New Jersey Employment Law Blog

The Supreme Court has upheld an EEOC rule that allows employers to coordinate retiree health benefits with Medicare for those who turn 65.  The rule, in effect, allows employers to reduce retiree benefits when they hit 65.  AARP opposed the rule on the theory that it constituted unlawful age discrimination.

Here's an LA Times article with more detail, the Supreme Court's order denying certiorari, and the EEOC rule.  

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Here's an interesting update from the Boston Globe on the age discrimination cases that are before the Supreme Court this term.

As the article aptly points out, the ADEA and coordinate state age discrimination laws are the only anti-discrimination statutes that will apply uniformly to all workers, so there's something in these cases for all of us.  And, as the population as a whole ages, there will be increasing numbers of older workers in the economy.

The five age cases that are before the Court will likely impact on older workers for many years to come. 

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"No good deed goes unpunished."   "Sometimes you just can't win."

Those sentiments (and perhaps a few others) must be floating around the hallways at Northwest Airlines, where the company and its pilots' union, the Airline Pilots Association, have joined forces to  save a new retirement plan from an age discrimination challenge by a group of senior pilots.  Yahoo Finance has the AP story.

Northwest and the ALPA have asked a federal judge "to declare that it's not age discrimination to tilt retirement contributions to less-experienced pilots to make up for freezing their pensions."  Unlike some other airlines, a bankrupt Northwest chose not to reduce retirement benefits by terminating  its pension plan and turning its obligation over to a federal guarantor.  Instead, Northwest kept the retirement plan but froze its pensions, so that pilots received what they earned, but their pensions stopped growing.  To make up the difference, Northwest supplemented the pension plan with a 401(k) plan, which included a company match.  Ironically, however, under this arrangement the larger 401(k) matching contributions went to the higher paid, more senior pilots.

Because of that, Northwest argued that the new plan had the perverse effect of giving older pilots who lost nothing on their pension more than they would have received before their pension was frozen. Meanwhile less-experience pilots made far less.

On December 1, with the agreement of the ALPA, Northwest terminated its matching payments.  They will resume on January 1, this time with the larger matches going to less-senior pilots in order "to equalize the difference between experienced pilots who will get their full pension, and younger pilots who no longer have the opportunity to see their pension grow."  The goal is to produce similar retirement income levels for both senior and junior pilots.  And that sounds only fair.

The plan is being opposed by some senior pilots as discriminatory based upon age.  The junior pilots, without the change, would be getting the worst of both worlds.

The case serves to illustrate how difficult it can be to reconcile the demands of groups of employees with competing economic interests.  And it moves us to raise another question that employment lawyers often ponder: "Who woulda thunk it?"

Posted In Age Discrimination , ERISA & Benefits , Employment Law News | Comments (1) | Permalink |

Yesterday we posted on an age discrimination claim filed by an ex-partner of a large New Jersey firm.  Today the news is of a long-term in-house attorney for Altria, Inc. who was fired because he didn't "fit the right profile," allegedly code for "being too old."  Here's the story.

What's going on here?  I thought that gray hair is indicative of experience and wisdom, good things in a lawyer.  Is there really a trend towards getting rid of middle aged lawyers in favor of younger folks?  Has anyone seen other evidence of such a trend?

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We've posted a number of times on the age discrimination case brought by the EEOC on behalf of former partners of legal giant Sidley Austin.  Now a similar case has been filed in New Jersey by James Toll, a former partner of Newark firm Sills Cummis.  Here's the report via Law.com.   Toll claims that he was fired because of his age.  Sills says it was because the nature of his practice was incompatible with the firm's direction.

An interesting question will the the impact of Toll's status as an equity partner in Sills Cummis.  We've previously posted on a similar issue in the context of a medical practice.

The case also asserts a claim under NJ's oppressed minority shareholder statute, which presents an interesting attack not often seen in this kind of litigation.

Our guess is that after some initial skirmishing, this one will be settled, but we'll follow it nonetheless.

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We've posted previously on the age discrimination case that was brought by the EEOC on behalf of demoted and fired partners of legal giant Sidley Austin.  The case has been followed closely by the legal community since it had the potential to affect the mandatory retirement policies of many large firms.  Now the Wall Street Journal reports that the case has been settled, with $27.5 million dollars being divided among 32 plaintiffs.

Due to the settlement, interesting and important questions about what it means to be a "partner" in a large law firm will not be decided by the court, at least not in this case.  Francis Pileggi of the Delaware Corporate and Commercial Litigation Blog has some thoughts on the subject, as does Professor Larry Ribstein on Ideoblog.    

A somewhat similar case was decided in New Jersey in 2006, where the issue was the definition of "employer" for purposes of CEPA, New Jersey's whistleblower law.  You can follow up through our post on Feldman v. Hunterdon Radiological Associates, bearing in mind that the issues, though similar, are not identical.

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Although the courts tout arbitration as a more efficient and cost-effective alternative to litigation, many experienced lawyers would beg to differ.  What are some of the disadvantages to arbitration? 

1. It's frequently as expensive as litigation, and sometimes more so.  If nothing else, you get a judge's time for free, but you have to pay an arbitrator an hourly rate.
2. While arbitration ostensibly provides a level playing field, in reality it isn't always so. 
3. Arbitrators vary widely in background and predisposition.  Most are attorneys who have private practices as their primary sources of income, and in the employment field typically represent either employees or management.  Some are more  competent than others.  Few have a published record from which to understand their views of legal issues until it's too late. 
4. An unjust arbitration award is, for all practical purposes, virtually impossible to appeal successfully.

It's the fourth item --- the near impossibility of a successful appeal of an arbitration award --- that brings us to today's topic.  Because, in a recent employment case, a plaintiff who won an age discrimination arbitration based upon violation of the Age Discrimination in Employment Act [ADEA]but was denied the statutory remedy of having his attorney's fees paid by the losing defendant, achieved the nearly impossible and got a court to order that the defendant pay his fees.

And this tells us just how seriously the court viewed the arbitrator's attempt to deny the plaintiff a statutory remedy.

Here's the opinion in Porzig v. Dresdner Kleinwort, decided August 7, 2007.

Arbitral awards can be appealed under just a few legal theories, generally involving arbitrator misconduct, ir if the arbitrator exhibits a "manifest disregard of the law."

Here the NASD arbitrators made a concerted effort to significantly reduce the fee for Porzig's attorney.  In doing so, the arbitrators ignored the "lodestar" analysis (basically hours expended times hourly rate) that has been the accepted standard in the federal courts for years.  The court noted that an award of fees calculated under the lodestar analysis is mandatory --- it must be awarded to a successful plaintiff.  So eventually Porzig's attorney got paid what the law said that his efforts were worth, not what the arbitrators subjectively thought they were worth.  Their failure to decide in accordance with the settled law constituted a "manifest disregard of the law."

Two practice pointers emerge.  First, the court noted that Porzig's attorneys adequately informed the arbitrators of the correct standard for the award and calculation of fees.  Had they not, they may not have won.  Lawyers who represent plaintiffs in fee shifting cases should make a record that they have informed the arbitrator of the correct standard for the award of fees.

Second, defense counsel made several erroneous arguments to the arbitrators, including a manifestly incorrect position on the very issue on which the arbitrators acted in manifest disregard of the law.  Thus, the arbitrators may have been led down the primrose path by defense counsel.  Whether this was intentional or the result of a good faith mistake does not appear from the opinion.  Defense lawyers in future arbitrations should be certain to make their arguments based upon a correct statement of the law.  Failure to do so may render appealable an otherwise bulletproof defense award.  And there is always the possibility of an ethics charge arising from an intentional misstatement of the law to a tribunal.

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Here's a case that the US Supreme Court has agreed to hear in the Fall.  It's another that deals primarily with technical matters of procedure.  (It involves the validity of the plaintiffs' filing of an administrative charge with the EEOC.  Such a filing is a prerequisite to bringing a lawsuit under federal anti-discrimination laws.)

Whatever the Supreme Court eventually decides, it will have little effect in New Jersey.  Experience tells us that most discrimination cases in New Jersey are filed under the NJ Law Against Discrimination --- commonly known as the LAD --- because its remedies usually are more favorable to plaintiffs and it does not have a requirement that plaintiffs first file with an administrative agency.  Thus, the LAD usually is a better choice for plaintiffs than similar federal statutes.

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AP reports that Sprint-Nextel has agreed to settle a class action suit that claims that it committed age discrimination against some 1700 plaintiffs during a downsizing that took place from late 2001 until early 2003.  The amount of the settlement is $57 million. 

This case follows closely the settlement of another case making same kinds of claims for about $5.5 million. 

Sprint-Nextel denied any wrongdoing, saying that it wanted to put the matter behind it so it could continue with business. 

Posted In Age Discrimination , Employment Law News | Comments (0) | Permalink |

The Houston Chronicle has an article today about the nationwide trend of an increasing number of age discrimination claims filed by baby boomers. 

"[A]ge-bias litigation is a scenario being repeated across the country as companies' streamlining efforts take a toll on baby boomers whose salaries make them targets for layoffs.  "We're seeing a ton of it," [an EEOC senior trial attorney] said."

Employment lawyers tend to agree that age discrimination cases are a bottom-up phenomenon.  Companies generally try to be fair and set appropriate policies.  Lower-level managers who implement those policies are the ones who usually create discrimination problems.

Here's a common scenario:

"[T]the bulk of age-discrimination complaints are brought by a sole plaintiff. These plaintiffs tend to have several things in common: They've worked for one employer for many years, have been stellar performers and were fired after new managers had taken over. 

"What we see over and over again is a new boss comes in and the new boss wants to reorganize and change things," said [one attorney]. "The new boss makes life miserable for the long-term, exceptional employees, and soon some or all of them begin to receive unfair scrutiny and eventually are fired, moved out or demoted."

 Demographics suggest that this trend will not change soon.  And, as the article points out, retaliation claims will probably follow the surge in pure age discrimination claims.

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Terminated older (over age 40) workers who receive severance packages will find themselves presented with a long document that includes, among other things, a release of any legal rights they may have against their employer.  Those releases --- or "waivers" in the parlance of federal law --- are governed by the Older Workers Benefit Protection Act [OWBPA].  The OWBPA contains detailed requirements that the employer must satisfy for their waivers to hold up in court. 

Over time a few ex-employees have been able to convince courts to void their releases, which allowed them to sue their ex-employers despite seeming to have signed away their rights.

The linked decision of the federal District of Minnesota in Pagliolo v. Guidant Corporation is a virtual road map to attacking a release under the OWBPA.  The opinion is methodical, and there's a lot to be learned here for both ex-employees and downsizing employers (and their attorneys).  

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A few months back we reported on the EEOC's attack on legal giant Sidley Austin.  The EEOC claims that Sidley's mandatory age 65 retirement policy unlawfully discriminates on the basis of age.  The issue continues to percolate in legal circles, as this article from Law.com shows.

All professional practices with a mandatory retirement policy need to keep an eye on this. 

For forward thinking lawyers the case may present an opportunity.  If the mandatory retirement policy is upheld, there may be some top-notch legal talent looking for places to continue their practices into their 70's.  Many small and mid-size firms would welcome them with open arms.  

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A common issue in employment discrimination litigation is the importance that should attach to comments made by representatives of the employer as evidence of discriminatory intent. Employers often argue that comments that might otherwise be seen as discriminatory should be disregarded as "stray remarks." Courts have struggled to find a coherent definition of stray remarks that fairly balances an employer's interest in being held liable only where it is proven to have a discriminatory intent against an ex-employee's interest in being allowed to prove discriminatory intent through the words of the employer's agents.

The Court of Appeals for the Second Circuit recently addressed the stray remarks issue in a helpful way.  The case is Tomassi v. Insignia Financial Group, Inc.  When Patricia Tomassi was 60 she was hired as Supervisor of Resident Services for a large apartment complex.  Soon thereafter, her supervisor, Mr. Stadmeyer, began to refer to her age.

Stadmeyer would begin sentences with “In your day and age. . . and suggest that Tomassi related well to and "could understand the mentality" of PCV/ST's senior residents.  Stadmeyer also repeatedly asked Tomassi whether she would be better off retiring so she could "take time off to rest."  According to Tomassi's deposition testimony,  "[H]e would ask me if I ever thought about retiring. He would ask me if I thought I could keep up with some of the work. He asked me if I was tired of working. . . [W]asn’t it time to retire, did I ever think about retiring. Tired of the commute."  Tomassi asserted that Stadmayer made such age-related comments to her “once a month, [or] once every couple [of] months."

Over the next couple of years Tomassi received raises and a promotion.  Her performance evaluations were good, although there was a criticism of the quantity of work that she produced.  Insignia, however, wanted a younger workforce for business reasons.

Tomassi was fired at age 63 and was replaced by a 25 year old.  Stadmeyer falsely told her that he had hired someone with website experience to take over her responsibilities.  He later testified that she was not doing her job effectively and efficiently.  More, Stadmeyer  told Tomassi that he terminated her because she didn't want to work long hours any more and would be better off with a part-time job, perhaps working with seniors.

The trial court entered summary judgment in favor of the defendants on Tomassi's age discrimination.  It held that Stadmeyer's statements were stray remarks that were insufficient to support the age discrimination claim.

The court of appeals reversed and sent the case back for a trial.  For example, Stadmeyer’s assertion to the effect that Tomassi was well suited to work with seniors was not offensive. Nonetheless, it had a strong tendency in the circumstances to show that Stadmeyer believed that, because of Tomassi’s age, she was not well suited to deal with the younger tenants Stadmeyer was hoping to attract.

The relevance of discrimination-related remarks does not depend on their offensiveness, but rather on their tendency to show that the decision-maker was motivated by assumptions or attitudes relating to the protected class. Inoffensive remarks may strongly suggest that discrimination motivated a particular employment action.

Because a jury could reasonably construe Stadmeyer's remarks to be evidence of age discrimination, the Second Circuit held that a trial was required.

Managers and HR professionals should not be lulled into a false sense of security by the stray remarks doctrine.  While the doctrine itself remains in effect, the Tomassi case makes clear that it will be applied by the courts on the facts of the particular case.  In short, there is no bright-line rule that managers can use to determine when their comments will be considered to be stray, and therefore harmless, and when they will be considered as evidence of discrimination.

Posted In Age Discrimination , Law Against Discrimination (LAD) | Comments (0) | Permalink |