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Until the nation’s highest court finds otherwise, the 2d U.S. Circuit Court of Appeals will continue to hold that business practices that have a disparate impact on older workers are actionable under a federal anti-discrimination law. Reaffirming 2d Circuit precedent that is at odds with the majority of federal appellate courts, the appeals court said that a challenge to a layoff plan implemented by a New York company was properly brought under the Age Discrimination in Employment Act (ADEA), even though the company did not intend to discriminate. The circuit, in Meacham v. Knolls Atomic Power Laboratory, No. 02-7378, upheld jury verdict findings that older employees at Knolls had lost their jobs not through an intentionally discriminatory layoff plan but through a facially neutral policy that had a discriminatory impact and that the company could have accomplished its goals by a different, non-discriminatory method. The plaintiffs’ lawyer, John B. DuCharme of Berger & DuCharme in Clifton Park, N.Y, said the suit was brought because 30 of 31 people who were laid off were older than 40. A total of 26 plaintiffs went to trial in the case, with some breaking off and settling with the company before proceedings were complete. The jury awarded 17 plaintiffs a total of $4.2 million and the trial judge awarded the plaintiffs a total of nearly $1 million in attorney fees and costs. On the appeal, Knolls Atomic Power Laboratory (KAPL), a subsidiary of Lockheed Martin Corp., argued that the statute does not allow disparate impact claims. It cited the U.S. Supreme Court case Hazen Paper Co. v. Biggins, 507 U.S. 604 (1993), which dealt with a claim of disparate treatment-which involves the proof of intentional discrimination. Writing for the unanimous three-member 2d Circuit panel, Judge Rosemary Pooler said the Hazen Paper court held that an “employer may lawfully discriminate based on factors closely correlated with age. “KAPL argues that this holding and dicta in Hazen Paper suggest that the Supreme Court ultimately will reject ADEA disparate impact claims,” Pooler said. “While this may be so, the Hazen Paper Court directly stated that it had not resolved the viability of ADEA disparate impact claims.” Pooler noted that the Supreme Court is likely to resolve the issue next term in Smith v. City of Jackson, 351 F.3d 183 (2003), where the 5th Circuit held that the disparate impact theory of recovery is not available in age discrimination cases. In so holding, the 5th Circuit joined four other circuits-the 1st, 7th, 10th and 11th-to come down on that side of the issue. The opposite position is held by the 2d, 8th and 9th circuits. The 6th Circuit, according to papers filed in the KAPL appeal, has yet to resolve the issue. “The Supreme Court’s express statement contradicts any claim that Hazen Paper expressly or implicitly overruled our prior precedent. And the Supreme Court’s dicta do not outweigh prior circuit authority,” Pooler said. “Of course, decisions of other circuits do not expressly or implicitly overrule our prior cases. Therefore we reject KAPL’s contention that disparate impact claims are not permissible under the ADEA.” The arguments at the 2d Circuit drew amicus briefs on both sides of the issue, with the U.S. Chamber of Commerce weighing in on behalf of KAPL and the plaintiffs’ position winning support from the Equal Employment Opportunity Commission, the American Association of Retired Persons and the National Employment Lawyers Association. Judges Joseph M. McLaughlin and Dennis Jacobs joined in Pooler’s opinion. Margaret Clemens of Nixon Peabody represented KAPL.

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