APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY -- NEWARK.
Aldisert, Sloviter, and Rosenn, Circuit Judges. Sloviter, Circuit Judge, dissenting.
This complex age discrimination case had its genesis in a decision by General Motors Corp. to lay off plaintiff William Massarsky in February 1971 as part of its reduction of the plant workforce. At that time, the Company retained a younger employee who was junior in service to Massarsky. Complaining that the Company discriminated on the basis of age in violation of the Age Discrimination in Employment Act of 1967 (ADEA or the Act), 29 U.S.C. §§ 621 et seq. (1976 & Supp. V 1981), Massarsky brought suit in 1976 in the United States District Court for the District of New Jersey.*fn1 After a long series of complicated procedural disputes, the case was tried and, based on the jury's answers to special interrogatories, the court entered judgment on all claims in the defendant's favor. Massarsky appeals from the denial of his post-trial motions for judgment notwithstanding the verdict and for a new trial. We affirm.*fn2
General Motors hired William Massarsky on September 30, 1963, when he was 40 years old. He was assigned on a full-time basis to the process engineering department of the New Departure-Hyatt Bearings Division of the Company at its facility in Clark, New Jersey. On February 28, 1971, after more than seven years of service to the Company, he was laid off from his job as a senior process engineer during a division-wide reduction in force due to an economic downturn.
The system used by General Motors to select employees for layoff was set forth in the company handbook entitled "Working with General Motors." The handbook described the Company's layoff policy as based on the length of the employee's service with the Company, ability, merit, and capacity being equal.*fn3 Massarsky established at trial (and the Company did not dispute) that employee Joseph Biondo, age 25, was retained during the Company's reduction in force in February 1971. At the time, Biondo was a fifth-year student enrolled in the General Motors Institute (GMI) under a work cooperative program with less than five years of Company service.*fn4 Notwithstanding that Massarsky had over two years more service than Biondo, the Company furloughed Massarsky but retained Biondo on the basis of an unpublicized company policy exempting GMI students from layoffs.*fn5
General Motors recalled Massarsky to employment on February 27, 1976. During the five years of his layoff, several openings developed in the process engineering department which the Company filled by transfers and promotions of employees in active service with the Company. This comported with the Company's usual practice of filling vacancies, if possible, by transfers of active employees on the payroll. If no active employee were available, the Company would recall to employment a qualified laid-off employee to fill the vacancy. Three of the active employees who were transferred into the process engineering department during Massarsky's layoff were young GMI students with less service than Massarsky.*fn6
In his complaint,*fn7 Massarsky alleged that General Motors had violated the federal Age Discrimination in Employment Act by selecting Massarsky for layoff and by its failure to recall him before 1976.*fn8 Massarsky proceeded on the theory that General Motors' policy of insulating GMI students from layoff during a reduction in work force at the expense of Massarsky and other older workers with longer service to the Company constituted a per se violation of the ADEA. Plaintiff also contended that the Company's internal policy of assigning GMI students to fill openings in a department while a senior employee was on layoff status also constituted a per se violation of the ADEA. Plaintiff's motions for directed verdict, for judgment notwithstanding the verdict, and for a new trial were all denied. On appeal, plaintiff has limited the issues for review to his ADEA claims and his pendent jurisdiction claim under the New Jersey statute.
II. THE MOTION FOR JUDGMENT NOTWITHSTANDING THE VERDICT
The Age Discrimination in Employment Act of 1967, 29 U.S.C. §§ 621 et seq. (1976 & Supp. V 1981), was intended
to promote employment of older persons based on their ability rather than age; to prohibit arbitrary age discrimination in employment; [and] to help employers and workers find ways of meeting problems arising from the impact of age on employment.
29 U.S.C. § 621(b). Although section 623(a) of the Act in fairly broad terms proscribes discrimination against "any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's age,"*fn9 this broad prohibition is modified by section 631(a), which limits the protections of the Act to those between the ages of 40 and 70.*fn10 See 29 U.S.C. § 631(a). Thus, it is not unlawful for an employer intentionally to discriminate against employees under 40 years of age.
Four exceptions to the ADEA are set forth in section 623(f) of the statute. First, discrimination on the basis of age is allowed "where age is a bona fide occupational qualification reasonably necessary to the normal operation of the particular business." 29 U.S.C. § 623(f)(1). Second, the Act permits covered entities to "observe the terms of bona fide seniority system or any bona fide employee benefit plan." Id. § 623(f)(2). Third, it is not unlawful for an employer to "discharge or otherwise discipline an individual for good cause." Id. § 623(f) (3). Finally, the Act permits employers to discriminate "based on reasonable factors other than age." Id. § 623(f)(1).*fn11
The United States Supreme Court has said little about the elements of a cause of action under the ADEA. However, because in many respects the provisions of the ADEA parallel those of Title VII, many courts have adapted to issues of age discrimination the principles of law applicable to cases arising under Title VII of the Civil Rights Act.*fn12 See Douglas v. Anderson, 656 F.2d 528, 531-32 (9th Cir. 1981); Loeb v. Textron, Inc., 600 F.2d 1003 (1st Cir. 1979); Schwager v. Sun Oil Co., supra, 591 F.2d at 60-61; Rodriguez v. Taylor, 569 F.2d 1231, 1239 (3d Cir. 1977), cert. denied, 436 U.S. 913, 56 L. Ed. 2d 414, 98 S. Ct. 2254 (1978). A Title VII plaintiff may prosecute his claim under either of two distinct legal theories. First, he may allege that he is the victim of intentional discrimination, i.e., that his employer applied an expressly race-based or sex-based standard in its treatment of the plaintiff. This "disparate treatment" theory traces its roots to McDonnell Douglas Corp. v. Green, 411 U.S. 792, 36 L. Ed. 2d 668, 93 S. Ct. 1817 (1973). Alternatively, he may rely upon the so-called "disparate impact" theory of Griggs v. Duke Power Co., 401 U.S. 424, 28 L. Ed. 2d 158, 91 S. Ct. 849 (1971). This theory applies when the employer's adverse action resulted not from any discriminatory motive but simply from application of facially neutral criteria that are alleged to have a disproportionate impact on members of the protected class and which cannot be justified by business necessity. See Dothard v. Rawlinson, 433 U.S. 321, 329, 53 L. Ed. 2d 786, 97 S. Ct. 2720 (1979); Albemarle Paper Co. v. Moody, 422 U.S. 405, 425, 45 L. Ed. 2d 280, 95 S. Ct. 2362 (1975). See also Teamsters v. United States, 431 U.S. 324, 335-36 n.15, 52 L. Ed. 2d 396, 97 S. Ct. 1843 (1977); Croker v. Boeing Co., 662 F.2d 975, 991 (3d Cir. 1981).
From what we can determine, the plaintiff in the instant case apparently has attempted to straddle these two theories of discrimination. Massarsky argues simply that General Motors failed to present a legally sufficient defense to the plaintiff's prima facie case under the ADEA. We therefore analyze his claim under both the disparate treatment and disparate impact theories. In so doing, we are required to view the evidence and all reasonable inferences therefrom in the light most favorable to the Company, the prevailing party in the trial court. Schwager v. Sun Oil Co., supra, 591 F.2d at 62; Fireman's Fund Insurance Co. v. Videfreeze Corp., 540 F.2d 1171, 1178 (3d Cir. 1976), cert. denied, 429 U.S. 1053, 50 L. Ed. 2d 770, 97 S. Ct. 767 (1977).
A plaintiff alleging disparate treatment, whether under Title VII or under the ADEA, bears the ultimate burden of persuading the jury that his treatment was "caused by purposeful or intentional discrimination." Smithers v. Bailar, 629 F.2d 892, 898 (3d Cir. 1980). See Texas Department of Community Affairs v. Burdine, 450 U.S. 248, 253, 67 L. Ed. 2d 207, 101 S. Ct. 1089 (1981). But because it often will be difficult for the plaintiff to obtain direct evidence of the employer's motive, the Supreme Court in McDonnell Douglas Corp. v. Green, supra, articulated a set of rules of proof that give the plaintiff the benefit of a presumption operating in his favor. Under the McDonnell Douglas approach, the plaintiff has the initial burden to establish a prima facie case of unlawful discrimination by a preponderance of the evidence. This prima facie case is easily made out: a plaintiff alleging a discriminatory layoff need show only that he is a member of the protected class and that he was laid off from a job for which he was qualified while others not in the protected class were treated more favorably.*fn13 Cf. Smithers v. Bailar, supra, 629 F.2d at 894-95; Rodriguez v. Taylor, supra, 569 F.2d at 1239. If the plaintiff makes this showing, the employer then bears the burden to "dispel the adverse inference from a prima facie showing under McDonnell Douglas," Smithers, supra, 629 F.2d at 894-95, by articulating "some legitimate, non-discriminatory reason" for its treatment of the employee. McDonnell Douglas, supra, 411 U.S. at 802.
Once the employer presents evidence showing lawful justification for its treatment of the plaintiff, the plaintiff must then prove that the asserted reason was merely a pretext for unlawful discrimination. The ultimate burden of persuasion remains on the plaintiff at all times; the defendant's burden is only to introduce sufficient evidence to create a genuine factual issue concerning the existence of a legitimate justification for the action. Croker v. Boeing Co., supra, 662 F.2d at 991. See Texas Department of Community Affairs v. Burdine, supra, 450 U.S. at 253-55. Nevertheless, the McDonnell Douglas model eases the plaintiff's burden considerably by compelling the employer to justify its conduct. This circuit has expressly applied the McDonnell Douglas approach to cases arising under the ADEA. See Rodriguez v. Taylor, supra; Smithers v. Bailar, supra.
In the instant case, Massarsky established a prima facie case of discriminatory treatment under the ADEA by showing that he was within the protected age class and was laid off from his job as a process engineer even though he was undisputably qualified for that position. It is also undisputed that a person considerably younger in age and with less seniority was retained. This placed on the Company the burden of producing some non-age justification for its employment action. General Motors countered by asserting that Massarsky's layoff was pursuant to company policy to lay off the employee with the least Company-wide service, except that under that policy GMI students were immune from layoff.
Massarsky claims that the policy of immunizing GMI students from layoff was not a "legitimate justification" for the Company's action because the Company thereby extended favorable treatment to a group predominantly composed of young employees (recent high school graduates). But any disproportionate effect of the Company's policy is irrelevant to a claim of "disparate treatment" so long as the personnel action was not motivated by any discriminatory animus.*fn14 To prevail on this aspect of his claim -- intentional discrimination -- Massarsky had to show that the Company's policy of insulating GMI students from adverse personnel actions, though age-neutral on its face, was a mere "pretext" for unlawful discrimination on the basis of age. For example, this conclusion would have been warranted had Massarsky established that the Company's purported policy was merely a post-hoc rationalization or a policy that had been adopted specifically for the purpose of concealing discrimination on the basis of age.
There was evidence, although offered by plaintiff as pre-trial admissions, that the Company had adopted a five page internal document containing guidelines for use inter alia by the Divisional Personnel Departments in connection with reductions in salaried work force. The guidelines document referred to "special consideration," among which was the following:
GMI students. GMI students should not be laid off. A division has a considerable investment in these students which should be protected. The GMI cooperative program should be continued.
The guidelines apparently were discussed at an administrative personnel conference on May 6, 1970. In addition, the Company offered evidence that the GMI institute is considerably more than a mere in-plant training program. GMI is a fully accredited five-year college in engineering and management. It operates degree programs in mechanical, electrical, and industrial engineering, and industrial administration. At the time of trial, it had a student body of 2,350 with approximately 20 percent minority students and as much as 35 percent women. Each student pays tuition. This evidence established that the Company policy with respect to GMI student immunity from layoff was in place sometime prior to Massarsky's furlough and that it was not pretextual or a coverup for intentional discrimination. The evidence was sufficient to rebut Massarsky's prima facie case of intentional discrimination.
After considering all the evidence, the jury returned a verdict for General Motors. The jury by special interrogatory determined that Massarsky failed to carry his burden of persuasion to establish that he was the victim of intentional discrimination because of age. This conclusion had a reasonable basis, given the paucity of evidence of motive presented in this case.
On motions for a directed verdict and for judgment notwithstanding the verdict, the movant must meet a strict test. These motions require the judge "to test the body of evidence not for its insufficiency to support a finding, but rather for its overwhelming effect. He must be able to say not only that there is sufficient evidence to support the finding, even though other evidence could support as well a contrary finding, but additionally that there is insufficient evidence for permitting any different finding." Fireman's Fund Insurance Co. v. Videfreeze Corp., supra, 540 F.2d at 1177 (quoting Mihalchak v. American Dredging Co., 266 F.2d 875, 877 (3d Cir.), cert. denied, 361 U.S. 901, 4 L. Ed. 2d 157, 80 S. Ct. 209 (1959)).
Of course, as the dissent observes, op. typescript at 5-6, where an employer's policy or practice is discriminatory on its face, it is unnecessary for the plaintiff to make a separate showing of intent to discriminate. Naturally, if General Motors' policy had been to select employees for layoff on the basis of their age, there would be no jury issue of intent. In that situation, the discriminatory treatment would be apparent from the terms of the policy. But here General Motors' policy is not facially discriminatory because it is not expressed in terms of age. The employees who were insulated from layoff received this favorable treatment on the basis of their status as GMI students, not their age. There is nothing to indicate that older persons were precluded from becoming GMI students, or that General Motors was not acting in good faith in operating the General Motors Institute. We simply cannot infer that the Company was using student status as nothing more than a proxy for age merely because the GMI student population contained primarily younger individuals.*fn15 In short, there is a vast difference between a shoddy policy framed in terms of age and a well-intentioned policy framed in terms of student status. To hold now that the intent to discriminate may be presumed from the circumstances of this case, in the face of the jury's finding that the policy favoring GMI students was not discriminatorily motivated, would be utterly incomprehensible.
The district court therefore acted correctly in denying the plaintiff's motions for a directed verdict and for judgment notwithstanding the verdict with respect to his layoff under a disparate treatment theory of the ADEA.
In his appellate briefs, Massarsky primarily characterizes this case as one involving the alleged disparate impact of a facially neutral rule.*fn16 He contends that General Motors' policy of insulating GMI students from layoff during a reduction in force, in conjunction with the policy of laying off the employee with the least seniority, operated to the detriment of members of the protected age group.
Initially, it should be remembered that Griggs v. Duke Power Co., the landmark case in which the Supreme Court held that a showing of disparate impact alone is sufficient to establish unlawful discrimination, involved race discrimination under Title VII. Although the Second Circuit has expressly recognized the disparate impact doctrine in the ADEA context, see Geller v. Markham, 635 F.2d 1027 (2d Cir. 1980), cert. denied, 451 U.S. 945, 68 L. Ed. 2d 332, 101 S. Ct. 2028 (1981), this court has never ruled on whether a plaintiff can establish a violation of the Act by showing disparate impact alone.*fn17 But even assuming, without deciding, that the disparate impact theory does apply to age discrimination suits, the district court correctly ruled that Massarsky is not entitled to any relief. The plaintiff had failed to make out a prima facie case under this doctrine.
The plaintiff's initial burden with respect to a disparate impact claim is heavier than it is when disparate treatment is alleged. To establish a prima facie case under the disparate impact model, the plaintiff must show "that the facially neutral employment practice had a significantly discriminatory impact." Connecticut v. Teal, 457 U.S. 440, 446, 102 S. Ct. 2525, 73 L. Ed. 2d 130 (1982). See Albemarle Paper Co. v. Moody, supra, 422 U.S. at 425. "If that showing is made, the employer must then demonstrate that 'any given requirement [has] a manifest relationship to the employment in question,' in order to avoid a finding of discrimination. . . . Even in such a case, however, the [employee] may prevail, if he shows that employer was using the practice as a mere pretext for discrimination." Connecticut v. Teal, supra, 457 U.S. at 446 (quoting Griggs v. Duke Power Co., supra, 401 U.S. at 432). It is apparent, however, that the employer's burden of justifying the employment practice does not arise until after the plaintiff has made out a prima facie case. See Albemarle Paper, supra, 422 U.S. at 425.
To establish his prima facie case of discriminatory impact, the plaintiff must show that the employer's selection process results in unfavorable treatment of a disproportionate number of members of the protected group to which the plaintiff belongs. See Dothard v. Rawlinson, supra, 433 U.S. at 329. Thus, an essential element of a disparate impact claim is a disparate impact on the protected group.
In the instant case, it is inescapable that Massarsky failed to establish this necessary element of his claim. Because the ADEA only prohibits discrimination against employees between the ages of 40 and 70, Massarsky had to show a disproportionate effect on individuals in that age group. He did, of course, show that the challenged employment practices of General Motors had a pernicious effect on him. But he offered no evidence to show that other similarly situated employees were likewise affected. An adverse effect on a single employee, or even a few employees, is not sufficient to establish disparate impact. See Whack v. Peabody & Wind Engineering Co., 595 F.2d 190, 194 (3d Cir. 1979); Harper v. Trans World Airlines, Inc., 525 F.2d 409 (8th Cir. 1976); Robinson v. City of Dallas, 514 F.2d 1271 (5th Cir. 1975) (Title VII cases). We cannot simply assume that a disproportionate number of older employees were adversely affected by the Company's policy of insulating GMI students from layoff. Because General Motors' practice was to lay off the person with the least service to the Company (assuming that merit, capacity, and ability were equal), whenever a short-service employee was insulated from layoff because of his status as a GMI student, the layoff inevitably would fall on some other employee with slightly more seniority. But it was always only those employees with the least service to the Company who were in danger of layoff. Absent statistical proof, it is pure conjecture to believe that protected older individuals predominated among these short-service employees. Indeed, it is plausible that Massarsky was, as the Company maintains, "an anomaly" because he was a short-service employee in the protected age group.
We recognize that the GMI students who were insulated from layoffs because of the Company's policy may generally have been younger than the employees who were laid off in their place. But this possibility does not help the plaintiff. The ADEA is only implicated when a policy has a differential impact on those within the protected class, i.e., those between 40 and 70 years of age. Even if all laid off employees were older that the GMI students who received special treatment, the Act would not be violated unless those age 40 to 70 were disproportionately represented among the laid off employees. And the plaintiff has proffered no evidence to show that the Company's policy actually had this differential impact.*fn18
The Supreme Court's recent decision in Connecticut v. Teal, supra, is fully consistent with this analysis. Teal involved a challenge to an examination used to select state employees for promotion to supervisory positions. Because plaintiff Teal failed the examination, the State excluded her from further consideration for permanent supervisory positions. Although the examination was racially discriminatory because it excluded a disproportionate number of black candidates, the State attempted to compensate for the effects of this discrimination by promoting a higher proportion of eligible blacks than whites in order to reach a nondiscriminatory "bottom line." The Supreme Court held that the examination had a disparate impact on plaintiff Teal because of her race, an impact that could not be cured by the State's extension of favorable treatment to others in the plaintiff's group. Thus, Teal stands for the proposition that an employment practice must be analyzed at "the first step in the employment process that produces an adverse impact on a [protected group], not the end result of the employment process as a whole." Costa v. Markey, 694 F.2d 876, 880 (1st Cir. 1982).
Judge Sloviter apparently believes that the point at which General Motors' policy had a "disparate impact" occurred when the Company insulated GMI students from layoff. We fail to see how this action alone had any real impact on Massarsky or any employee. The insulation of GMI students from layoff was merely an administrative matter that, at the very most, increased to some small degree the potential that other employees, regardless of their age, might someday be furloughed in the event of operational cutbacks. But there was no tangible impact until it actually became necessary for the Company to lay off a process engineer, and it was then -- and only then -- that Massarsky was adversely affected. The reason Massarsky was selected for layoff was that he possessed the least seniority of all employees eligible for layoff. Thus, unlike Teal, where the plaintiff was affected by the ...