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Fractured 11th Circuit rules ADEA doesn’t support job applicant’s disparate impact claim

By Lorene D. Park, J.D.

In a lengthy opinion including dissents and partial dissents, the Eleventh Circuit held on rehearing that reading the whole text of the ADEA makes clear that job applicants may not bring disparate impact claims under Section 4(a)(2) because they lack status as an “employee.” The majority also affirmed dismissal of the applicant’s untimely disparate treatment claim because he waited over two years to file an EEOC charge, and he pleaded facts showing he did not exercise diligence in pursuing his rights. However, the case was remanded to the appellate panel to address whether the continuing violations doctrine might apply to the disparate treatment claim (Villarreal v. R.J. Reynolds Tobacco Co., October 5, 2016, Pryor, W.).

Seeking recent graduates. In 2007, at the age of 49, the applicant submitted an online application to be a territory manager with R.J. Reynolds. With help from a recruiting contractor, the company screened applicants using a set of guidelines. The guidelines described the “targeted candidate” as someone “2–3 years out of college” who “adjusts easily to changes” and instructed the contractor to “stay away from” applicants “in sales for 8–10 years.” Neither the contractor nor R.J. Reynolds told the applicant that he had been rejected, and he did not follow up.

Age discrimination suit. In May 2010, after an attorney contacted him to tell him that R.J. Reynolds may have discriminated against him, the applicant filed an EEOC charge of age discrimination. While that was pending, he applied five more times and was rejected each time. After amending his charge to add these rejections, he filed a collective action under the ADEA alleging disparate treatment under Section 4(a)(1) and disparate impact under Section 4(a)(2).

Reasoning that the ADEA only allows disparate impact claims by current employees, not job applicants, the district court dismissed this claim. It also dismissed the disparate treatment claims arising before November 19, 2009, as untimely. The court denied the applicant’s motion to amend his complaint to address equitable tolling, finding this would be futile as he did not diligently pursue his rights—he didn’t contact R.J. Reynolds to find out why his application was rejected and did not allege that the company misled him. On appeal, he argued that a job applicant can sue for disparate impact under ADEA Section 4(a)(2), 29 U.S.C. §623(a)(2).

Does the ADEA allow disparate impact claims by applicants? In a November 30, 2015, decision, a divided Eleventh Circuit panel reversed, finding the ADEA’s language unclear on whether it authorizes disparate impact claims by job applicants and deferring to the EEOC’s interpretation, construing Section 4(a) (2) to allow these claims. It also held that the applicant was entitled to equitable tolling, though it did not address the applicant’s arguments regarding the continuing violations doctrine. On rehearing, a fractured end banc appeals court backpedaled.

Applicant has no “status as employee” under Section 4(a) (2). Noting that statutory text must be construed “as a whole,” the appellate court considered not only Section 4(a)(2), but also the context provided by Sections 4(c)(2) and 4(a)(1). Section 4(a)(2) prohibits an employer from “limit[in], segregate[in], or classify[in] his employees in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee,” because of age. The key phrase to the majority was “or otherwise adversely affect his status as an employee.” By using “or otherwise” to join the verbs, Congress made “deprive [in] or tend [in] to deprive any individual of employment opportunities” a subset of “adversely affect [in] [the individual’s] status as an employee.” In other words, explained the appeals court, Section 4(a) (2) protects an individual only if he has a “status as an employee.”

Statutory context confirmed this reading, since Section 4(c) (2) specifically applies to applicants because it adds the words “or as an applicant for employment” to a provision that largely parallels Section (4) (a) (2). In further support, the majority contrasted Section 4(a)(2) with the text of Section 4(a)(1), which covers applicants by making it unlawful for employers to “fail or refuse to hire or discharge any individual or otherwise discriminate” because of age. Section 4(a) (2) does not mention refusing to hire, noted the court, and so applies only to employees.

Here, because the applicant had no status as an “employee,” his Section 4(a) (2) claim failed. His attempts to argue that the term “employee” meant something broader than “employee,” and included any person aggrieved, also failed. In addition, because the court found the statutory text clear, there was no need to defer to the EEOC’s interpretation. In conclusion on this issue, the appeals court noted that Congress did not leave applicants without recourse, and they could sue for disparate treatment under Section 4(a) (1), though the applicant here voluntarily dismissed his timely claim of disparate treatment.

No equitable tolling, but maybe continuing violations. Although the applicant argued that he was entitled to equitable tolling of his remaining disparate treatment claim, the appeals court disagreed because he did not allege that R.J. Reynolds actively misled him and he alleged facts that prevented him from proving he was diligent (he did nothing for more than two years between his initial application and a communication from a lawyer). The applicant also argued that the continuing violation doctrine made his claim timely, but the panel did not address this issue so his argument was remanded to the appellate panel.

Dissent on statutory text. Judge Martin, joined by Judges Wilson and Pryor (and partially joined by Judges Jordan and Rosenbaum on the equitable tolling issue) dissented. She contended that the majority’s reading of the phrase “or otherwise adversely affect his status as an employee” rendered superfluous the phrase “deprive or tend to deprive any individual of employment opportunities.” Addressing this assertion, the majority responded that the surplusage canon of statutory interpretation does not apply in this context because the phrase “or otherwise” operates as a catchall: “the specific items that precede it are meant to be subsumed by what comes after the ‘or otherwise.’” In the majority’s view, Judge Martin’s interpretation would not give effect to every word because it reads “otherwise” out of the statute and reads the words “any individual” in isolation. Reading the text as a whole, explained the majority, showed that the “individuals” covered by the statute are those with a “status as an employee.”

Dissent on equitable tolling. Joining the dissent only with respect to the equitable tolling issue, Judges Jordan and Rosenbaum agreed with Judge Martin that the court should not have addressed equitable tolling because the complaint and proposed amendment were silent on how the applicant learned his application was rejected. (The majority addressed this point, noting that the proposed amended complaint stated that the applicant learned that his application was rejected in 2010 when an attorney called him, not by his own diligence.)

Judge Jordan reads Section 4(a) (2) differently. Also, while agreeing with the holding that the applicant cannot assert a disparate impact claim, Judge Jordan wrote separately to offer a different way to read Section 4(a) (2). Under this reading, an applicant can bring a disparate impact claim, but only if the challenged practice also affects the employer’s existing employees (which was not alleged here).