Klausner & Kaufman Successful at the High Court
On January 9, 2008, the firm’s principal, Bob Klausner, argued before the United States Supreme Court in Kentucky Retirement Systems v. EEOC, Case No. 06-1037.
On June 19, 2008, the Court handed down the long-awaited ruling. In a 5-4 decision, the Supreme Court held that the Kentucky Retirement Systems did not discriminate on the basis of age. The majority adopted the argument advanced by Kentucky that the plan was designed based on “pension status” rather than on unlawful age-based criteria.
The Court noted that the plan in place in Kentucky shared common features with Social Security, the Federal Employees Retirement Programs, and a substantial number of state and local retirement systems. It was recognized that Kentucky’s plan design was not structured around an aged-based rationale; that once eligible for normal retirement, disability was no longer available. The Court also noted that while some older workers may have been disadvantaged by Kentucky’s plan, it was equally likely that an older worker would receive more money. Lastly, the majority held that there was no evidence that Kentucky had any motivation involving anti-age bias.
The EEOC filed suit against KRS in 1998. Summary judgment was granted in favor of KRS on the basis that the statute did not intentionally discriminate against older workers. A three-judge panel of the U.S. 6th Circuit Court of Appeals affirmed the dismissal. The EEOC moved for rehearing by the entire fourteen-member court which determined in late 2006 that the statute did discriminate, by a vote of 10-4. KRS requested the U.S. Supreme Court to exercise its discretionary review authority. That request was granted in September, 2007. The question before the Supreme Court was whether any use of age in a governmental retirement plan violates the age discrimination laws.
On September 25, 2007, the United States Supreme Court granted a Petition for Certiorari filed by the Kentucky Retirement Systems to review an en banc decision of the United States Court of Appeals for the 6th Circuit holding the KRS statute discriminated on the basis of age. Under the KRS plan, once a member becomes eligible for an unreduced normal retirement based on years of service or a combination of years of service and age, disability benefits are no longer available. If a member is disabled prior to retirement, the plan imputes years of service needed to get a member to the earliest normal retirement date, but not more than double the years of actual service.
In the briefs, KRS pointed out that in Kentucky, retirement was based on either age or years of service and that age alone was not the determining factor. The EEOC argued that if all other factors except age were equal, a younger person always got either the same or better benefits than an older person. Kentucky countered that this was not correct as an older worker begins membership closer to retirement than a younger worker and therefore is more favorably situated.
The ruling in favor of Kentucky ends more than 10 years of litigation. One of the side effects of that litigation was a reduction in disability benefits for persons hired beginning in 2004. The decision also protects hundreds of other state and local systems which, like Kentucky, make benefit decisions based on pension status, whether or not linked to age. Kentucky was supported in the case by Attorney Generals from 13 states, and several important trade, labor and governmental associations.
Please click here for decision.
Please click here for a transcript of the proceedings before the Supreme Court. Copies of the briefs are available upon request.