Blog Post

Meacham v. Knolls Atomic Power Laboratory, No 02-7378 (2d Cir. Jan. 7, 2009); Dieffenbach v. CIGNA, No. 08-1474 (3d Cir. Jan. 7, 2009)

Posted by: Paul Mollica
January 07, 2009
Topic: Daily Developments in EEO Law

Meacham v. Knolls Atomic Power Laboratory, which the U.S. Supreme Court recently decided 7-1 for the employees, makes its third trip to the Second Circuit on remand. And befitting its history, in an unpublished order, the case must return once again to the district court -- possibly for yet another trial. And a facinating little ERISA preemption case turns up in the Third Circuit's non-precdential cache.

Meacham v. Knolls Atomic Power Laboratory concerned the age impact of a ranking policy that the utility used to conduct a reduction-in-force back in 1996. A trial found that the company committed age discrimination, but the case has had a long, torturous trip since -- three visits to the Second Circuit and two to the U.S. Supreme Court. On the first grant of certiorari, the high court vacated and remanded in light of Smith v. City of Jackson, 544 U. S. 228 (2005), which affirmed the viability of the disparate impact theory under the ADEA. The second time, last term, the high court affirmed (with the concurrence of the only dissenter, Justice Thomas) that the burden of proving "reasonable factors other than age" -- as a defense to a disparate impact case, 29 U.S.C. § 623(f)(1) -- fell on the employer.

Now comes the unpublished remand order, and the Second Circuit remands the case back to the district court to assess whether the employer waived the RFOA defense or whether a hearing may be required to resolve the defense. Here is the order on remand:

"(1) Did the employer waive the RFOA affirmative defense by its conduct at the district court?

"(2) If so, was any such waiver excused as the [sic] 'the result of conflicting statements in our case law, for which [the employer] should not be penalized'?

"(3) If the employer did not waive the defense, or if any such waiver is excused:

"(a) Should the employer prevail as a matter of law on the RFOA defense in light of the Supreme Court's decision?

"(b) Should this case be resolved on the record created, or is a new trial warranted in light of the change in the relevant law?

"Depending on the findings and rulings made in considering these questions, the district court may enter such orders and conduct such further proceedings (including discovery and trial) as the district court deems appropriate. Any further appeal in this case will be assigned to a new panel in the ordinary course."

Nice touch that the old panel divorces itself from future proceedings. The district court judge is not so lucky.

Diffenbach v. CIGNA, No. 08-1474 (3d Cir. Jan. 7, 2009): The former employee sued CIGNA in the Court of Common Pleas for Chester County, Pennsylvania under state law for age discrimination, and also to break a "general liability waiver CIGNA requires in exchange for severance benefits." (There had been prior litigation by the parties over Diffenbach's employment, settled by the above agreement.) Because the settlement agreement addressed putative ERISA benefits, the employer removed the case to federal district court and obtained not just dismissal of the case (on res judicata grounds) but sanctions against the plaintiff.

But the employee wins a moral -- and real -- victory in the Third Circuit. It holds, in an unpublished decision, that removal was invalid and that the district court lacked subject matter jurisdiction to enter any orders. It rejects CIGNA's contention that the benefits part of the settlement gave it a toe-hold to claim complete preemption under ERISA:

"[Plaintiff] did not seek accrued benefits due, as in many typical complete preemption cases. [citations omitted] The parties previously came to an agreement about the amount of severance pay due Dieffenbach; the agreement and award were upheld in subsequent litigation. Although he sought a declaratory judgment, he sought a judgment not to enforce his rights under the plan or to clarify his entitlement to benefits under it; he wanted a declaration that the liability release violated Pennsylvania public policy. Similarly, the injunction Dieffenbach requested - an order that a provision be written out of severance plan - was not an injunction to require CIGNA to pay him benefits. He also sought unspecified compensatory and punitive damages, but they were not for violations of the terms of the plan. He sought relief on the belief that the terms of the plan conflict with state law and public policy. Accordingly, Dieffenbach did not raise a claim that was completely preempted as a claim under ERISA's civil enforcement provision."

So the panel ordered that the case be returned to state court, and (in a rebuke to CIGNA) "vacate[s] the District Court's orders, not only those specified in the notice of appeal, but also all those entered in this case," including (presumably) the sanctions.