Mistretta v. Sandia Corp.
24 Empl. Prac. Dec. (CCH) 31,304, 639 F.2d 588, 1980 U.S. App. LEXIS 12996 (1980)
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Rule of Law:
Under the Age Discrimination in Employment Act (ADEA), 'consent' plaintiffs in a collective action are not required to file individual notices of intent to sue with the Secretary of Labor or state agencies if a representative plaintiff has done so on behalf of similarly situated employees. An employer's violation is 'willful' if it knew or showed reckless disregard for whether its conduct was prohibited by the ADEA, justifying liquidated damages.
Facts:
- Sandia Corporation experienced a cutback in federal funding in early 1973.
- This funding cutback led to a reduction in force (RIF) at Sandia in the Spring of 1973, resulting in the termination of numerous employees.
- Sandia had an internal 'stretch out' salary policy, which was discontinued in April 1973, that mandated longer time intervals between minimum salary increases for older employees (e.g., those 46 and over waited longer than those 29 and under).
- Sandia's management review committees were aware of the potential impact of the RIF on employees within the protected age class (ages 40-65) under the ADEA.
- Despite this awareness, Sandia's management disregarded the adverse effects of the RIF on older employees when these concerns were brought to their attention.
- Several employees, including Mistretta, McCrory, and Charles Puglisi, were among those terminated during or after the 1973 RIF, with Puglisi's involuntary termination occurring in January 1975.
- Mistretta and McCrory filed formal charges with the New Mexico Human Rights Commission and a notice of intent to sue with the Secretary of Labor, explicitly stating their actions were for themselves "individually and on behalf of all others similarly situated."
Procedural Posture:
- In Fall 1975, five terminated employees (including Mistretta and McCrory) filed two actions in the United States District Court for the District of New Mexico, alleging age discrimination under the ADEA.
- These two actions were consolidated, and more former Sandia employees joined as parties by filing consents under 29 U.S.C. § 216.
- On March 20, 1975, the Secretary of Labor filed a separate complaint in the same District Court on behalf of fourteen former Sandia employees, also alleging age discrimination related to the reduction in force.
- The District Court further consolidated the individual actions with the Secretary of Labor's action.
- The consolidated cases were set for a two-stage trial: a 'liability' phase and a 'remedial' phase.
- The 'liability' phase was tried to the court (Judge Edwin L. Mechem) from January 19, 1977, through February 17, 1977.
- On October 20, 1977, the trial court issued an Interlocutory Opinion, holding inter alia that a prima facie case of illegal age discrimination had been shown, based on a pattern or practice directed at employees between ages 52 and 64.
- The 'remedial' phase for the seventeen private plaintiffs commenced on June 20, 1978, and continued through July 6, 1978.
- On September 28, 1978, the trial court entered findings of fact and conclusions of law, with supplemental findings on December 14, 1978.
- Judgments totaling $920,277.00 plus interest and attorney's fees were entered on December 22, 1978, in favor of fifteen private plaintiffs and against Sandia Corporation; judgment was entered in favor of Sandia on the claims of two private plaintiffs (including Puglisi). These judgments were made final on December 27, 1978.
- Sandia Corporation appealed all judgments rendered against it to the U.S. Court of Appeals for the Tenth Circuit; Charles Puglisi cross-appealed the dismissal of his complaint.
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Issue:
1. Does the Age Discrimination in Employment Act (ADEA) require each 'consent' plaintiff to individually file a notice of intent to sue with the Secretary of Labor and to commence state proceedings in a deferral state, or is it sufficient if representative plaintiffs do so on behalf of 'similarly situated' employees? 2. Is an employer's violation of the ADEA 'willful' (warranting liquidated damages) if the employer was aware that its actions might violate the Act and struggled with its impact on the protected class but disregarded the problem? 3. Does an age-based salary 'stretch out' policy that was discontinued before the lawsuit but had continuing effects on employees' compensation constitute compensable age discrimination under the ADEA?
Opinions:
Majority - William E. Doyle
1. No, the ADEA does not require each 'consent' plaintiff to individually file notice or commence state proceedings if representative plaintiffs do so for the group. The court held that the ADEA's broad remedial purposes, as interpreted in Bean v. Crocker National Bank, are best served by allowing similarly situated complainants to join an action even if they haven't individually filed notice, provided a named plaintiff has complied with the notice requirements for the group. Mistretta and McCrory's filings, which included "all others similarly situated," sufficiently notified the New Mexico Human Rights Commission and the Secretary of Labor to fulfill the jurisdictional requirements of § 14(b) and the principles of Oscar Mayer & Co. v. Evans. 2. Yes, an employer's violation of the ADEA is 'willful' if the employer was aware that its actions might violate the Act, struggled with its impact on the protected class, and disregarded the adverse effects. The evidence demonstrated that Sandia was fully aware that the ADEA was "in the picture" and that management struggled with the impact of the force reduction on the protected class but disregarded the problem when adverse effects were brought to their attention. This conduct, consistent with the standard from Coleman v. Jiffy June Farms, Inc., supported the finding of willfulness, justifying liquidated damages. 3. Yes, an age-based salary 'stretch out' policy, even if discontinued, constitutes compensable age discrimination if its effects had continuing impacts on employees' compensation. The court found that the stretch out system had both overt and hidden age bias, requiring older employees to wait longer for salary increases and continuing to affect employees because salary increases were granted as percentages of current salary. Therefore, the trial court's award of damages based on this policy was affirmed. Additionally, the court affirmed damages for plaintiff William Robertson (age 50), stating that while no prima facie case for his specific age group was established by statistics, the trial court was not required to ignore general statistical evidence of discrimination against older employees. Robertson presented individual evidence of discrimination, which Sandia failed to rebut as pretextual. The court affirmed the dismissal of Charles Puglisi's claim, finding substantial evidence supported Sandia's non-discriminatory reasons for his termination. On reconsideration, the court modified its remand instruction regarding damage deductions for Robertson and Kassens, clarifying that layoff allowances should only be deducted if actually paid, and since these plaintiffs elected extended termination dates in lieu of allowances, no deduction was appropriate for those specific awards.
Dissenting - Barrett
No, the ADEA's jurisdictional prerequisite for commencing state proceedings was not sufficiently satisfied by the aggrieved parties. The dissent argued that the plain language of 29 U.S.C. § 633(b) requires more than a "simple filing" with the state agency; it necessitates that the state agency be afforded the first opportunity to redress the alleged discriminatory practices within the sixty-day period. The record was deemed barren of evidence showing that the 60-day period for the New Mexico Human Rights Commission's exclusive jurisdiction had expired, or that the Commission was given a genuine opportunity to investigate and act before the federal action was filed. The dissent would have remanded the case to the District Court to specifically determine if this jurisdictional prerequisite was met, and if not, to set aside the judgments and require compliance.
Analysis:
This case significantly clarifies the procedural landscape for collective actions under the ADEA, particularly regarding the notice and deferral requirements for 'consent' plaintiffs. By affirming that representative filings can satisfy these requirements, the court streamlines the process for groups of employees to pursue age discrimination claims. The decision also reinforces a robust standard for establishing 'willfulness,' crucial for securing liquidated damages, emphasizing that an employer's awareness of the ADEA and conscious disregard for its implications can lead to enhanced penalties. Furthermore, the court's ruling on the 'stretch out' policy highlights that discriminatory practices, even if discontinued, can create enduring harm and lead to ongoing liability for employers if their effects persist on employee compensation. The allowance of an individual claim for a plaintiff outside the age range of the prima facie statistical showing also demonstrates the flexibility of ADEA proof, underscoring that broader statistical evidence can complement individual showings of discrimination.
