Hazen Paper Company v. Biggins

• Decision Date: 20 April 1993
• Docket Number: No. 91-1600,91-1600
• Parties: HAZEN PAPER COMPANY, et al., Petitioners, v. Walter F. BIGGINS
• Court: U.S. Supreme Court

507 U.S. 604

113 S.Ct. 1701

123 L.Ed.2d 338

HAZEN PAPER COMPANY, et al., Petitioners,

v Walter F. BIGGINS.

No. 91-1600.

Argued Jan. 13, 1993.

Decided April 20, 1993.

Syllabus ^*

Petitioners fired respondent Biggins when he was 62 years old and apparently a few weeks short of the years of service he needed for his pension to vest. In his ensuing lawsuit, a jury found, inter alia, a willful violation of the Age Discrimination in Employment Act of 1967 (ADEA), which gave rise to liquidated damages. The District Court granted petitioners' motion for judgment notwithstanding the verdict on the "willfulness" finding, but the Court of Appeals reversed, giving considerable emphasis to evidence of pension interference in upholding ADEA liability and finding that petitioners' conduct was willful because, under the standard of Trans World Airlines, Inc. v. Thurston, 469 U.S. 111, 128, 105 S.Ct. 613, 625, 83 L.Ed.2d 523, they knew or showed reckless disregard for the matter of whether their conduct contravened the ADEA.

Held:

1. An employer does not violate the ADEA by interfering with an older employee's pension benefits that would have vested by virtue of the employee's years of service. In a disparate treatment case, liability depends on whether the protected trait under the ADEA, age—actually motivated the employer's decision. When that decision is wholly motivated by factors other than age, the problem that prompted the ADEA's passage—inaccurate and stigmatizing stereotypes about older workers' productivity and competence—disappears. Thus, it would be incorrect to say that a decision based on years of service—which is analytically distinct from age—is necessarily age-based. None of this Court's prior decisions should be read to mean that an employer violates the ADEA whenever its reason for firing an employee is improper in any respect. The foregoing holding does not preclude the possibility of liability where an employer uses pension status as a proxy for age, of dual liability under the Employee Retirement Income Security Act of 1974 and the ADEA, or of liability where vesting is based on age rather than years of service. Because the Court of Appeals cited additional evidentiary support for ADEA liability, this case is remanded for that court to reconsider whether the jury had sufficient evidence to find such liability. Pp. ____.

2. The Thurston "knowledge or reckless disregard" standard for liquidated damages applies not only where the predicate ADEA violation is a formal, facially discriminatory policy, as in Thurston, but also where it is an informal decision by the employer that was motivated by the employee's age. Petitioners have not persuaded this Court that Thurston was wrongly decided or that the Court should part from the rule of stare decisis. Applying the Thurston standard to cases of individual discrimination will not defeat the two-tiered system of liability intended by Congress. Since the ADEA affords an employer a "bona fide occupational qualification" defense, and exempts certain subject matters and persons, an employer could incorrectly but in good faith and nonrecklessly believe that the statute permits a particular age-based decision. Nor is there some inherent difference between this case and Thurston to cause a shift in the meaning of the word "willful." The distinction between the formal, publicized policy in Thurston and the undisclosed factor here is not such a difference, since an employer's reluctance to acknowledge its reliance on the forbidden factor should not cut against imposing a penalty. Once a "willful" violation has been shown, the employee need not additionally demonstrate that the employer's conduct was outrageous, provide direct evidence of the employer's motivation, or prove that age was the predominant rather than a determinative factor in the employment decision. Pp. ____.

953 F.2d 1405 (CA1 1992), vacated and remanded.

O'CONNOR, J., delivered the opinion for a unanimous Court. KENNEDY, J., filed a concurring opinion, in which REHNQUIST, C.J., and THOMAS, J., joined.

Robert B. Gordon, Boston, MA, for petitioners.

Maurice M. Cahillane, Jr., Springfield, MA, for respondent.

John R. Dunne, for the U.S. as amicus curiae by special leave of the Court.

Justice O'CONNOR delivered the opinion of the Court.

In this case we clarify the standards for liability and liquidated damages under the Age Discrimination in Employment Act of 1967 (ADEA), 81 Stat. 602, as amended, 29 U.S.C. § 621 et seq.

I

Petitioner Hazen Paper Company manufactures coated, laminated, and printed paper and paperboard. The company is owned and operated by two cousins, petitioners Robert Hazen and Thomas N. Hazen. The Hazens hired respondent Walter F. Biggins as their technical director in 1977. They fired him in 1986, when he was 62 years old.

Respondent brought suit against petitioners in the United States District Court for the District of Massachusetts, alleging a violation of the ADEA. He claimed that age had been a determinative factor in petitioners' decision to fire him. Petitioners contested this claim, asserting instead that respondent had been fired for doing business with competitors of Hazen Paper. The case was tried before a jury, which rendered a verdict for respondent on his ADEA claim and also found violations of the Employee Retirement Income Security Act of 1974 (ERISA), 88 Stat. 895, § 510, 29 U.S.C. § 1140, and state law. On the ADEA count, the jury specifically found that petitioners "willfully" violated the statute. Under § 7(b) of the ADEA, 29 U.S.C. § 626(b), a "willful" violation gives rise to liquidated damages.

Petitioners moved for judgment notwithstanding the verdict. The District Court granted the motion with respect to a state-law claim and the finding of "willfulness" but otherwise denied it. An appeal ensued. 953 F.2d 1405 (CA1 1992). The United States Court of Appeals for the First Circuit affirmed judgment for respondent on both the ADEA and ERISA counts, and reversed judgment notwithstanding the verdict for petitioners as to "willfulness."

In affirming the judgments of liability, the Court of Appeals relied heavily on the evidence that petitioners had fired respondent in order to prevent his pension benefits from vesting. That evidence, as construed most favorably to respondent by the court, showed that the Hazen Paper pension plan had a 10-year vesting period and that respondent would have reached the 10-year mark had he worked "a few more weeks" after being fired. Id., at 1411. There was also testimony that petitioners had offered to retain respondent as a consultant to Hazen Paper, in which capacity he would not have been entitled to receive pension benefits. Id., at 1412. The Court of Appeals found this evidence of pension interference to be sufficient for ERISA liability, id., at 1416, and also gave it considerable emphasis in upholding ADEA liability. After summarizing all the testimony tending to show age discrimination, the court stated:

"Based on the foregoing evidence, the jury could reasonably have found that Thomas Hazen decided to fire [respondent] before his pension rights vested and used the confidentiality agreement [that petitioners had asked respondent to sign] as a means to that end. The jury could also have reasonably found that age was inextricably intertwined with the decision to fire [respondent]. If it were not for [respondent's] age, sixty-two, his pension rights would not have been within a hairbreadth of vesting. [Respondent] was fifty-two years old when he was hired; his pension rights vested in ten years." Id., at 1412.

As to the issue of "willfulness" under § 7(b) of the ADEA, the Court of Appeals adopted and applied the definition set out in Trans World Airlines, Inc. v. Thurston, 469 U.S. 111, 105 S.Ct. 613, 83 L.Ed.2d 523 (1985). In Thurston, we held that the airline's facially discriminatory job-transfer policy was not a "willful" ADEA violation because the airline neither "knew [nor] showed reckless disregard for the matter of whether" the policy contravened the statute. Id., at 128, 105 S.Ct., at 625 (internal quotation marks omitted). The Court of Appeals found sufficient evidence to satisfy the Thurston standard, and ordered that respondent be awarded liquidated damages equal to and in addition to the underlying damages of $419,454.38. 953 F.2d, at 1415-1416.

We granted certiorari to decide two questions. 505 U.S. ----, 112 S.Ct. 2990, 120 L.Ed.2d 868 (1992). First, does an employer's interference with the vesting of pension benefits violate the ADEA? Second, does the Thurston standard for liquidated damages apply to the case where the predicate ADEA violation is not a formal, facially discriminatory policy, as in Thurston, but rather an informal decision by the employer that was motivated by the employee's age?

II

A.

The courts of appeals repeatedly have faced the question whether an employer violates the ADEA by acting on the basis of a factor, such as an employee's pension status or seniority, that is empirically correlated with age. Compare White v. Westinghouse Electric Co., 862 F.2d 56, 62 (CA3 1988) (firing of older employee to prevent vesting of pension benefits violates ADEA); Metz v. Transit Mix, Inc., 828 F.2d 1202 (CA7 1987) (firing of older employee to save salary costs resulting from seniority violates ADEA) with Williams v. General Motors Corp., 656 F.2d 120, 130, n. 17 (CA5 1981) ("[S]eniority and age discrimination are unrelated. . . . We state without equivocation that the seniority a given plaintiff has accumulated entitles him to no better or worse treatment in an age discrimination suit."), cert. denied, 455 U.S. 943, 102 S.Ct. 1439, 71 L.Ed.2d 655 (1982); EEOC v. Clay Printing Co., 955 F.2d 936, 942 (CA4 1992) (emphasizing distinction between employee's age and years of service). We now clarify that there is no disparate treatment under the ADEA when the factor motivating the employer is some...