APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF KANSAS (D.C. No. 6:05-CV-01368-EFM-KMH)
The opinion of the court was delivered by: Briscoe, Chief Judge.
United States Court of Appeals
Elisabeth A. Shumaker Clerk of Court
Before BRISCOE, Chief Judge, BALDOCK and HOLMES, Circuit Judges.
This case arises from the Boeing Company's ("Boeing") 2005 sale, to Spirit AeroSystems, Inc. ("Spirit"),*fn1 of facilities in Wichita, Kansas, and Tulsa and McAlester, Oklahoma (the "Wichita Division" or "Division"). On June 16, 2005, Boeing terminated the Division's entire workforce of more than 10,000. The next day, Spirit rehired 8,354 employees, who had been selected by Boeing's managers. Although older employees predominated in the workforce both before and after the sale, a lower percentage of older workers than younger ones were rehired.*fn2 The plaintiffs (the "Employees") sued, seeking to represent a class of about 700 former Boeing employees who were not hired by Spirit.
The Employees alleged, among other things, that Boeing, Onex, and Spirit (the "Companies") violated the Age Discrimination in Employment Act ("ADEA"), the Employee Retirement Income Security Act ("ERISA"), Title VII of the Civil Rights Act of 1964 ("Title VII"), and the Americans with Disabilities Act ("ADA"). In two separate orders, the district court granted summary judgment on the Employees' Title VII and ADA claims, Apsley v. Boeing Co., No. 05-1368-MLB, 2007 WL 3231526 (D. Kan. Oct. 30, 2007), and their ERISA and ADEA claims, Apsley v. Boeing Co., 722 F. Supp. 2d 1218 (D. Kan. 2010).*fn3 The court denied the Employees' motion for reconsideration. Mem. & Order, Apsley v. Boeing Co., No. 05-1368-EFM (D. Kan. Mar. 28, 2011) (Doc. 365) [hereinafter "Mem. & Order of Mar. 28, 2011"]. The court certified its orders as final judgments under Federal Rule of Civil Procedure 54(b), and the Employees appealed. We have jurisdiction under 28 U.S.C. § 1291, and we affirm.
A. Boeing's Decision to Sell the Wichita Division
As part of a strategy to become more competitive, Boeing began in the late 1990s to focus its business on the initial engineering and design, sales and marketing, and final assembly of aircraft. Boeing increasingly outsourced the manufacture of component assemblies to outside suppliers and began to sell off some of its internal manufacturing operations.
One such operation was the Wichita Division. In 2002, Jeff Turner, the Division's general manager, discussed restructuring possibilities with Boeing executives. Restructuring was intended to reduce costs to make the Division competitive with outside suppliers for Boeing contracts. Ultimately, in 2003, Boeing decided instead to sell the Division's assets. Boeing advertised the Division for sale in 2003 and 2004, emphasizing the potential for cost savings and growth under new ownership. The new company would have a long-term supply agreement with Boeing, while cost savings would also make it competitive for non-Boeing business.
The parties' dispute in this case is primarily about how Boeing expected these savings would be achieved. According to the Companies, the new company would save money by paying its employees less and increasing productivity. Boeing believed that the Wichita Division labor contracts provided wages higher than the market required in Wichita, Tulsa, and McAlester. It also considered the Division's job codes to be too narrow and rigid, leading to inefficiencies. It was thought that a new, separate company would be able to negotiate less costly, more flexible labor contracts.
The Wichita Division's labor costs were also high because of the advanced age and seniority of its workforce. Significant seniority-based layoffs in the early 2000s had eliminated many younger employees, and the average age of the workforce was approximately forty-nine. The Companies, the Employees argue, planned to cut costs by getting rid of older, more expensive workers.
B. Selection of Spirit's Workforce
In 2004, Boeing entered into exclusive negotiations with Onex (the company which later formed Spirit) for the divestiture of the Wichita Division. The Wichita Division employed 10,671 people in June 2005, but Boeing projected that Spirit could still meet the Division's statement of work with only 80 to 90% of the workforce. The parties decided that Boeing management would recommend the most skilled and flexible employees for Spirit to hire. The Companies also agreed that Boeing would be responsible for paying layoff benefits for the employees Spirit did not hire. As a result, they determined that the purchase price would be adjusted upward if Spirit kept less than 90% of eligible employees. Spirit initially asked Division management to select 85% of the workforce; ultimately, management recommended 86.2% and Spirit retained 87.5%.
The Wichita Division's Human Resources personnel developed an evaluation system for managers to use which included the following factors: skills, productivity, quality, teamwork/attitude, safe work practices, lean,*fn4 and corrective action. Managers were given details and examples for each criterion, but they were given no indication of how to weigh the seven factors. They were not instructed to consider employees' past training records, but they were specifically told not to consider age.
The Wichita Division was made up of twenty-nine director groups, which
size from a handful of employees to over a thousand. Under each
director, one or two
levels of managers oversaw the hourly employees. Each level of
involved in the selection process. Over the course of the first half
of 2005, hundreds of
meetings took place involving managers and human resources
an employee's first-level manager gave an initial recommendation, and
managers who had worked with the employee provided input. The
agreed on whether or not to recommend the employee. The directors
then approved or
disapproved the managers' decision, and a panel reviewed the
Near the end of the selection process, human resources
an internal study to assess how racial minorities, women, and older
faring under the selection process. The study showed that all three
categories were being
adversely impacted. The Companies have stated that they "did not
differences with discrimination or any other reason," Aplee. Supp.
App. at 1094, but after
the study was conducted, "there were some additional recommendations
of employees to be hired in organizations where there were differences
in the selection rate as it related to race or gender," id. "There
were no adjustments made based on any differences as they related to
the age of the workforce in a particular group." Id.
While Division managers were selecting Spirit's workforce, Spirit and its consultants were working out the new company's pension plan. Once employees were terminated from Boeing, they could no longer accrue additional benefits under its plans. As for benefits that were already accrued, the Companies agreed that Spirit would assume Boeing's pension liabilities at the close of the sale for the employees it hired, as long as Boeing transferred sufficient funds to cover them. Boeing would remain responsible for the pensions of employees Spirit did not hire.
Spirit also decided to set up a new pension plan for its employees. Spirit negotiated with the International Association of Machinists ("IAM"), and agreed to contribute to the IAM National Pension Fund ("NPF"), a joint labor-management multiemployer pension fund. According to the schedule used by the NPF, an employer entering the fund when Spirit did would ordinarily have to contribute $1.35 for each hour worked by each eligible employee. But because Boeing's workforce was atypically old, with many employees approaching or already past the retirement age of fifty-five, the NPF's actuaries calculated that Spirit's rate would be $1.65. Spirit took the position that it should pay the lower rate because it believed the average age of its workforce would decrease over time. In the end, Spirit and the NPF agreed that Spirit would pay a rate of $1.35, but it would place an additional $.30 per hour in an escrow account. In 2010, the NPF would determine whether $1.35 or $1.65 was the correct rate. Due, apparently, to a change in its policies, the NPF determined in January 2006 that Spirit was no longer required to make the additional payment, and returned the escrowed funds.
D. Spirit's Workforce Demographics
The sale closed on June 16, 2005. On that day, Boeing terminated its entire Wichita Division workforce of 10,671 employees. The next day, 8,354 of them were hired and came to work as Spirit's Day One workforce. Employees over forty were recommended and rehired*fn6 at slightly lower rates, overall, than employees under forty. The average age of Spirit's workforce was 48.2, about five months younger than the Wichita Division workforce was the day before.
The Employees, individually and on behalf of a class, sued Boeing,
Spirit, alleging violations of federal law in seven counts. They
alleged age discrimination
in violation of the ADEA, under theories of pattern or practice of
disparate treatment and
disparate impact (Count I); interference with ERISA rights (Count
IV); and retaliation (Count VII).*fn7 The Employees also sought declaratory judgments on
(Counts II and III); alleged a breach of contract in violation of the
Relations Act (Count V); and sought injunctive and equitable relief
relating to their other
claims (Count VI). The district court conditionally certified a
class claim on the
Employees' ADEA count. Apsley, 2007 WL 3231526, at *2.
In response to three motions filed by the Companies, the district
all of the Employees' claims except their individual claims of
disparate treatment under
the ADEA. In their first motion, the Companies sought judgment on
the pleadings on
Counts II, III, and IV under Federal Rule of Civil Procedure 12(c).
The court dismissed
Counts II and III, which sought declaratory judgments that the
Companies had failed to
keep proper records and had used improper consent forms. Id. at *3.
The court refused to
dismiss Count IV, in which the Employees alleged that the Companies
together to prevent the Employees from obtaining and receiving
pension benefits in
violation of ERISA § 510, 29 U.S.C. § 1140. Mem. & Order at 10-11,
Apsley v. Boeing
Co., No. 05-1368-MLB (D. Kan. Dec. 18, 2006) (Doc. 139) [hereinafter
"Mem. & Order
of Dec. 18, 2006"].
The Companies next filed a narrow motion for summary judgment based on the Employees' failure to exhaust administrative remedies. This motion, which the court granted, was limited to (1) ADEA claims arising from conduct that predated the asset sale and (2) claims for retaliation under Title VII and the ADA. Apsley, 2007 WL 3231526, at *3.
Finally, the Companies moved for summary judgment on the Employees' claims under the ADEA and ERISA. The court granted the motion in full as to the ERISA claim, and as to two of the Employees' three ADEA claims: their collective action claim for a pattern or practice of intentional age discrimination and their individual and collective disparate impact claims. Apsley, 722 F. Supp. 2d at 1249.
The Employees filed a motion for reconsideration, which the district court denied. Mem. & Order of Mar. 28, 2011. Although the Employees' individual claims for disparate treatment in violation of the ADEA remained unresolved, the district court granted the parties' motions for certification of its prior orders for review by this court under Rule 54(b). Mem. & Order, Apsley v. Boeing Co., No. 05-1368-EFM (D. Kan. July 11, 2011) (Doc. 384).
We review de novo the district court's decisions granting summary judgment for the Companies, Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998), and we view the record in the light most favorable to the Employees, Westland Holdings, Inc. v. Lay, 462 F.3d 1228, 1229 (10th Cir. 2006). Although the Employees have provided evidence that discrimination occurred during Boeing's divestiture of the Division, we agree with the district court that the Employees cannot prove a pattern or practice of age discrimination. And while older employees fared slightly worse than younger ones in the divestiture, the Employees are unable to show that the Companies' hiring practices had a significant disparate impact on older workers. We also agree with the district court that the Employees cannot show that the Companies acted with the specific intent to interfere with their attainment of pension benefits. Finally, we see no error in the district court's dismissal of the Employees' retaliation claims.
A. Pattern or Practice Under the ADEA
Under the ADEA, a class of plaintiffs proceeding under a pattern or practice theory must first make a prima facie showing that "'unlawful discrimination has been a regular procedure or policy followed by an employer or group of employers.'" Thiessen v. Gen. Elec. Cap. Corp., 267 F.3d 1095, 1106 (10th Cir. 2001) (quoting Teamsters v. United States, 431 U.S. 324, 360 (1977)). If they succeed, "'[t]he burden then shifts to the employer to defeat the prima facie showing of a pattern or practice by demonstrating that the plaintiffs' proof is either inaccurate or insignificant.'" Id. (quoting Teamsters, 431 U.S. at 360) (alteration omitted). "'If an employer fails to rebut the inference that arises from the [plaintiffs'] prima facie case,' the finder of fact can conclude 'that a violation has occurred' and the trial court can award prospective equitable relief." Id. (quoting Teamsters, 431 U.S. at 361).
"If the plaintiffs also seek 'individual relief for the victims of the discriminatory practice,' the case moves into the second or subsequent stages." Id. (quoting Teamsters, 431 U.S. at 361). "In these additional proceedings, it must be determined whether each individual plaintiff was a victim of the discriminatory practice. Importantly, by having prevailed in the first stage of trial, the individual plaintiffs reap a significant advantage for ...