Blog Post

Lugo-Velazquez v. Stiefel Laboratories, No. 07-2138 (1st Cir. Apr. 4, 2008); Diaz v. Eagle Produce, No. 06-15878 (9th Cir. Apr. 4, 2008)

Posted by: Paul Mollica
April 06, 2008
Topic: Daily Developments in EEO Law

This term, the Supreme Court has before it Kentucky Retirement Systems v. EEOC, No. 06-1037, which will determine whether the express use of age as a factor for eligibility in a retirement plan violates the Age Discrimination in Employment Act, without further proof that the use of age is arbitrary or antagonistic to older workers.

Lugo-Velazquez v. Stiefel Laboratories, No. 07-2138 (1st Cir. Apr. 4, 2008), transposes the same question to Title VII: May a national employer exclude only citizens of Puerto Rico from a 401k benefit plan? The Court holds "Yes" because the Puerto Rican citizen owes no federal income tax, and thus has no need to tax-protect retirement income: "Additionally, Lugo has presented no argument calling into question the magistrate judge's conclusion that the provider of Stiefel's § 401(k) plan, Fidelity Investments, excluded employees residing in Puerto Rico from being plan participants for federal tax reasons. The magistrate judge noted that under a qualified § 401(k) plan, an employee contributes pre-tax income to the plan, thus deferring the employee's federal income tax payments. But residents of Puerto Rico with only local income do not pay federal income tax. See 26 U.S.C. § 933."

Diaz v. Eagle Produce, No. 06-15878 (9th Cir. Apr. 4, 2008), meanwhile, furnishes a rare specimen of an employee who beats back summary judgment by pointing solely to the insufficiency -- under McDonnell Douglas and Burdine -- of an employer's legitimate, non-discriminatory reason for its adverse action. The employee, Diaz, fell victim to a general reduction in force, and the employer cited the economic reasons as the reason for the RIF. Four plaintiffs, including Diaz, appeal.

Alone among the four employees, Diaz wins reversal of summary judgment because the general citation of "economic reasons" does not satisfy the need to show why the particular employee was selected for termination: "On its own, the explanation that Diaz was discharged as part of a general reduction in force fails this requirement. Workforce reduction explains why Eagle Produce laid off a group of its workers, but it does not explain why Diaz was chosen to be part of that group. Because no other explanation was given with respect to Diaz, Eagle Produce failed to satisfy its burden at stage two on his claim, and summary judgment was inappropriate."