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Announcing several important holdings in age discrimination and ERISA law, the 3rd U.S. Circuit Court of Appeals Tuesday refused to revive the claims of 17 Conrail workers who said they were targeted for layoffs in 1995 because Conrail was worried about its “aging workforce” and also wanted to deprive them of the chance to take advantage of early-retirement packages that were offered the following year. Significantly, the unanimous three-judge panel in Anderson v. Conrail upheld U.S. District Judge Harvey Bartle III’s use of a stricter test for assessing whether a plaintiff in a reduction-in-force case had made out a prima facie case of age discrimination. The court also rejected a novel argument by plaintiffs’ attorney Alice W. Ballard that the prima facie case should have been made easier for the Conrail workers because they were “indirect” victims of discrimination. The ruling is a victory for Conrail’s team of lawyers from Pepper Hamilton — Laurence Z. Shiekman, Brian T. Ortelere, Joann Hyle, Larry R. Wood Jr. and Hope A. Comisky. In an opinion handed down last year, Bartle, a judge in the Eastern District of Pennsylvania, found that, in age discrimination cases brought under a pretext theory, courts employ a “slightly modified” version of the Title VII prima facie test. To succeed, the plaintiff must establish four elements — that he or she was 40 years old or older, was qualified for the position, suffered an adverse employment action, and was replaced by a “sufficiently younger” person to raise an inference of age discrimination. But in a reduction-in-force case, Bartle held that in order to satisfy the fourth element of the prima facie case, the plaintiff must also show that the sufficiently younger person retained was “similarly situated.” Although the 3rd Circuit has never imposed such a requirement, Bartle said he agreed with decisions from the 6th and 11th Circuits that called for modifying the prima facie test in reduction-in-force cases. Now the 3rd Circuit has upheld Bartle’s approach, saying it makes sense because the Age Discrimination in Employment Act is not a “bumping statute.” Writing for the court, Senior U.S. Circuit Judge Max Rosenn found that Bartle was correct in requiring each of the 30 plaintiffs to show that Conrail retained a younger worker who was similarly situated. “Were we to hold otherwise, we would be construing ADEA as guaranteeing a protected employee a job at the expense of a sufficiently younger employee,” Rosenn wrote in an opinion joined by 3rd Circuit Judge Anthony J. Scirica and visiting Judge Robert J. Ward of the Southern District of New York. Rosenn found Bartle correctly rejected many of the claims because the older workers pointed to an entry-level younger worker whose job was not similar to the ones from which they had been fired. Ballard filed the suit on behalf of a group of 30 workers, but Bartle dismissed claims of 14 for failing to make out a prima facie case. Of the 16 who survived summary judgment, 13 settled out of court and three went to trial and met with mixed results — two were rejected and one won a verdict. In the appeal, the 17 non-settling plaintiffs all challenged Bartle’s decision to dismiss their ERISA claim as time-barred. Fourteen of the plaintiffs also challenged Bartle’s rejection of their “indirect” theory of discrimination, and 10 appealed Bartle’s finding that they failed to make out a prima facie case. According to court papers, Conrail (which is now defunct) laid off 30 workers in July 1995 from in its central office, all but one of whom were in the 40-55 age range. In the layoff, the workers were given severance pay of about one year’s salary. In February 1996, Conrail announced a “voluntary separation program” or a buyout, which provided separation incentives to qualified employees that were more generous than the severance package given to the laid-off workers. The 1996 benefits included payment of two years’ salary and an additional $5,000 expense allowance. In November 1998, the 30 laid-off workers filed suit claiming that the decision by Conrail to reduce its aging workforce “was motivated by a desire to thin its middle-aged ranks” to make room for younger new hires. And in an ERISA claim, they alleged that Conrail fired them to preclude them from participating in the voluntary buyout program it planned to offer the following year. Bartle dismissed the ERISA claims after finding they were barred by the same two-year statute of limitations that would apply in a wrongful discharge claim. In the appeal, Ballard argued that Bartle erred in rejecting her argument that the plaintiffs could establish a prima facie case simply by showing that Conrail’s terminations were designed to make room for younger new employees and by showing that its proffered reason of the need for immediate cost savings was pretextual. The theory, Ballard said, was premised on the 3rd Circuit’s 1999 decision in Anjelino v. New York Times Co. which held that male workers had standing under Article III to sue under the sex discrimination laws, where the employer aimed the alleged discrimination at female co-workers. The Anjelino court held that the male plaintiffs had pleaded “specific facts to demonstrate a concrete injury as well as a nexus between the alleged injury and the sex-based discrimination, even though that discrimination was aimed in the first instance at others.” As a result, the court held that “indirect victims of sex-based discrimination have standing to assert claims under Title VII if they allege colorable claims of injury-in-fact that are fairly traceable to acts or omissions by defendants that are unlawful under the statute.” But Bartle found Anjelino was irrelevant because the Conrail plaintiffs offered no proof that they were harmed indirectly by an age-based reduction-in-force decision “directed at others.” Now the 3rd Circuit has agreed, saying, “Even if Anjelino relieved each plaintiff from individually satisfying a prima facie case under the McDonnell Douglas framework, it would not relieve the plaintiffs from showing that the terminations ‘are fairly traceable to acts or omissions by defendants that are unlawful under the statute.’ Stated differently, Anjelino does not relieve the plaintiffs from establishing that the RIF decision was unlawful under ADEA.” Ballard argued that the group had direct evidence of age bias because Conrail was concerned that its workforce was predominately middle-aged. That fact, she said, “boded badly for Conrail’s future, because the flow through the pipeline of upcoming leaders was down to a trickle.” Rosenn disagreed, saying such “generalized evidence” of Conrail’s aging workforce was not enough to show that its reduction in force “was illegitimately contrived on the basis of age.” Turning to the pretext theory, Rosenn found that Bartle had correctly rejected the claims of the 10 workers for failing to point to a similarly situated younger worker who was retained. “As to each of these 10 plaintiffs, they attempted to satisfy the fourth element by comparing themselves to entry-level positions or other low-level positions without providing any evidence of [routine] shuffling,” Rosenn wrote.

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