Meacham v. Knolls Atomic Power Laboratory

• Decision Date: 14 August 2006
• Docket Number: Docket No. 02-7474-cv(XAP).,Docket No. 02-7378-cv(L).
• Citation: 461 F.3d 134
• Parties: Clifford B. MEACHAM, Thedrick L. Eighmie, and Allen G. Sweet, individually and on behalf of all other persons similarly situated, Plaintiffs-Appellees-Cross-Appellants, James R. Quinn, Ph.D., Deborah L. Bush, Raymond E. Adams, Wallace Arnold, William F. Chabot, Allen E. Cromer, Paul M. Gundersen, Clifford J. Levendusky, Bruce E. Palmatier, Neil R. Pareene, William C. Reynheer, John K. Stannard, David W. Townsend, and Carl T. Woodman, Consolidated-Plaintiffs-Appellees, Hildreth E. Simmons, Jr., Henry Bielawski, Ronald G. Butler, Sr., James S. Chambers, Arthur J. Kaszubski, David J. Kopmeyer, Christine A. Palmer, Frank A. Paxton, Janice M. Polsinelle, Teofils F. Turlais, and Bruce E. Vedder, Consolidated-Plaintiffs-Appellees, v. KNOLLS ATOMIC POWER LABORATORY, a/k/a KAPL, Inc., Lockheed Martin Corporation, and John J. Freeh, both individually and as an employee of KAPL and Lockheed Martin, Defendants-Appellants-Cross-Appellees.
• Court: U.S. Court of Appeals — Second Circuit

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461 F.3d 134 Clifford B. MEACHAM, Thedrick L. Eighmie, and Allen G. Sweet, individually and on behalf of all other persons similarly situated, Plaintiffs-Appellees-Cross-Appellants,
James R. Quinn, Ph.D., Deborah L. Bush, Raymond E. Adams, Wallace Arnold, William F. Chabot, Allen E. Cromer, Paul M. Gundersen, Clifford J. Levendusky, Bruce E. Palmatier, Neil R. Pareene, William C. Reynheer, John K. Stannard, David W. Townsend, and Carl T. Woodman, Consolidated-Plaintiffs-Appellees,
Hildreth E. Simmons, Jr., Henry Bielawski, Ronald G. Butler, Sr., James S. Chambers, Arthur J. Kaszubski, David J. Kopmeyer, Christine A. Palmer, Frank A. Paxton, Janice M. Polsinelle, Teofils F. Turlais, and Bruce E. Vedder, Consolidated-Plaintiffs-Appellees,
v.
KNOLLS ATOMIC POWER LABORATORY, a/k/a KAPL, Inc., Lockheed Martin Corporation, and John J. Freeh, both individually and as an employee of KAPL and Lockheed Martin, Defendants-Appellants-Cross-Appellees. Docket No. 02-7378-cv(L). Docket No. 02-7474-cv(XAP). United States Court of Appeals, Second Circuit. Submitted After Remand: June 28, 2005. Decided: August 14, 2006.

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Margaret A. Clemens, Nixon Peabody LLP (John E. Higgins, on the brief), Rochester, NY, for Defendants-Appellants-Cross-Appellees.

John B. Ducharme, Berger, DuCharme & Harp, LLP, Clifton Park, NY, for Plaintiffs-Appellees-Cross-Appellants.

Laurie A. McCann, Daniel B. Kohrman, AARP Foundation Litigation; Melvin Radowitz, AARP, Washington, DC, for Amicus Curiae AARP in support of Plaintiffs.

Stephen A. Bokat, Robin S. Conrad, Ellen Dunham Bryant, National Chamber Litigation Center, Washington, DC; Mark S. Dichter, Morgan, Lewis & Bockius LLP, Philadelphia, PA; Grace E. Speights, Anne M. Bradford, Jonathan C. Fritts, Morgan, Lewis & Bockius, LLP, Washington, DC, for Amicus Curiae Chamber of Commerce of the United States of America in support of Defendants.

Nicholas M. Inzeo, Acting Deputy General Counsel, Philip B. Sklover, Associate General Counsel, Vincent J. Blackwood, Assistant General Counsel, Barbara L. Sloan, Attorney, Equal Employment Opportunity Commission, Washington, DC, for Amicus Curiae Equal Employment Opportunity Commission in support of Plaintiffs.

Jennifer Bosco, National Employment Lawyers Association, San Francisco, CA; Cathy Ventrell-Monsees, Chevy Chase, MD, for Amicus Curiae National Employment Lawyers Association in support of Plaintiffs.

Before McLAUGHLIN, JACOBS, and POOLER, Circuit Judges.

JACOBS, Circuit Judge.

This case returns to us on remand from the United States Supreme Court. See Meacham v. Knolls Atomic Power Lab., 381 F.3d 56, 62 (2d Cir.2004) ("Meacham"), vacated and remanded by KAPL, Inc. v. Meacham, 544 U.S. 957, 125 S.Ct. 1731, 161 L.Ed.2d 596 (2005). Originally, we had reviewed this case on appeal from a judgment of the United States District Court for the Northern District of New York (Homer, M.J.), inter alia, denying the motion of defendants-appellants ("defendants") seeking judgment as a matter of law pursuant to Fed. R. Civ. 81 Cal. 588, 23 P. 50(b) after a jury verdict awarding damages to plaintiffs-appellees ("plaintiffs").¹ See Meacham v. Knolls Atomic Power Lab., 185 F.Supp.2d 193 (N.D.N.Y. 2002). Plaintiffs are former employees of defendant Knolls Atomic Power Laboratories ("KAPL"), which designs advanced nuclear propulsion systems; trains sailors in their use; and oversees their maintenance,

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repair, refueling and decommissioning. Plaintiffs lost their jobs at the Knolls Atomic Power Laboratory (the "Lab") in an involuntary reduction in force ("IRIF"), and sued under the Age Discrimination in Employment Act, 29 U.S.C. § 631(a), ("ADEA") and the New York Human Rights Law, N.Y. Exec. Law § 296(3-a)(a), ("HRL"). The jury verdict rested on a disparate-impact theory of liability. Previously, we held that (i) plaintiffs had established a prima facie case under the ADEA by demonstrating the disparate impact on older workers of the subjective decision-making involved in the IRIF; and (ii) notwithstanding defendants' facially legitimate business justification for the IRIF and its constituent parts, there was sufficient evidence of an equally effective alternative to the subjective components of the IRIF to support liability. See Meacham, 381 F.3d at 71-76. The Supreme Court vacated our judgment affirming the judgment of the district court and remanded for reconsideration in light of Smith v. City of Jackson, 544 U.S. 228, 125 S.Ct. 1536, 161 L.Ed.2d 410 (2005), which issued while defendants' petition for a writ of certiorari was pending. See KAPL, 544 U.S. 957, 125 S.Ct. 1731, 161 L.Ed.2d 596. We have considered City of Jackson and the parties' supplemental briefing, and we now vacate the judgment of the district court and remand with instructions to enter judgment as a matter of law in favor of defendants on all claims and to dismiss the case.

I.

The Lab is funded by the United States Navy's Nuclear Propulsion Program ("NR") (jointly with the Department of Energy), which sets annual staffing limits for the facility in consultation with KAPL.² In fiscal year 1996, the NR imposed a more stringent limit on annual staffing levels and (at the same time) assigned additional work to the Lab that required new hires. Among the compliance measures adopted by KAPL was an IRIF in which plaintiffs, all of whom are over forty years of age, lost their jobs. Meacham, 381 F.3d at 62-63.

KAPL provided a guide for implementing the IRIF to participating (i.e., over-budget) managers. The guide instructed managers

to select employees for the IRIF by listing "all employees in [their] group[s] on [a] matrix"; ranking them between zero and ten for performance, flexibility, and criticality of their skills; and giving up to ten points for company service. Managers were to rate performance based on an average of the two most recent performance appraisals. The tests for making a flexibility determination were whether the employee's "documented skills [could] be used in other assignments that [would] add value to current or future Lab work" and whether the employee was "retrainable for other Lab assignments." Critical skills were those skills that were critical to continuing work in the Lab as a whole. In addition, KAPL directed managers to consider whether the "individual's skill [was] a key technical resource for the NR program" and whether "the skill [was] readily accessible within the Lab or generally 23 available from the external market."

Id. at 63-64 (brackets and emphasis in original). Once employees were thus ranked, managers were instructed to identify for layoff employees at the bottom—as necessary to achieve the required staff reduction—and then to perform an adverse impact analysis to determine whether the layoffs "might have a disparate impact on a protected class of employees."

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Id. at 64. To ensure compliance with the ADEA, managers were instructed to perform an analysis "similar" to the EEOC's "four-fifths" rule, by which (according to the guide) a "serious discrepancy" would exist "if the selection rate for a protected group is greater than 120% of the rate for the total population." Id. Once this process was completed,

a review board was to assess the manager's selections "to assure adherence to downsizing principles as well as minimal impact on the business and employees." Finally, KAPL's general manager, John Freeh, and its [general] counsel, Richard Correa, were to review the final IRIF selections and the impact analyses.

Id.

In the end, 245 out of an estimated 2,063 eligible employees were placed on the matrices; thirty-one employees on the matrices were selected for layoff, thirty of whom were over forty years of age.

II.

In Meacham, we held that plaintiffs adduced evidence sufficient to establish a prima facie case for disparate-impact liability under the ADEA. Id. at 71-74. Plaintiffs identified a specific employment practice—KAPL's "unaudited and heavy reliance on subjective assessments of `criticality' and `flexibility'" in implementing the IRIF — and presented evidence supporting a reasonable inference that the practice caused the "startlingly skewed results." Meacham, 381 F.3d at 75 n. 8. We see nothing in City of Jackson that casts doubt on this holding. City of Jackson reiterated the requirement that disparate-impact plaintiffs under the ADEA are "`responsible for isolating and identifying the specific employment practices that are allegedly responsible for any observed statistical disparities,'" 544 U.S. at 241, 125 S.Ct. 1536 (quoting Wards Cove Packing Co. v. Atonio, 490 U.S. 642, 656, 109 S.Ct. 2115, 104 L.Ed.2d 733 (1989)) (emphasis in City of Jackson); in Meacham, we held that plaintiffs had satisfied that specificity requirement, see Meacham, 381 F.3d at 74.

A.

The matrix for adjudicating disparate-impact claims, once a plaintiff has made out a prima facie case, was first authoritatively established in Wards Cove Packing Co. v. Atonio, in the context of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. ("Title VII"). 490 U.S. 642, 109 S.Ct. 2115, 104 L.Ed.2d 733 (1989). The employer assumes the burden of producing evidence that the challenged employment practice has a legitimate business justification, see id. at 658-59, 109 S.Ct. 2115; see also Watson v. Fort Worth Bank & Trust, 487 U.S. 977, 998, 108 S.Ct. 2777, 101 L.Ed.2d 827 (1988); however, "`the ultimate burden of proving that discrimination against a protected group has been caused by a specific employment practice remains with the plaintiff at all times,'" Wards Cove, 490 U.S. at 659, 109 S.Ct. 2115 (quoting Watson, 487 U.S. at 997, 108 S.Ct. 2777). Thus, after the employer has proffered a legitimate business justification, the plaintiff bears the burden of persuading the jury that the employer's justification does not pass the test of "business...