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Breen v. Chao

United States District Court, District of Columbia

May 26, 2017

KATHLEEN BREEN, et al., Plaintiffs,
v.
ELAINE L. CHAO, SECRETARY OF TRANSPORTATION, DEPARTMENT OF TRANSPORTATION, et al., [1] Defendants.

          OPINION

          PAUL L. FRIEDMAN United States District Judge.

         Plaintiffs, former flight service (“FS”) specialists with the Federal Aviation Administration (“FAA”), brought this suit against the FAA and the Department of Transportation (collectively “defendants” or the FAA) alleging discrimination on the basis of age, in violation of the Age Discrimination in Employment Act of 1967 (“ADEA”), 29 U.S.C. § 621, et seq. Defendants terminated plaintiffs' employment pursuant to a reduction in force (“RIF”) that involved outsourcing the FS function to Lockheed Martin, a private company. Plaintiffs allege (1) a disparate treatment claim - that the FAA decided to outsource the FS function because of the age of the FS specialists, and (2) a disparate impact claim - that the FAA's decision had a disproportionate impact on workers over the age of 40.

         Defendants have moved for summary judgment on both theories. As to the disparate treatment claim, they contend that (1) the RIF applied to every FS specialist, regardless of age; (2) the agency had legitimate, nondiscriminatory reasons for outsourcing the FS function; and (3) comments made by FAA managers about age and the aging workforce were not made by decision makers in the A-76 process or the 2005 RIF decision and, in any event, were legitimate in the context in which they were made. As for the disparate impact claim, defendants argue that there can be no disparate impact claim based on the RIF or, alternatively, on the 2002 decision to designate the FS function as “non-core, ” because neither was a facially neutral employment policy or practice. Upon careful consideration of the parties' briefs, the relevant legal authorities, and the entire record in this case, the Court will deny defendants' summary judgment motion on plaintiffs' disparate treatment claim but grant their motion on plaintiffs' disparate impact claim.[2]

         I. FACTUAL AND PROCEDURAL BACKGROUND

         A. The Role of Flight Service Specialists

         FS specialists provide preflight, inflight, and airport advisory information to aircraft operators. Def. Facts ¶ 3. Before a flight, FS specialists communicate with pilots directly, providing meteorological and aeronautical information to help them plan safe flights. Pl. Opp. Facts ¶ 1-2. FS specialists also communicate with pilots during flight by radio, helping them to avoid hazards, aiding them during emergencies, helping lost pilots find their bearings, and initiating search and rescue operations if they cannot confirm that a flight has ended safely. Id.; Def. MSJ at 4; Def. MSJ, Ex. 61 at 33-34 [Dkt. 256-62]; Def. MSJ, Ex. 80 at 37 [Dkt. 256-81]. FS specialists can also disseminate information through the National Air System via Notices to Airmen. Pl. Opp. Facts ¶ 1-2. FS specialists are not involved in separating or controlling aircraft while in the air; that is the job of so-called “Aircraft Separating Controllers.” Def. Facts at ¶ 5; see also 5 U.S.C. § 2109(1)(A)(i). FS specialists also cannot prohibit a pilot from flying, but can recommend that pilots do not fly if doing so would be hazardous. Def. MSJ at 3; 5 U.S.C. § 2109(1)(A)(ii).

         FS specialists comprised one of several air traffic control functions that the FAA administered prior to the October 2005 RIF. Def. Facts ¶ 1. At that time, commercial airlines relied on their own or on a contractors' employees to provide the information that FS specialists also provided. Id. ¶ 9; Def. MSJ, Ex. 61 at 95 [Dkt. 256-62]; Def. MSJ, Ex. 86 at 52 [Dkt. 256-87]; Def. MSJ, Ex. 51 at 44 [Dkt. 256-52]. Some private pilots also used private companies to plan for flights. Def. Facts ¶ 10; Def. MSJ, Ex. 50 at 52 [Dkt. 256-51]. Despite these alternatives, plaintiffs contend that the FAA's FS function provided the most comprehensive source of flight information. Pl. Opp. Facts ¶ 4-5 (“Flight Service is virtually the only source of in-flight air/ground services for general aviation.”) (emphasis omitted); Pl. Facts at ¶ 14 (“[N]o non-governmental workforce . . . was trained and certified to perform all of the functions of flight service for general aviation.”).

         The FAA's “Aerospace Forecast” for 2005-2016 noted several ominous trends affecting the FS function, such as the fact that “[t]he introduction of new technology for flight service has significantly changed the operating environment for the flight service system.” Def. MSJ, Ex. 3 at VII-16 [Dkt. 256-4]. The FAA predicted that the “increased use of automation and new system capabilities” would “dampen the growth in traditional FS[] workload measures, ” such as contact with pilots. Id. at VII-16-18. In the years leading up to 2005, the FAA collected data showing that private pilots increasingly accessed weather reporting, flight planning, and navigational assistance - the traditional FS functions - online. Def. MSJ, Ex. 42 ¶ 6 [Dkt. 256-43]; Def. MSJ, Ex. 80 at 33-34 [Dkt. 256-81]; Def. MSJ, Ex. 84 at 50 [Dkt. 256-85]. The FAA also approved systems for transmitting weather information directly into pilots' cockpits during flight without the need for a FS specialist. See Def. MSJ, Ex. 1 at 1 [Dkt. 256-2]. And comprehensive automated weather systems replaced the FS specialists' task of going outside at airports to observe weather conditions. Def. MSJ, Ex. 53 at 59 [Dkt. 256-54]; Def. MSJ, Ex. 61 at 26 [Dkt. 256-62]; Def. MSJ, Ex. 62 at 73-74 [Dkt. 256-63].

         As a result of these changes, the work of FS specialists declined; there were fewer contacts with pilots, fewer briefings, and fewer flight plan filings every year. Def. MSJ, Ex. 2 at VII-8 [Dkt. 256-3]; Def. MSJ, Ex. 3 at VII-16, VII-18 [Dkt. 256-4]. As FS specialists retired or left their jobs, the FAA decided not to rehire new FS specialists to replace them. Pl. MSJ, Ex. 33 at 142 [Dkt. 263-35]. The number of FS specialists the FAA employed gradually declined and the remaining FS specialists were gradually “aging” in the years leading up to 2005. Def. Facts ¶¶ 18-19; Def. MSJ at 15-16. FS facilities also were starting to deteriorate insofar as buildings required repair or replacement and the computer system used by FS specialists required major investment and attention. Def. MSJ at 17.

         These changes caused the FAA to seek methods to consolidate air traffic control functions in order to save money. See, e.g., Def. Facts ¶¶ 16-17. A number of internal and external studies found that the FAA could save significant amounts of money by restructuring and consolidating its FS function. Id. ¶¶ 21-23; Pl. Facts ¶ 10. A 1996 report by the FAA's Office of the Inspector General recommended that the FAA “consider having the private sector provide the full range of flight services.” Def. Facts ¶ 24; Pl. Opp. Facts ¶ 7. Other reports recommended consolidation but also recommended that the FS function remain within the government. Pl. Opp. Facts ¶ 9-11.

         B. The FAIR Act

         Between the late 1990s and the early 2000s, the government pushed federal agencies to restructure and outsource any functions that the private sector could provide better and more efficiently. Def. MSJ at 17-18. Congress's 1998 Federal Activities Inventory Reform Act (“FAIR Act”) mandated that agencies annually classify all activities performed by government personnel as either commercial or inherently governmental, and submit a list of those that were “not inherently governmental functions.” Federal Activities Inventory Reform Act of 1998, Pub. L. No. 105-270 § 2(a)-(b), 112 Stat. 2382 (codified as amended in scattered sections of the United States Code); ses also Def. Facts ¶ 31; Def. MSJ at 18. Agency heads were then to review the list and consider contracting with a private source for the listed activities. 112 Stat. 2382 at § 2(d). If the agency head decided that certain activities could be outsourced, he or she was to use a competitive process to select the private contractor. Id. The rules for such a competition are outlined in Office of Management and Budget (“OMB”) Circular A-76, and competitions under these rules are called “A-76” studies or competitions. Office of Mgmt. & Budget, Exec. Office of the President, Circular No. A-76 (Revised) (2003); Def. MSJ at 19.

         To further expand A-76 competitions, President George W. Bush put the “Competitive Sourcing Initiative” on his President's Management Agenda (“PMA”) in 2001. Def. Facts ¶ 32. The Initiative required federal agencies to either subject 15% of their commercial work functions to an A-76 process or directly convert 15% of their commercial activity inventory by the end of fiscal year 2003. Id. ¶ 34. These cost comparisons and conversions were to continue after 2003 until eventually 50% of every agency's commercial activity inventory had been covered. Pl. Opp. Facts ¶ 12. The OMB discarded these numeric benchmarks in July 2003. Def. Opp. Facts ¶ 8; Def. MSJ, Ex. 9 at 7-8 [Dkt. 256-10]. As a result, the FAA in 2002 was under pressure to save money and consider functions for possible competitive sourcing. Def. Facts ¶¶ 38-39.

         C. Before the A-76 Study

         During negotiations in 2002 for the FAA's budget request for fiscal year 2003, the FAA sought budgetary authority to modernize the computer software used by FS specialists. Def. Facts ¶ 35; Pl. Opp. Facts ¶ 14. The OMB suggested that the FAA look at consolidating instead of updating its computer systems. Pl. Opp. Facts ¶ 14; Def. MSJ, Ex. 47 at 21-24 [Dkt. 256-48] (Deposition of Chief Financial Officer Christopher Bertram (“Bertram Dep.”)). Instead of consolidation, the FAA decided to conduct an A-76 study to see if the FAA could provide flight services more efficiently. Pl. Opp. Facts ¶ 15; Bertram Dep. at 28. Defendants claim that it was the FAA's Chief Financial Officer, Christopher Bertram, and his deputy CFO, John Hennigan, who made this decision. See Def. MSJ at 20.[3]

         In June 2002, Bertram sent a memorandum to the FAA's Administrator, Jane Garvey, about the decision of the FAA's Office of Financial Services to subject the FS function to an A-76 competition as a means of meeting the OMB's requirements. Def. Facts ¶ 40. Bertram's memorandum stated that, according to the OMB instructions and the Competitive Sourcing Initiative's 15% requirement, the FAA would need to outsource 1, 100 positions by the end of calendar year 2003, and that outsourcing the FS function could meet this goal. Id. ¶ 41. Bertram also informed Administrator Garvey that the FAA had engaged an outside contractor to perform a feasibility study to clarify the scope of the review and determine whether private companies would bid on the work. Id. ¶ 42; Def. MSJ at 22. The FAA then formed a working group to develop an action plan for considering the FS function for an A-76 process. Def. Opp. Facts ¶ 7. The members of this group included Deputy CFO John Hennigan, Ronald Page from the FAA's Office of Finance, and former FS division managers Marilyn Jackson-Brame and Jack Nimmo. Pl. Facts ¶ 5; Pl. MSJ, Ex. 9 at 64, 199-200 [Dkt. 265-7]; Pl. MSJ, Ex. 54 at 39 [Dkt. 265-42].

         The FAA contracted with the accounting firm Grant Thornton LLP to perform the feasibility study; Grant Thornton ultimately found that that the FS function was a strong candidate for competitive sourcing. Def. Facts ¶ 43; Pl. MSJ, Ex. 22 at ¶ 00253 [Dkt. 265-14]. It based this finding on the participation of three private sector companies that performed work similar to FS specialists, none of which eventually bid on the FS function contract when it was offered. Pl. Opp. Facts ¶ 17. According to plaintiffs, Grant Thornton's study also found, however, that one part of the FS function was inherently governmental and should not be contracted out. Pl. Opp. Facts ¶ 17. Defendants dispute this because Grant Thornton's report identified a private vendor who had performed such services outside of the United States. Def. Opp. Facts ¶ 12; see Pl. MSJ, Ex. 22 at ¶ 00248 [Dkt. 265-14]. After reviewing the Grant Thornton report, the FAA retained Grant Thornton for an additional four years and paid the company nearly $14 million for its work. Pl. Opp. Facts ¶ 17 n.5.

         CFO Bertram accepted the results of Grant Thornton's feasibility study and, in August 2002, he notified then Acting FAA Administrator Monte Belger that he had decided to proceed with an A-76 study for the FS function. Def. Facts ¶ 44; Def. MSJ, Ex. 11 [Dkt. 256-12].[4] Belger stated that proceeding with an A-76 study was part of an effort to meet the requirements of the President's Management Agenda. Def. Facts ¶ 45. In his deposition, Bertram claimed that he did not learn or consider the average age of the FS workforce in the course of making the decision to subject the FS function to an A-76 study, but instead based that decision on budgetary and financial concerns. Id. ¶¶ 48-50; see Bertram Dep. [Ex. 47] at 106, 111. Bertram also testified that he did not know if the staff members who advised him were aware of the age of the FS workforce. Bertram Dep. at 112.

         As noted, John Hennigan was Bertram's deputy CFO during this time. Def. Facts ¶ 51. Hennigan's office was in charge of compiling the 2002 FAIR Act list of activities that were not inherently governmental. Id. ¶¶ 53-54. Hennigan stated in his deposition that he did not consider age in determining what to classify an activity as commercial on the inventory list. Id. ¶ 55. The National Association of Air Traffic Specialists (“NAATS”), the union that includes FS specialists, challenged the decision to include FS specialists on the FAIR Inventory in March 2003. Id. ¶ 56. The FAA denied the challenge and NAATS appealed to the Department of Transportation, which upheld the FAA's denial in May 2003. Id. ¶¶ 57-58. Only six groups on the 2002 FAIR Inventory had more than 1, 101 full-time equivalent positions, including the FS specialists. Id. ¶ 59. FS specialists were the only workforce out of these six seriously considered for an A-76 study. Pl. Opp. Facts ¶ 21.

         D. The A-76 Study Leading to the RIF

         After realizing that their budget office was not equipped to undertake a major A-76 study, Bertram and Hennigan placed the responsibility for conducting it in the newly created Office of Competitive Sourcing. Def. MSJ at 24. Early in 2003, Joann Kansier became the Director of that office, and Marilyn Jackson-Brame her deputy director. Def. Facts ¶¶ 68-69. Kansier was not personally involved in CFO Bertram's earlier decision to subject the FS function to the A-76 process. Id. ¶ 70. Jackson-Brame was involved in the debate, but she was against the decision Bertram made. Id. ¶¶ 71-72; Pl. MSJ, Ex. 9 at 94-97, 112 [Dkt. 265-7].

         Both Kansier and Marion Blakey, the FAA Administrator, made references to an “aging workforce” on numerous occasions. In a June 25, 2003 briefing made to OMB and NAATS about the A-76 process, Kansier listed “aging workforce” as one of five items under the “State of AFSS” that together created an opportunity for an A-76 process for the FS function. Def. MSJ, Ex. 14 at ¶ 01179 [Dkt. 256-15]. Kansier used a similar reference in two slide presentations she gave on January 12, 2003, and August 1, 2003. Pl. MSJ, Ex. 20 at ¶ 01155, D007686 [Dkt. 263-24]. Kansier subsequently changed this “aging workforce” language to “retirement eligible workforce” on other slide presentations and on the FAA website. Id. at ¶ 007193, P04428, P00003. Administrator Blakey also referred to the FS workforce as “eligible to retire” in two speeches, although not as a reason for the A-76 process. Pl. MSJ, Ex. 55 at ¶ 01166, P00633 [Dkt. 265-43]. And plaintiff Kathleen Breen testified at her deposition that the Administrator specifically referred to the age of certain persons in explaining why they should not be promoted. Breen Dep. at 101.

         One of the first steps in the A-76 process was for the FAA to create a statement listing the requirements for bidders and what work all bidders must perform. Def. Facts at ¶ 73; Def. MSJ, Ex. 38 ¶ 5 [Dkt. 256-39] (Declaration of Joann Kansier (“Kansier Decl.”)). The Office of Competitive Sourcing formed a team to develop the statement consisting of FAA management from the FS division, NAATS union members, and contract support from Grant Thornton. Def. Facts ¶¶ 74-75; Def. MSJ, Ex. 15 at 1 [Dkt. 256-16]. In December 2013, after requests for input from interested parties, the FAA announced that it would subject the FS function to the A-76 process and solicit bids. Def. Facts ¶¶ 77-79; Kansier Decl. ¶ 7. Several FS specialists - who are plaintiffs in this action - allege that the FAA's statement soliciting bids significantly understated the tasks performed by FS specialists. Pl. Opp. Facts ¶ 26.

         In May 2004, the FAA released a formal request for bids to five private sector companies who were selected to take part in the competition, including Lockheed, and to the government's in-house bidder - known as Most Efficient Organization (“MEO”). Def. Facts ¶ 80; Kansier Decl. ¶¶ 2, 8, 9. According to plaintiffs, the FAA guaranteed a workforce to the winning bidder in the sense that it promised that “the majority of the Flight Service workforce would be made available to the winning bidder.” Pl. Facts ¶ 9. At the very least, the FAA told the winning bidder that many FS specialists would be available to recruit. See Pl. MSJ, Ex. 16 at 17-19 [Dkt. 263-20]. Defendants, however, point to the official solicitation for bids to show that the FAA did not guarantee a workforce, but instead required that the winning bidder offer a right of first refusal for employment opening[s] to FAA employees who were qualified for those openings and “who ha[d] been or will be adversely affected or separated as a result of award of this contract.” Pl. MSJ, Ex. 15 at § I.4 [Dkt. 263-19]. Further, one of the items the FAA assessed when evaluating bids was “the degree to which the staffing approach provides for recruitment and retention to ensure delivery of effective services to support safe and efficient flight.” Def. MSJ, Ex. 18 at 10 [Dkt. 256-19] (Judge Neill Opinion, Public Version (“Neill Opinion”)).[5] The bidders then presented both their technical and cost proposals, and technical and cost evaluation teams at FAA reviewed the bids. Def. Facts ¶¶ 81-82; Kansier Decl. ¶¶ 11-12. The technical team rated Lockheed's proposal as “excellent” on each of four factors, and the MEO's proposal as “good” on one factor and “satisfactory” on the other three. Def. Facts ¶¶ 86-87; Neill Opinion at 54-55. The cost team concluded that Lockheed's bid was 5% less costly than the MEO's. Def. Facts ¶ 87; Neill Opinion at 52.

         The FAA then submitted the technical and cost team evaluations to the Source Selection Evaluation Board, which the FAA tasked with issuing a recommendation to the ultimate selection official. Def. Facts ¶¶ 88, 90; Kansier Decl. ¶ 16; Def. MSJ at 27. Kansier and contracting officer Donald King chaired the board, which also consisted of both technical and cost experts. Def. Facts ¶¶ 88, 90; Kansier Decl. ¶ 16. The Board rejected two findings of weaknesses and one of costliness associated with the MEO proposal, but ultimately concluded that Lockheed had the best technical solution and “clearly provided the greatest benefit to the Government.” Def. Facts ¶¶ 91-92; Neill Opinion at 100. One Board official, Dennis DeGaetano, concurred with the Board's recommendation because Lockheed had the best bid, even though it cost slightly more than one other proposal. Def. Facts ¶ 94. Kansier later stated that the Board did not consider age in making its decision. Kansier Decl. ¶ 26. DeGaetano also said that he did not consider age in making the decision. Def. MSJ, Ex. 58 at 98 [Dkt. 256-59]; Def. MSJ, Ex. 36 ¶ 8 [Dkt. 256-37]. The FAA estimated that the Lockheed contract would save taxpayers about $2.1 billion over the ten-year life of the contract. Def. MSJ at 28. The FAA ultimately announced the decision to award the contract to Lockheed on February 1, 2005. Id. at 29.

         The FAA issued RIF notices to all FS employees covered by the Lockheed contract in July 2005. Def. Opp. Facts ¶ 18; Pl. MSJ, Ex. 19 [Dkt. 263-23]. The RIF occurred on October 3, 2005, thereby terminating plaintiffs' employment with the FAA. Def. Facts ¶¶ 111, 114. Not every FS specialist hired by the FAA lost his or her government position because the FAA permitted some individuals to continue in positions other than as FS specialists. See Def. MSJ at 41.

         E. Administrative Challenges to the RIF

         After the FAA announced that Lockheed had won the award, the MEO and Kathleen Breen - as the agent for the FS specialists - each filed contests with the Office of Dispute Resolution for Acquisition to challenge the decision. Def. Facts ¶¶ 101-03; Neill Opinion at 3. Judge Edwin B. Neill of the General Services Administration Board of Contract Appeals served as the Special Master overseeing the contests. Def. Facts ¶ 105. Judge Neill ultimately rejected both contests in their entirety, applying standards of review that ask whether the agency decision had a rational basis, whether it was arbitrary, capricious or an abuse of discretion, and whether it was supported by substantial evidence. Neill Opinion at 61; Def. Facts ¶ 106. FAA Administrator Blakey adopted Judge Neill's findings of fact and recommendations in full. Id. ¶ 107. Breen did not further appeal this determination. Def. MSJ at 31.

         In 2005, nine plaintiffs filed this lawsuit on their own behalf and as representatives of 834 others, alleging disparate treatment and disparate impact claims under the ADEA. See First Amended Class Action Complaint [Dkt. 3]. Judge Richard W. Roberts of this Court denied plaintiffs' motion for a preliminary injunction against the RIF on September 30, 2005, see Breen v. Mineta, No. 05-0654, 2005 WL 3276163, at *10 (D.D.C. Sept. 30, 2005), and denied defendants' motion to dismiss for lack of jurisdiction or, in the alternative, for summary judgment on January 8, 2007. See Breen v. Peters, 474 F.Supp.2d 1, 9 (D.D.C. 2007). Defendants thereafter filed this motion for summary judgment. Plaintiffs filed a cross motion for summary judgment on the disparate impact claim, but later withdrew the motion. See Plaintiffs' Unopposed Motion to Withdraw Their Cross Motion for Summary Judgment [Dkt. 306].

         II. LEGAL FRAMEWORK

         Summary judgment is appropriate only if “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, 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.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986); see Baumann v. District of Columbia, 795 F.3d 209, 215 (D.C. Cir. 2015); Fed.R.Civ.P. 56(a), (c). In making that determination, the Court must view the evidence in the light most favorable to the nonmoving party and draw all reasonable inferences in its favor. Baumann v. District of Columbia, 795 F.3d at 215; see Tolan v. Cotton, 134 S.Ct. 1861, 1866 (2014) (per curiam); Anderson v. Liberty Lobby, Inc., 477 U.S. at 255; Talavera v. Shah, 638 F.3d 303, 308 (D.C. Cir. 2011). A disputed fact is “material” if it “might affect the outcome of the suit under the governing law.” Talavera v. Shah, 638 F.3d at 308 (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. at 248). A dispute over a material fact is “genuine” if it could lead a reasonable jury to return a verdict in favor of the nonmoving party. See Scott v. Harris, 550 U.S. 372, 380 (2007); Grimes v. District of Columbia, 794 F.3d 83, 94-95 (D.C. Cir. 2015); Paige v. DEA, 665 F.3d 1355, 1358 (D.C. Cir. 2012). “Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge at summary judgment. Thus, [the court] do[es] not ...


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