State: Fla. Power case to test bias theory

Like businesses all over America, Florida Power Corp. downsized in the 1990s. Congress had injected heady competition into the utility industry. Companies were scrambling to buy each other out or merge.

From 1992 through 1996, the St. Petersburg-based utility cut roughly one-fifth of its workforce. About 1,200 residents of west-central Florida lost their jobs, and a sleeker Florida Power eventually attracted a well-heeled suitor from North Carolina.

Now, a decade after those first layoffs, Florida Power's job-cutting decisions have fallen under intense nationwide scrutiny. More than 100 former employees sued, claiming age bias, and their case will be argued Wednesday before the U.S. Supreme Court.

At stake is a theory of discrimination law called "disparate impact." It is so important that AARP, the U.S. Chamber of Commerce and the National Employment Lawyers Association have weighed in with arguments.

It boils down to this: People claiming race, gender and religious bias can use statistics to file class action suits without any proof of overt discrimination. Should older workers be able to do the same?

AARP says yes.

"More than 40 percent of AARP's members remain active in the work force," AARP attorney Laurie McCann noted in a brief. "Since the consequences of discrimination are equally devastating regardless of the employer's motivation or the protected status of the victim, older workers must be afforded the same rights."

In disparate impact cases, plaintiffs need not prove intentional bias -- just that a policy favors one group over another and serves no reasonable business necessity. Disparate impact suits address subtle, even subconscious bias.

Managers may think they are firing "dead wood," for example, but are really singling out old people on the mistaken belief that they are less productive.

Employers argue that age bias is harder to sort out than gender or racial bias. When a policy disadvantages women or minorities, there's a good bet that discrimination is taking place, says Philadelphia lawyer Mark Dichter, who represents the Chamber of Commerce.

But many good, rational business practices simply fall harder on older workers, he says. Think salary caps, or hiring practices that favor recent college graduates who are up on the latest computer skills.

The Supreme Court first articulated the notion of disparate impact in 1971, after a Duke Power Co. plant required all applicants for cleaner, higher-paying jobs to have high school degrees.

Before the 1964 Civil Rights Act, Duke Power simply gave these jobs to white people, who needed no degree and performed just fine. Black workers got dirtier, lower-paying jobs. The new high school requirement, on its face, was race-neutral. But the court ruled that it needlessly disadvantaged black workers because North Carolina historically had deprived them of education opportunities.

Age bias is controlled by the 1967 Age Discrimination in Employment Act, which prohibits discrimination against workers over 40. Because that law so closely tracked the Civil Rights Act, courts and lawyers assumed that the "disparate impact" principle also would apply to age lawsuits. Companies got into trouble, for example, when they fired workers with the most seniority.

But a 1993 case involving a Massachusetts paper plant suggested that workers claiming age bias must prove intentional discrimination, not just "disparate impact." In that Hazen Paper case, a 62-year-old man was fired just before his 10th year with the company, which would have earned him a pension.

Though other federal laws prohibit skulduggery with pension plans, the firing was not age discrimination, the U.S. Supreme Court ruled. Tenure-based firings might appear to hit older workers harder, but a longtime employee under 40 might vest in the pension plan while an older, more recent employee might not. So the policy didn't directly attack age.

In that ruling, the court went out of its way to note that it had never applied the "disparate impact" theory to age discrimination cases.

In Ocala, U.S. District Judge Terrell Hodges, citing Hazen Paper, threw out the class action suit filed by Florida Power employees. The plaintiffs had argued that 70 percent of terminated workers were over 40 but only about half the general workforce was.

"The odds of that being random were like flipping a coin 20 times and coming up heads 19 times," said Tampa lawyer Scott Charlton, who represents the employees. Before the firings, the older employees had excellent evaluations, Charlton said.

He also produced an affidavit of Patsy Baynard, former director of research and development. She swore that Richard Korpan, then executive vice president of the utility's corporate parent, said Florida Power needed to eliminate older workers because they had a "mentality of entitlement" and wouldn't adapt to needed changes.

In one department, she said, older male employees began dying their hair to hide gray.

Florida Power officials swore that employees were fired for poor performance and that dozens of managers decided who went and who stayed.

With so many managers making decisions, the only thing that bound workers together in a class were statistics and disparate impact theory, Hodges ruled. No disparate impact, no class. Workers still could try to prove that age bias motivated their particular firing, but Hodges killed the class action.

Last summer, the 11th U.S. Circuit of Appeals agreed. Since other U.S. circuit courts still accept disparate impact in age cases, the Supreme Court will use the Florida Power case to settle the matter.

Regardless of the Supreme Court ruling, Charlton said, former employees will take their individual cases to trial, starting in July with 12 workers from the information technology department. Managers there have told conflicting stories about why people were fired, Charlton contends.

"In IT, disparate impact is icing on the cake. We already have the cake."

Progress Energy, which took over Florida Power, faces $60-million in claims, Charlton said.

Florida Power spokesman Aaron Perlut declined to speculate on damages or discuss details of the case during litigation, other than saying that legitimate business factors drove the layoffs.

"Florida Power does not make any business decisions, including hiring or termination," he said, "based on age, race, sex, religion or national origin."

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Lucy Morgan

From the Times state desk