Opinion Recap: Meacham v. Knolls Atomic Power Lab

Stanford student Scott Noveck wrote the following recap of Thursday’s decision in Meacham v. KAPL (06-1505). Please note that Scott was part the Stanford team who represented the petitioners.

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.