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Creating circuit split, 11th Circuit finds ADEA authorizes disparate impact claims by job applicants

By Kathleen Kapusta, J.D.

The language of the ADEA is unclear as to whether it authorizes disparate impact claims by job applicants, said a divided Eleventh Circuit, which deferred to the EEOC’s interpretation of the statute and construed ADEA Section 4(a)(2) to apply to disappointed job applicants like the plaintiff here. Further finding that the plaintiff was entitled to equitable tolling of the ADEA’s 180-day limitations period, even though he filed his first charge of discrimination more than two years after he applied for a position with RJ Reynolds Tobacco, the appeals court reversed the dismissal of his lawsuit and remanded. Judge Vinson, dissenting, asserted that “Although every case is important to the litigants involved, not every case is independently significant. But this one is, and it has the potential to create bad law in two important areas” (Villarreal v. R.J. Reynolds Tobacco Co., November 30, 3015, Martin, B.).

“Stay away from” candidates with experience. At the age of 49, the plaintiff first applied for a territory manager position with RJ Reynolds in November 2007 by submitting an online application. With the assistance of recruiting services, the company, in screening applicants, used a set of “resume review guidelines” that listed a number of characteristics it wanted in its new hires, some of which related to age, such as telling hiring managers to target candidates who are “2–3 years out of college” but to “stay away from” candidates with “8–10 years” of prior sales experience.

The company never responded to the plaintiff’s application. Over two years later, he filed an EEOC charge alleging age discrimination. While the charge was pending, he applied for a territory manager position five more times and was rejected each time. After amending his charge to add these applications and rejections, he sued for disparate treatment and disparate impact under the ADEA on behalf of himself and all other similarly situated applicants.

Lower court dismissal. Reasoning that the ADEA only allows suits for disparate impact claims brought by current employees, the district court dismissed this claim. It also dismissed all claims related to hiring decisions before November 19, 2009, as untimely, finding that the plaintiff was not entitled to equitable tolling. Although he moved to amend his complaint to add facts in support of equitable tolling, the district court found this would be futile as he did not diligently pursue his rights: He did not contact RJ Reynolds to find out why his application had been rejected and he failed to allege any misrepresentation or concealment by RJ Reynolds.

Disparate impact claims. On appeal, the Eleventh Circuit noted that in Smith v. City of Jackson, Miss., the Supreme Court in 2005 held for the first time that the ADEA authorizes disparate impact claims. Smith, however, involved only claims of current employees, not job applicants. Section 4(a)(1), which makes it unlawful to “discriminate against any individual … because of such individual’s age,” is the provision that authorizes disparate treatment claims.

Section 4(a)(2), which makes it unlawful for an employer “to limit … his employees in any way which would deprive or tend to deprive any individual of employment opportunities … because of such individual’s age,” focuses on the effects of the action on the employee rather than the motivation for the action of the employer, said the court, noting that it is the part of Section 4(a) that authorizes disparate impact claims. While the plaintiff argued that RJ Reynolds “limited” its “employees” in a “way which would deprive or tend to deprive” an “individual” like him “of employment opportunities” because of his age, RJ Reynolds contended that Section 4(a)(2) covers only things a company does to “limit, segregate, or classify” its employees.

Ambiguity. Though both of these readings seemed reasonable, the court found that the plain language of the statute does not make clear whether job applicants may bring disparate impact claims. And the parties’ other arguments underscored the fact that Section 4(a)(2) can reasonably be read in more than one way. Thus, because of the text’s ambiguity, the court turned to the EEOC’s interpretation of the statute.

“Any individual” or “employees?” Section 4(a)(2) clearly authorizes disparate impact claims, said the court, noting that what was less clear was whether its reference to “any individual” includes job applicants, or whether the separate term “his employees” limits the entire provision to current employees. When a statute is ambiguous, policy choices belong to the agency that enforces the statute. The EEOC’s current ADEA disparate impact regulation, 29 C.F.R. Sec. 1625.7(c), does not distinguish between prospective and existing employees but instead states that “[a]ny employment practice that adversely affects individuals within the protected age group on the basis of older age is discriminatory unless the practice is justified by a ‘reasonable factor other than age.’”

EEOC’s view. According to the EEOC, Section 4(a)(2) protects any individual an employer discriminates against, regardless of whether that individual is an employee or job applicant. RJ Reynolds argued that Section 1625.7 was not entitled to deference on whether Section 4(a)(2) permits disparate impact liability for applicants because it merely applies the “reasonable factor other than age” (RFOA) defense from Section 4(f)(1) to ADEA liability, rather than providing a basis for disparate impact liability, which comes from Section 4(a)(2).

Rejecting this contention, the court found that Smith foreclosed this argument. “Because the Smith plurality found that the text of § 4(a)(2) plainly authorizes disparate impact liability, it was not necessary for a majority of Justices to analyze whether and how courts must defer to the EEOC’s disparate impact regulation,” said the court. The Smith plurality did reference the regulation to explain why the RFOA provision cannot be understood apart from the statutory scheme as a whole and also explained that the EEOC has “consistently interpreted the ADEA to authorize relief on a disparate-impact theory” and that the regulation “set[s] forth the standards for a disparate-impact claim.”

As for the company’s argument that the regulation is not entitled to deference on whether Section 4(a)(2) permits disparate impact liability for applicants, the court pointed out that it describes the standard for challenging an “employment practice that adversely affects individuals within the protected age group,” and the preamble to the final regulations makes clear that the term “individuals” covers both employees and applicants. Deferring to the EEOC’s reading of the statute, the court construed Section 4(a)(2) to apply to job applicants.

Equitable tolling. The plaintiff argued that he was entitled to equitable tolling because he did not know—nor could he have known—that he had been discriminated against until April 2010, when he was informed about the resume review guidelines and RJ Reynolds’s hiring practices. Since Reeb v. Economic Opportunity Atlanta, Inc., the Eleventh Circuit has regularly reaffirmed the “reasonably prudent” person standard in ADEA cases. Contrary to what the district court found, equitable tolling does not require misrepresentation by the employer. Rather, it delves into whether “the facts supporting a cause of action became apparent or should have become apparent to a reasonably prudent person with concern for his or her rights.”

Reasonable prudence. And because a person’s “mere suspicion of age discrimination, unsupported by personal knowledge,” does not trigger the limitations period, the clock does not begin to run until he has enough information to support his cause of action. Finally, because secret preferences in hiring are unlikely to be readily apparent to the individual discriminated against, a plaintiff need not undertake an entirely futile investigation into hidden discriminatory practices in the name of “due diligence.” Even if the plaintiff’s diligence is relevant to the ultimate inquiry—at what point the facts necessary to support his lawsuit should have been apparent to a person with a reasonably prudent regard for his rights—his failure to ask RJ Reynolds why he had not been hired was not fatal to his claim. Noting that he alleged he could not have even suspected age discrimination until shortly before he filed his EEOC charge, the court found a fact question as to whether a person such as the plaintiff, with a reasonably prudent regard for his rights, could have learned the facts necessary to support his lawsuit earlier than April 2010.

Dissent. In dissent, Judge Vinson argued that the statute’s plain language clearly protects both employees and job applicants from disparate treatment in Section 4(a)(1), but it only protects employees in Section 4(a)(2). Section 4(a)(2) does not use the word “individual” in isolation, but clearly protects only individuals whose “status as an employee” was adversely affected by an employer’s “limit[ing], segregat[ing], or classify[ing] his employees.” In the context of Section 4(a)(2), the “individuals” authorized to file suit are limited to actual “employees,” rather than people who have no employment relationship with the employer at all.

Three other circuits have said that Section 4(a)(2) is limited to employees, and a four-Justice plurality in Smith treated Section 4(a)(2) as limited to employees, stressed the dissent. While the plaintiff dismissed all of this as dicta, the dissent pointed out that “that’s a lot of dictum to ignore,” noting “there is dicta and then there is dicta, and then there is Supreme Court dicta.’” Arguing that the ADEA is plain and unambiguous, the dissent concluded that “Consistent with two District Courts, three Courts of Appeal, and eight Supreme Court Justices (the full Court that considered the Smith case): ‘Section 4(a)(2), of course, does not apply to applicants for employment at all—it is only § 4(a)(1) that protects this group.’”

The dissent also asserted that it “makes absolutely no sense to apply tolling in a situation like the one here, where there was no misconduct by RJ Reynolds that in any way contributed to [the plaintiff’s] late filing. Unlike every one of the cases cited by the majority, the company did not conceal facts, erect any barriers, or take advantage of a ‘loophole’ to keep him from filing timely. Nor was he misled about the applicable statute of limitations.” Rather, he “just did nothing—not even make a phone call to see that his resume had been reviewed—for approximately two and a half years. To the extent the majority believes that equitable tolling is available in cases like this one simply because people who are discriminated against in hiring do not have sufficient information to know they were victims of discrimination, that is hardly an unusual or extraordinary circumstance,” he contended.