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Coghlan v. Peters

May 28, 2008

MALACHY COGHLAN, ET AL., PLAINTIFFS,
v.
MARY E. PETERS, SECRETARY, UNITED STATES DEPARTMENT OF TRANSPORTATION,*FN1 DEFENDANT.



The opinion of the court was delivered by: Paul L. Friedman United States District Judge

OPINION

This matter is before the Court on defendant's renewed motion to dismiss the amended complaint for lack of subject matter jurisdiction and for failure to state a claim pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure, respectively, or, in the alternative, for summary judgment.*fn2 On March 31, 2008, this Court issued an Order and Judgment granting defendant's motion, and noting that an Opinion explaining the Court's reasoning would follow. The Court now sets forth its reasoning.

I. BACKGROUND AND PROCEDURAL POSTURE

This is a dispute about the employee compensation policies of the Federal Aviation Administration, an agency within the United States Department of Transportation. Plaintiffs Malachy Coghlan and Timothy O'Hara bring suit under the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq. ("ADEA"), on behalf of themselves and similarly situated FAA employees. They allege that the FAA's pay practices discriminate against employees who, like themselves, are more than 40 years of age and earn the maximum salary possible for their respective positions. See Pls.' Opp. at 3-4; see also Am. Compl. ¶¶ 29-31.

Mr. Coghlan filed suit in this Court on July 27, 2005. The original complaint asserted ADEA claims on behalf of Mr. Coghlan and all similarly situated FAA employees based on allegedly discriminatory pay setting decisions the FAA made in 2004. An amended complaint was filed on December 20, 2005. The amended complaint added Mr. O'Hara as a class representative and asserted claims on behalf of all similarly situated FAA employees based on allegedly discriminatory pay setting decisions the FAA made in 2005.

On January 23, 2006, defendant moved to dismiss or, in the alternative, for summary judgment. On March 29, 2007, this Court issued an Order denying defendant's motion. On May 29, 2007, the Supreme Court issued its decision in Ledbetter v. Goodyear Tire & Rubber Co., 127 S.Ct. 2162 (2007). Because that decision addressed the timeliness of administrative complaints of pay discrimination -- an issue crucial to this case -- the Court vacated its Order denying defendant's motion, and ordered the parties to submit supplemental briefs addressing "whether, in view of the Supreme Court's decision in Ledbetter, plaintiffs' ADEA pay discrimination claim is untimely." Coghlan v. Peters, Civil Action No. 05-1476, Order Vacating March 29, 2007 Order (D.D.C. May 30, 2007). The parties filed those briefs, the Court decided the matter by Order of March 31, 2008, and the Court now explains that decision.

II. GOVERNING LAW

"The ADEA broadly bars age discrimination in employment. And it provides a federal government employee two alternative avenues to judicial redress." Rann v. Chao, 346 F.3d 192, 195 (D.C. Cir. 2003), cert. denied, 543 U.S. 809 (2004). First, pursuant to 29 U.S.C. §§ 633a(c) and 633a(d), an employee may bring his claim directly to federal court "so long as, within 180 days of the allegedly discriminatory act, he provides the [Equal Employment Opportunity Commission] with notice of his intent to sue at least 30 days before commencing suit." Id. Second, pursuant to 29 U.S.C. §§ 633a(b) and 633a(c), an employee may choose to pursue his claims administratively in the first instance and then file suit in federal court if he is dissatisfied with the results of the administrative process. See id.; see also Stevens v. Dep't of Treasury, 500 U.S. 1, 5-6 (1991).

Employees who choose the latter route must "consult [an EEO] Counselor prior to filing a [formal administrative] complaint in order to try to informally resolve the matter."

29 C.F.R. § 1614.105(a). This initial contact must be made "within 45 days of the date of the matter alleged to be discriminatory or, in the case of personnel action, within 45 days of the effective date of the action." 29 C.F.R. § 1614.105(a)(1). "As a general rule, discrimination claims alleging conduct that occurred more than 45 days prior to the initiation of administrative action are time-barred in a subsequent action." Velikonja v. Ashcroft, 355 F. Supp. 2d 197, 204 (D.D.C. 2005). Mr. Coghlan and Mr. O'Hara chose to pursue their administrative remedies in the first instance. As a result -- and as they acknowledge -- they were required timely to pursue their administrative remedies with respect to all the claims they seek to pursue here and to exhaust those remedies before coming to court. See Pls.' Opp. at 14-16.

III. STANDARD OF REVIEW

A. Rule 12(b)(1), Rule 12(b)(6), or Rule 56?

Defendant seeks dismissal of the amended complaint pursuant to Rule 12(b)(1) and Rule 12(b)(6) of the Federal Rules of Civil Procedure or, in the alternative, summary judgment. See Def.'s Mot. at 1. Thus, at the outset, the Court must address how to treat defendant's motion and identify the applicable standard of review.

As an initial matter, the Court concludes that it would be inappropriate to treat defendant's motion as a motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1). It remains unclear in this Circuit whether or not the ADEA's administrative exhaustion requirements are jurisdictional. See Rann v. Chao, 346 F.3d at 194-95. In light of that uncertainty, this Court will give plaintiffs the benefit of the doubt and assume that the exhaustion requirement is not jurisdictional. See Woodruff v. Peters, Civil Action No. 05-2071, 2007 WL 1378486, at *5 (D.D.C. May 9, 2007). Accordingly, the Court will not regard defendant's exhaustion argument as an attack on this Court's subject matter jurisdiction.*fn3

Nor will the Court address defendant's motion as a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6). That course would be inappropriate here because both parties refer to and rely on matters outside the pleadings, and when "matters outside the pleadings are presented to and not excluded by the court [on a motion to dismiss pursuant to Rule 12(b)(6)], the motion must be treated as one for summary judgment under Rule 56." FED. R. CIV. P. 12(d). Therefore, as both parties have had an adequate opportunity to present all materials pertinent to summary judgment, see FED. R. CIV. P. 12(d), the Court will consider those "matters outside the pleadings" on which the parties rely, and treat defendant's motion as a motion for summary judgment under Rule 56.

B. Summary Judgment Standard

Summary judgment may be granted only if "the pleadings, the discovery and disclosure materials on file, and any affidavits [or declarations] show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(c); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986); Holcomb v. Powell, 433 F.3d 889, 895 (D.C. Cir. 2006). "A fact is 'material' if a dispute over it might affect the outcome of a suit under the governing law; factual disputes that are 'irrelevant or unnecessary' do not affect the summary judgment determination." Holcomb v. Powell, 433 F.3d at 895 (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. at 248). An issue is "genuine" if the evidence is such that a reasonable jury could return a verdict for the non-moving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. at 248; Holcomb v. Powell, 433 F.3d at 895. When a motion for summary judgment is under consideration, "the evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in [his] favor." Anderson v. Liberty Lobby, Inc., 477 U.S. at 255; see also Mastro v. Potomac Electric Power Co., 447 F.3d 843, 849-50 (D.C. Cir. 2006); Aka v. Washington Hospital Center, 156 F.3d 1284, 1288 (D.C. Cir. 1998) (en banc ); Washington Post Co. v. Dep't of Health and Human Services, 865 F.2d 320, 325 (D.C. Cir. 1989). On a motion for summary judgment, the Court must "eschew making credibility determinations or weighing the evidence." Czekalski v. Peters, 475 F.3d 360, 363 (D.C. Cir. 2007).

The non-moving party's opposition, however, must consist of more than mere unsupported allegations or denials and must be supported by affidavits, declarations or other competent evidence setting forth specific facts showing that there is a genuine issue for trial. See FED. R. CIV. P. 56(e)(2); Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986). The non-moving party is "required to provide evidence that would permit a reasonable jury to find" in his favor. Laningham v. U.S. Navy, 813 F.2d 1236, 1242 (D.C. Cir. 1987). If the evidence is "merely colorable" or "not significantly probative," summary judgment may be granted. Anderson v. Liberty Lobby, Inc., 477 U.S. at 249-50; see Scott v. Harris, 127 S.Ct. 1769, 1776 (2007) ("[W]here the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, 'there is no genuine issue for trial.'") (quoting Matsushita Electric Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)). To defeat summary judgment, a plaintiff must produce more than "a scintilla of evidence to support his claims." Freedman v. MCI Telecommunications Corp., 255 F.3d 840, 845 (D.C. Cir. 2001).

IV. THE CORE COMPENSATION SYSTEM AND PLAINTIFFS' CLAIMS

Beginning in 2000, the FAA gradually "converted" most (but not all) of its employees from one pay system, known as the General Schedule system, to a new pay system, called the Core Compensation System. See Def.'s Mot. at 8 n.4; Pls.' Opp. at 11.*fn4 Under the Core Compensation System, each employee's position falls within a particular "pay band" -- a compensation range defined by a minimum and maximum salary. See Def.'s Mot. at 7. Pay bands are adjustable -- that is, the FAA Administrator may adjust the minimum and maximum salaries for pay bands when he or she deems it appropriate to do so. The Administrator makes this decision on an annual basis. See id. at 8-11.*fn5

FAA employees subject to the Core Compensation System receive salary increases within their pay band in the form of discretionary raises. See Def.'s Mot. at 7-8. These discretionary raises, which are based on individual and organizational performance, are awarded on an annual basis in January or February. See id. at 9. Most FAA employees receive their raises subject to a policy that this Court will refer to as the "lump sum policy." Under this policy, if an employee's base salary equals or exceeds the pay band maximum at the time the employee is awarded an annual pay raise, the employee receives his or her pay raise as a lump sum cash payment rather than as an increase to his or her base salary. See id. at 8-9; see also id., Ex. 9, Human Resources Policy Manual, COMP-2.4C: Annual Pay Changes in the Core Compensation System ("FAA HR Policy Manual") (setting forth the lump sum policy).

The lump sum policy does not apply to all FAA employees. For example, the FAA's "non-converted" employees -- those employees who continue to be compensated under the General Schedule system -- receive annual pay raises as base salary increases even if they earn the maximum salary for their respective positions. See Pls.' Opp. at 11; id., Ex. 1, Plaintiffs' Statement of Material Facts In Dispute ¶ 10 ("Pls.' Facts"). In addition, some FAA employees who have been converted to the Core Compensation System nevertheless are not subject to the lump sum policy. These employees are parties to collective bargaining agreements which require that their annual pay raises be awarded as salary increases rather than lump sum payments, even if their salaries meet or exceed the pay band maximum. See Def.'s Mot. at 9 n.5; id., Ex. 17, Declaration of Christopher K. Early ¶ 11. Finally, a significant number of FAA employees were "grandfathered" into the Core Compensation System. See Def.'s Mot. at 8-9. The FAA permits these employees, whose salaries met or exceeded the pay band maximum at the time they were converted, to continue receiving annual pay raises in the form of base salary increases rather than lump sum payments. See id.

Plaintiffs argue that the FAA's practice of awarding raises in the form of lump sum payments to some FAA employees who earn the highest possible salary for their positions but not to others amounts to age discrimination under the ADEA. Plaintiffs point out that in years when the FAA decides not to adjust the pay bands, those "high earners" who are compensated under the Core Compensation System, are not part of a collective bargaining agreement, and were not "grandfathered" into the Core Compensation System receive their annual raises as lump sums rather than as salary increases. In contrast, those high earners who are compensated under the General Schedule system, or compensated under the Core Compensation System but are part of a collective bargaining agreement, or were grandfathered into the Core Compensation System receive their annual raises as salary increases even if the FAA decides not to adjust the pay bands.

According to Mr. Coghlan and Mr. O'Hara, this differential treatment violates the ADEA for two reasons. First, plaintiffs maintain that lump sum payments are less desirable than salary increases because (1) they reduce the size of affected employees' pay checks (because affected employees receive annual pay raises as one-time lump sum payments rather than increases to base salary), and (2) they adversely affect employees' retirement and life insurance benefits (because the accrual of those benefits is linked to base salary). See Am. Compl. ΒΆΒΆ 16-17. Second, plaintiffs contend that, as a practical matter, those high earners who receive their raises as lump sums are older, as a group, than those high earners who do not. See Pls.' Opp. at 11-12. Thus, plaintiffs argue (1) that the FAA has engaged in and continues to engage in disparate treatment of older workers because the FAA is "aware [the Core Compensation System and lump sum policy] compensate[] older ...


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