The Third Circuit Court of Appeals recently created a circuit split when it disagreed with prior decisions from the Second, Sixth, and Eighth Circuits regarding the Age Discrimination in Employment Act of 1967 (ADEA). In Karlo v. Pittsburgh Glass Works, LLC, No. 15-3435 (January 10, 2017), the Third Circuit held that “subgroup” disparate impact claims are cognizable under the ADEA.

Factual Background

Pittsburgh Glass Works, LLC is an automotive glass manufacturer in Pennsylvania. During the recession, the company implemented several mass layoffs, one of which resulted in the discharge of 100 employees on March 31, 2009. The company gave broad discretion to unit directors in selecting who would be laid off; it did not provide training or guidelines for selection, nor did it document why certain employees were laid off.

Several former employees who had been discharged in the March 31, 2009 layoff brought suit against Pittsburgh Glass Works. Among other claims, they argued that the mass layoff had a disparate impact on individuals over the age of 50. The district court granted summary judgment to the company on the disparate impact claim because a “fifty-and-older disparate-impact claim is not cognizable under the ADEA.” In other words, the court—like several before it—reasoned that a disparate impact claim under the ADEA needs to disproportionately affect the protected group (i.e., individuals over 40) as a whole, not just a subgroup of the protected group. The plaintiffs appealed that decision to the Third Circuit.

The Third Circuit’s Decision

The Third Circuit found that the district court’s determination regarding subgroups and the ADEA—that subgroup disparate impact claims were not cognizable under the law—was incorrect and that similar determinations by other circuit courts were also flawed.

The Third Circuit took the position that discrimination against a subgroup of a protected group can support an ADEA disparate impact case. In deciding this issue, the court looked to precedent from the Supreme Court of the United States. In 1996, the Supreme Court found that subgroup disparate treatment claims were cognizable under the ADEA, stating that “the fact that one person has lost out to another person in the protected class is thus irrelevant, so long as he has lost out because of his age.” Since the disparate treatment and disparate impact provisions of the ADEA have the same language (i.e., “because of such individual’s age”), the Third Circuit found that they should be interpreted consistently.

The court also looked to a Supreme Court decision regarding Title VII of the Civil Rights Act of 1964, in which the court found that “the purpose of Title VII ‘is the protection of the individual employee, rather than the protection of the minority group as a whole.’” The Third Circuit found that the same reasoning applied to the ADEA.

The court concluded its analysis of subgroup disparate impact claims under the ADEA by looking at the act’s remedial purpose. “Refusing to recognize subgroup claims would deny redress for significantly discriminatory policies that affect employees most in need of the ADEA’s protection,” it noted.

With a firm holding that subgroup disparate impact claims are cognizable under the ADEA, the Third Circuit turned its attention to the district court’s exclusion of expert testimony. Based upon its holding that an over-50 disparate impact claim could be asserted under the ADEA, the Third Circuit reversed the district court’s exclusion of the proposed testimony of an expert who opined that certain subgroups of employees (i.e., individuals older than 45, 50, and 55) were more likely to be discharged. Remanding for further Daubert consideration, the court also instructed that the expert’s failure to perform a statistical adjustment using a particular methodology might simply affect the weight of the expert’s findings, rather than foreclosing admissibility of the testimony, as the district court had concluded. On the other hand, the Third Circuit held that the district court had not abused its discretion when it excluded proposed expert testimony about reasonable human resources practices that Pittsburgh Glass Works could have employed, or when it excluded expert testimony that the procedures used by the company directors were susceptible to implicit biases.

Lastly, the Third Circuit concluded that the district court had not committed clear error when it granted a motion for decertification on the grounds that the plaintiffs had failed to establish that unnamed plaintiffs were similarly situated enough to justify a collective action. Emphasizing that the record established that the plaintiffs held different titles, performed different duties, worked in different locations, and were discharged based upon decisions of multiple managers, the court declined the invitation to conclude that these differences deserved less weight due to the overall small size of the collective action.

Key Takeaways

This ruling underscores, once again, the importance of evaluating fully the impacts of reductions in force and similar, division-wide or company-wide decisions in advance of implementation, and confirms that statistical evidence will continue to occupy a crucial role in litigating disparate impact claims. Beyond the immediate implications for employers with operations in Delaware, New Jersey, Pennsylvania, and the U.S. Virgin Islands, it is likely that litigants will utilize the Third Circuit’s ruling as a basis for seeking recognition of subgroup claims in ADEA disparate impact cases elsewhere in the country.


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