U.S. E.E.O.C. v. Baltimore County

• Decision Date: 21 January 2009
• Docket Number: No. L-07-2500.,L-07-2500.
• Citation: 593 F.Supp.2d 797
• Parties: U.S. EQUAL EMPLOYMENT OPPOTUNITY COMMISSION, Plaintiff, v. BALTIMORE COUNTY, et al., Defendants.
• Court: U.S. District Court — District of Maryland

593 F.Supp.2d 797

U.S. EQUAL EMPLOYMENT OPPOTUNITY COMMISSION, Plaintiff, v. BALTIMORE COUNTY, et al., Defendants.

Civil No. L-07-2500.

United States District Court, D. Maryland.

January 21, 2009.

Debra Michele Lawrence, Maria Salacuse, U.S. Equal Employment Opportunity Commission, Baltimore, MD, Christopher W. Lage, U.S. Equal Employment Opportunity Commission, Office of General Counsel, Washington, DC, Jacqueline H. McNair, U.S. Equal Employment Opportunity Commission, Philadelphia, PA, for Plaintiff.

James J. Nolan, Jr., Baltimore County Office of Law, Towson, MD, Linda D. McKeegan, Kahn Smith and Collins PA, Baltimore, MD, Bernard Ilkhanoff, Ilkhanoff and Silverstein PC, Shrewsbury, PA, Warren Gary Kohlman, Jennifer L. Hunter, Bredhoff and Kaiser PLLC, Washington, DC, for Defendants.

MEMORANDUM

BENSON EVERETT LEGG, Chief Judge.

In this action brought under the Age Discrimination in Employment Act (the "ADEA"), the U.S. Equal Employment Opportunity Commission (the "EEOC") challenges an aspect of the Baltimore County pension system that governs employees hired prior to July 1, 2007. Under that system, the percentage of salary that new-hires pay into Baltimore County's pension plan varies depending on the number of years to retirement eligibility. For example, a thirty-year-old new-hire contributes more than a twenty-year-old newhire. In its suit, the EEOC contends that this provision discriminates against older workers.

Following discovery, the parties filed cross-motions for summary judgment. The Court heard oral argument on December 16, 2008. The Court concludes that the former Baltimore County plan does not violate the ADEA because (i) Baltimore County was motivated by a permissible principle, the time value of money, rather than the age of new-hires, and (ii) retirement benefits of older new-hires accrue faster than do the benefits of younger new-hires. Thus, the Court will, by separate order: (1) deny the EEOC's motion, (2) grant Baltimore County's motion, and (3) close the case.

I. FACTUAL BACKGROUND

Pursuant to Article 5 of the Baltimore County Code, Baltimore County maintains a defined benefit pension plan known as the Employee Retirement System (the "ERS"). Participation in the ERS is mandatory for full-time employees younger than fifty-nine years old. The ERS requires employees to contribute a percentage of their salaries to the pension plan, which is also funded by employer contributions. For individuals hired prior to July 1, 2007, the percentage employees are required to contribute varies from employee to employee, and is determined by a worker's age at the time of enrollment. For example, an employee who enrolls in the ERS at age twenty is required to contribute 4.42% of his salary, whereas an employee who enrolls at age fifty-eight must contribute 7.65% of his salary. In other words, the older an employee is when he enrolls in the ERS, the greater the amount deducted from his paycheck as a contribution to the fund. Similarly, Baltimore County contributes more towards the relative cost of funding retirement benefits for older new-hires. Thus, while older newhires contribute more towards their retirement benefits, they bear progressively less of the relative cost of those benefits.

On June 6, 2007, Baltimore County changed its pension system. Under the new system, employees hired after July 1, 2007 contribute to the ERS at a flat rate, regardless of their age at the time of hiring. As noted above, individuals hired before that date make contributions at rates determined by their age at the time of enrollment. The EEOC brings this action on behalf of older Baltimore County workers hired prior to July 1, 2007.¹

In April 1999 and January 2000, the EEOC issued Notices of Charge of Discrimination to Baltimore County on behalf of Richard Bosse and Wayne Lee, correctional officers with the Baltimore County Bureau of Corrections. Both Bosse and Lee claimed that requiring older new-hires to contribute more than younger new-hires discriminates against employees on the basis of age. While Baltimore County denies that its former pension system was discriminatory, it nonetheless cooperated in the EEOC's investigation and provided details about the ERS. On August 24, 2000, in response to a request for additional information, Baltimore County provided the EEOC with financial data concerning the relationship between an ERS participant's age and his retirement costs. The EEOC did not respond, and no further actions were taken for over five years.

On March 6, 2006, the EEOC notified Baltimore County that it had determined that the ERS violated the ADEA. After the parties' settlement efforts failed, the EEOC filed suit on September 18, 2007, alleging that Baltimore County's practice of requiring older workers to contribute more to the mandatory pension plan violates Section 4(a)(1) of the ADEA.² 29 U.S.C. § 623(a)(1). On January 9, 2008, the EEOC filed an Amended Complaint alleging that the ERS contribution system also violates Section 4(i) of the ADEA. 29 U.S.C. § 623(i). The Court denied Baltimore County's Motion to Dismiss on July 24, 2008, and held oral argument regarding the cross-motions for summary judgment on December 16, 2008.

II. STANDARD OF REVIEW

The Court may grant summary judgment when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986); see also Felty v. Graves-Humphreys Co., 818 F.2d 1126, 1128 (4th Cir.1987) (recognizing that trial judges have "an affirmative obligation" to prevent factually unsupported claims and defenses from proceeding to trial). Nevertheless, in determining whether there is a genuine issue of material fact, the Court views the facts, and all reasonable inferences to be drawn from them, in the light most favorable to the non-moving party. Pulliam Inv. Co. v. Cameo Properties, 810 F.2d 1282, 1286 (4th Cir.1987).

III. ANALYSIS

In its amended complaint, the EEOC asserts claims under both Section 4(a)(1) and Section 4(i) of the ADEA. See 29 U.S.C. § 623(a)(1); 29 U.S.C. § 623(i). After careful consideration of the operation of the ERS, the Court finds that Baltimore County has violated neither of those statutory provisions.

A. Section 4(a)(1)

The EEOC first claims that the older version of the ERS violates Section 4(a)(1) of the ADEA. Section 4(a)(1) makes it "unlawful for an employer ... [to] discriminate against any individual [over forty years of age] with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's age." 29 U.S.C. § 623(a)(1). The phrase "compensation, terms, conditions, or privileges of employment," as used in that section, includes "all employee benefits, including such benefits provided pursuant to a bona fide employee benefit plan." 29 U.S.C. § 630(l).

While it may be axiomatic, it should be noted that the ADEA does not prohibit employer actions when the motivating factor is something other than the employee's age. See Hazen Paper Co. v. Biggins, 507 U.S. 604, 609, 113 S.Ct. 1701, 123 L.Ed.2d 338 (1993). Indeed, as the Supreme Court has explicitly explained, "[w]hen the employer's decision is wholly motivated by factors other than age, the problem of inaccurate or stigmatizing stereotypes disappears. This is true even if the motivating factor is correlated with age." Id. at 611, 113 S.Ct. 1701.

Moreover, this case is controlled by a recent Supreme Court decision concerning a defined benefit pension plan offered by the State of Kentucky. See Kentucky Retirement Sys. v. EEOC, ___ U.S. ___, 128 S.Ct. 2361, 171 L.Ed.2d 322 (2008). Under Kentucky's system, if a worker in a hazardous job was injured prior to becoming eligible for retirement benefits, the plan added on the necessary years of service. This was done to ensure that employees injured in the line of duty and no longer able to work would receive support in the form of retirement benefits. The EEOC maintained that this provision discriminated against older injured workers who had already reached retirement age. Although injured, those workers did not receive any additional years of imputed service. The Agency contended that the Kentucky system violated the ADEA because it treated younger workers more favorably. Id. at 2365.

After examining Kentucky's system— and the motivating factor behind it—the Court held that "[w]here an employer adopts a pension plan that includes age as a factor, and that employer then treats employees differently based on pension status, a plaintiff, to state a disparate treatment claim under the ADEA, must adduce sufficient evidence to show that the differential treatment was `actually motivated' by age, not pension status." Id. at 2370. The Court then concluded that Kentucky's plan had been motivated by age, not pension status, and, as a result, was not in violation of the ADEA. Id. In arriving at that conclusion, the Court relied upon six factors. As demonstrated below, those factors demand a similar conclusion in this case.

First, the Court noted that "as a matter of pure logic, age and pension status remain `analytically distinct' concepts ... one can easily conceive of decisions that are actually made `because of pension status and not age, even where pension status is itself based on age." Id. at 2367. The instant case involves just such a decision. Baltimore County's requirement that older new-hires pay higher contribution rates is based on the number of years a new-hire has until reaching normal retirement age and how long it will take to accumulate a sufficient reserve to fund the new-hire's life annuity. This is an economic—not age-based—consideration. It is of no legal consequence, therefore, that the...