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Aliotta v. Bair

September 18, 2008

BARBARA ALIOTTA ET AL., PLAINTIFFS,
v.
SHEILA C. BAIR, IN HER OFFICIAL CAPACITY AS CHAIRMAN, FEDERAL DEPOSIT INSURANCE CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Ricardo M. Urbina United States District Judge

Document Nos. 43, 44

MEMORANDUM OPINION

GRANTING THE DEFENDANT'S MOTION FOR SUMMARY JUDGMENT; DENYING THE PLAINTIFFS'MOTION FOR PARTIAL SUMMARY JUDGMENT

I. INTRODUCTION

This case comes before the court on the defendant's motion for summary judgment and the plaintiffs' motion for partial summary judgment on the issue of liability. The plaintiffs, former and current employees of the Division of Resolutions and Receiverships of the Federal Deposit Insurance Corporation ("FDIC" or "the defendant" or "the Agency"), bring a class action suit under the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. §§ 621 et seq., alleging age discriminatory employment practices. The plaintiffs move for partial summary judgment on the grounds that the defendant's 2005 downsizing effort, which included buyouts, transfers and a reduction in force ("RIF"), had an adverse impact on employees over the age of 50. The defendant in turn moves for summary judgment, contending that the plaintiffs have failed to establish a case of disparate impact or disparate treatment caused by the RIF itself, which they maintain is the only adverse employment action contemplated in the downsizing.

Because the plaintiffs have not demonstrated that the buyouts or transfers were involuntary, and because the plaintiffs have not established that the RIF, independently considered, had a discriminatory effect on older employees, the court grants the defendant's motion for summary judgment and denies the plaintiffs' motion for partial summary judgment on the issue of liability.

II. BACKGROUND

A. Factual History

The following facts are undisputed. The FDIC is an independent federal agency that insures deposits in almost all U.S. banks, regulates state-chartered banks that are outside the Federal Reserve System and receives and manages the assets of failed banks. Def.'s Mot. for Summ. J. ("Def.'s Mot.") at 3. The FDIC's workload fluctuates with the nature of the banking industry; it peaked during the savings and loan and bank crises of the late 1980s and early 1990s and ebbed as the number of bank failures declined in the mid-1990s. Id. at 4; Am. Compl. ¶ 56. In the fourteen-year period between 1980 and 1994, 1600 FDIC-insured institutions failed or received financial assistance; as the crisis abated, the number of failures decreased, and only one FDIC-insured bank failed in 1997. Def.'s Mot.at 4-5. FDIC used both buyouts and reductions in force to diminish its workforce between 1995 and 2003. Pls.' Reply in Support of Pls.' Mot. for Summ. J. ("Pls.' Reply") at 4.

The FDIC's Division of Resolutions and Receiverships ("DRR") manages assets from failed banking institutions. Def.'s Mot. at 9. On August 19, 2004, DRR Director Mitchell Glassman sent a memorandum to all DRR employees stating, "it is apparent that fewer problem institutions and our adoption of more efficient business processes have led to a declining workload and excess staff." Def.'s Mot., Ex. 2. In October 2004, Glassman informed DRR employees that management planned to reduce DRR staff from 515 positions to approximately 240 positions, a reduction of 53%. Am. Compl. ¶ 68. Glassman stated that the Agency hoped to attain these staffing levels through a buyout program and opportunities for DRR employees to cross-over to the Division of Supervision and Consumer Protection ("DSC"), but that management also projected a need for an involuntary RIF by the end of 2005. Def.'s Mot., Ex. 7 ("Glassman Memo").

On October 26, 2004, John F. Bovenzi, Deputy to the Chairman and Chief Operating Officer of the FDIC, sent an e-mail to all Agency employees describing a buyout program and an RIF that would be implemented in the following months. Def.'s Mot., Ex. 6 ("Bovenzi Memo"). Bovenzi stated that five Agency divisions, including DRR, had workforce levels unjustified by current workload and would be targeted for downsizing in 2005. Id. The e-mail said that the Agency would offer buyouts to most employees in those divisions and that limited buyout offers would be extended to employees in non-targeted divisions as well. Id. An intranet posting in November 2004 explained the reorganized staffing structure and described some new positions that would be created within the post-RIF DRR structure. Def.'s Mot., Ex. 10 ("DRR Posting").

The buyouts described in Bovenzi's e-mail of October 26, 2004, offered to most employees in DRR and, on a more limited basis, to employees throughout the Agency, included a cash payment equal to 50% of annual salary, the ability to combine the buyout with early or regular retirement agreements, no restriction on re-employment in another federal agency and other incentives. Bovenzi Memo. The buyout period lasted from November 2004 to May 2, 2005; management retained discretion to determine employees' departure dates based on workload factors. Id. In DRR, 132 employees accepted the buyout offer; the Agency no longer considered those employees who accepted a buyout for positions remaining in the post-RIF, restructured DRR. Def.'s Mot. at 15. In total, 578 FDIC employees accepted a buyout package. Pls.' Reply at 4. Additionally, 73 DRR employees transferred to other FDIC divisions prior to the distribution of any RIF notices. Pls.' Mot. for Partial Summ. J. ("Pls.' Mot.") ¶ 31.

The Agency proceeded with the RIF in 2005 in negotiation with the National Treasury Employees Union, the collective bargaining group of FDIC employees. Def.'s Mot. at 15-16. In total, 73 DRR employees transferred to other FDIC divisions prior to the distribution of any RIF notices. Def.'s Resp. to Pls.' Statement of Undisputed Facts ("Def.'s Resp.") ¶ 31. On June 30, 2005, the Agency notified 63 DRR employees that they had been selected for RIF terminations; their employment terminated September 3, 2005. Def.'s Statement¶ 63. The RIF notifications described the factors considered in selecting employees for involuntary termination: veteran's preference, civil service tenure, length of federal service and performance ratings. Def.'s Mot., Ex. 21 ("RIF Notice"). The FDIC terminated 53 employees, 7 retired in lieu of separation and 3 resigned in lieu of separation; after the RIF, 233 DRR employees remained. Def.'s Resp.¶¶ 67-68.

Analyzing only the 53 involuntary separations, 7 retirements in lieu of involuntarily separation and 3 resignations in lieu of involuntarily separation (63 total), the defendant's expert, industrial and organizational psychologist Dr. P.R. Jeanneret, Ph.D., found that the average age of employees affected by the 2005 RIF was 48.28 years. Def.'s Mot., Ex. 27 ("Jeanneret Report") at 6. Of those 63 employees, 57.1% were younger than 50 and 42.9% were over age 50. Id. at 19. DRR employees averaged 51.96 years of age on November 1, 2004, and 51.81 on September 17, 2005. Id. at 16. On November 1, 2004, 58.3% of DRR employees were over the age of 50; employees under the age of 50 made up 41.7% of DRR workforce. Id. at 17. On September 17, 2005, 59.6% of DRR employees were over age 50; 40.4% were younger. Id.

In contrast, the plaintiffs' expert, Dr. Lance Seberhagen, Ph.D., found that the 2005 downsizing had an adverse impact on employees over age 50 by examining all departures from DRR in 2005. Def.'s Mot., Ex. 28 (Seberhagen Report) at 3. Seberhagen determined that 34.9% of DRR employees on January 1, 2005, were under age 50 and 65.1% were over 50. Id. at 8. Seberhagen calculated "RIF-related" impact based on departure codes assigned to voluntary retirements, early retirements, retirements in lieu of involuntary separation, resignations in lieu of involuntary separation, resignations, terminations of FDIC appointment and involuntary terminations.*fn1 Id. at 17. Using those separation categories, Seberhagen determined that, of all DRR employees who left the Agency in 2005, 24.3% were under age 50 and 75.7% were over 50. Id.

B. Procedural History

The original 19 plaintiffs filed notice of intent to sue with the Equal Employment Opportunity Commission ("EEOC") on October 31, 2005. Am. Compl. ¶ 4. Additional plaintiffs filed similar notices with the EEOC on November 10, 2005, and December 5, 15 and 22, 2005, and January 3 and 20, 2006. Id. All the plaintiffs served the FDIC with a copy of the notice of intent to sue on the same day they filed with the EEOC. Id. The plaintiffs also notified the EEOC and the FDIC of their intent to file a class action suit. Id. The original plaintiffs filed their complaint with this court on December 5, 2005, and amended it to include additional plaintiffs on February 8, 2006. On July 25, 2006, the court certified the plaintiffs as a class of "Former or present employees of FDIC's Division of Resolution and Receiverships who were born on a date on or before September 30, 1955, and who, as a result of the 2005 RIF, either accepted a buyout or reduction in grade, or were terminated from their positions in the DRR." Aliotta v. Gruenberg, 237 F.R.D. 4, 13 (D.D.C. 2006).*fn2

The plaintiffs filed a motion for partial summary judgment for the issue of liability on February 25, 2008, on the grounds that the Agency's 2005 downsizing had an adverse impact on DRR employees over the age of 50. The same day, the defendant filed a motion for summary judgment claiming that the plaintiffs failed to show that the 2005 RIF was ...


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