Graffam v. Scott Paper Co.

• Court: Court of Appeals for the First Circuit
• Decided: July 14, 1995
• Docket: 95-1046
• Status: Published

Opinion

USCA1 Opinion

July 14, 1995

                                [Not for Publication]
                                [Not for Publication]



                            United States Court of Appeals
                            United States Court of Appeals

                                For the First Circuit
                                For the First Circuit

                                 ____________________



        No. 95-1046



                              RONALD E. GRAFFAM, ET AL.,



                               Plaintiffs, Appellants,



                                          v.



                             SCOTT PAPER COMPANY, ET AL.,



                                Defendants, Appellees.



                                 ____________________



                     APPEAL FROM THE UNITED STATES DISTRICT COURT



                              FOR THE DISTRICT OF MAINE



                       [Hon. Gene Carter, U.S. District Judge]
                                          ___________________



                                 ____________________



                                        Before



                                Boudin, Circuit Judge,
                                        _____________

                            Coffin, Senior Circuit Judge,
                                    ____________________

                              and Stahl, Circuit Judge.
                                         _____________



                                 ____________________



            Gerald  F.  Petruccelli, with  whom  James  B.  Haddow, Daniel  W.
            _______________________              _________________  __________

        Bates, Francis M. Jackson, and Petruccelli & Martin, were on brief for
        _____  __________________      ____________________

        appellants.

            William  J.  Kayatta,  Jr.,  with whom  Catherine  R.  Connors, B.
            __________________________              ______________________  __

        Simeon  Goldstein,  and  Pierce,  Atwood,  Scribner,  Allen,  Smith  &
        _________________        _____________________________________________

        Lancaster, were on brief for appellees.
        _________



                                 ____________________


____________________



STAHL, Circuit Judge.   Following a nine-day  bench
                      STAHL, Circuit Judge.
                             _____________



            trial, the  district  court entered  judgment for  defendants



            Scott  Paper Company  and  S.D. Warren  Company (collectively



            "Warren") in  this age discrimination suit  brought by eleven



            former employees ("plaintiffs").  The plaintiffs alleged that



            the  selection procedures  ("selection  procedures") used  by



            Warren to  reduce by  twenty percent  the number of  salaried



            employees at its paper mill in Westbrook,  Maine, effected an



            illegal  disparate impact  on employees  over age fifty.   In



            awarding judgment  to Warren, the district  court found that,



            though the  selection procedures did indeed  have a disparate



            impact on  older-age employees, Warren had  made a sufficient



            showing that  the procedures were job  related and consistent



            with  business necessity.  Graffam v. Scott Paper Co., 870 F.
                                       _______    _______________



            Supp. 389, 399-404 (D. Me. 1994).  After a careful  review of



            the record, we affirm.



                                          I.
                                          I.
                                          __



                                      Background
                                      Background
                                      __________



                      In late 1990, Warren  concluded that it must reduce



            by twenty  percent its  salaried work force  of approximately



            471  employees  at  its  mill   in  Westbrook,  Maine.    The



            conclusion  was  dictated,  at  least in  part,  by  Warren's



            decision  to sell  the mill  and a  corresponding requirement



            that the  mill be made  more attractive to  potential buyers.



            Consequently,  Warren set about creating selection procedures


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for identifying which employees it would need to discharge in



            order to meet the desired force reduction goal.



                      In January  1991, a Mill  Leadership Team  ("MLT"),



            consisting  of  the  heads  of several  departments  and  the



            manager of the  Westbrook mill, met for  a number of  days to



            develop a plan for  achieving Warren's reduction goal.   As a



            result,  each department  identified  job  functions and  job



            positions that could be eliminated.  Department heads divided



            the  jobs  in  each  department  --  including  those  to  be



            eliminated --  into specific  job groups and  placed salaried



            employees subject  to the  downsizing  into the  newly-formed



            groups.       Positions    with    similar   functions    and



            responsibilities were grouped together so that employees with



            comparable  skills ultimately  would  be  rated against  each



            other.



                      At the same time, MLT members  collectively defined



            the selection procedures.  As  their starting point, the  MLT



            modified   procedures   previously   developed  by   Warren's



            corporate offices for  use in  an employee  downsizing.   MLT



            members reviewed drafts of these selection procedures, sought



            to  understand  and  clarify  the  assessment  criteria,  and



            discussed the applicability of  the criteria to the Westbrook



            mill.  After the revisions  were included, MLT members tested



            the new procedures by  conducting mock assessments of persons


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known  to the  MLT  members  but  who  were  not  subject  to



            discharge.  



                      The final assessment plan  allocated a total of 100



            points  to  seven criteria:    technical  job skills  (twenty



            points);  performance (ten  points); length  of  service (ten



            points);    leading-change     skills    (fifteen    points);



            interpersonal skills (fifteen  points); self management  (ten



            points);  and  versatility  (twenty  points).     The  skills



            included in the technical job skill criterion varied for each



            individual  job  group.    An individual  who  received  zero



            technical  skill points  would not  be  retained in  favor of



            another  employee   with  a  higher  technical  skill  rating



            regardless of which employee  had the higher respective total



            assessment score.  Every employee was awarded the maximum ten



            performance  points,  provided  that  the  employee  had  not



            received  counselling for unacceptable  job performance.  The



            common  criteria of  length  of service  and  leading-change,



            interpersonal,   self-management,   and  versatility   skills



            ("common criteria") were applied identically to all employees



            across all job groups. 



                      Once  the  MLT  finished ironing  out  the  revised



            assessment criteria, teams of at least three individuals were



            formed   to  evaluate  the   salaried  employees  subject  to



            downsizing.    Each  team  included  an  MLT  member who  had



            participated  in  developing   and  discussing  the   written


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criteria, and  at least one person  who possessed substantial



            first-hand   knowledge   regarding   the   skills   and  past



            performance of  each employee  assessed.  Every  assessor was



            provided a text explaining the assessment criteria and a list



            of  technical job  skills  applicable to  the particular  job



            group he or  she would  assess.   The teams  reached a  final



            consensus rating  for each  employee through  oral discussion



            and  group decision.    Following the  team assessments,  MLT



            members  met  to  review  the process.    Additionally,  each



            department head was required to present, explain, and justify



            the results of the selection process in his or her department



            to a corporate review team that included management personnel



            from the mill's corporate headquarters.



                      The downsizing process resulted in  the termination



            of thirty-nine  percent of  the salaried employees  age fifty



            years  and older  but only  nine percent  of  those employees



            under age fifty.   All of  the plaintiffs  in this case  were



            over age fifty when Warren discharged them as a result of the



            downsizing effort.  Following their discharge, the plaintiffs



            commenced  this action  in federal  district court,  alleging



            that  Warren had  discriminated  against them  on account  of



            their  age   in  violation  of  the   Age  Discrimination  in



            Employment Act  of 1967  ("ADEA"), 29  U.S.C.     621-34, and



            Maine state law.  At trial, plaintiffs, pursuing  their claim



            under a theory of disparate impact liability, maintained that


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the  selection  procedures,  though  neutral on  their  face,



            effected   a  substantial   disparate  impact   on  older-age



            employees.   Following a  nine-day bench trial,  the district



            court entered judgment for  Warren, from which the plaintiffs



            now appeal.



                                         II.
                                         II.
                                         ___



                                      Discussion
                                      Discussion
                                      __________



            A.  Standard of Review
            ______________________



                      We review  the  district court's  findings of  fact



            only for clear error.  See Fed. R. Civ. P. 52(a); Cumpiano v.
                                   ___                        ________



            Banco  Santander P.R.,  902 F.2d  148,  152 (1st  Cir. 1990).
            _____________________



            Clear error  exists when, after reviewing  the entire record,



            we  have a "strong, unyielding belief that a mistake has been



            made."  Cumpiano, 902  F.2d at 152; see also  Industrial Gen.
                    ________                    ___ ____  _______________



            Corp. v. Sequoia  Pac. Sys. Corp.,  44 F.3d 40, 43  (1st Cir.
            _____    ________________________



            1995).  If,  however, the district court premised its factual



            findings on an incorrect view of the law, we are not bound by



            the clearly erroneous standard.  E.g., Brown Daltas & Assocs.
                                             ____  ______________________



            v. General Accident Ins. Co., 48 F.3d 30, 36 (1st Cir. 1995).
               _________________________



            "[T]o the extent that findings  of fact can be shown to  have



            been predicated upon, or induced by, errors of law, they will



            be accorded diminished respect on appeal."  Dedham Water  Co.
                                                        _________________



            v.  Cumberland Farms Dairy, Inc., 972 F.2d 453, 457 (1st Cir.
                ____________________________



            1992).



            B.  Age Discrimination Claim
            ____________________________


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The  plaintiffs  contend  that  Warren's  selection
                      



            procedures,  though neutral  on their  face, resulted  in the



            discharge   of  a   disproportionate   number  of   older-age



            employees.  The theory of disparate impact liability has  its



            roots in the Supreme Court's decision in Griggs v. Duke Power
                                                     ______    __________



            Co., 401 U.S. 424 (1971).  In Griggs, the Court held that the
            ___                           ______



            use  of  a  facially   neutral  objective  test  that  tended



            disproportionately  to  exclude  African-Americans  from  the



            employment  pool  but  did  not  measure skills  demonstrably



            related  to  job  performance  violated  Title  VII's   anti-



            discrimination  provisions.   In  the context  of Title  VII,



            Congress codified  the disparate  impact theory in  the Civil



            Rights Act of 1991.  See Pub. L. No. 102-166,   3, 105  Stat.
                                 ___



            1071  (1991) (listing  as  one of  its  purposes "to  confirm



            statutory authority and provide statutory  guidelines for the



            adjudication of disparate impact suits under title VII").



                      Congress, however, has  never explicitly  addressed



            the theory of disparate impact liability in the ADEA context.



            Moreover,  though  the  Supreme Court  has  acknowledged that



            "[t]here are  important similarities  between [Title  VII and



            the ADEA],  . . .   both in their aims --  the elimination of



            discrimination from the workplace -- and in their substantive



            provisions[,]" Lorillard  v. Pons, 434 U.S.  575, 584 (1978),
                           _________     ____



            it  has  nonetheless  "never  decided  whether  the disparate



            impact  theory of  liability  is available  under the  ADEA."


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Hazen Paper Co.  v. Biggins,  113 S. Ct.  1701, 1706  (1993).
            _______________     _______



            Similarly,   though   we   assumed   without   analysis   the



            applicability of  the theory in  Holt v. Gamewell  Corp., 797
                                             ____    _______________



            F.2d 36, 37 (1st Cir. 1986), we have never directly addressed



            the issue.  See also  Caron v. Scott Paper Co., 834  F. Supp.
                        ___ ____  _____    _______________



            33,  35-38  (D.  Me. 1993).    Again,  for  purposes of  this



            opinion, we assume arguendo that the district court correctly
                               ________



            held  that the ADEA  supports a claim  for age discrimination



            based on a disparate impact theory of liability.1  



                      As  applied in Title VII cases, to prove a claim of



            disparate  impact discrimination, a plaintiff must identify a



            facially neutral employment practice  or policy that causes a



            statistically  discernible  disparate impact  on  a protected


____________________



            1.  Though admittedly addressing only  the issue of disparate

            treatment, the  Hazen Court arguably  cast some doubt  on the
                            _____

            viability of  a  disparate impact  claim  under the  ADEA  by

            holding  that  "[w]hen  the  employer's  decision  is  wholly

            motivated  by   factors  other  than  age,   the  problem  of

            inaccurate and stigmatizing stereotypes  disappears.  This is

            true even if the motivating factor is correlated with age . .

            .  ."   Hazen, 113  S.  Ct. at  1706.   Taking  note of  this
                    _____

            language, two of our sister circuits have recently questioned

            whether the  theory of disparate impact  liability applies to

            the ADEA.  See  DiBiase v. Smithkline Beecham Corp.,  48 F.3d
                       ___  _______    ________________________

            719, 732 (3d Cir. 1995) (plurality) ("[I]n the wake of Hazen,
                                                                   _____

            it is doubtful  that traditional disparate impact theory is a

            viable theory of liability under the ADEA."); EEOC v. Francis
                                                          ____    _______

            W. Parker  School,  41 F.3d  1073, 1076-78  (7th Cir.  1994),
            _________________

            cert. denied, 1995  U.S.L.W. 3887 (U.S.  June 19, 1995)  (No.
            _____ ______

            94-1558);  but see Houghton v. Sipco, Inc., 38 F.3d 953, 958-
                       ___ ___ ________    ___________

            59   (8th   Cir.   1994)  (assuming   without   analysis  the

            applicability of disparate impact  theory of liability to the

            ADEA).  See also Michael C. Sloan, Comment,  Disparate Impact
                    ___ ____                             ________________

            in  the  Age Discrimination  in  Employment  Act:   Will  the
            _____________________________________________________________

            Supreme Court Permit It?, 1995 Wis. L. Rev. 507 (1995).
            ________________________



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                                          8



employee group.   See EEOC v.  Steamship Clerks Union,  Local
                              ___ ____     ______________________________



            1066, 48 F.3d 594, 601  (1st Cir. 1995).  Once  the plaintiff
            ____



            has  made  this  initial  showing, the  defendant  must  then



            attempt to debunk the sufficiency of the plaintiff's evidence



            or, in the alternative, show  that the challenged practice is



            either job related and  consistent with business necessity or



            that  it fits within a specific statutory exception.2  Id. at
                                                                   ___



            604.   If the employer  attempts to justify  its actions, the



            plaintiff may  seek to  cast doubt  on  the justification  by



            showing,  inter  alia,  an  alternate  practice  exists  that
                      _____  ____



            equally  protects the  employer's putative interest  but does



            not  disproportionately  burden  employees in  the  protected



            class.  Id.
                    ___



                      The  plaintiffs  contend  that  the  district court



            found  that   the  selection  procedures   merely  identified



            qualities important  for  employees to  possess  in  general.



            They  argue that such  a finding  is equivalent  to measuring



            "the  person in  the abstract"  and not  the "person  for the



            job,"  Griggs, 401 U.S. at 436, and, therefore, is inadequate
                   ______



            to establish an  affirmative defense to a claim  of disparate



                                
            ____________________



            2.  The ADEA provides that an  employer may take an otherwise

            prohibited employment  action if the action  is predicated on

            "reasonable factors other than age."  29 U.S.C.    623(f)(1).

            The plaintiffs  contend that, in  the context of  a disparate

            impact claim, this defense is equivalent to Title VII's "job-

            related/business-necessity"  defense.     Cf.  29  C.F.R.    
                                                      ___

            1625.7(d)  (interpreting the  "reasonable  factor other  than

            age"  defense as  limited only  to  factors justifiable  as a

            "business necessity").



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                                          9



impact discrimination.  The plaintiffs argue further that the



            district court erred by failing to inquire whether Warren had



            established that the selection procedures identified specific



            job  behaviors  that significantly  correlated  to successful



            performance of the specific jobs  in question.  They maintain



            that,  if  the  correct  standard  were  to  be applied,  the



            evidence is  insufficient to  support a  finding in favor  of



            Warren.  We disagree.



                      Our review  of  the district  court's  careful  and



            extensive opinion  satisfies us that it  did supportably find



            that  Warren's selection  procedures measured skills  and job



            behaviors necessary  for, and significantly  correlated with,



            successful performance of  the jobs in  question.  The  court



            found  that  the  common   criteria  used  in  the  selection



            procedures  identified  necessary  technical  and  managerial



            skills "important  to all  the rated jobs  at the mill."   To



            support this  finding, the court pointed  to Warren's expert,



            Dr.  Richard  S.  Barrett,  a  consultant  in  the  field  of



            industrial psychology, who testified  at some length that the



            common  criteria   described   job  behaviors   required   in



            managerial  and technical  jobs in  a manufacturing  facility



            such as the  Westbrook mill.   In addition,  the court  noted



            that three department heads at the mill, who had participated



            in  designing  and  implementing  the  selection  procedures,



            testified  that  the   common  criteria  fairly   represented


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                                          10



important  skills  needed  to   perform  the  jobs  in  their



            departments.   The  court also  relied  on the  testimony  of



            Warren's  Human  Resource  Director,  Gary  Parafinczuk,  who



            explained, inter alia, that,  prior to the downsizing, Warren
                       _____ ____



            had devoted  money and resources to  teaching and encouraging



            the very skills assessed by the common criteria.  



                      The district court also noted that the testimony of



            the various department  heads established that the  technical



            skills  portion of the  selection procedures  (which differed



            for  each job  group) identified  important skills  needed to



            perform the specific  jobs in  each job group.   Finally,  in



            discrediting  the testimony  of the  plaintiff's  expert, Dr.



            James Mahoney, in  favor of Dr.  Barrett, the district  court



            expressly  rejected  the  plaintiff's  contention   that  the



            selection procedures were not consistently  predictive of, or



            significantly  correlated with, the  necessary skills for the



            successful performance of the specific jobs in question.



                      Notwithstanding   the   district  court's   careful



            analysis, the plaintiffs contend that, because Warren applied



            the  same common criteria in equal weights to every job group



            assessed, the selection procedures could not possibly measure



            job   skills   significantly   correlated   with   successful



            performance of any specific job.  We are not  convinced:  The



            fact  that the skills identified by  the common criteria were



            important in  many managerial and technical  mill jobs simply


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                                          11



does not compel a  finding that the skills were  unrelated to



            the particular  jobs at  issue.  Furthermore,  the plaintiffs



            totally  disregard the  fact  that the  technical skills  and



            performance  criteria  directly   measured  each   employee's



            specific  job performance  skills and  that,  although Warren



            applied the  common criteria to all  employees, the employees



            were rated and ranked only within their specific job group by



            persons familiar with  individual employees and group  needs.



            Moreover,   we  seriously  doubt   that  Warren   would  have



            previously committed  money and resources  to developing  the



            skills measured  by  the common  criteria  if they  were  not



            directly related to successful job performance.  In addition,



            the employees' own expert  admitted on cross-examination that



            one way to assess the validity of the selection procedures as



            a  tool   for  measuring  skills  directly   related  to  job



            performance  would  be  to  examine  whether   a  statistical



            correlation existed  between earlier promotions  at the  mill



            and the  assessment scores.  Subsequently,  Dr. James Medoff,



            an expert  in labor statistics retained  by Warren, testified



            that,  when he reviewed the data supplied by Warren, he found



            a strong correlation between those two factors.



                      In  sum,  we believe  that, in  determining whether



            Warren had  sufficiently justified  its use of  the selection



            procedures,  the district  court  supportably found  that the


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                                          12



procedures  measured skills  necessary  for,  and  correlated



            with, successful performance of the jobs in question.3   



                      We also believe that the record adequately supports



            the  district court's finding that Warren's implementation of



            the  selection procedures  assured  that  they  would  fairly



            identify the  employees who  most fully possessed  the skills



            and  abilities needed  for  successful job  performance.   In



            making this finding the court relied in part on Dr. Barrett's



            assessment of  Warren's efforts.  Barrett  testified that the


____________________



            3.  Furthermore,  we do not think, on the facts of this case,

            that the  law necessarily required Warren  to offer empirical

            studies to validate the  selection procedures as job related.

            Such  a  requirement  would  place a  substantial  burden  on

            employers, like  Warren, already forced by economic necessity

            to reduce the  size of their  work force.   See generally  29
                                                        ___ _________

            C.F.R.    1607 (EEOC  guidelines outlining  empirical methods

            for validating  selection procedures in  Title VII  context).

            Employers, however,  are not  required,  "even when defending

            standardized   or  objective   tests,  to   introduce  formal

            `validation studies' showing that particular criteria predict

            actual on-the-job performance."   Watson v. Fort Worth Bank &
                                              ______    _________________

            Trust, 487 U.S. 977, 999 (1988) (plurality); cf. id. at 1006-
            _____                                        ___ ___

            7 (Blackmun, Brennan, Marshall,  JJ., concurring) ("While . .

            . formal validation  techniques .  . . may  sometimes not  be

            effective  in measuring  the  job-relatedness of  subjective-

            selection processes,  a variety of methods  are available for

            establishing the link  between these selection processes  and

            job  performance, just  as they  are  for objective-selection

            devices." (footnote omitted)); Albemarle Paper Co.  v. Moody,
                                           ___________________     _____

            422  U.S. 405, 449 (1975)  (Blackmun, J., concurring).  Here,

            the selection procedures are  not objective tests employed to

            screen potential job applicants, but instead are more akin to

            subjective evaluations directly measuring actual abilities of

            known employees.  Moreover, there is no evidence in this case

            that  the procedures  were used  to "freeze"  the effects  of

            prior intentional  age  discrimination.   See Albemarle,  422
                                                      ___ _________

            U.S.  at 427 ("The question of job relatedness must be viewed

            in  the context of the  plant's operation and  the history of

            the testing program.").    



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                                          13



team  format  for  rating  each employee,  calling  for  open



            discussion and justification of each assessment and consensus



            decision-making, enhanced  the quality of  the rating system.



            The court  also pointed  out  that all  raters who  testified



            stated that  they understood  the criteria  and how  to apply



            them.   Furthermore,  the  court noted  that the  post-rating



            review sessions,  at which each department  head was required



            to justify his or her decisions, further  assured the quality



            and fairness of the assessments.  We have reviewed the record



            and  find that  it adequately  and convincingly  supports the



            district  court's  conclusions.    Accordingly,  the district



            court's findings are not clearly erroneous.4



                                         III.
                                         III.
                                         ____



                                      Conclusion
                                      Conclusion
                                      __________



                      For  the  foregoing reasons,  the  judgment  of the



            district court is affirmed.       


____________________



            4.  Warren  additionally contends that the plaintiffs' appeal

            should  fail  because, inter  alia,  they  improperly used  a
                                   _____  ____

            subgroup  (employees  age  fifty  years  and  older)  of  the

            protected class (employees age forty years  and older) as the

            basis for their disparate  impact claim.  Because we  find no

            error in  the district  court's factual findings,  we do  not

            reach this argument. 



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