Marie Bryan v. Government of the VI , 916 F.3d 242 ( 2019 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
No. 18-1941
___________
MARIE BRYAN
v.
GOVERNMENT OF THE VIRGIN ISLANDS
___________
NAOMI CLARKE THOMAS
v.
GOVERNMENT OF THE VIRGIN ISLANDS
Marie Bryan; Naomi Clarke Thomas,
Appellants
__________
On Appeal from the District Court
of the Virgin Islands
(D.V.I. Nos. 3-14-cv-00097 & 3-14-cv-00098)
District Judge: Honorable Curtis V. Gomez
___________
Argued December 13, 2018
Before: CHAGARES, HARDIMAN, and RESTREPO,
Circuit Judges.
(Filed: February 19, 2019)
Glen M. Connor
Richard P. Rouco [Argued]
Quinn Conner Weaver Davies & Rouco
2 20th Street North, Suite 930
Birmingham, AL 35203
Attorneys for Appellants
Claude E. Walker
Attorney General
Pamela R. Tepper
Solicitor General
Su-Layne U. Walker [Argued]
Assistant Attorney General
Office of Attorney General of Virgin Islands
Department of Justice
34-38 Kronprindsens Gade
GERS Complex, 2nd Floor
St. Thomas, V.I. 00802
Attorneys for Appellee
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____________
OPINION OF THE COURT
____________
HARDIMAN, Circuit Judge.
In 2011, facing a severe budget crisis, the Virgin Islands
enacted the Virgin Islands Economic Stability Act (VIESA or
the Act). See United Steel Paper & Forestry Rubber Mfg.
Allied Indus. & Serv. Workers Int’l Union AFL-CIO-CLC v.
Gov’t of Virgin Islands, 842 F.3d 201, 204 (3d Cir. 2016)
(citing 2011 V.I. Sess. Laws 84). VIESA sought to reduce
government spending by reducing payroll while continuing to
provide necessary public services. See 2011 V.I. Sess. Laws 84pmbl. The Act encouraged some of the Government’s most
expensive employees (those with at least thirty years of
credited service) to retire using a carrot-and-stick approach:
VIESA offered $10,000 to each long-tenured employee who
chose to retire within three months. Id. § 7(a). And those
declining to retire had to contribute an additional 3% of their
salary to the Government Employees Retirement System (the
System) starting at the end of those three months. Id. § 7(k).
The legality of that 3% contribution requirement is the subject
of this appeal.
Appellants Marie Bryan and Naomi Thomas are
members of the System with over thirty years of credited
service who chose not to retire during the statutory period.
They do not object to the $10,000 carrot, but they claim the 3%
stick violates federal and territorial laws protecting workers
over the age of 40 from discrimination based on their age. We
disagree, and hold the provision valid because: (1) it did not
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target employees because of their age under the Supreme
Court’s decision in Hazen Paper Co. v. Biggins, 507 U.S. 604,
610 (1993); (2) its focus on credited years of service entitles
the Government to the ADEA’s reasonable-factor-other-than-
age defense; and (3) the Virgin Islands Supreme Court would
deem Section 7(k) consistent with existing territorial anti-
discrimination statutes. Accordingly, we will affirm.
I
Essentially all employees of the Government of the
Virgin Islands are members of the System. Like many pension
plans, the System provides members with a retirement annuity
based on their years of service and average salary. To receive
credit for years of service, members must regularly contribute
a portion of their salary to the System. Thirty years of service
entitles a member to retire with a full-service retirement
annuity.
On top of the employee contribution, the Government is
required by statute to contribute to the System, “which together
with the members’ contributions and the income of the
[S]ystem will be sufficient to provide adequate actuarially
determined reserve for the annuities, benefits and
administration of [the System].” 3 V.I.C. § 718(f). Since 2007,
the Government has contributed 17.5% of employees’
compensation per pay period. Id. § 718(g).
In 2014, Bryan and Thomas brought separate actions
alleging that Section 7(k) violated the Age Discrimination in
Employment Act of 1967 (ADEA), the Virgin Islands Civil
Rights Act, and the Virgin Islands Discrimination in
Employment Act. Their actions were consolidated and the
District Court certified a class of similarly situated persons.
4
The parties presented a stipulated record and agreed to a
bifurcated trial so the District Court could address liability
first. The Court dismissed the territorial law claims and entered
judgment in favor of the Government on the federal claims.
This appeal followed.
II
The District Court had jurisdiction under 28 U.S.C.
§ 1331 and 29 U.S.C. § 626 over Bryan and Thomas’s federal
(ADEA) claims, and supplemental jurisdiction under 28 U.S.C.
§ 1367 over their territorial law claims. We have jurisdiction
under 28 U.S.C. § 1291. Our review is plenary because the
District Court decided legal questions on a stipulated record.
See, e.g., In re Johns, 37 F.3d 1021, 1023 (3d Cir. 1994).
III
We first address the federal claims, which rely on both
disparate treatment and disparate impact theories of liability.
Although both are cognizable under the ADEA, neither applies
here because Section 7(k) reasonably sought to reduce payroll
costs and increase the System’s solvency based on employees’
credited years of service, not age.
A
To succeed on a disparate treatment claim, a plaintiff
must demonstrate “the employee’s protected trait actually
played a role” and “had a determinative influence on the
outcome” of the decisionmaking process that led to the
challenged action. Hazen Paper, 507 U.S. at 610; see 29 U.S.C.
§ 623(a) (“It shall be unlawful for an employer . . . [to]
discriminate against any individual . . . because of such
5
individual’s age . . . .” (emphasis added)). In other words, age
must have been a but-for cause of the action, and the plaintiff
bears the burden of proving so. Gross v. FBL Fin. Servs. Inc.,
557 U.S. 167, 177, 180 (2009). Accordingly, “there is no
disparate treatment under the ADEA when the factor
motivating the employer is some feature other than the
employee’s age.” Hazen Paper, 507 U.S. at 609. Critical for
purposes of this appeal, the Supreme Court has distinguished
between age and years of service, concluding that “it is
incorrect to say that a decision based on years of service is
necessarily ‘age based.’” Id. at 611; see also Tomasso v.
Boeing Co., 445 F.3d 702, 710 n.8 (3d Cir. 2006) (finding a
decision to reduce layoff protection for employees based on
years of service did not equate to age-based discrimination).
When an employer’s action is based on years of service,
it does not involve the inaccurate and stigmatizing age-based
stereotypes the ADEA intended to address. Hazen Paper, 507
U.S. at 611. For that reason, termination based solely on
financial considerations related to years of service is not
actionable under the ADEA. See id. at 612–13. And although
an employer may not use a direct proxy for age to discriminate
surreptitiously against older workers, an employee’s tenure
(without more) is not such a direct proxy. See id. at 611–13; cf.
Erie Cty. Retirees Ass’n v. Cty. of Erie, 220 F.3d 193, 211 (3d
Cir. 2000) (recognizing Medicare eligibility as a proxy for age
because it necessarily follows turning 65).
Here, Bryan and Thomas have not demonstrated that
age played a role in the decisionmaking process that led to
Section 7(k)’s enactment. VIESA does not discuss age or any
stereotypes based on age. Instead, it cites the economic
downturn and budgetary shortfall facing the Virgin Islands in
2011. See 2011 V.I. Sess. Laws 84 pmbl. And to address that
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problem, it targets years of service, not age. See Hazen Paper,
507 U.S. at 611.
Bryan and Thomas first argue Section 7(k) facially
discriminates based on age. This is a nonstarter because
nothing in the statute mentions age. Cf. Int’l Union, United
Auto., Aerospace & Agric. Implement Workers of Am. v.
Johnson Controls, Inc., 499 U.S. 187, 198–99 (1991) (finding
facial discrimination in policy that classified employees “on
the basis of gender and childbearing capacity”).
Unable to demonstrate facial discrimination, Bryan and
Thomas also invoke a proxy theory for age. Since thirty
credited years of service implicates only members over 40,
they argue, the Government must have targeted older workers
for the 3% contribution. They also note that some courts have
found non-age factors that always correlate with age satisfy the
ADEA’s “because of age” requirement. See, e.g., Hilde v. City
of Eveleth, 777 F.3d 998, 1006 (8th Cir. 2015) (addressing
retirement eligibility that depended on an employee reaching
age fifty); Erie Cty. Retirees Ass’n, 220 F.3d at 211 (addressing
Medicare eligibility as age-dependent). But while it is true that
every Government employee with thirty years of service is
over 40 (because the Government does not hire nine-year-
olds), Bryan and Thomas point to nothing in the record to
establish that all System members in the protected class have
achieved thirty years of credited service. Nor does the record
suggest that the Government used thirty years of credited
service as a proxy for age.1 So this is not the “special case”
1
Rather than point to such evidence, Bryan and Thomas
claim a former Government Director of Personnel’s testimony
in another case establishes cost savings could not have been a
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where a direct proxy could be masquerading as a factor other
than age. Hazen Paper, 507 U.S. at 613.
In sum, because Section 7(k) was motivated by factors
other than age—factors that are not direct proxies for age—it
does not violate the ADEA’s bar on disparate treatment.
B
We turn next to the disparate impact claim. Such claims
challenge facially neutral employment practices “that in fact
fall more harshly on one group than another.” Hampton v.
Borough of Tinton Falls Police Dep’t, 98 F.3d 107, 112 (3d
Cir. 1996) (quoting Hazen Paper, 507 U.S. at 609). Disparate
impact claims do not require proof of discriminatory motive
like disparate treatment claims. Id. But the Supreme Court has
held that disparate impact liability under the ADEA “is
narrower than under Title VII,” in large part because of the
reason for the 3% contribution. Even if that were so, it does not
follow that age was a but-for reason. But more importantly, it’s
not so. Using the increased contribution to encourage
employees to retire from the Government payroll directly
reduces costs as those retirees cease to draw Government
salaries and begin to draw pensions from the System.
Additionally, requiring employees who get more out of the
System to pay more into the System contributes to its solvency.
Although the contribution does not result in direct cost-savings
for the Government because the System is a separate fisc, the
3% contribution does lower costs for that System—to which
the Government must contribute directly to prevent
insolvency. And it directly reduces payroll costs by increasing
employee turnover.
8
ADEA’s reasonable-factor-other-than-age (RFOA)
affirmative defense. Smith v. City of Jackson, 544 U.S. 228,
240 (2005); see 29 U.S.C. § 623(f)(1).2
A reasonable, non-age factor that explains an
employer’s decision therefore precludes disparate impact
liability, Smith, 544 U.S. at 239, and the burden is on the
employer to demonstrate the factor’s reasonableness,
Meacham v. Knolls Atomic Power Lab., 554 U.S. 84, 91
(2008). Reasonableness does not require “that ‘there are no
other ways for the employer to achieve its goals.’” Karlo v.
Pittsburgh Glass Works, LLC, 849 F.3d 61, 70 (3d Cir. 2017)
(alteration omitted) (quoting Smith, 544 U.S. at 243). In fact,
we have described the burden to demonstrate reasonableness
as “relatively light.” Id. at 80.
Particularly relevant examples of RFOAs include
“seniority and rank,” Smith, 544 U.S. at 242, preserving
employees’ eligibility for a supplemental insurance plan,
Carson v. Lake Cty., 865 F.3d 526, 536–37 (7th Cir. 2017), and
“lowering overall employee costs by increasing turnover,”
2
The Government does not also assert a “bona fide
employee benefit plan” defense. See 29 U.S.C. § 623(f)(2).
Bryan and Thomas argue that Section 7(k) does not satisfy the
“equal benefit or equal cost rule” of Section 623(f)(2)(B), but
that is beside the point. That rule provides an exception to an
affirmative defense the Government does not assert, not a
standalone ground for liability. See Am. Ass’n of Retired
Persons v. E.E.O.C., 489 F.3d 558, 561–62 (3d Cir. 2007)
(referring to the ADEA’s equal benefit or equal cost defense).
So even assuming Section 7(k) “violates” the rule, it does not
bear on the Government’s liability here.
9
Allen v. Highlands Hosp. Corp., 545 F.3d 387, 405 (6th Cir.
2008) (alteration omitted).
Because Section 7(k)’s cost-savings justification was
reasonable, the Government is entitled to the RFOA defense.
As we noted, the additional 3% contribution reasonably
resulted in cost savings to the Government by increasing both
employee turnover and the System’s solvency. See supra note
1. Even though it falls disproportionately on older employees,
the action reasonably targets long-tenured employees with
higher salaries—not all older workers—to encourage them to
retire from the Government payroll and to pay more into the
pension system. That suffices to meet the defense’s relatively
light burden and stave off the disparate impact claim.
IV
We turn last to the territorial law claims. Because the
Supreme Court of the Virgin Islands has not yet interpreted the
Virgin Islands Civil Rights Act (VICRA) or the Virgin Islands
Discrimination in Employment Act (VIDEA) as to age
discrimination, our task is “to predict how the Supreme Court
of the Virgin Islands would decide” the issue. Edwards v.
HOVENSA, LLC, 497 F.3d 355, 360–61 (3d Cir. 2007). We
agree with the District Court that the Virgin Islands Supreme
Court is unlikely to hold that VIESA violated VICRA or
VIDEA for two reasons.
First, we expect the Virgin Islands Supreme Court
would try to harmonize the three statutes if at all possible. See
Virgin Islands Taxi Ass’n v. W. Indian Co., Ltd., 66 V.I. 473,
484–85 (2017). The Court presumes that when the legislature
enacts a new law, the law is intended to operate in harmony
with existing statutes because it deems the legislature to have
10
knowledge of existing law when it legislates. Haynes v. Ottley,
61 V.I. 547, 566–67 (2014). So the Court strives to give effect
to multiple statutes on the same subject “unless doing so would
be impossible.” Id.There is no conflict among the three statutes if, as with
federal law, they are read to mean that targeting years of
service alone does not constitute age-based discrimination
under VICRA or VIDEA. We do not suppose the Court would
find that VIESA repealed parts of VICRA or VIDEA by
implication, because such repeals are generally disfavored.
Simmonds v. People, 59 V.I. 480, 499 (2013). And invalidating
the more recent and more specific Section 7(k) (for violating a
statute already on the books when it was enacted) would run
contrary to the Court’s typical approach to statutory
interpretation. See Haynes, 61 V.I. at 564. So harmonizing the
statutes is not only possible, but practical as well.
Second, for the reasons discussed already regarding the
federal claims, the Virgin Islands statutes’ bar on
discrimination “because of age,” 10 V.I.C. § 64(1)(a), is
unlikely to apply to Section 7(k)’s distinction based on credited
years of service. Beyond the distinction between age and years
of service in Hazen Paper, by enacting VIESA, the Virgin
Islands legislature was responding to a crisis that threatened
the welfare of all of the Territory’s residents, young and old. It
therefore acted because of several reasons, none of them age.
For these reasons, we perceive no error in the District
Court’s dismissal of Bryan and Thomas’s territorial law
claims.
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* * *
Although other reasonable measures could have also
achieved the Government’s cost-saving goals, we do not
second-guess an employer’s choice among reasonable,
nondiscriminatory alternatives. See Karlo, 849 F.3d at 84.
Requiring that long-tenured employees who declined to retire
contribute 3% more of their salaries to the pension system each
year was reasonably related to maintaining the System’s
solvency and it did not discriminate based on age. We will thus
affirm the District Court in all respects.
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