9497067
Source: CourtListenerOpinion
Date Created: 2023-08-05 16:42:37.960834+00
Date Added: 2024-06-11T17:57:59.148995
License: Public Domain

FERGUSON, Circuit Judge,
concurring in part and dissenting in part:
I concur in the majority’s decision to vacate the grant of summary judgment in favor of defendant Salem-Keizer Yellow Cab. I dissent from the majority’s denial of summary judgment to plaintiff David En-low. The uncontested facts establish a violation of the Age Discrimination in Employment Act (“ADEA”). In ruling otherwise, the majority fundamentally misconstrues the discriminatory intent that must be shown in a case of facial discrimination.
Mr. Enlow, a 72-year-old" cabdriver, was discharged from Yellow Cab because the company’s new insurance policy did not cover drivers, over 70. The majority remands this case for a fact finder to determine whether Yellow Cab acted with discriminatory animus. Yet there are no material facts in dispute. The only question to be resolved is whether, as a matter of law, the Age Discrimination in Employment Act (“ADEA”) is violated where an employer terminates a 72-year-old employee because the company’s chosen insurance policy does not cover drivers over 70.
The answer to that question must be yes. Where an employer intentionally uses age as a criterion for an employment decision, engaging in facial discrimination, it cannot be a defense that the employer sought only to save costs. Nor can the employer escape liability by claiming that exigent circumstances excused its actions. The ADEA prohibited age discrimination while carefully enumerating several exceptions 'to the rule. See 29 U.S.C. § 623(f). None of these exceptions applies here. The majority’s implicit creation of a new exception for employment actions allegedly taken in good faith dilutes the protections Congress sought to provide for older workers.
I.
Yellow Cab contends that Mr. Enlow did not establish the discriminatory intent required for an ADEA disparate treatment claim, as described by Hazen Paper Co. v. Biggins, 507 U.S. 604, 113 S.Ct. 1701, 123 L.Ed.2d 338 (1993). In that case, the Supreme Court held that an employer does not violate the ADEA by terminating an older employee in order to prevent his pension benefits from vesting, even if pension status is correlated with age. Id. at 611-12, 113 S.Ct. 1701. The Court reasoned that age and pension status are “analytically distinct,” and noted that a younger employee who has worked for a particular employer his entire career *655might be closer to qualifying for pension benefits than an older employee newly hired. Id. at 611,113 S.Ct. 1701.
Yellow Cab claims that here, too, it discharged Mr. Enlow based on a classification — insurability—that is analytically distinct from age. Unlike the situation in Hazen, however, there is not merely a correlation between age and qualification for insurance coverage, but absolute identification: Mr. Enlow did not qualify for Yellow Cab’s new insurance policy because he was over 70, and as a result, the company fired him. The cab company acknowledged that but for Mr. Enlow’s age, he would not have been discharged. Thus, Mr. Enlow meets Hazen’s requirement that an employee show that age “actually played a role in [the employer’s decision-making] process and had a determinative influence on the out-come.” 507 U.S. at 610, 113 S.Ct. 1701.
Yellow Cab’s attempt to separate out insurability from age is unavailing. In City of Los Angeles Dept. of Water & Power v. Manhart, the Supreme Court rejected the employer’s argument that a plan requiring women to make larger monthly contributions to a pension plan than men was “based on the factor of longevity rather than sex.” 435 U.S. 702, 712, 98 S.Ct. 1370, 55 L.Ed.2d 657 (1978). The Court stated: “It is plain ... that any individual’s life expectancy is based on a number of factors, of which sex is only one.... [0]ne cannot say that an actuarial distinction based entirely on sex is based on any other factor other than sex. Sex is exactly what it is based on.” Id. at 712-13, 98 S.Ct. Í370 (internal citations omitted). Here, too, an individual’s insurance risk is based on numerous factors, but Mr. Enlow’s inability to qualify for insurance coverage was based solely on age. The cab company cannot splice out insurability from age where, as in Manhart, the proffered basis for its employment practice coincides absolutely with a protected trait.
Nor can Yellow Cab escape liability by shifting blame to the insurance carrier that established the coverage limits. The Supreme Court held more than twenty years ago that an employer violated Title VII where the retirement plans offered to its employees provided lower monthly benefits to women, even though the discriminatory conditions were supplied by private insurers. Ariz. Governing Comm, for Tax Deferred Annuity & Deferred Compensation Plans v. Norris, 463 U.S. 1073, 103 S.Ct. 3492, 77 L.Ed.2d 1236 (1983). The employer “cannot disclaim responsibility for the discriminatory features of the insurers’ options,” and violates Title VII “regardless of whether third parties are also involved in the discrimination.” Id. at 1089, 103 S.Ct. 3492. Here, too, Yellow Cab is no less responsible for violating the ADEA because it did so in response to an insurance policy it selected from a third party.
Furthermore, even assuming that the company was not motivated by stigmatizing stereotypes of older workers, Yellow Cab has violated the ADEA. Hazen explains that “[i]t is the very essence of age discrimination for an older employee to be fired because the employer believes that productivity and competence decline with old age.” 507 U.S. at 610, 113 S.Ct. 1701. Congress enacted the ADEA in order to address the concern that “older Workers were being deprived of employment on the basis of inaccurate and stigmatizing stereotypes.” Id. Hazen further stated that where an employer’s decision is “wholly motivated by factors other than age,” the problem presented by such stereotyping “disappears.” Id. at 611, 113 S.Ct. 1701.
This interpretation of the ADEA’s rationale, however, does not shield Yellow Cab. Precedent declares that in a case of *656facial discrimination, the explicit use of a protected trait as a criterion for the employer’s action establishes discriminatory intent, regardless of the employer’s subjective motivations. “Whether an employment practice involves disparate treatment through explicit facial discrimination does not depend on why the employer discriminates but rather on the explicit terms of the discrimination.” Int’l Union, UAW v. Johnson Controls, Inc., 499 U.S. 187, 199, 111 S.Ct. 1196, 113 L.Ed.2d 158 (1991) (finding an employer’s fetal-protection policy to be sex discrimination in violation of Title- VII where it excluded women , of child-bearing capacity from jobs exposing them to lead). There, the Supreme Court noted that “the absence of a malevolent motive does not convert a facially discriminatory policy into a neutral policy.” Id. See also Frank v. United Airlines, Inc., 216 F.3d 845, 854 (9th Cir.2000) (reaffirming that “where a claim of discriminatory treatment is based upon a policy which on its face applies less favorably to one gender ... a plaintiff need not otherwise establish the presence of discriminatory intent.”)
The majority attempts to distinguish Johnson Controls, as well as Manhart, on the grounds that Yellow Cab was not aware of the insurance policy’s age-based provision when it purchased it. That fact is simply irrelevant. The employer engaged in facial discrimination not when it purchased the policy, but when it terminated Mr. Enlow. In addition, the employment decision was not less offensive under Johnson Controls or Manhart because it only affected one individual, or because the discrimination was not announced in a formal, written policy. The crucial fact, in each case, is that the employer openly and explicitly relied on an impermissible classification, in this case age.
Although the principle that, in a case of facial discrimination, an employer’s subjective motivations are not controlling, was originally announced in Title VII cases, this Court has applied that principle to claims under the ADEA. In Equal Employment Opportunity Comm’n v. Borden’s, Inc., we stated that where a severance policy denied a benefit to workers 55 and older, no showing of the employer’s ill will toward' older people was required.1 724 F.2d 1390, 1393 (9th Cir.1984), overruled on other grounds in Pub. Employees Ret. Sys. of Ohio v. Betts, 492 U.S. 158, 109 S.Ct. 2854, 106 L.Ed.2d 134 (1989), superceded by revision to 29 U.S.C. §§ 621, 623.
Indeed, there is good reason to find discriminatory intent where an employer’s decision or policy discriminates on its face: where differential treatment based on a protected trait is open and explicit, older workers are stigmatized on account of their age regardless of the employer’s subjective motivations. Moreover, although there is no evidence that Yellow Cab itself espoused stereotypes of older workers, by dismissing Mr. Enlow because of an insurance policy that did not cover drivers over 70, it ratified the insurance company’s categorical judgment that drivers over 70 were not competent. Whatever the rights of the insurance business to set coverage limits as it deems appropriate, Yellow *657Gab’s termination of an older employee based on the new policy’s age exclusion implicated the stigmatizing stereotypes to which Hazen refers. Mr. Enlow’s dismissal falls squarely within the range of discriminatory employment actions that the ADEA sought to prevent.2
The majority seems to believe that to establish disparate treatment, Mr. Enlow must show that Yellow Cab acted in bad faith. The majority opinion recites at length Yellow Cab’s claims that it found out that Mr. Enlow would not be insured only one day before it had to prove to the city of Salem that all its employees were covered. In the same vein, the opinion recounts that the cab company helped secure other employment for Mr. Enlow, and, according to Yellow Cab, offered to re-hire him if he took a physical exam.3 Even assuming the truth of these claims, the “emergency situation” facing the cab company was, at least in part, of its own making: it chose a new insurance carrier without ever bothering to look at a copy of the new policy’s terms, and without verifying that all of its employees would be covered. It is also questionable whether requiring Mr. Enlow alone to submit to a physical exam ás a condition of re-employment, solely because of his age, would itself violate the ADEA.
In the end, we need not judge whether Yellow Cab acted with ill will. Once discriminatory intent is established, as it is here, the plaintiff need not make an additional showing that the employer acted in bad faith. While an employer’s good faith is relevant to a decision to impose liquidated damages, see Hazen, 507 U.S. at 614-617, 113 S.Ct. 1701, it does not exempt an employer from liability. To sympathize with Yellow Cab’s predicament is one thing; to create a new “good faith” exception to the ADEA, where the statute already provides exceptions that protect employers’ legitimate interests, is quite another.
II.
One of these ADEA exceptions, in fact, was invoked by Yellow Cab and addressed by both parties in their motions for summary judgment. Yellow Cab asserted below that its employment decision fell within the ADEA exception for actions taken “where the differentiation is based on reasonable factors other than age.” 29 U.S.C. § 623(f)(1). This affirmative defense, however, fails as a matter of law. Here, Yellow Cab differentiated Mr. Enlow from other drivers precisely because of his age — making the defense inapplicable. See EEOC v. Johnson & Higgins, Inc., 91 F.3d 1529, 1541 (2d Cir.1996) (“By its terms, the statute supplies an exception for ‘age-neutral’ decisions based on other factors such as health or even education that might be correlated with age ... not an exception for policies that explicitly but reasonably discriminate based on age.”). *658Moreover, the Equal Employment Opportunity Commission (“EEOC”) regulations interpreting the ADEA state that the “reasonable factors other than age” defense is unavailable where an “employment practice uses age as a limiting criterion.” 29 C.F.R. § 1625.7(c).
The EEOC regulations also provide that a differentiation based on the average cost of employing older workers does not qualify under this exception. 29 C.F.R. § 1625.7(f). Citing that regulation, the Eleventh Circuit rejected a cost-savings defense in a case with almost identical facts as the case before us. In Tullis v. Lear School, Inc., 874 F.2d 1489 (11th Cir.1989), a private school fired a 66-year-old bus driver because its insurance carrier only covered drivers 65 or younger. The Eleventh Circuit ruled that the school’s decision to dismiss the driver was based on his age, id. at 1490-91, and that the increased insurance cost for the school did not exempt it from complying with the ADEA. Id. at 1490.
III.
Mr. Enlow’s claim of age discrimination should be granted on summary judgment. There are no material facts for a trier of fact to determine. As a matter of law, the termination of an employee because he is older than the age limitation of his employer’s insurance policy violates the ADEA, even if the employer chose that policy to save money. Had Yellow Cab terminated a female employee because its insurance policy did not cover women, or discharged an Asian employee because its insurance excluded Asians, we would surely have repudiated those actions. As certainly, Yellow Cab’s decision to terminate a 72-year-old cabdriver because its new insurance excluded drivers over 70 deserves our censure. Anti-discrimination law would mean nothing if an employer could justify a facially discriminatory action by invoking its bottom line.

. Borden’s held that a policy that denied severance pay only to employees who were eligible for retirement constituted disparate treatment. 724 F.2d at 1393. While that holding may not survive Hazen, the Borden’s analysis of the intent required in facial discrimination cases is still apt. Moreover, in a case decided after Hazen, the Third Circuit found a separate inquiry into an employer's subjective motivations unnecessary in a case of facial age discrimination. See DiBiase v. SmithKline Beecham Corp., 48 F.3d 719, 726 (3d Cir.1995).

. In addition, by its own terms, the ADEA's purpose is to promote the employment of older persons based on their ability rather than their age. 29 U.S.C. § 621(b). Yellow Cab’s own pleadings acknowledge that Mr. Enlow, a nineteen-year employee of the company, maintained solid job performance. Yellow Cab’s supplemental brief to this Court reiterated that the cab company did not consider Mr. Enlow to be an unsafe driver. His dismissal in spite of his continued ability violates the spirit and the letter of the ADEA.

. The majority repeatedly states that according to Yellow Cab, the termination of Mr. Enlow was to be temporary. The opinion does not explain, however, why this would make a difference. The ADEA prohibits age discrimination “with respect to ... compensation, terms, conditions, or privileges of employment ...”. 29 U.S.C. § 623(a)(1). It does not only prohibit "permanent” termination. Thus, although this fact is contested, it is not a material fact requiring us to remand the case.