Robert R. Henn v. National Geographic Society
819 F.2d 824 (1987)
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Rule of Law:
An offer of early retirement, if an employee may decline it and continue working under lawful conditions, does not constitute age discrimination under the Age Discrimination in Employment Act (ADEA) unless the alternative conditions of employment amount to a constructive discharge which itself violates the ADEA.
Facts:
- The National Geographic Society experienced declining advertising sales, prompting a decision to reduce its ad sales employee count.
- In June 1983, the Society offered all ad salesmen over age 55 an option for early retirement.
- The offer included a severance payment of one year's salary, retirement benefits calculated as if retiring at 65, lifetime medical coverage, and supplemental life insurance.
- Twelve of the fifteen recipients accepted the early retirement offer; the three who declined remained employed by the Society.
- The four plaintiffs, who were among those who accepted the offer, had experienced recent poor sales performance and were told by supervisors that they needed to sell more ads.
- One plaintiff, Henn, reported his supervisor, Bill Hughes, saying, 'some of you older guys will not be around at the end of the year.'
- A internal memorandum recommending firings mentioned the high average age of the sales staff and the need for 'younger sales personnel' but the Society did not adopt the firing recommendation.
Procedural Posture:
- Four former employees of the National Geographic Society filed a lawsuit in federal district court, contending their separation violated the Age Discrimination in Employment Act (ADEA).
- The district court granted summary judgment to the National Geographic Society, concluding that early retirement violates the ADEA only if the alternative is 'constructive discharge' and that the plaintiffs' working conditions were unchanged.
- The plaintiffs appealed the district court's grant of summary judgment to the United States Court of Appeals for the Seventh Circuit.
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Issue:
Does an offer of early retirement, accepted by employees, create a prima facie case of age discrimination under the ADEA, or does such a claim require proof that the employee's continued employment would have constituted a constructive discharge?
Opinions:
Majority - Easterbrook, Circuit Judge
No, an offer of early retirement, accepted by employees, does not create a prima facie case of age discrimination under the ADEA; such a claim requires proof that the employee's continued employment would have constituted a constructive discharge where an actual discharge would violate the ADEA. The court held that an offer of early retirement is a benefit to the employee, as it provides an additional option (retirement with a valuable package) while leaving the status quo (continued employment under lawful conditions) available. The fact that the offer may be 'too good to refuse' does not make the choice involuntary, likening it to a choice between higher and lower monetary amounts. Section 4(a)(1) of the ADEA prohibits age discrimination, but an offer of early retirement, even if targeted at older employees, is not inherently discriminatory. Section 4(f)(2) of the ADEA, allowing distinctions for bona fide benefit plans, is a defense only triggered if an employee can first establish a prima facie case of discrimination; employees receiving such an offer are beneficiaries, not adversely affected, so § 4(f)(2) does not apply to them. The court rejected the Second Circuit's holding in Paolillo v. Dresser Industries, Inc., which found that every early retirement plan creates a prima facie case, stating that Paolillo misconstrued prior cases and ignored the Equal Employment Opportunity Commission (EEOC) regulation, 29 C.F.R. § 1625.9(f), which states that the ADEA does not make it unlawful to permit individuals to elect early retirement at their own option. This regulation is entitled to substantial deference under Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. A 'prima facie case' requires circumstances raising a suspicion of discrimination, and an offer of early retirement, being beneficial, does not create such an inference. The court clarified that 'voluntariness' in this context focuses on whether the employee received adequate information, whether the choice was free from fraud or misconduct, and whether they had a genuine opportunity to decline the offer; feeling pressure or finding the decision difficult is not sufficient. An employee can only challenge an early retirement offer if the conditions of continued employment themselves violated the ADEA, amounting to a 'constructive discharge.' The plaintiffs' complaints about the 'silent treatment' and threats related to poor sales performance did not rise to the level of constructive discharge, as such communications are inherent risks of a salesman's job, and there was no evidence the Society would have unlawfully fired the plaintiffs due to age.
Analysis:
This case significantly clarified the standard for challenging early retirement incentive programs under the ADEA in the Seventh Circuit, rejecting the Second Circuit's Paolillo approach and establishing an opposing view among the circuits. It firmly placed the burden on plaintiffs to demonstrate that their continued employment would have involved a 'constructive discharge' that itself violated the ADEA, rather than merely making a difficult choice. This ruling makes it more challenging for employees to successfully sue over early retirement packages, recognizing them as beneficial options rather than inherently discriminatory actions, and strengthens employers' ability to offer such programs without immediately triggering an ADEA defense burden. It emphasizes that a voluntary offer, even if highly attractive, does not automatically suggest discriminatory intent.
