Minch, James D. v. City of Chicago ( 2004 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 02-2587
JAMES D. MINCH, RICHARD A. GRAF, and
RICHARD COSENTINO,
Plaintiffs-Appellees,
v.
CITY OF CHICAGO,
Defendant-Appellant.
____________
No. 02-2588
DONALD DRNEK,
Plaintiff-Appellee,
v.
CITY OF CHICAGO,
Defendant-Appellant.
____________
Appeals from the United States District Court
for the Northern District of Illinois, Eastern Division.
Nos. 01 C 0840 & 01 C 2586—Elaine E. Bucklo, Judge.
____________
ARGUED FEBRUARY 28, 2003—DECIDED April 9, 2004
____________
Before POSNER, MANION, and ROVNER, Circuit Judges.
2 Nos. 02-2587 & 02-2588
ROVNER, Circuit Judge. In 1996, Congress restored to
the Age Discrimination in Employment Act (“ADEA”) an
exemption permitting state and local governments to place
age restrictions on the employment of police officers and
firefighters. See 29 U.S.C. § 623(j) (1994 & Supp V 1999).
Four years later, the Chicago City Council exercised its
authority under this exemption to reestablish a mandatory
retirement age of 63 for certain of the City’s police and fire-
fighting personnel. Police officers and firefighters who were
subject to the age restriction filed two suits asserting in
relevant part that the reinstated mandatory retirement
program amounted to subterfuge to evade the purposes of
the ADEA. See § 623(j)(2). Although the text of the City’s
ordinance indicated that the City was reestablishing a
mandatory retirement age in furtherance of public safety,
the plaintiffs asserted that in truth the City, as evidenced
by the remarks of certain City Council members and City
officials, acted out of bias against older workers and a de-
sire to open positions on its police and firefighting forces for
younger and more diverse individuals. The City moved to
dismiss the complaints, contending that the plaintiffs had
failed to state a claim of age discrimination on which the
court could grant relief. The district court denied the
motion, reasoning that if the plaintiffs could prove that the
City reinstated a mandatory retirement age for discrimi-
natory reasons, the mandatory retirement program would
amount to a subterfuge to evade the purposes of the ADEA.
Drnek v. City of Chicago, 192 F. Supp. 2d 835 (N.D. Ill.
2002) (“Drnek I”). The court subsequently certified for
interlocutory appeal the question of whether there is any
evidence through which a plaintiff might prove that a
mandatory retirement program, so long as it satisfies the
other criteria specified by the statutory exemption, see
§ 623(j)(1), constitutes a subterfuge to evade the purposes
of the ADEA. Drnek v. City of Chicago, 205 F. Supp. 2d 894,
900 (N.D. Ill. 2002) (“Drnek II”). Although we answer that
question in the affirmative, we conclude that the particular
Nos. 02-2587 & 02-2588 3
theory of subterfuge that the plaintiffs pursue in this case
is not viable. We accordingly remand with directions to
dismiss their ADEA claims.
I.
Historically, Chicago, like many other state and local
governments, has placed age limits on the employment of
its police and firefighting personnel. As early as 1939, for
example, Chicago’s municipal code required city firefighters
to retire at the age of 63.
As it was originally enacted in 1967, the ADEA by its
terms did not apply to the employees of state and local
governments. Congress amended the statute to include
those employees in 1974. P.L. 93-259 § 28(a)(2), 88 Stat. 55,
74 (April 8, 1974). However, in view of the Tenth Amend-
ment jurisprudence of the day, see National League of Cities
v. Usery, 426 U.S. 833, 96 S. Ct. 2465 (1976), overruled by
Garcia v. San Antonio Metro. Transit Auth., 469 U.S. 528,
105 S. Ct. 1005 (1985), the constitutional validity of the
amendment remained in doubt until 1983, when the
Supreme Court held in E.E.O.C. v. Wyoming, 460 U.S. 226,
103 S. Ct. 1054 (1983), that the Tenth Amendment posed no
obstacle to banning age discrimination by state and local
governments.1 State and local rules establishing maximum
1
More recently, of course, the Supreme Court has held that
Congress exceeded its authority under the enforcement clause of
the Fourteenth Amendment when it purported to abrogate the
States’ Eleventh Amendment immunity from suit by private
individuals under the ADEA. Kimel v. Florida Bd. of Regents, 528
U.S. 62, 120 S. Ct. 631 (2000). That holding does not affect the
plaintiffs’ suits against the City, however, as the Eleventh
Amendment does not apply to municipalities. See Lake Country
(continued...)
4 Nos. 02-2587 & 02-2588
hiring and retirement ages for police officers and
firefighters were now vulnerable to challenge; only if it
could be shown that age was a bona fide occupational
qualification for these positions would the rules survive
scrutiny under the ADEA. See Kopec v. City of Elmhurst,
193 F.3d 894, 897 (7th Cir. 1999). The Equal Employment
Opportunity Commission (“E.E.O.C.”) began to challenge
these age limits as discriminatory. Chicago, seeing the
handwriting on the wall, raised the mandatory retirement
age for its firefighters and police officers to 70, the maxi-
mum age at which employees enjoyed the protection of the
ADEA at that time.2
Responding to the concerns expressed by state and local
governments, Congress in 1986 amended the ADEA to
exempt the mandatory retirement of state and local police
and firefighting personnel from the statute’s coverage. P.L.
99-592 §§ 3, 4, 100 Stat. 3342, 3342-43 (Oct. 31, 1986). As
we noted in Kopec, Congress enacted the exemption in rec-
ognition that there was, as of that time, no consensus as to
the propriety of age limits on employees working in the
realm of public safety. 193 F.3d at 903-04. The exemption
thus permitted any state or local government which, as of
March 3, 1983 (the day after the Supreme Court decided
E.E.O.C. v. Wyoming), had in place age restrictions on the
employment of police officers and firefighters, to restore
(...continued)
Estates, Inc. v. Tahoe Regional Planning Agency, 440 U.S. 391,
401 & n.19, 99 S. Ct. 1171, 1177 & n.19 (1979); Nelson v. LaCrosse
County Dist. Atty., 301 F.3d 820, 827 n.7 (7th Cir. 2002); Richman
v. Sheehan, 270 F.3d 430, 439 (7th Cir. 2001).
2
Congress later amended the ADEA to remove age 70 as the
maximum age at which the statute applied. See P.L. 99-592
§ 2(c)(1), 100 Stat. 3342, 3342 (Oct. 31, 1986).
Nos. 02-2587 & 02-2588 5
those restrictions.3 In 1988, Chicago took advantage of the
exemption and reinstated a mandatory retirement age of 63
for its firefighters and police officers.
Pursuant to a sunset provision in the 1986 legislation, the
exemption permitting the reinstatement of these age limits
expired at the end of 1993. P.L. 99-592 § 3(b), 100 Stat.
3342, 3342. In the ensuing years, Chicago, along with other
state and local governments, were again compelled to drop
their age restrictions on the employment of police and
firefighting personnel.
3
The exemption provided that “[i]t shall not be unlawful for an
employer which is a State, a political subdivision of a State, an
agency or instrumentality of a State or a political subdivision of
a State, or an interstate agency to fail or refuse to hire or to dis-
charge any individual because of such individual’s age if such
action is taken:
(1) with respect to the employment of an individual as a
firefighter or as a law enforcement officer and the in-
dividual has attained the age of hiring or retirement in
effect under applicable State or local law on March 3,
1983, and
(2) pursuant to a bona fide hiring or retirement plan that is
not a subterfuge to evade the purposes of this chapter.
29 U.S.C. § 623(j) (1988).
The 1986 legislation also called upon the United States
Secretary of Labor and the E.E.O.C. to study the feasibility of
examining police and firefighting personnel for physical and
mental fitness as an alternative to age limitations on their
employment. P.L. 99-592 § 5, 100 Stat. 3342, 3343. The legislation
further directed the E.E.O.C. to propose guidelines for the
administration of such physical and mental assessments. Id.Although a feasibility study was completed, no guidelines for the
administration of fitness testing for such workers were ever
proposed. See Kopec, 193 F.3d at 897 n.1.
6 Nos. 02-2587 & 02-2588
In 1996, however, Congress reinstated the exemption, this
time without any sunset provision, and retroactively to the
date that the prior exemption had expired in 1993. P.L. 104-
208 §§ 119(1)(b), 119(3)(b), 110 Stat. 3009, 3009-23 - 3009-
25 (Sept. 30, 1996); see Kopec, 193 F.3d at 898. The 1996
legislation also broadened the exemption, allowing cities
and states which had not imposed age restrictions on their
police and firefighters prior to the Wyoming decision to
enact such limits. As relevant here, the exemption, codified
at 29 U.S.C. § 623(j), 4 permits a publ i c
4
The 1996 exemption provides as follows:
(j) Employment as firefighter or law enforcement
officer.
It shall not be unlawful for an employer which is a State, a
political subdivision of a State, an agency or instrumentality
of a State or a political subdivision of a State, or an interstate
agency to fail or refuse to hire or to discharge any individual
because of such individual’s age if such action is taken—
(1) with respect to the employment of an individual as a
firefighter or as a law enforcement officer, the employer
has complied with section 3(d)(2) of the Age
Discrimination in Employment Amendments of 1996 if
the individual was discharged after the date described in
such section, and the individual has attained—
(A) the age of hiring or retirement, respectively, in effect
under applicable State or local law on March 3, 1983;
or
(B) (i) if the individual was not hired, the age of hiring
in effect on the date of such failure or refusal to
hire under applicable State or local law enacted
after September 30, 1996; or
(ii) if applicable State or local law was enacted after
September 30, 1996, and the individual was
discharged, the higher of—
(continued...)
Nos. 02-2587 & 02-2588 7
(...continued)
(I) the age of retirement in effect on the date of
such discharge under such law; and
(II) age 55; and
(2) pursuant to a bona fide hiring or retirement plan that is
not a subterfuge to evade the purposes of this chapter.
29 U.S.C. § 623(j) (1994 & Supp. V. 1999).
In the 1996 legislation, Congress also directed the Secretary of
Health and Human Services to study and report to Congress
within three years on the feasibility of testing the ability of police
and firefighters to complete public safety tasks. Within four years,
the Secretary was to issue advisory guidelines for the use and
administration of tests designed to gauge the mental and physical
competence of police and firefighting personnel. After those
guidelines were issued, the Secretary was further directed to issue
regulations identifying appropriate tests that a state or local
government could use to evaluate the fitness of police officers and
firefighters who had reached the mandatory retirement age
specified by that government. Once those regulations were in
place, state and local governments would be compelled to give
their public safety personnel the opportunity to demonstrate their
continued fitness for duty once they reached retirement age. P.L.
104-208 § 119(2), 110 Stat. at 3009-24 - 3009-25; see Kopec, 193
F.3d at 898 n.2. To date, however, no such guidelines or regula-
tions have been issued.
The failure to promulgate guidelines and regulations for fit-
ness testing gives rise to an ambiguity in the statute. Section
623(j)(1) purports to condition applicability of the exemption on
the state or local government’s compliance with section (3)(d)(2)
of the 1996 amendment. This is an apparent reference to the
fitness guidelines and regulations that the Secretary of Health
and Human Services was directed to promulgate. See Drnek I,
192 F. Supp. 2d at 838-39. As no such guidelines and regula-
tions have yet been issued, state and local governments obvi-
ously cannot comply with them. Consequently, this component
(continued...)
8 Nos. 02-2587 & 02-2588
employer to discharge a police officer or firefighter based on
his age, subject to two principal conditions. First, section
623(j)(1) specifies that the employee must have attained
either the age of retirement that the state or municipality
had in place as of March 3, 1983 or, if the age limit was
enacted after the date the 1996 exemption took effect, the
higher of the retirement age specified in the post-1996
enactment or the age of 55. Second, section 623(j)(2)
requires that the state or city discharge such an employee
pursuant to a bona fide retirement plan that is not a
subterfuge to evade the purposes of the statute.
Four years later, the Chicago City Council adopted a
mandatory retirement ordinance (“MRO”) reinstating a
mandatory retirement age of 63 for its police officers and for
its uniformed firefighting fire personnel.5 In the pre-
(...continued)
of section 623(j)(1) is essentially meaningless at this juncture.
As the district court summarized, “The provision in § 623(j)(1)
for compliance with § 3(d)(2) merely imposed an obligation
on employers to provide [fitness] tests when and if suitable tests
became available; it did not make tests a condition precedent
to the operation of the exception. Because HHS has not pro-
mulgated the regulations called for by the statute, the City could
not violate § 623(j)(1) by failing to provide fitness tests before
enforcing the [Mandatory Retirement] Ordinance.” Id. at 842.
5
In relevant part, the City’s Municipal Code, as amended by the
MRO, reads:
(a) Effective December 31, 2000, the age of 63 shall be the
maximum age for employment of sworn members of the
police department, including a sworn member who is
transferred or appointed to a supervisory or admini-
strative position.
(b) Effective December 31, 2000, the age of 63 shall be the
maximum age for employment of any member of the uni-
formed service of the fire department, the duties of whose
(continued...)
Nos. 02-2587 & 02-2588 9
amble to that ordinance, the City Council indicated that
its purpose in restoring the retirement age was to protect
the safety of Chicago residents.6
(...continued)
position are primarily to perform work directly connected
with the control and extinguishment of fires or the
maintenance and use of firefighting apparatus and
equipment, including an employee engaged in this
activity who is transferred or appointed to a supervisory
or administrative position. . . .
***
(d) All persons to whom this ordinance applies shall be re-
tired upon attainment of age 63. Any person to whom
this ordinance applies whose age is 63 or more on Decem-
ber 31, 2000 shall be retired upon that date.
***
Municipal Code of Chicago § 2-152-410 (Lexis Nexis 2001).
6
The preamble to the MRO stated:
WHEREAS, The Safety of the citizens of the City of
Chicago is of the utmost concern to the City Council of the
City of Chicago; and
WHEREAS, The citizens of the City of Chicago deserve the
most effective police and fire protection possible;
WHEREAS, The City Council finds that these goals are
served by returning to the mandatory retirement age of sixty-
three which had historically applied to sworn police and
uniformed firefighters; and
WHEREAS, Both the Illinois Legislature and United States
Congress have recognized the necessity of allowing municipal-
ities to institute mandatory retirement for police and fire
personnel;
....
Journal of Proceedings in the Chicago City Council Journal, May
17, 2000, 32900-32901.
10 Nos. 02-2587 & 02-2588
The four plaintiffs were Chicago police officers and uni-
formed firefighters who were 63 or greater when the MRO
took effect and thus were forced to take immediate retire-
ment. They filed two actions against the City asserting,
in relevant part, that the City was not actually motivated
by public safety purposes in enacting the MRO. The cases
were consolidated in the district court. Although the
plaintiffs do not dispute at this juncture that the MRO and
their involuntary retirement pursuant to the MRO satisfy
the criteria set forth in section 623(j)(1), they allege that the
MRO amounts to a subterfuge to evade the purposes of the
ADEA and for that reason amounts to illegal age discrimi-
nation. Among other motives for enacting the MRO, the
plaintiffs assert, the City wanted to get rid of what one city
council member described as “old-timers” and “deadbeats”
in the police and fire departments and to make room in
those departments for younger, more racially and ethnically
diverse individuals who would work harder and bring
“fresh” ideas with them. This amounts to age discrimination
in violation of the ADEA, in the plaintiffs’ view.
The district court denied the City’s motion to dismiss the
plaintiffs’ ADEA claims. Drnek I, 192 F. Supp. 2d at 843-46.
In the court’s view, the question of whether the city rein-
stated a mandatory retirement age of 63 as a subterfuge for
age discrimination was one of fact that necessitated inquiry
beyond the statement of purpose set forth in the preamble
to the MRO into the true motive or motives behind the
legislation. Id. at 844-45. “Age-based retirement is tolerated
in limited circumstances under § 623(j), but not for the
wrong reasons, i.e. not for reasons that are merely a cover-
up for the type of ageism prohibited by the ADEA.” Id. at
845. Here, the plaintiffs were able to point to the remarks
of the sponsor of the MRO and of high-ranking city officials
as proof that the City may have been motivated
impermissibly by stereotypes and bias against older
members of the police and fire departments when it enacted
Nos. 02-2587 & 02-2588 11
the MRO. The plaintiffs also represented that the City had
delayed reinstating the retirement age of 63 until after a
close friend of the Mayor (who otherwise would have been
forced to retire) voluntarily retired at age 68. The district
court found these allegations, suggesting that the City did
not actually enact the MRO for legitimate, safety-related
reasons, sufficient to state a viable claim for subterfuge. Id.
at 843-46.
On reconsideration, the court distinguished Bell v. Purdue
Univ., 975 F.2d 422 (7th Cir. 1992), in which this court had
rejected a claim of subterfuge notwithstanding evidence of
an employer’s animus toward older employees. Bell dealt
with an employer’s practice of ceasing pension fund contri-
butions on behalf of an employee once he or she reached the
age of 65. The relevant version of the ADEA contained an
exception permitting age-based decisions in employee
benefit programs so long as they were not a subterfuge to
evade the purposes of the statute. See 29 U.S.C. § 623(f)(2)
(1982). Looking to the Supreme Court’s decision in Public
Employees Retirement Sys. of Ohio v. Betts, 492 U.S. 158,
109 S. Ct. 2854 (1989), we concluded that an age-based
differential in fringe benefits would not amount to a
subterfuge unless the employer used that differential to
camouflage age discrimination in some distinct aspect of the
employment relationship—i.e., other than with respect to
fringe benefits. Bell, 975 F.2d at 430. The City argued that
here, as in Bell, there was no case to be made that it had
taken advantage of a statutory exemption that expressly
allowed mandatory retirement in order to commit some
other type of age-based discrimination forbidden by the
statute.
The district court acknowledged that “[t]here is some
consistency between the City’s interpretation here and the
Betts/Bell interpretation.” Drnek II, 205 F. Supp. 2d at 898.
However, the court was concerned that applying the
Betts/Bell approach in the context of mandatory retirement
12 Nos. 02-2587 & 02-2588
would render the subterfuge provision of section 623(j)(2) “if
not dead, at least moribund.” Id. Whereas the exception at
issue in Betts and Bell concerned only fringe benefits,
leaving all other aspects of the employment relationship
protected by the ADEA’s ban on arbitrary age discrimina-
tion, section 623(j) permits an employer to terminate a
worker’s employment altogether, leaving nothing in the
employment relationship for the statute to protect. Id.Thus, a view of subterfuge that required the plaintiff to
show that mandatory retirement is being used as a cover for
some type of age discrimination other than age-based
discharge would render the “not a subterfuge” language of
section 623(j)(2) “utterly meaningless.” Id. at 899. The court
therefore declined to apply Bell’s rationale to this case. It
remained convinced that if the City had reinstated manda-
tory retirement with the aim of clearing older employees
from the ranks of firefighters and police officers in order to
make room for younger workers, as the plaintiffs alleged,
that discriminatory purpose in and of itself would establish
a subterfuge within the meaning of section 623(j)(2). Id.Recognizing that there was room for disagreement on
the issue, however, the court granted the City’s request to
certify a question for interlocutory review. See 28 U.S.C.
§ 1292(b). The City had asked the court to certify the
question “whether allegedly illicit motives on the part of
individual legislators and municipal officials for enacting a
retirement plan that mandatorily retires police and fire
personnel at age 63 and results in their replacement with
younger workers can demonstrate subterfuge under section
623(j) of the ADEA.” The court rejected this as an appropri-
ate question, “because it is too early in the lawsuit to
determine that this is the only type of evidence of subter-
fuge that the plaintiffs could discover.” Drnek II, 205 F.
Supp. 2d at 899 (emphasis in original). At the same time,
the court was forced to wonder what proof might suffice to
establish subterfuge. If, as the City contended, evidence of
Nos. 02-2587 & 02-2588 13
impure motives for enacting the MRO did not suffice, and
if, as the court believed, it was essentially impossible for a
plaintiff to establish the type of subterfuge envisioned by
Betts and Bell, then as a practical matter, there was no way
to show that a mandatory retirement program constituted
a subterfuge to evade the purposes of the ADEA. In effect,
so long as a mandatory retirement program satisfied the
basic eligibility criteria set forth in section 623(j)(1), the
program would be immune from challenge as a subterfuge.
See id. at 898-99. The court thus opted to certify a broader
question than the City had proposed, asking “whether a
plaintiff can demonstrate subterfuge under § 623(j)(2) with
any kind of evidence if there is no violation of § 623(j)(1).”
Id. at 900 (emphasis in original).
II.
This appeal calls upon us to consider under what cir-
cumstances a mandatory retirement program for public
safety personnel might constitute a subterfuge to evade the
purposes of the ADEA. The question certified by the district
court asks whether there is any evidence with which a
plaintiff can demonstrate subterfuge under section 623(j)(2)
if there is no violation of section 623(j)(1). We agree with
the district court that subterfuge can be shown even if the
requirements of subsection (j)(1) are satisfied. A plaintiff
can establish subterfuge if he or she can demonstrate that
a state or local government took advantage of the exemp-
tion and imposed a mandatory retirement age for police and
firefighting personnel in order to evade a different substan-
tive provision of the statute. However, because the ADEA
expressly permits employers like Chicago to reinstate
mandatory retirement programs for police and fire person-
nel and thus to discharge employees based on their age,
proof that local officials exercised this right for impure
motives will not in and of itself suffice to establish subter-
14 Nos. 02-2587 & 02-2588
fuge for purposes of section 623(j)(2). Given that the plain-
tiffs’ theory of subterfuge in these cases relies solely on
proof that Chicago City Council members and other City
officials may have harbored discriminatory attitudes about
older workers when they reinstated a mandatory retirement
age of 63 for police officers and firefighters and that they
adopted the MRO for illicit motives unrelated to public
safety, the plaintiffs have failed to state an ADEA claim on
which relief may be granted.
The ADEA itself does not specify what constitutes a
“subterfuge to evade the purposes” of the statute, and the
Supreme Court has not specifically addressed that question
within the confines of section 623(j)(2). However, the
Supreme Court’s decision in Betts and our own decision in
Bell have considered the meaning of “subterfuge” for pur-
poses of a similar provision of the ADEA, since revised. The
language of section 623(j)(2) appears to have been modeled
after (and is virtually identical to) the language construed
in Betts and Bell, see Knight v. Georgia, 992 F.2d 1541, 1545
(11th Cir. 1993), and so we look to those cases for guidance
as to what might constitute a subterfuge for purposes of
section 623(j)(2). See Trans World Airlines v. Thurston, Inc.,
469 U.S. 111, 121, 105 S. Ct. 613, 621 (1985); Oscar Mayer
& Co. v. Evans, 441 U.S. 750, 756, 99 S. Ct. 2066, 2071
(1979).
At issue in Betts was the validity of an age-based dis-
ability retirement program for state and local government
employees in Ohio. Under the terms of that program, an
employee who became permanently disabled before the age
of 60 was eligible for disability retirement benefits, which
amounted to a minimum of 30 percent of her final average
salary. Employees who became disabled after the age of
60, however, were eligible only for standard retirement
benefits based on their age and years of service. No floor
applied to those benefits, so that an employee who became
disabled after the age of 60 could (depending on her age and
Nos. 02-2587 & 02-2588 15
length of service) receive retirement benefits amounting to
substantially less than 30 percent of her final average
salary. The plaintiff in Betts had a medical condition that
forced her to retire at age 61, and her monthly benefits
under the standard retirement program were about half
what they would have been had she been eligible for the
age-restricted disability retirement benefits. She filed suit
contending that the age ceiling of 60 that the program
placed on disability retirement benefits violated the ADEA’s
ban on age discrimination.
At the time that Betts was decided, the ADEA contained
a provision exempting from the statute’s ban on age dis-
crimination any bona fide employee benefit plan, including
a retirement and pension plan, so long as the plan was not
a subterfuge to evade the purposes of the statute. 29 U.S.C.
§ 623(f)(2) (1982). The parties in Betts conceded that the
disability retirement plan at issue was bona fide, and as the
Supreme Court noted, that plan fell squarely within the
exemption. 492 U.S. at 166, 109 S. Ct. at 2860-61. Thus,
only if the plan amounted to a subterfuge to evade the
purposes of the statute would it be illegal. Interpretive
regulations issued by the Department of Labor and the
E.E.O.C. indicated that fringe benefit programs awarding
different levels of benefits based on age were not a subter-
fuge so long as the age distinctions were cost-justified.
Relying in part on those regulations, the lower courts had
concluded that Ohio’s disability retirement program
amounted to a subterfuge to evade the purposes of the
ADEA because the state could point to no cost justification
or other substantial business purpose for restricting
eligibility to persons who became disabled before reaching
the age of 60. Betts v. Hamilton County Bd. of Mental
Health Retardation, 631 F. Supp. 1198 (S.D. Ohio 1986),
aff’d, 848 F.2d 692 (6th Cir. 1988). The Supreme Court
reversed.
16 Nos. 02-2587 & 02-2588
At the outset of its analysis, the Supreme Court rejected
the notion, reflected in the interpretative regulations, that
an age-based distinction in employee benefits could only
survive scrutiny under the ADEA if the employer were able
to establish a cost justification for the distinction— i.e., that
providing the benefit to older workers would burden the
employer with added costs. In the court’s view, such a
requirement could not be squared with the plain language
of the statutory exemption for fringe benefit plans, which
said nothing about such a justification. 492 U.S. at 169-172,
109 S. Ct. at 2862-64. Although the plaintiff pointed to
support in the legislative history for the notion that the
exemption should be limited to age-based distinctions that
were cost-justified, the Court saw no need to resort to
legislative history, as the statutory language was clear:
line-drawing based on age was permitted in a fringe benefit
program so long as the program did not constitute a
subterfuge to evade the purposes of the statute. See id. at
172, 109 S. Ct. at 2864.
The term, “subterfuge,” in the Court’s view, should be gi-
ven its ordinary meaning, id. at 168, 109 S. Ct. at 2862, i.e.,
“a scheme, plan, stratagem, or artifice of evasion,” id. at
167, 171, 109 S. Ct. at 2861, 2863 (quoting United Air
Lines, Inc. v. McCann, 434 U.S. 192, 203, 98 S. Ct. 444, 450
(1977)). The Court observed that the purposes of the ADEA
include promoting the employment of older persons based
on ability rather than age, prohibiting arbitrary age
discrimination in employment, and helping employers and
workers ascertain means of addressing difficulties arising
from the impact of age upon employment. Id. at 175-76, 109
S. Ct. at 2866 (quoting 29 U.S.C. § 621(b)). The only one of
these purposes that the retirement plan at issue could be a
subterfuge to evade would be the elimination of arbitrary
age discrimination in employment. Id. at 176, 109 S. Ct. at
2866. But not all age discrimination is arbitrary, the Court
pointed out, for the ADEA itself sets out various exemptions
Nos. 02-2587 & 02-2588 17
from and affirmative defenses to its coverage. Ibid. In order
to determine whether a particular practice is arbitrary, and
therefore contrary to the purposes of the ADEA, one must
look for guidance to the substantive provisions of the
statute, which “provide the best evidence of the nature of
the evils Congress sought to eradicate.” Ibid. The statute
does prohibit age-based discrimination in compensation and
the other terms, conditions or privileges of employment, see
29 U.S.C. § 623(a)(1), and that provision could be construed
to reach employee benefit plans. Id. at 176-77, 109 S. Ct. at
2866. One thus could say that any retirement or other
employee benefit plan restricting eligibility based on age
constitutes a form of age discrimination in the terms and
conditions of employment and to that extent amounts to a
subterfuge to evade the statutory purpose of prohibiting
such arbitrary discrimination. Id. at 177, 109 S. Ct. at 2866.
But that view obviously would render the statutory exemp-
tion for benefit programs “nugatory.” Ibid. On the other
hand, one could read the exemption and its “not a subter-
fuge” criterion to permit age-based line drawing in a fringe
benefit program such as a disability retirement plan, so
long as the plan does not discriminate “in other, non-fringe
benefit aspects of the employment relationship.” Id. at 177,
109 S. Ct. at 2866. This alternate construction, the Court
reasoned, would give effect both to the broad ban on
arbitrary age discrimination in employment and to the
exemption for bona fide employee benefit plans. Id. at 177,
180, 109 S. Ct. at 2866-67, 2868.
The Court postulated two scenarios in which an employee
benefit plan might be considered an effort to evade the
purposes of the ADEA. In the first scenario, an employer
implements a provision in a benefit plan that has the effect
of penalizing an employee who has spoken out against
practices made unlawful by the ADEA. In that instance, the
plan could be viewed as a means of retaliating against the
employee for asserting his statutory rights, something
18 Nos. 02-2587 & 02-2588
which is forbidden by the anti-retaliation provision of the
statute. Id. at 180, 109 S. Ct. at 2868; see 29 U.S.C. §
623(d). In the second scenario, the employer reduces the
salaries of all workers while substantially increasing fringe
benefits for younger workers. There too, the terms of the
fringe benefit plan could be viewed as an effort to accom-
plish something that the statute expressly forbids—paying
younger workers higher wages than older workers, based
solely on age. Ibid.; see 29 U.S.C. § 623(a)(1). These exam-
ples sufficed to demonstrate that the subterfuge provision,
construed as the Court thought it should be, provided “not-
insignificant protections” to older workers while at the same
time preserving a safe harbor for bona fide employee benefit
plans. Ibid.The Court therefore sustained Ohio’s age-based disability
retirement plan notwithstanding the lack of proof that the
age cutoff of 60 was justified by cost considerations. The
statutory scheme placed the burden on the plaintiff to
establish subterfuge, the Court observed:
[The subterfuge prong of the exemption] is not so much
a defense to a charge of age discrimination as it is a
description of the type of employer conduct that is
prohibited in the employee benefit plan context. By
requiring a showing of actual intent to discriminate in
those aspects of the employment relationship protected
by the provisions of the ADEA, [the subterfuge prong]
redefines the elements of a plaintiff’s prima facie case
instead of establishing a defense to what would other-
wise be a violation of the Act. Thus, when an employee
seeks to challenge a benefit plan as a subterfuge to
evade the purposes of the Act, the employee bears the
burden of proving that the discriminatory plan provi-
sion actually was intended to serve the purpose of
discriminating in some non-fringe benefit aspect of the
employment relation.
Nos. 02-2587 & 02-2588 19
Id. at 181, 109 S. Ct. at 2868. The plaintiff in Betts had not
shown that the retirement disability plan was a vehicle for
discrimination in some aspect of employment relationship
other than fringe benefits, and so she had not proven that
it was a subterfuge to evade the purposes of the ADEA. Id.
at 182, 109 S. Ct. at 2869.
In Bell v. Purdue Univ., supra, this court considered
whether a university’s practice of discontinuing contribu-
tions to pension plans for employees once they reached age
65 might constitute a subterfuge.7 Employees filed suit
contending that the practice amounted to age discrimina-
tion. The university defended the practice based on the
same statutory provision at issue in Betts, exempting a
bona fide fringe benefit plan from the statutory ban on age
discrimination so long as it was not a subterfuge to evade
the purposes of the ADEA. This court found Betts control-
ling, and, accordingly, it looked for proof that the univer-
sity’s practice of cutting off pension fund contributions at
age 65 reflected an effort to discriminate in other aspects of
the employment relationship. 975 F.2d at 425-26, 428-29.
We found no evidence to support such a finding.
Although the plaintiffs in Bell highlighted “statements
and anecdotal evidence that some officials at Purdue pre-
ferred younger faculty,” id. at 429, we found this evidence
insufficient to support the claim of subterfuge. Arguably the
evidence spoke to the university’s motives for cutting off
pension contributions for older employees—the plaintiffs
held it up as proof that the cutoff was adopted as a way to
7
An amendment to the ADEA which took effect after the
plaintiffs filed suit required an employer to continue contributing
to a pension fund on an employee’s behalf until the employee
actually retired. P.L. 99-509 § 9201, 100 Stat. 1973, 1973-74 (Oct.
21, 1986); see Bell, 975 F.2d at 423. Bell thus addressed the
legality of the university’s practice with respect to pension fund
contributions prior to the effective date of the amendment. Id.20 Nos. 02-2587 & 02-2588
discourage faculty members from staying on past the age of
65. But we made clear that “the defendants cannot be liable
for their motives if their conduct has not evaded the ADEA’s
prohibitions.” Id. And the plaintiffs could point to nothing
suggesting that the university was using the contribution
cutoff as a way to alter the wages of older employees, or
alternatively to force their retirement or otherwise diminish
their employment prospects. Id. at 429-30. “The plaintiffs .
. . have offered no evidence that the fringe benefit cut in
this case is anything more than meets the eye—an age
differential in fringe benefits which is permitted under the
ADEA.” Id.Here, the plaintiffs urge us to disregard the approach
to subterfuge set out in Betts and followed by this court
in Bell. The Older Workers Benefit Protection Act, P.L. 101-
433 § 101, 104 Stat. 978 (Oct. 16, 1990) (“OWBPA”), over-
ruled the result in Betts, amending the ADEA so as to
prohibit employers from disfavoring older workers in em-
ployee benefit programs except as justified by cost consider-
ations. See Bell, 975 F.2d at 424 n.2. For that reason, the
plaintiffs insist that the Betts approach to subterfuge is no
longer valid. We disagree.
Although Congress overruled the result of Betts, the
manner in which it did so is telling. Rather than supplying
its own definition of what constitutes a subterfuge to evade
the purposes of the ADEA, Congress elected to remove the
“not a subterfuge” language altogether from the exemp-
tion for benefit programs. See P.L. 101-433 § 103, 104 Stat.
978, 978-89. That course suggests that Congress, although
displeased with the result in Betts, was not attempting to
supplant the Court’s approach to subterfuge. See Modderno
v. King, 82 F.3d 1059, 1060-61 (D.C. Cir. 1996); Knight, 992
F.2d at 1546.
Betts itself made this same point. The Court in Betts
looked to its prior decision in United Air Lines, Inc. v.
Nos. 02-2587 & 02-2588 21
McCann, 434 U.S. 192, 98 S. Ct. 444 (1977), for guidance as
to what might constitute a subterfuge. McCann had con-
cluded that a retirement plan compelling employees to stop
working at the age of 60 could not constitute a subterfuge
to evade the purposes of the ADEA when the plan had been
adopted more than 25 years before the statute was enacted.
Id. at 203, 98 S. Ct. at 450. In the interim between McCann
and Betts, Congress had overruled the result in McCann by
adding language to the statutory exemption for benefit
plans stating that no such plan shall require or permit the
involuntary retirement of any individual based on his or her
age. P.L. 95-256 § 2(a), 92 Stat. 189, 189 (April 6, 1978). In
view of the amendment, the plaintiff in Betts contended
that McCann’s subterfuge analysis was no longer good law.
The Court rejected that argument. The Court noted that
Congress had not amended the statute by supplying its own
definition of subterfuge or by modifying the subterfuge
language; rather, it had simply added a clause forbidding
mandatory retirement based on age. 492 U.S. at 168, 109 S.
Ct. at 2862. The Court thus saw no reason to depart from
McCann’s understanding of subterfuge. Ibid.In section 623(j)(2), Congress has used virtually the same
language that the Court construed in Betts. Indeed, Con-
gress enacted the current version of section 623(j) in 1996,
years after Betts was decided. Had Congress intended for
courts to embark on a different course with respect to
subterfuge, it could have made that clear in the statutory
language. Accordingly, we see no signal from Congress that
subterfuge should be handled differently for purposes of
section 623(j)(2) than it was by the Supreme Court in Betts
and subsequently by this court, following Betts’ lead, in
Bell. See Knight, 992 F.2d at 1546. We note that our sister
circuits, in construing similar subterfuge language con-
tained in the Americans with Disabilities Act, 42 U.S.C. §
12201(c), have likewise continued to look to Betts as the
relevant precedent on subterfuge. See E.E.O.C. v. Aramark
22 Nos. 02-2587 & 02-2588
Corp., 208 F.3d 266, 269-70 (D.C. Cir. 2000); Leonard F. v.
Israel Discount Bank of New York, 199 F.3d 99, 103-06 (2d
Cir. 1999); Ford v. Schering-Plough Corp., 145 F.3d 601,
611 (3d Cir. 1998); Krauel v. Iowa Methodist Medical
Center, 95 F.3d 674, 678-79 (8th Cir. 1996).
Among other things, Betts makes clear that the bur-
den is on the plaintiffs to establish that the mandatory
retirement of firefighters and police officers constitutes a
subterfuge to evade the purposes of the ADEA. 492 U.S.
at 181, 109 S. Ct. at 2868. The plaintiffs remind us that the
OWBPA also overruled Betts in this regard, shifting the
burden to the employer to prove that a benefit plan drawing
distinctions based on age is not a subterfuge. See P.L. 101-
433 § 103, 104 Stat. 978, 979; e.g., Erie County Retirees
Ass’n v. County of Erie, Pa., 220 F.3d 193, 204-05 (3d Cir.
2000). Once again, however, the route that Congress chose
to that end is significant. Congress added language to the
exemption for benefit plans expressly allocating to the
employer the burden of proof on subterfuge. See § 623(f)(2)
(“[a]n employer . . . shall have the burden of proving that
[its] actions [in observing the terms of a benefit plan] are
lawful in any civil enforcement proceeding brought under
this chapter”). By contrast, it omitted such language in
1996 when it reenacted section 623(j)(2), electing instead to
use language virtually identical to that before the Supreme
Court in Betts. The fact that Congress elected to use
language that Betts had construed to impose the burden of
proof on the plaintiff leaves no doubt in our minds that
Congress meant to embrace that construction. See Bragdon
v. Abbott, 524 U.S. 624, 645, 118 S. Ct. 2196, 2208 (1998);
Lorillard v. Pons, 434 U.S. 575, 580-81, 98 S. Ct. 866, 870
(1978); see also, e.g., Leonard F., 199 F.3d at 104. Therefore,
we must proceed to consider how the plaintiffs might carry
their burden within the Betts framework for subterfuge.
We may resolve one point with dispatch. In the question
that the district court certified, the court asked whether
Nos. 02-2587 & 02-2588 23
there is any evidence with which a plaintiff might establish
subterfuge for purposes of section 623(j)(2) if there is no
violation of section 623(j)(1). If, for example, a public
employer had in place age restrictions on the employment
of public safety officers prior to March 3, 1983, as
Chicago did, are there any circumstances under which
the reinstatement or renewed enforcement of those age
limits could possibly amount to a subterfuge to evade the
purposes of the ADEA? The district court understood the
City to be arguing that this question must be answered
in the negative, foreclosing any inquiry into subterfuge.
Cf. Knight, 992 F.2d at 1546-47 (because mandatory
retirement age of 55 for Georgia state troopers was estab-
lished in 1970, before ADEA was extended to cover state
employees, the retirement age necessarily could not have
been a subterfuge to evade the purposes of the ADEA);
see Drnek II, 205 F. Supp. 2d at 897-98. To accept this ar-
gument as correct, the district court believed, would be
to collapse the two prongs of section 623(j) and render
subsection (j)(2), which contains the subterfuge language,
a nullity. Id. at 898-99. We agree. Section 623(j) permits a
state or local government to discharge a police officer and/
or firefighter who has reached a mandatory retirement age
so long as that retirement age was in place when Wyoming
was decided or (if not) the plaintiff is at least 55 years old
(prong 1) and the discharge is effectuated pursuant to a
bona fide retirement plan that is not a subterfuge to evade
the purposes of the ADEA (prong 2). Both subsections of the
exemption must be given meaning to the extent possible.
See, e.g., Ortloff v. United States, 335 F.3d 652, 659 (7th Cir.
2003) (citing Connecticut Nat’l Bank v. Germain, 503 U.S.
249, 253, 112 S. Ct. 1146, 1149 (1992)), cert. denied, 124 S.
Ct. 1520 (2004). As set forth below, we believe there are
circumstances in which the reinstatement of mandatory
retirement might amount to a subterfuge for purposes of
section 623(j)(2), even if such a program meets the require-
ments of section (j)(1).
24 Nos. 02-2587 & 02-2588
Evidence that City officials had impure motives for rein-
stating a mandatory retirement age, however, will not by
itself support an inference of subterfuge. As Betts makes
plain, an employment plan “cannot be a subterfuge to evade
the ADEA’s purpose of banning arbitrary age discrimina-
tion unless it discriminates in a manner forbidden by the
substantive provisions of the Act.” 492 U.S. at 176, 109 S.
Ct. at 2866. The ADEA does not forbid Chicago from
making age-based retirement decisions as to its police and
firefighting personnel; it expressly allows state and local
governments to make such decisions so long as they act
within the parameters set forth in section 623(j)(1), which
Chicago did. The statute does not condition the validity
of such retirement programs on proof that the public
employer has adopted the program genuinely believing that
it is justified in the interest of public safety. Instead,
recognizing that there was not yet any national consensus
as to the relationship between age and one’s fitness to serve
as a police officer or firefighter, Congress opted simply to
restore the status quo ante, permitting states and cities to
continue imposing age limits on these positions as they had
been able to do prior to the ADEA’s extension to state and
municipal employers and Wyoming’s 1983 holding sustain-
ing that extension. See Kopec, 193 F.3d at 903-04.
Thus, proof that Chicago resumed mandatory retirement
for police and fire personnel based in whole or in part on
stereotypical thinking—that older individuals are not up to
the rigors of law enforcement or firefighting and should
make room for younger, “fresher” replacements—or for
reasons wholly unrelated to public safety, will not establish
subterfuge because it does not reveal a kind of discrimina-
tory conduct that the ADEA by its very terms forbids. The
Supreme Court in Betts concluded that age-based decisions
in disability retirement benefits were not vulnerable to
challenge as a subterfuge merely because there was no
proof that the age differentials were justified on a cost
Nos. 02-2587 & 02-2588 25
basis. The statute, as it was written at that time, expressly
allowed such decisions. 492 U.S. at 169-177, 109 S. Ct. at
2862-67. Likewise, we concluded in Bell that an age-based
cutoff in the university’s retirement contributions did not
amount to a subterfuge even in the face of evidence that the
university preferred a younger faculty. “[T]he defendants
cannot be liable for their motives if their conduct has not
evaded the ADEA’s prohibitions,” we said, 975 F.2d at 429(emphasis supplied), and doing something that the statute
expressly permits does not evade its prohibitions. See Betts,
492 U.S. at 176-77, 109 S. Ct. at 2866-67.
What is necessary to establish subterfuge is proof that the
employer is using the exemption as a way to evade another
substantive provision of the act. Id. at 181, 109 S. Ct. at
2868. Both of the hypotheticals that Betts used to illustrate
this point envision the employer making an age-based
distinction that is expressly permitted by the statute as a
means of committing another kind of discrimination that
the ADEA prohibits. Here then, a viable claim of subterfuge
would require the plaintiffs to allege and prove that
Chicago took advantage of the statutory authorization to
mandatorily retire police officers and firefighters as a
means of discriminating in another aspect of the employ-
ment relationship—that is, other than in the discharge
decision—in a way that the statute forbids.
The district court was concerned that so limiting the
means of establishing subterfuge would render the subter-
fuge provision of section 623(j)(2) almost meaningless.
Because mandatory retirement, in contrast to a reduction
in fringe benefits, effectively ends the employment relation-
ship, the district court reasoned, it would be difficult if not
impossible for a mandatorily retired police officer or
firefighter ever to show that the employer used the retire-
ment program as a means of committing some independent
form of forbidden discrimination. Drnek II, 205 F. Supp. 2d
at 898-99.
26 Nos. 02-2587 & 02-2588
Yet, that is not the case. In fact, each of the two hypothe-
ticals that the Supreme Court cited in Betts as examples of
viable claims for subterfuge under the former version of
section 623(f)(2) readily translates into the present context.
First, as Betts makes clear and as the district court recog-
nized, a plaintiff of course would have a claim for subter-
fuge if a city or state government exercised its right to
reimpose age limits in order to retaliate against one or more
employees for protesting practices made illegal by the
ADEA. Betts, 492 U.S. at 180, 109 S. Ct. at 2868; Drnek II,
205 F. Supp. 2d at 899. Second, Betts suggested in the
context of a fringe benefit plan that reducing the wages of
all workers while substantially increasing the benefits
provided to younger workers might constitute a subterfuge
for wage discrimination against older workers. 492 U.S.
at 180, 109 S. Ct. at 2868. One can imagine a variant
of that hypothetical here: as the City suggests, if it were
shown that a public employer had reinstated mandatory
retirement for police and firefighting personnel pursuant to
section 623(j) but, at the same time, created a new, lower-
paying position not restricted by age and invited the man-
datorily-retired officers to apply for that position, then it
could be inferred that the employer was using its manda-
tory retirement program as a subterfuge for wage discrimi-
nation against older employees. These examples demon-
strate that the subterfuge provision of section 623(j)(2)
retains meaning when construed in a manner consistent
with Betts and Bell. We therefore see no need to depart
from the approach of those precedents.
We owe a plaintiff’s complaint a generous construction in
deciding whether it states a claim on which relief can
be granted. E.g., Boim v. Quranic Literacy Inst., 291
F.3d 1000, 1001-02 (7th Cir. 2002). Here, the plaintiffs’
complaints broadly allege that the MRO amounts to a sub-
terfuge to evade the purposes of the ADEA. Unadorned,
those allegations might state a viable ADEA claim if the
Nos. 02-2587 & 02-2588 27
plaintiffs were prepared to establish subterfuge in one of
the ways illustrated by Betts. However, as fleshed out in the
briefing, the particular theory of subterfuge that the
plaintiffs are pursuing is not viable. The plaintiffs suggest
no way in which Chicago might have used its authority
to reimpose mandatory retirement pursuant to section
623(j) as a subterfuge for forbidden discrimination in some
other aspect of their employment relationship. Their sole
contention is that in exercising the City’s prerogative to
reinstate mandatory retirement, certain City legislators and
other officials were motivated by a desire to remove from
the police and firefighting forces older workers whom they
felt were not up to the job and/or to create openings for
younger workers. Yet, the statutory exemption expressly
permits the City to reinstate its mandatory retirement
program, and the inevitable result of any such program will
be to force older employees from the workforce and create
openings for younger workers. That some City officials
affirmatively wished for that result, perhaps because of
unfortunate stereotypes about the abilities of older workers,
is immaterial insofar as section 623(j)(2) is concerned. Betts
and Bell require proof that the City was using mandatory
retirement as a vehicle to commit some other type of age
discrimination forbidden by the ADEA. And here the
plaintiffs can postulate no type of discrimination other than
the very type of age-based discrimination (mandatory
retirement) that the statute permits.
III.
Having answered the question certified for interlocu-
tory review, we REMAND these cases to the district court
with directions to DISMISS the plaintiffs’ ADEA claims and
to conduct such further proceedings as may be consistent
with this opinion. We thank the parties and amicus Ameri-
can Association of Retired Persons for their helpful briefs.
28 Nos. 02-2587 & 02-2588
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—4-9-04