Iowa Employment Law Blog : Iowa Employment Lawyer & Attorney : Patrick Smith : Bradshaw Fowler Proctor & Fairgrave Law Firm : Des Moines, Central IA Discrimination & Labor Law

On November 30, 2009, the U.S. Court of Appeals for the Eighth Circuit issued an opinion on the remand of  Gross v. FBL Financial Group, Inc.   We have discussed the Gross case in several previous posts (here, here, and here).  The case has particular local interest because it was tried in the Southern District of Iowa, appealed to the U.S. Court of Appeals for the Eighth Circuit, and ultimately to the U.S. Supreme Court. 

In a decision that surprised many in the employment law community, the Supreme Court  held that an age discrimination plaintiff always has the burden of proving that age was the "but for" cause of the adverse employment action, regardless whether the employer had a "mixed motive", and regardless whether there is "direct evidence" of discrimination.  Under Gross,  the burden of persuasion never shifts to the defendant.  The trial judge's instructions were in error, the Court concluded, because FBL was required to prove it would have made the same decision regardless of Gross' age.  The case was remanded for a new trial.

Despite the Supreme Court's ruling, Gross argued to the Eighth Circuit on remand that his original jury verdict should stand because the jury was correctly instructed under the Iowa Civil Rights Act (ICRA).  Notably, this was the first time the ICRA issue had come up in the case.  The reason: between the date of the U.S. Supreme Court's decision in Gross and the Eighth Circuit's remand opinion, the Iowa Supreme Court issued an opinion in the case of DeBoom v. Raining Rose, Inc.   One of the significant issues decided in DeBoom was that an employer is liable under the ICRA if the jury finds unlawful discrimination was "a motivating factor" in the employment decision.   Gross argued that it did not matter under the ICRA whether the burden shifted to FBL to prove the "same decision" defense, because liability attaches once the jury concludes discrimination was "a motivating factor."

We predicted back in September that DeBoom would have a significant impact on the litigation of age discrimination cases in Iowa, because the standard under the ICRA was different than under the ADEA.   We did not realize at the time, however, that the issue would come up in the Gross case itself.  

Interestingly, Judge Colloton, writing for the Court, did not agree with Gross' contention that the jury was instructed consistent with the Iowa Civil Rights Act, and thus remanded for a trial on both the ICRA and ADEA claims.  Why? The primary reason was that DeBoom was a "pretext" case, and not a "mixed motive" case.   In mixed motive cases, the Eighth Circuit concluded that Iowa precedent requires the same approach as the Eighth Circuit did pre-Gross.  That is, the defendant has the burden of proving the same decision defense only if there is direct evidence of discrimination.  Thus, the jury instruction was still in error, despite DeBoom. 

This matter is far from settled,and will likely result in further litigation in the Iowa Courts for years to come.   It is not clear the Iowa Supreme Court intended the DeBoom case to be as limiting as the Eighth Circuit purported to make it.

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Des Moines Register columnist Marc Hansen writes about an interview he had with Jack Gross, the plaintiff in Gross v. FBL Financial, Inc., decided by the U.S. Supreme Court last June.   Mr. Gross was in Washinton, DC last week to testify before the Senate Judiciary committee that is considering amendments to the ADEA that would effectively overrule the Gross decision.   

Lawyers and judges think and talk about cases in terms of how the "law" applies to the "facts."  It is easy to forget these controversies involve real people with interesting backgrounds, stories, and motives.   Any good trial lawyer knows the likelihood of success in a lawsuit often depends more on the people involved and how they present themselves, rather than obscure legal rules or abstract "facts."   

Jack Gross' case is now back in the Southern District of Iowa, waiting for a new trial.   The jury instructions will be slightly different this time around (assuming Congress has not changed the law by then).  It will be interesting to see if it makes any difference in the outcome. 

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More signs this week that the federal government is ramping up enforcement of employment laws.  The Department of Justice Civil Rights Division is seeking a $22 million budget increase for 2010, and is seeking to hire 50 new attorneys.   Law Memo Employment Law Blog reports that the EEOC has been very active recently in filing lawsuits.   The Agency  filed 32 lawsuits against employers during one seven day period in September.  Add to that 13 new lawsuits filed or announced on September 29 alone.   The Department of Labor is in the process of hiring 250 new investigators to look for wage and hour violations, particularly in the areas of overtime requirements, minimum wage, and employee breaks.   If you have not done so already, now would be a good time to conduct an audit of your employment practices and procedures. 

This post on HR Daily Advisor offers practical advice on how to avoid retaliation claims.  The first rule: don't let managers or supervisors take adverse action against employees who have complained without first checking with HR.

Washington DC Employment Law Update reports that Senate Judiciary Committee Chairman Patrick Leahy (D, VT) announced his committee is going to hold a hearing to investigate whether the Supreme Court has been misinterpreting laws designed to protect workers from discrimination.  On the witness list, Jack Gross, the plaintiff from Des Moines in the case Gross v. FBL Financial Services, Inc.  (See our related post on this subject here, as well as this one from Workplace Prof Blog).   Gross held that an age discrimination plaintiff must prove that age was the "but-for" reason for the adverse employment action; in other words, the employment action would not have been taken "but-for" the employee's age.  Before Gross, most courts required the plaintiff to prove only that age was "a motivating factor".   Amending the ADEA to lower the burden of proof for employees may be added to Congress' list of pending employment legislation.

Are lawyers giving bad advice about the impact of new technology in the workplace?   In this post on the Fistful of Talent blog, Kris Dunn complains that lawyers too often advise clients only about the perils of social networking and other cutting edge communication tools.  She contends this type of legal advice only scares HR professionals away from modern technology, rather than empowering them to use it effectively.   Attorney Anthony Zaller of California Employment Law Report  proposes this solution: if you want practical legal advice about social networking technology, make sure your employment lawyer uses Facebook, LinkedIn or Twitter,  or at least uses a Blackberry or iPhone.   I'm not sure a lawyer's own use of social networking technology will allow them to give better advice on the subject;  but, the point is well taken that clients need solutions to the legal issues this technology presents, not merely warnings about the inevitable lawsuits.  

Next Friday (October 9) I will be presenting a talk entitled "the Brave New World of Employment Law: What's New in 2009 and What to Expect in the Year Ahead" at the 3rd Annual American Corporate Counsel Association (Iowa Chapter) Annual Seminar in Iowa City.  This has become a marquee event for corporate counsel in Iowa, and I look forward to seeing many of you there.

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On June 18 the United States Supreme Court issued its opinion in the case of Gross v. FBL Financial Services, an age discrimination case arising out of Iowa.   We first reported on the Gross case when the Court heard arguments a couple of months ago.   Since the decision was issued, many commentators have opined that the ruling was a "win" for employers because it will make it more difficult for employees to prove age bias. 

This case presents a fairly typical age discrimination claim: the plaintiff, Jack Gross, was a 54 old middle manager who reassigned as part of a reorganization and replaced by a younger employee he used to supervise.  Although his pay was not reduced, Gross nonetheless believed his new assignment was a demotion, and filed a lawsuit alleging age discrimination.  The case was tried in the U.S. District Court for the Southern District of Iowa.  The jury found Gross was a victim of age discrimination and awarded him $47,000 in damages.

The trial judge gave the jury a "mixed motive" instruction.  That means there was evidence the employment decision was motivated by both permissible and impermissible factors.   If the plaintiff proved that age was a motivating factor in the decision to demote him, the burden shifted to the employer to prove it would have taken the same action "regardless of age"; that is, the other factors that motivated the decision would have resulted in the same action despite the plaintiff's age.

FBL appealed the verdict to the U.S. Court of Appeals for the Eighth Circuit.  The Circuit Court decided that the trial judged erred in his instructions to the jury, and returned the case for a new trial.   The Eighth Circuit held the court should not have imposed upon FBL the burden of proving the "same decision", because Gross did not have "direct evidence" of discrimination.  "Direct evidence" generally means statements or actions by the relevant decision makers that tend to show in a direct way the decision maker is biased.  In Gross' case, he had no such direct evidence of discrimination, and so relied entirely upon circumstantial evidence.  In a case lacking direct evidence of discrimination, the Circuit court held that, the burden of proving age discrimination should have remained with the plaintiff, rather than shifting the burden to the employer to prove that factors other than age prevailed in the decision making process.

The issue presented to the Supreme Court was whether a plaintiff must present direct evidence of discrimination in order to obtain a mixed motive instruction in an age discrimination case.    However, Justice Thomas, writing for a 5-4 majority, did not ever address that particular question.  Rather, the Court concluded the text of the Age Discrimination in Employment Act (ADEA)  does not permit an employer to be liable based upon a "mixed motive".   In other words, it is never sufficient for a plaintiff to prove simply that age was a motivating factor; rather the plaintiff in an ADEA claim must prove the adverse action occurred "because of" age-it must be the motivating factor.   Moreover, the burden of proving discrimination always rests with the plaintiff; it does not shift to the employer.

 The case will now return to the U.S. District Court for the Southern District of Iowa for another trial.  This time, the jury will be instructed consistent with the standard articulated by the U.S. Supreme Court.    It may be more difficult for Jack Gross to prove his age was the motivating factor his his new assignment, rather than simply a motivating factor.  This one word change in the jury instruction, combined with the employer having no burden to prove the same decision defense, should make it easier for employers to prevail in age cases, particularly at trial, but perhaps also at the summary judgment stage.  Trial courts are likely to require plaintiffs to present both more and stronger proof of discrimination to clear the summary judgment hurdle.

What doe the future hold for ADEA cases?   It is possible Congress will step in an amend the ADEA to bring back the mixed motive instruction.   That is precisely what Congress has done in the past to remedy Court decisions it deemed unfair to employees.   As noted in prior posts, the present Congress and President have been particularly active in enacting new employment laws to protect employees, and thus it would not be surprising to see Congressional action in the wake of the Gross decision.  

We will continue to monitor developments in this area and keep you posted. 

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Conventional wisdom in the world of layoffs and reductions in force has held that older workers are more at risk for layoff because they generally earn higher salaries than their younger colleagues.  However, in this downturn, employers' concern about the high cost of age bias claims may have put the jobs of younger workers more at risk. According to recent Department of Labor figures, the unemployment rate among the 24-35 age group was 9.7% in April 2009, compared with a rate of 6.4% for workers over age 55.   One year ago, those figures were 5.1% and 3.1% respectively. 

The federal Age Discrimination in Employment Act (ADEA) prohibits an employer from treating employees over the age of forty less favorably than younger employees because of their age.   To effectively defend against a claim of age bias, an employer making a lay off decision must rely upon non-age related criteria.   Using compensation as a factor is generally not advisable because pay selecting higher paid employees for lay off will generally result in more workers over forty being in the lay off pool.    For better or for worse, it appears many employers have concluded it is easier to defend an age bias claim when the last employees hired are the first ones who are let go as part of a reduction in force.

Age bias claims are little more complicated under Iowa law.  The Iowa Civil Rights Act protects any employee from age discrimination who is 18 or older.    Therefore, under Iowa law, employers must be especially vigilant to avoid using factors that are related to age when making lay off decisions--whether the age is younger or older.  

According to a recent Wall Street Journal Article ("With Jobs Scarce, Age Becomes an Issue"), older employees might also be favored because of personal circumstances that are not likely to affect as many  younger, single employees, such as children in college or a spouse's health problems. Another potential factor favoring older employees, as discussed in a a recent post here, is that the EEOC has recently issued guidelines for avoiding discrimination against employees who are caregivers.

To avoid age bias claims, or at least make them more defensible, employers may want to consider some of the following criteria when identifying employees for lay off:

1.  Use as many objective criteria as possible when evaluating employees;

2.  Avoid using salary or benefit levels as a criteria; some courts have held that the use of such criteria creates an inference of age discrimination;

3.   If performance criteria are used, determine whether existing performance data is current and relevant; consider risks and benefits of updating performance evaluations (e.g., a sudden downward change in performance might be viewed as a pretext for age discrimination)

 4.  If performance reviews are updated prior to the RIF, it is better if the reviewing manager has little or no knowledge concerning the RIF;

 5.   Consider who will make the decisions based upon the established criteria;

 6.  Stick to the criteria;

 7.  Be aware of the presence in the RIF group of “whistle-blowers” or persons about to vest pension or retiree health benefits;

 8.  Consider obligations under collective bargaining agreement or seniority system;

 9.  Consider whether “bumping” will be permitted, and if so, how it will be administered.

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The United States Supreme Court has been very active recently in hearing employment law cases, and this term is no exception.   In fact, just last week, the Court heard oral argument on what has become a closely watched age discrimination case that arose in Iowa. 

Gross v. FBL Financial Services, Inc., which was tried in Des Moines before U.S. Magistrate Thomas Shields, concerns the burden of proof when the employer has a mixed motive.   Mixed motive refers to a situation in which a protected characteristic such as age may have played a role in the employment decision, but the same decision would have been made regardless of the plaintiff's age.  One of the issues presented to the Court in Gross was who bears the ultimate burden of proving the "same decision" defense. 

Judge Shields instructed the jury that if the plaintiff proved that age was a motivating factor in his termination, the burden shifted to the employer to prove it would have taken the same action even if age was not a factor.   However, on appeal, the Eighth Circuit reversed the trial court, and held that the burden or persuasion shifts to the employer only if the plaintiff proves by direct evidence that age was a factor.  If the plaintiff has only circumstantial evidence of age bias, the burden remains on the plaintiff.  Direct evidence of bias is generally much more difficult for a plaintiff to find, so many discrimination cases rely upon circumstantial evidence. 

We will keep close tabs on the Gross case, and will provide a full report and analysis when the Court issues its ruling.

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