KY Retirement System v. EEOC--Summary of June 19, 2008 Decision

As I suspected when I wrote my summary to the case, the numbers and "justice" of the case all belonged on one side--that of the plaintiff, who was represented in this case by the EEOC. The EEOC's position was supported by the Sixth Circuit but, as I feared, would be and actually was reversed by the Supreme Court, on a 5-4 vote (Opinion by Breyer). This case is very, very strange because there are absolutely no ideological bedfellows together among the Justices. We simply have a difference in opinion, slicing through ideology and alliances, that divides the Justices right down the middle. Scalia and Thomas parted from each other; Roberts and Alito were on opposite sides. The two Clinton appointees, Breyer and Ginsburg, disagreed with each other, and the most reliable liberals, Souter and Stevens, disagreed with each other. And, to top it all off, Justice Kennedy, who almost always provides the "fifth vote" in a 5-4 decision, was on the losing side of a 5-4 case. Thus, almost nothing makes sense in this case.

This essay will review the factual particulars of the case, state the arguments made by Justice Bryeer and then quote a paragraph or two from the dissenting position. Ultimately this is a "pro-state" decision and an "anti-worker" decision, but it deals with an issue in the KY retirement law that no one had imagined, or taken into consideration, when it was drafted. Here we go.

Background Law and Facts

"Kentucky permits “hazardous position” workers, e.g., policemen, to receive normal retirement benefits after working either 20 years or 5 years and attaining age 55 and pays “disability retirement” benefits to workers meeting specified requirements. Kentucky's “Plan” calculates normal retirement benefits based on actual years of service. The Plan calculates disability benefits by adding to an employee's actual years of service the number of years that the employee would have had to continue working in order to become eligible for normal retirement benefits, adding no more than the number of years the employee had previously worked. Charles Lickteig, who continued working after becoming eligible for retirement at age 55, became disabled and retired at age 61. He filed an age discrimination complaint with respondent (EEOC) after the Plan based his pension on his actual years of service without imputing any additional years. The EEOC filed suit against Kentucky and others (collectively Kentucky), arguing that the Plan failed to impute years solely because Lickteig became disabled after age 55. The District Court granted Kentucky summary judgment, holding that the EEOC could not establish age discrimination, but the Sixth Circuit ultimately reversed on the ground that the Plan violated the Age Discrimination in Employment Act of 1967 (ADEA)."

Legal Argument

The Court's holding (just for the record) is that KY's system does not discriminate against workers who become disabled after becoming eligible for retirement based on age. I think the crucial argument that drove the entire case was that, for the majority, the action of KY must be perceived to have been intentional--i.e., age of the claimaint must have been an actual motivating factor in the employer's decision. Once the Court, however, sets the bar this high, it is a foregone conclusion that no one can scale it. The minority disagreed that this was the right standard (see below). In any case, the case most important for the majority in articulating its philosophy here was Hazen Paper Co. v. Biggins, 507 US 604 (1993). Here is how their argument went:

"The ADEA forbids an employer to “discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's age.” 29 U.S.C. § 623(a)(1) (emphasis added). A plaintiff claiming age-related “disparate treatment” ( i.e., intentional discrimination) must prove that age “ actually motivated the employer's decision.” Hazen Paper Co. v. Biggins, 507 U.S. 604, 610, 113 S.Ct. 1701, 123 L.Ed.2d 338 (emphasis added). In Hazen Paper, the Court found that, without evidence of intent, a dismissal based on pension status was not a dismissal “because ... of age,” id., at 611-612, 113 S.Ct. 1701, noting that, though pension status depended upon years of service, and years of service typically go hand in hand with age, the two concepts are “analytically distinct,” id., at 611, 113 S.Ct. 1701. And the dismissal at issue there, if based purely on pension status, would not embody the evils prompting the ADEA: It was not based on a “prohibited stereotype” of older workers, did not produce any “attendant stigma” to those workers, and was not “the result of an inaccurate and denigrating generalization about age.” Id., at 612, 113 S.Ct. 1701. However, the Court noted that discrimination based on pension status could violate the ADEA if pension status was a “proxy for age.” Id., at 613, 113 S.Ct. 1701."

All the Court had to do, then, was to "apply" the lessons of Hazen Paper to the facts of this case. The result?

"Applying Hazen Paper, the circumstances here, taken together, show that the differences in treatment in this particular instance were not “actually motivated” by age. (1) Age and pension status remain “analytically distinct” concepts. (2) Here, several background circumstances eliminate the possibility that pension status serves as a “proxy for age.” Rather than an individual employment decision, at issue here are complex systemwide rules involving not wages, but pensions-a benefit the ADEA treats somewhat more flexibly and leniently in respect to age. Further, Congress has otherwise approved programs, such as Social Security Disability Insurance, that calculate disability benefits using a formula that expressly takes account of age. (3) The disparity here has a clear non-age-related rationale. The Plan's disability rules track Kentucky's “normal retirement” rules by imputing only those additional years of service needed to bring the disabled worker's total to 20 or to the number of years that the individual would have worked had he worked to age 55. Thus, the disability rules' purpose is to treat a disabled worker as though he had become disabled after, rather than before, he had become eligible for “normal retirement” benefits. Age factors into the disability calculation only because the normal retirement rules themselves permissibly consider age. The Plan simply seeks to treat disabled employees as if they had worked until the point at which they would be eligible for a normal pension. Thus, the disparity turns upon pension eligibility and nothing more. (4) Although the Plan placed an older worker at a disadvantage here, in other cases, the rules can work to the advantage of older workers, who may get a bigger boost of imputed years than younger workers. (5) Kentucky's system does not rely on the sorts of stereotypical assumptions, e.g., the work capacity of “older” workers relative to “younger” workers, that the ADEA sought to eradicate. The Plan's “assumptions” that no disabled worker would have continued to work beyond the point at which he was both disabled and pension eligible do not involve age-related stereotypes, but apply equally to all workers regardless of age. (6) The nature of the Plan's eligibility requirements means that, unless Kentucky were severely to cut the benefits to disabled workers who are not yet pension eligible, it would have to increase the benefits available to disabled, pension-eligible workers, while lacking any clear criteria for determining how many extra years to impute for those already 55 or older. The difficulty of finding a remedy that can both correct the disparity and achieve the Plan's legitimate objective-providing each disabled worker with a sufficient retirement benefit-further suggests that this objective, not age, “actually motivated” the Plan."

The Dissent

The dissenters concluded that the majority had misread the ADEA. Two paragraphs of its opinion are important to quote.

"The Court today ignores established rules for interpreting and enforcing one of the most important statutes Congress has enacted to protect the Nation's work force from age discrimination, the Age Discrimination in Employment Act of 1967 (ADEA or Act), 81 Stat. 602, as amended, 29 U.S.C. § 621 et seq. That Act prohibits employment actions that “discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's age.” § 623(a)(1). In recent years employers and employees alike have been advised by this Court, by most Courts of Appeals, and by the agency charged with enforcing the Act, the Equal Employment Opportunity Commission (EEOC), that the most straightforward reading of the statute is the correct one: When an employer makes age a factor in an employee benefit plan in a formal, facial, deliberate, and explicit manner, to the detriment of older employees, this is a violation of the Act. Disparate treatment on the basis of age is prohibited unless some exemption or defense provided in the Act applies."

Thus, the dissent would argue that if age is a factor in a "formal, facial, deliberate and explicit manner," that is enough. You don't have to demonstrate motivation. And...

"As a threshold matter, all should concede that the paradigm offered to justify the statute is a powerful one: The young police officer or firefighter with a family is disabled in the heroic performance of his or her duty. Disability payments are increased to account for unworked years of service. What the Court overlooks, however, is that a 61-year-old officer or firefighter who is disabled in the same heroic action receives, in many instances, a lower payment and for one reason alone: By explicit command of Kentucky's disability plan age is an express disadvantage in calculating the disability payment."

There you have it. Much more could be said about this case. But not now and not by me...

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