Graffam v. Scott Paper Co.

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[Not for Publication]
[Not for Publication]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

-2-
2

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

-3-
3

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

-4-
4

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

-5-
5

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

-6-
6

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."

-7-
7

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).

-8-
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").

-9-
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

-10-
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

-11-
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

-12-
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.").

-13-
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.

-14-
14