Meacham v. Knolls Atomic Power Laboratory

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Authorship: This page edited by Scott Noveck of Stanford Law School. Scott was on the Stanford team who represented petitioners. Please note that Akin Gump is not affiliated with petitioners.

Contents

[edit] Briefs and Documents

Docket: 06-1505

Issue: Whether, under Smith v. City of Jackson (2005), an employee alleging disparate impact under the ADEA has the burden of persuasion in establishing the contested action was based on “reasonable factors other than age.”

Argument Transcript

Merit briefs

Amicus briefs

[edit] Pre-Argument Articles

[edit] Argument Preview

When an employer engages in business practices that have a disproportionately harmful effect on older workers, and when equally effective but less discriminatory alternatives were available, an employer may nevertheless avoid liability for age discrimination if its practices were based on a “reasonable factor other than age” (RFOA). But if an employee brings action under the Age Discrimination in Employment Act, and the evidence of reasonableness presented by the parties is in equipoise – that is, it ultimately comes down to a tie – is the employer still liable for age discrimination, or has the plaintiff failed to prove her case?

This question depends on who bears the burden of proof under the RFOA provision: Does it simply operate as an affirmative defense, for which the employer bears the burden of persuasion, or does it instead define an additional element necessary to establish a prima facie case of age discrimination, for which the burden of persuasion rests with the plaintiff? On April 23, the Supreme Court will consider this issue in Meacham v. Knolls Atomic Power Laboratory, and its answer to this seemingly technical question could have significant ramifications any time a business seeks to reorganize or streamline its workforce to adapt to changing market conditions.

[edit] Background

[edit] The Age Discrimination in Employment Act

The Age Discrimination in Employment Act (ADEA) prohibits employers from taking any action which “in any way . . . would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual’s age.” Congress based the ADEA’s substantive prohibitions on an earlier version of Title VII of the Civil Rights Act of 1964, which prohibits discrimination on the basis of race, sex, religion, or national origin. Recognizing, however, that age is different from these other characteristics because age is often closely correlated with other factors that have a direct impact on an employee’s job performance, Congress also provided that “[i]t shall not be unlawful for an employer . . . to take any action otherwise prohibited . . . where the differentiation is based on a reasonable factor other than age.”

Three Terms ago, in Smith v. City of Jackson (2005), the Court found that the ADEA gives rise to liability not just for intentional discrimination (known as “disparate treatment” cases), but also for “disparate impact” claims. In a disparate impact case, the plaintiff points to a policy that has a statistically significant adverse impact on older employees, shows that the employer had equally effective and less discriminatory alternatives available, and argues that the failure to adopt one of those less discriminatory alternatives constitutes age discrimination.

Disparate impact claims are traditionally governed by the three-step analysis laid out in Wards Cove Packing Co. v. Antonio (1989). In the first step, the plaintiff must identify a specific employment practice and show that this practice has a statistically significant disparate impact upon older workers. The burden then shifts in the second step to the employer, who must produce a legitimate business justification for the practice. Importantly, this burden is only one of production; the burden of persuasion still remains with the plaintiff, who in the third stage of the Wards Cove analysis may meet this burden by showing either that the given justification does not support the policy or that the employer could have adopted an equally effective alternative that would have been less discriminatory.

In Smith, the Court emphasized the importance of the RFOA provision in protecting employers from liability for many routine employment practices. Thus, for example, employers need not choose the employment practice with the least disparate impact of all possible alternatives; rather, they must merely choose one which is “not unreasonable.” But because the Court found that the practice before it in Smith was “unquestionably reasonable,” it had no occasion to address how the RFOA provision interacts with the Wards Cove framework or to decide which party bears the burden of persuasion on the RFOA issue.

[edit] Proceedings Below

This case arose after budget cuts forced respondent KAPL, Inc., which operates the Knolls Atomic Power Laboratory under contract with the Department of Energy, to reduce the size of its approximately 2000-person workforce by 108 employees. Because of changing research priorities, KAPL identified several areas that would be critical to the laboratory’s future work, as well as a number of other areas in which it had “excess skills.” KAPL created a “voluntary separation plan” which offered early retirement incentives to workers in the latter category who had at least twenty years’ experience, but even after offering these incentives, KAPL found that it still needed to reduce its workforce by approximately thirty-five more employees.

As a result, KAPL was forced to implement an “involuntary reduction in force” (IRIF), using procedures that were based in part on practices used by companies such as IBM, GE, Pepsi, and Ford. First, KAPL developed a budget for each unit within the lab and identified those units that were over-budget. Within these units, it placed all employees on a “matrix” and asked managers to rate their employees based on four factors: performance, “flexibility,” “criticality,” and years or service. Performance scores were based taken from recent performance reviews, and years of service scores were determined by a simple formula. But for flexibility and criticality scores, managers were given only limited guidance, and they were ultimately left with substantial discretion to make highly subjective evaluations. Once these matrices were completed, the lowest-ranked employees were tentatively designated for termination. KAPL then performed an “impact analysis” to make sure that the results did not discriminate by race or by sex, but no comparable analysis was performed with regard to age.KAPL ultimately laid off thirty-one workers, thirty of whom were over forty years of age and thus deemed “older workers” protected under the ADEA; the court of appeals would later refer to this result as “startlingly skewed.” Twenty-eight of these employees filed suit in federal court in the Northern District of New York alleging that the IRIF violated the ADEA as well as New York’s Human Rights Law, which mirrors the ADEA. A jury later found, after being instructed to apply the traditional Wards Cove framework, that the IRIF had a disparate impact that discriminated on the basis of age, and it awarded plaintiffs more than $6 million in damages. The district court ultimately upheld this judgment against KAPL’s motion for judgment notwithstanding the verdict or for a new trial, ruling that the jury could have found that KAPL discriminated against older workers by undertaking the involuntary reduction in force without considering other alternatives, such as a hiring freeze or an expansion of the voluntary separation program to make more workers eligible for early retirement.

The Second Circuit initially affirmed, although on somewhat different grounds. The court held that the evidence was sufficient to show that KAPL violated the ADEA through its “unaudited and heavy reliance on subjective and assessments of ‘criticality’ and ‘flexibility.’” This decision was issued shortly before the Supreme Court granted certiorari in Smith, and the Supreme Court subsequently granted, vacated, and remanded the Second Circuit’s decision in this case for reconsideration in light of Smith.

On remand, the Second Circuit voted 2-1 to reverse its earlier decision and vacate the jury verdict. The court read Smith as modifying the traditional Wards Cove test for ADEA cases by replacing the “business necessity” test, which a plaintiff could meet by showing the existence of an equally effective but less discriminatory alternative practice, with the more stringent “reasonableness” test. Reviewing the evidence of reasonableness, the court appeared to find this a close question, but ultimately held that the plaintiff bore the burden of persuasion – as is true throughout the Wards Cove analysis – and that this burden had not been met. In dissent, Judge Pooler argued that the RFOA provision is an affirmative defense, for which the burden of persuasion instead falls on the employer, and that KAPL did not meet that burden.

The employees petitioned for certiorari on two questions: (1) who bears the burden of persuasion for showing a “reasonable factor other than age”; and (2) whether the practice at issue in this case, whereby employers “confer[] broad discretionary authority upon individual managers to decide which employees to lay off,” should be deemed reasonable as a matter of law. The Court called for the views of the Solicitor General, who recommended that cert. be granted on the first question but denied on the second. The Court followed SG’s recommendation, granting certiorari limited to the question of which party bears the burden of persuasion for proving whether an employment practice that has a disparate impact on older workers was nonetheless based on reasonable factors other than age.

[edit] Merits Briefing

[edit] Petitioners’ Opening Brief

Petitioners begin their opening brief by focusing on the text of the ADEA and related statutes. Petitioners argue that the RFOA provision’s reference to action “otherwise prohibited” establishes it as an exception to a general prohibition, and they explain that this sort of exception has long been construed as an affirmative defense for which the party claiming its benefits bears the full burden of proof. Petitioners argue that this rule has been applied with special vigor for cases brought under the Fair Labor Standards Act, through which the ADEA is enforced. Petitioners also emphasize close ties between the text of the ADEA and that of other employment discrimination statutes, for which many parallel exceptions have previously been construed as affirmative defenses.

The petitioners also argue that the burden of persuasion belongs on the employer because much of the information relevant to the question of whether an employment practice was reasonable – such as the purposes of the practice and the methods used to pursue those objectives – rests exclusively in the employer’s knowledge. Employees, by contrast, would face extraordinary difficulties in assembling the information required to make an affirmative showing of unreasonableness, and imposing such an obstacle would upset the “balance of interests” struck by the statute.

Finally, to the extent that any ambiguity remains as to which party should bear the burden of persuasion, petitioners argue that the Court should defer to the consistent interpretation of the agencies charged with enforcing the statute – originally the Department of Labor, now the EEOC – that the RFOA provision operates as an affirmative defense and the burden falls upon the employer. Borrowing from an argument advanced by Justice Scalia in his Smith concurrence, petitioners pose this as a classic case for agency deference: Congress authorized the agencies to issue “such rules and regulations as it may consider necessary and appropriate” to carry out the statute, and the agencies have done so pursuant to notice and comment. Petitioners argue that the case for deference is especially strong here because Congress opted to leave the agencies’ interpretation undisturbed when amending a closely related provision of the ADEA in 1990; indeed, these regulations have remained on the books in one form or another for nearly four decades.

Petitioners then address the difficult question of how the RFOA provision interacts with the three-stage Wards Cove framework that the Court previously established to govern the common text which the ADEA shares with Title VII. In their view, the reasonableness test does not “substitute” for the business necessity test in the third step of the Wards Cove analysis; rather, once the plaintiff has navigated the Wards Cove framework and shown a disparate impact created by an employment practice that is not necessary to its business, the employer can then invoke the RFOA provision and show that its practices were nonetheless reasonable. But petitioners also argue in the alternative that if the Court were to integrate the reasonableness test into the Wards Cove framework and establish a more “consolidated” burden-shifting scheme, it would still be most appropriate to place the burden of persuasion for reasonableness on the employer.

[edit] Government Brief

The United States filed an amicus curiae brief in support of the employees. Like petitioners, the government begins by focusing on the text and structure of the Act. The government explains that the ADEA’s substantive prohibitions are laid out in Sections 4(a)-(c) and 4(e), whereas Section 4(f) – which contains the RFOA provision – creates “exceptions” to those general rules. The government points to the “otherwise prohibited” language as also supporting this view, and notes that its interpretation “squares with the background rule that ‘the burden of proving justification or exemption under a special exemption to the prohibitions of a statute generally rests on one who claims its benefits.’” The government also argues that the RFOA should be construed consistently with its “neighboring exceptions” and with a similarly worded exception in the Equal Pay Act, which have each been interpreted as affirmative defenses. And the government maintains that the Court should defer to the longstanding DOL and EEOC regulations assigning the burden of proving reasonableness to the employer.

The government’s position diverges from that of the petitioners, however, on the issue how of the RFOA provision interacts with the traditional Wards Cove analysis. The government criticizes petitioner’s four-stage framework – the three stages of Wards Cove supplemented with a separate affirmative defense – on the ground that “[t]he ADEA provides no textual basis for asking both whether a challenged employment practice is supported by a business justification and whether it is based on reasonable factors other than age.” Instead, the government suggests, the reasonableness test replaces the business necessity test in the Wards Cove framework, but with the burden of persuasion falling on the employer.

[edit] Respondents’ Brief

Respondents begin by focusing on the ADEA’s prohibition on discrimination “because of . . . age” and argue that a plaintiff has not established this part of a prima facie case until she has shown that the challenged business practice was not based on a reasonable factor other than age. Respondents suggest that this extra showing is required under the ADEA, but not under Title VII, because age, unlike race, “is often relevant to certain employment-related categories,” and thus “a statistically significant adverse impact on older workers cannot establish that a particular employee has suffered disadvantage ‘because of’ age.” Put differently, “because the probative value of the [Wards Cove] prima facie case in the age context is weaker, the remaining steps in the analysis must do more work than in a Title VII case.” Consequently, respondents argue, it should be the ADEA plaintiff – and not the employer – who bears the burden of proving whether or not the employment practice was based on reasonable factors other than age.

The respondents then criticize the petitioners’ proposed four-step analysis as “unworkably complex and functionally at odds with RFOA.” Respondents contend that asking whether an employment practice was “reasonable” after already asking whether it was a “business necessity” would be redundant and counterintuitive, and in any case “it is unclear how it could function in a set of jury instructions.” Moreover, respondents argue, Wards Cove characterized the third step – in which a plaintiff proves that the challenged practice was not a business necessity because there were equally effective and less discriminatory alternatives – as showing “pretext”; but if a plaintiff has shown that a challenged practice is a pretext for intentional age discrimination, it would make no sense to then ask whether the practice was based on reasonable factors other than age.

Respondents thus agree with the government that the reasonableness test replaces Wards Cove’s business necessity test in ADEA disparate impact cases, but reject the government’s position that the employer, rather than the employee, bears the burden. Respondents argue that the government’s approach, like petitioners’, fails to satisfy the statutory requirement that the plaintiff prove discrimination “because of” age. They also suggest that the government’s approach could result in employers facing a greater burden in ADEA cases than in Title VII cases, even though all parties agree that it should be harder for plaintiffs to win an age discrimination case than it would be a sex or race discrimination case. Therefore, respondents conclude, the only proper reading of the ADEA is to place the burden of proof under the RFOA provision on the plaintiff.

Respondents also dispute the petitioners’ interpretation of the ADEA’s text and structure. They point to Public Employees Retirement System v. Betts (1989), in which the Court concluded that one of the ADEA’s Section 4(f)(2) exceptions does not operate as an affirmative defense, to show that the ADEA’s structure alone is not sufficient to establish the RFOA provision as an affirmative defense. (Betts’s interpretation of Section 4(f)(2) was later overridden by statute, but Congress left the RFOA provision – which had significant textual differences from the provision at issue in Betts – unchanged.) Respondents also argue that the “otherwise prohibited” language cannot bear the weight that petitioners assign to it; to the contrary, Congress could have written the RFOA provision as simply applying to action “prohibited” elsewhere in the statute, so the use of the phrase “otherwise prohibited” must mean “which would have been prohibited if not for this RFOA provision.” If this is the case, then a plaintiff has not shown prohibited action until she has affirmatively disproved the existence of a reasonable factor other than age.

Respondents then counter petitioners’ policy argument with one of their own. According to respondents, the burden of persuasion must fall on “the party who asserts the more uncommon occurrence,” and because many of the policies that have a disparate impact on older workers will turn out to be reasonable, the burden should be on the plaintiff to demonstrate that this is one of the uncommon cases in which the challenged practice is unreasonable. Respondents also argue that even if the Court were to focus on petitioners’ “access to information” argument, this would mean only that employers should bear a burden of production, not the burden of persuasion.

Respondents further argue that the EEOC’s interpretation is not entitled to deference because the text of the relevant EEOC regulation does not actually seem to apply to disparate impact cases. And even if it did, respondents maintain, the Court should give little or no deference to a regulation which “does not implicate the agency’s interest in administering its own proceedings,” but rather “purports to allocate the RFOA burden of proof in judicial proceedings.”

[edit] Petitioners’ Reply Brief

Petitioners devote the start of their reply brief to the respondents’ “because of age” argument. They argue that this language refers only to “causation” – that is, the factor which distinguishes those who face an adverse impact from those who do not is their age, a requirement that is always met by the first step of the Wards Cove analysis. Petitioners claim that respondents’ argument would treat disparate impact liability as simply a sophisticated way of showing intentional discrimination through circumstantial evidence, but the Court has repeatedly explained that disparate impact liability is very different from disparate treatment claims. Having disputed respondents’ main textual hook, petitioners return to the text of the statute and reiterate their arguments that the text and structure of the statute overwhelmingly point in petitioners’ favor.

Petitioners then address the respondents’ policy-based objections. In response to the concern that their proposed four-stage analysis would be unworkably complex, petitioners argue that the Court has approved similar burden-shifting schemes in the past, such as for Title VII mixed-motive cases; tacking on an affirmative defense to the Wards Cove framework – a framework that has proven workable in the past – would not add significant additional complexity. They likewise dispute respondents’ claim that unreasonable discrimination is the more “uncommon occurrence,” arguing that the proper question is not simply whether these employment policies are likely to be based on reasonable factors other than age, but rather whether such policies are likely to be reasonable in cases in which less discriminatory alternatives were available. Finally, petitioners urge the Court not to address the question of whether the policies at issue in this case were reasonable as a matter of law, suggesting instead that the Court simply decide the legal standard and then remand for further proceedings.

[edit] Oral Argument Recap

Arguing for the petitioners, Kevin K. Russell told the justices that this case presents “a single important but narrow question” and argued that the ADEA unambiguously places the burden of proof for showing a reasonable factor other than age (RFOA) on the employer. Russell advanced three main points in support of this claim: first, the statute sets up the RFOA defense as an exception to liability; second, the RFOA provision appears in the middle of a sentence where it is sandwiched between two other affirmative defenses; and third, the ADEA’s substantive prohibitions use language identical to that of Title VII, which does not require proof of unreasonableness as part of the plaintiff’s case in chief. Justice Ginsburg quickly asked about the purpose of petitioners’ proposed “double inquiry,” first asking whether the challenged employment practice is a business necessity and then asking whether it was based on a reasonable factor other than age. In response, Russell again pointed to the language of the statute, answering that this simply “arises out of the structure of the statute as Congress wrote it.”

The Chief Justice expressed concern that liability for age discrimination should be “narrower” than liability under Title VII for discrimination on the basis of age or sex. Russell responded that Congress has already acknowledged and addressed this concern in two ways. First, it provided employers in age discrimination cases with the RFOA defense, “a capacious defense that’s not available to any other defendant in a Federal employment discrimination statute.” Second, Congress “lowered the bar for Title VII plaintiffs [in the Civil Rights Act of 1991] and left in place the Wards Cove test for age discrimination.”

Justice Alito then pressed Russell on whether his proposal would allow plaintiffs to evade the requirement that they show an adverse effect “because of . . . age.” Russell argued that “‘because of age’ refers to . . . the effect of” the employment practice, rather than the practice itself. He illustrated this difference with the example of a weight-lifting requirement: an employer might require all of its employees to be able to lift fifty pounds, and this would have a disparate impact felt more heavily by older workers because of their age, yet it is a separate question whether this practice is reasonable or not given the nature of the job.

Russell faced several questions from Justice Kennedy asking why employers should bear the full burden of persuasion, rather than a mere burden of production. Russell said that placing the burden of persuasion on the plaintiff would pose some difficulties, but that “ultimately I think [it’s] beside the point” because the language of the statute unambiguously establishes an affirmative defense with the full burden on the employer. Searching for a policy rationale for allocating the burdens this way, Justice Kennedy questioned whether this interpretation of the statute would yield a result which “doesn’t make sense.” “[I]f I find the text of the statute neutral or at least not clear,” he asked, “this it is proper for me to ask as a matter of efficiency where the burden should be placed, isn’t it?”

Pressed on this question, Russell honed in on the point that “most of the facts going to reasonableness are in the employer’s possession.” The Chief Justice suggested that this problem can be addressed by liberal discovery rules, but Russell stuck to his position, arguing that the Chief Justice’s objection would apply to every case in which informational disadvantages are at issue, but yet many statutes still address such disadvantages by providing affirmative defenses. In any case, Russell argued, the statute at issue here is clear, and even if the Court found it ambiguous (as Justice Kennedy suggested he might), it should defer to the judgment of the EEOC.

Representing the United States as amicus curiae, Daryl Joseffer of the Solicitor General’s office echoed the petitioners’ textual arguments, pointing both to the statute’s use of the phrase “otherwise prohibited” and to the placement of the RFOA provision between two other affirmative defenses. When Justice Kennedy asked for some authority for the claim that adjacent provisions should operate in a similar way, Justice Scalia stepped in to suggest that petitioners’ reading might be supported by a form of noscitur a sociis: “if it’s in with two other chickens, it’s probably a chicken.”

Justice Alito again asked what to make of the requirement that plaintiffs show discrimination “because of age.” Like petitioners, Joseffer argued that this requires only that plaintiffs have suffered an adverse effect on the basis of age, not that the challenged employment practice have actually taken age into account. This reading “has to be the case because disparate impact is not based on intent.” Moreover, a more demanding interpretation of the “because of age” requirement would fail to make sense of the statute, Joseffer explained, because it would treat the “more specific” RFOA provision as “essentially surplusage.”

Joseffer also pointed out that in every civil rights statute Congress has passed since Wards Cove, it has expressly placed the burden of persuasion during the “justification stage” on the defendant. Justice Ginsburg asked whether this construction would create a more generous standard for plaintiffs in age discrimination suits than Title VII race or sex discrimination cases, and Joseffer insisted that this would not be the case because the reasonableness standard is “not very daunting.”

Arguing on behalf of respondent KAPL, Seth A. Waxman began by embracing the “three-step balance-shifting paradigm” that the Court has established for many employment discrimination cases, but emphasized that these cases have only required employers to meet a burden of production, not a burden of persuasion. Because age is often closely correlated with legitimate employment characteristics, Waxman argued, a showing of disparate impact on older workers merely establishes a “presumption which . . . need be met only by a burden of production.”

Justice Stevens pressed Waxman to explain how his view of the statute could accommodate its use of the phrase “otherwise prohibited.” Waxman explained that as he reads this statute, “it means nothing other than it’s prohibited subject to the following conditions.”

Waxman further argued that unlike most other affirmative defenses, the RFOA provision is not in the nature of confession and avoidance. But this argument faced considerable resistance from Justice Souter, who suggested that an employer invoking the RFOA defense would confess “I admit the impact falls more heavily on the old” and be seeking to avoid liability nonetheless. Justice Stevens and Chief Justice Roberts also chimed in with similar questions.

Waxman spent a considerable amount of time discussing the details of the record below. He faced brief questioning from Justice Ginsburg over the prospect that the subjectivity involved in judgments of “criticality” and “flexibility” could have opened the door to “at least unconscious age bias,” but Waxman argued that there is nothing wrong with relying on human judgment. Justices Stevens and Ginsburg also clarified the procedural posture of the case, noting that unlike in Smith, this case has gone through trial and a jury verdict that was upheld against challenges to the sufficiency of the evidence.

In a brief rebuttal, Russell reiterated his arguments about “because of age” and offered his own clarifications of the record below, asking the Court to either remand to the court of appeals for further proceedings or to reverse the Second Circuit decision outright.

[edit] Opinion Analysis

By a vote of 7-1, the Supreme Court ruled on Thursday that when an employer engages in business practices that place a disproportionate burden on older workers, the employer bears the burden of persuasion of showing that its action was based on reasonable factors other than age. The decision in Meacham v. Knolls Atomic Power Laboratory eases the burden on plaintiffs bringing disparate impact claims under the Age Discrimination in Employment Act (ADEA).

The case arose after Knolls Atomic Power Laboratory (KAPL), faced with significant budget cuts, laid off thirty-one workers. Of those, thirty were over the age of forty and therefore fell under the ADEA’s protections for older workers. In 2005, the Court held in Smith v. City of Jackson that the ADEA gives rise to “disparate impact” liability when an employer adopts practices that have such a statistical disparity in their effect on older workers, but noted that the ADEA carves out an exception for cases in which the employer’s decision is based on “reasonable factors other than age” (RFOA). City of Jackson left open, however, the question of which party bears the burden of proving whether the RFOA exception has been met. This was the key question in Meacham, after the lower court found the evidence of reasonableness to be essentially in equipoise.

Writing for six justices, Justice Souter concluded that Congress had designed the RFOA provision to operate as an affirmative defense for which the employer bears the burden of proof, explaining that “We have to read [the statute] the way Congress wrote it.” Souter first noted that the statute is structured with its various exemptions set out in a separate section from its substantive prohibitions, and the RFOA provision is placed among those exceptions. Several of the RFOA’s adjacent exceptions have been recognized to place a burden of persuasion on the employer, and the Court could find no reason, Souter explained, “for a heterodox take” on the RFOA exception. Souter then emphasized “the longstanding convention” that the burden of proving an exemption falls upon the party that stands to benefit, and explained that this “is part of the backdrop against which the Congress writes laws, and we respect it unless we have compelling reason to think Congress meant [otherwise].” The Court also noted several prior cases in which it had held similar provisions in two other remedial labor statutes, the Equal Pay Act and the Fair Labor Standards Act, to operate as affirmative defenses.

Finally, Justice Souter explained, “If there were any doubt, the stress of the idiom ‘otherwise prohibited’ . . . would dispel it.” Congress had added that phrase to several of the ADEA’s exceptions in 1990 to overrule the Court’s decision in Public Employees Retirement System of Ohio v. Betts (1989), which had interpreted one of the ADEA’s other exceptions to place the burden of proof on the plaintiff. Reviewing the history of this language, Justice Souter concluded that “[t]he amendment in the aftermath of Betts shows that Congress understands the phrase the same way we naturally read it, as a clear signal that a defense to what is ‘otherwise prohibited’ is an affirmative defense, entirely the responsibility of the party raising it.”

Justice Souter dismissed KAPL’s argument that the plaintiff must bear the burden of disproving the existence of a reasonable factor other than age because the ADEA only applies to discrimination that occurs “because of age.” This argument, Souter explained, had already been considered and rejected in City of Jackson, when the Court found that any business practices that have a disparate impact on older workers can constitute discrimination “because of age” under the ADEA. “Because of age” is merely a “factual condition,” asking whether older workers were affected differently than younger workers. In a disparate impact case, it is assumed that a non-age factor is at work, and the RFOA provision then asks whether that factor was “reasonable” or not.

Justice Souter then addressed the interaction of the RFOA provision with the burden-shifting analysis and “business necessity” test from Wards Cove Packing Co. v. Antonio (1989). The Court had explained in City of Jackson that “Wards Cove’s pre-1991 interpretation of Title VII’s identical language remains applicable to the ADEA,” but the three parties to this case – the employees, KAPL, and the Government as amicus curiae supporting the employees – had each taken very different positions on how the Wards Cove framework should factor into the ADEA analysis. To the extent that the parties and the lower courts had taken this language to mean that the standard Wards Cove framework still applies to ADEA claims, the Court appears now to have decided that this was inadvisable and should be regarded only as dictum: “If, indeed, City of Jackson’s reference to Wards Cove could be read literally to include [these] aspects of the latter case, beyond what mattered in City of Jackson itself, the untoward consequences of the broader reading would rule it out.” Instead, Justice Souter adopted a much simpler approach: once the plaintiffs have identified a specific employment practice and shown that it has a statistically significant disparate impact on older workers, the employer now bears the full burden of proving that its actions were nonetheless based on “reasonable” factors.

Finally, Justice Souter addressed the concern that this reading of the ADEA would make age discrimination cases easier for plaintiffs to win than race discrimination or sex discrimination cases, even though age is often closely correlated with other factors that have a direct bearing on job performance. Souter noted two factors which serve to mitigate this concern. First, plaintiffs raising an ADEA claim must identify a specific unreasonable employment practice which causes the disparity, which he indicated “is not a trivial burden.” Second, Souter emphasized that “the only thing at stake in this case is the gap between production and persuasion,” and the decision will only affect the outcome of a case when the evidence is in perfect equipoise. Souter did acknowledge, however, that this decision “makes it harder and costlier [for employers] to defend” against ADEA suits than if the statute had instead placed this burden on the plaintiffs.

Two other justices filed short separate opinions. Justice Scalia concurred only in the result, saying he would defer to the Equal Employment Opportunity Commission, which had interpreted its regulations to require that employers bear the burden of persuasion under the RFOA provision. Justice Thomas concurred in part and dissented in part, agreeing with the majority in principle that the RFOA provision operates as an affirmative defense, but refusing to side with the employees because he does not believe the ADEA permits disparate impact claims at all. Justice Breyer did not participate in the case.

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