The 7-to-1 decision overturned a ruling by the federal appeals court in New York, which said employees had the burden of disproving an employer’s defense of reasonableness.
The case was brought by 28 employees who lost their jobs during cutbacks at a federal research laboratory in upstate New York. All but one of the employees who were laid off were at least 40, the age at which protections begin under the federal Age Discrimination in Employment Act.
The issue in the case, while technical, is important for the litigation of age discrimination cases in which an employer’s action or policy that appears neutral on its face has a disparate impact on older workers. David Certner, the chief legislative counsel for AARP, praised the decision and said it would prove “vital to the creation and maintenance of a workplace that is fair and free of age bias.”
From a broader perspective, this decision, coming near the end of the Supreme Court’s term, completed a five-for-five sweep for employees’ rights in workplace discrimination cases that was little short of astonishing, given how far the court had appeared to be tilting toward business under Chief Justice John G. Roberts Jr. By comfortable margins, the court interpreted federal antidiscrimination statutes broadly to enable employees to overcome procedural hurdles and to pursue a category of claims not fully detailed in the statutes themselves.
Business lawyers, while pointing to victories in other parts of their agenda, were quick to acknowledge that the court’s apparent turnabout in the employment area was a big surprise.
“It’s been a clean sweep,” said Robin S. Conrad, executive vice president of the National Chamber Litigation Center, which handles Supreme Court cases for the United States Chamber of Commerce.
A year ago, Ms. Conrad proclaimed the court’s 2006-7 term “our best term ever.” Now “it’s back to the drawing board,” she said in an interview, adding, “To achieve our objectives, we’ll have to battle it out case by case.”
The National Federation of Independent Business, which represents small businesses, said the decision Thursday “will make it much harder for small-business owners to defend themselves against allegations of violations of the Age Discrimination in Employment Act,” particularly when it comes to responding to “market changes and new technology without fearing that any real change in their business plan will prompt a baseless lawsuit.”
In the case on Thursday, Meacham v. Knolls Atomic Power Laboratory, No. 06-1505, the employer was faced with laying off some employees after a voluntary buyout failed to produce the desired staff reduction. Managers were instructed to rate employees for how “flexible” and “retrainable” they were. Of the 31 who were eventually laid off, 30 were at least 40 years old.
The age discrimination law provides that an employment action that would be “otherwise prohibited” is lawful if “the differentiation is based on reasonable factors other than age.” The question in the case was what happens once an employer invokes this defense: does the employer have to prove, or do the plaintiffs have to disprove, the existence of the reasonable non-age factors?
The laid-off Knolls Atomic workers won their case before a jury, but the United States Court of Appeals for the Second Circuit overturned the verdict on the ground that the employees had not refuted the reasonableness of the laboratory’s selection process.
In his majority opinion overturning the appeals court’s decision, Justice David H. Souter said the structure of the statute made it clear that the defense was “entirely the responsibility of the party raising it.” He said that by using the phrase “otherwise prohibited,” Congress meant to offer employers “an excuse or justification for behavior that, standing alone, violates the statute’s prohibition,” but only if they could prove their entitlement to the defense.
“There is no denying that putting employers to the work of persuading fact-finders that their choices are reasonable makes it harder and costlier to defend,” Justice Souter said. But that is a complaint to make to Congress, he added.
Justice Antonin Scalia wrote a concurring opinion to say that the court was properly adopting the position of the Equal Employment Opportunity Commission. The only dissenter was Justice Clarence Thomas, who once headed that commission. He said that he viewed the age discrimination law as barring only deliberate discrimination and that he did not agree with the court’s precedent establishing that the law applied as well to policies that had only a discriminatory impact.
Justice Stephen G. Breyer did not participate in the case. According to his latest financial statement, he owns stock in State Street Bank, and the bank in turn owns 18 percent of the Lockheed Martin Corporation, a government contractor that administers the laboratory for the Department of Energy.
Two other rulings on Thursday also had implications for the workplace.
The court ruled 7 to 2 that federal labor law pre-empted a California law that limited many employers from speaking to their employees about union-related issues.
The California law, enacted in 2000 with the support of organized labor, was similar to laws in a dozen other states, with similar bills pending in still more states. It was upheld by the federal appeals court in San Francisco in a lawsuit brought by the Chamber of Commerce, supported by a number of other groups including the National Right to Work Legal Defense Foundation.
Under the law, employers that received state grants, contracts or reimbursements could not use the money to “assist, promote or deter union organizing.” Certain activities favoring unions were permitted, however.
Writing for the majority on Thursday, Justice John Paul Stevens said federal labor law had embraced “wide-open debate” about labor issues, as long as the employer did not try to coerce employees into accepting its point of view. Consequently, the state law is incompatible with federal labor law, the court concluded.
Justices Breyer and Ruth Bader Ginsburg dissented in the case, Chamber of Commerce v. Brown, No. 06-939. Legislatures normally have “broad authority to decide how to spend the people’s money,” they said.
Finally, the court voted 5 to 4 to uphold a Kentucky retirement plan for certain workers who receive credit for unworked years if forced by disability to retire before the age of 55. Although older workers do not receive a similar benefit, the distinction does not amount to age discrimination, Justice Breyer wrote for the majority in Kentucky Retirement Systems v. Equal Employment Opportunity Commission, No. 06-1037.
In an unusual lineup, the dissenters were Justices Scalia, Ginsburg, Anthony M. Kennedy and Samuel A. Alito Jr.