EMPLOYMENT LAW

U.S. Supreme Court Holding Impacts Employers “Reasonable Factors Other Than Age” Defense in ADEA Cases

In Meacham v. Knolls Atomatic Power Laboratory, 128 S.Ct. 2395 (June 19, 2008), the U.S. Supreme Court held that an employer defending a disparate impact claim under ADEA bears both the burden of production and the burden of persuasion when asserting the affirmative defense that the employer’s actions were based on reasonable factors other than age (RFOA).

Respondent, Knolls Atomic Power Laboratory (“Knoll”), is a contractor for the National Government involved in the maintenance of the Nation’s fleet of nuclear powered warships. The United States Navy and the Department of Energy jointly fund Knolls’ operations, decide what projects it should pursue, and set its annual staffing limits. In 1996, Knolls was ordered to reduce its work force. After more than one hundred employees chose to take the company's buyout offer, Knolls was left with thirty-some jobs to cut. In order to select those for layoff, Knolls told its managers to score their subordinates on three scales, “performance,” “flexibility,” and “critical skills.” The scores were summed, along with points for years of service, and the totals determined who should be let go.

Of the 31 salaried employees laid off, 30 were at least 40 years old. Twenty-eight of them sued, raising both disparate-treatment (discriminatory intent) and disparate-impact (discriminatory result) claims under the ADEA and state law, alleging that Knolls “designed and implemented its workforce reduction process to eliminate older employees and that, regardless of intent, the process had a discriminatory impact on ADEA-protected employees.” To show a disparate impact, the workers relied on a statistical expert's testimony to the effect that results so skewed according to age could rarely occur by chance; and that the scores for “flexibility” and “criticality,” over which managers had the most discretionary judgment, had the firmest statistical ties to the outcomes.

The district court found for plaintiffs on the disparate-impact claim (but not on the disparate treatment claim), and the Second Circuit initially affirmed applying a “business necessity” standard. The U.S. Supreme Court then vacated the judgment and remanded for further proceedings in light of the holding in Smith v. City of Jackson, 544 U.S. 228 (2005), in which the Supreme Court held that an employer does not need to prove “business necessity” in order to challenge an age discrimination case; rather the employer only needs to demonstrate that its decision was based on a reasonable factor other than age.

The Second Circuit then revered its earlier decision and held for Knolls because in its prior ruling it had applied a “business necessity” standard rather than a “reasonableness” test and because petitioners had not carried the burden of persuasion as to the reasonableness of Knolls’ non-age factors.

The U.S. Supreme Court was then presented with the case and held that an employer defending a disparate-impact claim under the ADEA bears both the burden of production and the burden of persuasion for the “reasonable factors other than age” (RFOA) affirmative defense. Specifically, the court provided:

The RFOA 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 defense is that the factor relied upon was a “reasonable” one for the employer to be using. Reasonableness is a justification categorically distinct from the factual condition “because of age” and not necessarily correlated with it in any particular way: a reasonable factor may lean more heavily on older workers, as against younger ones, and an unreasonable factor might do just the opposite

The Court recognized the concern that placing an employer’s burden of persuasion on an RFOA defense might “encourage strike suits or nudge plaintiffs with marginal cases into court. . . .” and “to allay some of the concern” reiterated its holding in City of Jackson that a plaintiff is required to point to specific employment practices “that are allegedly responsible for any observed statistical disparities” rather than merely pointing to a generalized policy that leads to such an impact.

Employee May Sue for Retaliation Under New Jersey LAD Based on Employer Post-Discharge Conduct

In Roa v. Lafe, ---A.2d ---, 2008 WL 2627625 (N.J. Super. July 7, 2008), Plaintiffs Fernando Roa and Liliana Roa, husband and wife, appealed an order that dismissed their LAD complaint finding it to be time-barred. Plaintiffs contended that the motion judge erred by determining that defendants' alleged post-termination retaliatory conduct was not part of a continuing violation or otherwise actionable under the New Jersey Law Against Discrimination (LAD).

In November 2005, Plaintiffs filed a complaint against LAFE, a food distribution company, and its vice-president, Marino Roa (brother of Fernando Roa) alleging that they were both untimely fired by LAFE in retaliation for making complaints about Marino engaging in two extramarital affairs with the wives of two other LAFE employees. Fernando Roa was fired on August 23, 2003; Liliana Roa was fired on October 23, 2003.

Defendants filed a motion to dismiss the complaint asserting that plaintiffs' LAD claims were time-barred. The motion judge dismissed the claims because the complaint was not filed until November 5, 2005, after the LAD’s two-year statute of limitation had expired.

Plaintiffs provided two theories to support their contention that the complaint was timely. Specifically, Fernando claimed that defendants retaliated against him by improperly canceling his health insurance, an issue not fully resolved until February 2004. Liliana argued that the retaliation continued post-termination because defendants opposed her application for unemployment benefits on false grounds, and that was not resolved until January 2004. Plaintiffs argued that defendants engaged in a continuing pattern of conduct in violation of the LAD or that the post-termination acts complained of were themselves acts of prohibited retaliatory conduct that occurred within the statutory timeframe.

The motion judge rejected theses arguments concluding that the post-termination actions of defendants could not serve as independent bases for plaintiffs' causes of action under the LAD because they were not related to current or prospective employment. The motion judge found that the broad language in the U.S. Supreme Court’s holding in Burlington N. & Santa Fe Ry. Co. v. White , 548 U.S. 53, 126 S.Ct. 2405, 165 L. Ed.2d 345 (2006) was inapplicable to the LAD, noting that the conduct complained of in that case was work-related conduct. The appeals court disagreed with the motion judge’s interpretation and concluded that “the Supreme Court's essential holding in Burlington Northern , i.e., that Title VII's anti-retaliation provision creates a distinct cause of action that need not be related to the workplace, applies with equal reasoning to construction of the LAD. This is consistent with both the express language of the LAD, as well as its broad remedial purposes.”

The motion judge also concluded that plaintiffs' terminations essentially cut-off the possibility of demonstrating a violation of the LAD that continued after they ceased to be employed by LAFE.

The appeals court agreed with the motion judge that each plaintiff's termination created the basis for asserting his or her respective cause of action under the LAD. However, the court held that the focus should be on whether the alleged “continuing violation” that occurs within the statutory time period is conduct that could potentially violate the LAD, as distinguished from the “continuing effect of a prior violation.” In this case, the actions plaintiffs complained of occurred in close proximity to their termination and were allegedly taken by defendants in retaliation for plaintiff's engaging in LAD-protected activity, and, therefore, “were in violation of the LAD in and of themselves.”

Having found that the continuing violation doctrine could apply, the appeals court reversed the dismissal of Fernando’s complaint and remanded to the trial court. However, the court found that Liliana's complaint was properly dismissed because she was aware as of October 2003 of the alleged retaliatory conduct.

CIVIL LITIGATION

A Release Which By its Terms Discharges All Claims and Parties Thereto Extinguishes Claims Against All Tortfeasors.

In Ford Motor Co. v. Buseman, ---A.2d ---, 2008 WL 2637181 (Pa. Super. July 7, 2008), the Pennsylvania Superior Court was presented with the issue of the effect to be accorded a release which by its terms discharged all claims and parties thereto.

The background is as follows: Appellee Robyn Buseman, as Administratrix of the estate of her daughter, Maya Buseman-Williams, filed a complaint against Appellants, alleging Ms. Buseman-Williams died as a result of injuries she sustained when a Ford Explorer she was passenger in rolled over. Appellee alleged the Ford Explorer was defectively designed and manufactured and it rolled over during a foreseeable driving maneuver.

Appellants filed a joint motion for summary judgment alleging that as part of the settlement of a federal suit filed by Appellee against Kevin Reeves, the driver of the Ford Explorer, Appellee executed and filed with the Court two separate releases. One release was with Ms. Buseman-Williams' insurer, Geico Insurance Company (Geico), and one was with Kevin Reeves' insurer, State Farm Insurance Company (State Farm). Appellants alleged that the releases discharged Kevin Reeves and “all other persons, firms or corporations,” and therefore, they sought summary judgment on the basis they had been released from liability. (Appellants noted in the motion for summary judgment that, in anticipation of the preclusive effect of the releases, Appellee filed a legal malpractice action against William C. Reil, Esquire, who represented Appellee during the federal settlement negotiations.)

Appellee filed an answer to the motion for summary judgment alleging that the releases were executed as to Kevin Reeves and the insurance companies only and that it was never her intention to release Appellants or any other party related to the product liability action. The trial court originally denied Appellants' motion for summary judgment; however, while an appeal was pending with the Superior Court the trial court filed a Pa.R.A.P.1925(a) opinion indicating that, after further review, it found genuine issues of material fact and the Ford Defendants were not entitled to judgment as a matter of law.

On appeal, the Superior Court focused on the document itself to understand the intent of the parties. Specifically, the release signed by Appellee with Geico released “Kevin Reeves ... and all other persons, firms or corporations of and from any and every claim, demand, right or cause of action, of whatever kind of nature, on account of or in any way growing out of any and all personal injuries and consequences thereof....” And, the release signed by Appellee with State Farm released “Kevin Reeves, ... and all other persons, firms or corporations liable or, who might be, claimed to be liable, none of whom admit any liability to the undersigned....”

The court held that the language in the releases at issue was unambiguous, clear, and broad in scope. The court compared the language to that found in the release in the seminal case of Buttermore v. AliquippaHospital, 522 Pa. 325, 561 A.2d 733 (1989), wherein the Pennsylvania Supreme Court was presented with the issue of the effect to be accorded a release which by its terms discharged all claims and parties thereto. The Buttermore court held that the release discharged others who had not contributed consideration toward the release, and in fact extinguished claims against all tortfeasors. The Pennsylvania Supreme Court provided:

If such a release can be nullified or circumvented, then every written release and every written contract or agreement of any kind no matter how clear and pertinent and all-inclusive, can be set aside whenever one of the parties has a change of mind or whenever there subsequently occurs a change of circumstances which were unforeseen, or there were after-discovered injuries, or the magnitude of a releasor's injuries was unexpectedly increased, or plaintiff made an inadequate settlement. It would make a mockery of the English language and of the law to permit this release to be circumvented or held to be nugatory.

Buttermore, 522 Pa. at 329-330.

As in Buttermore, the two releases in this case applied to “all other persons, firms or corporations of and from any and every claim demand, right or cause of action, of whatever kind of nature,” and “all other persons, firms or corporations liable or, who might be, claimed to be liable ... from any and all claims....” In light of the clear, unambiguous nature of the releases, the court concluded that in the absence of fraud, accident, or mutual mistake, Appellee was prevented from recovering from Appellants in the instant action.