by Kevin C. McCormick, JD, Whiteford, Taylor & Preston LLP
In a significant decision, The U.S. district court in Baltimore declined to award the Equal Employment Opportunity Commission (EEOC) retroactive or prospective monetary relief in an age discrimination case in which the agency claimed that Baltimore County had improperly calculated pension fund contributions.
The court’s decision brings to an end contentious litigation between the EEOC and Baltimore County that spanned more than 16 years. The court found that the EEOC’s 8-year delay in bringing the lawsuit constituted an unreasonable delay warranting a denial of the requested retroactive and prospective damages. Let’s take a closer look at the court’s decision.
Background facts
In April 1999 and January 2000, the EEOC issued notices of charges of discrimination to Baltimore County on behalf of two correctional officers who alleged that the county’s pension plan and employee plan contribution rates discriminated against them on the basis of their age. The county timely denied the charges and provided the EEOC all of the requested information, including its actuary’s cost justification for the employee contribution rates.
Five and a half years later, in March 2006, the EEOC issued a notice to the county that its pension plan violated the Age Discrimination in Employment Act of 1967 (ADEA). A year and a half later, in September 2007, the agency actually filed a lawsuit against Baltimore County alleging violations of the ADEA.
In particular, the EEOC alleged that since January 1996, the county had engaged in unlawful employment practices by requiring two individual employees in a class of similarly situated employees who were least 40 years old to pay higher contributions to the pension plan than those paid by younger individuals, in violation of the ADEA.
On January 21, 2009, the district court granted Baltimore County’s motion for summary judgment and dismissed the EEOC’s lawsuit without a trial. The agency appealed that decision, and the 4th Circuit ultimately reversed it and sent the matter back to the lower court for further proceedings. The district court then issued a partial judgment in favor of the EEOC on the issue of liability under the ADEA. The court’s decision was affirmed by the 4th Circuit in 2014.
Although the EEOC, the county, and six unions representing county employees who participated in the pension system had agreed to a joint consent order that included a plan for equalizing pension plan contribution rates over the next 2 years, the EEOC maintained that employees who may have been harmed by the unlawful pension practices were entitled to retroactive and prospective monetary relief from the county. Baltimore County estimated that the retroactive liability alone could total more than $19 million.
Court’s decision
In considering the EEOC’s motion for retroactive and prospective monetary damages, the court carefully reviewed the ADEA’s language, as well as relevant cases involving pension fund contributions. Contrary to the EEOC’s arguments, the court found that such damages are not mandatory but should be left to the discretion of the court. Citing the significant harm the imposition of enhanced damages would place on the pension fund itself, participants in the fund, and others, the court found that no additional monetary award, retroactive or prospective, was warranted.
The court went further and stated unequivocally that even if retroactive monetary relief was mandatory under the ADEA, it would decline to award such relief in this case because of the EEOC’s unreasonable delay in bringing the suit. According to the court, even if a defendant hasn’t been sufficiently harmed by a delay to warrant the dismissal of the action, courts reserve the discretion to reduce any excessive back-pay liability attributable to the period of unreasonable delay.
Inexcusably or unreasonably delaying the filing of a lawsuit indicates a lack of diligence. The court observed that the potential for increased back-pay liability was arguably the most prejudicial aspect of the EEOC’s delay in this case.
The agency initially filed charges of age discrimination against Baltimore County in 1999 and 2000. The county timely denied those charges and provided the EEOC all requested information, including its actuary’s cost justification for employee contribution rates. The actuary had advised the county in 1988 that its employee plan contribution rates didn’t violate the ADEA.
Furthermore, in response to charges of age discrimination filed against Baltimore County, the actuary issued a letter expressing its understanding that a bona fide employee benefit plan doesn’t discriminate against older employees, even if they must pay more for their benefits, as long as they don’t have to bear a higher percentage of the cost of the benefits than younger employees.
The court found that the EEOC’s 8-year delay in filing suit constituted an unreasonable delay far exceeding delays previously deemed unreasonable by the courts. For example, the court noted that a 30-month delay between the end of conciliation and the date the EEOC finally filed suit in one case was unreasonable.
In another case, a 5-year-and-8-month delay between the filing of the charge and the filing of the complaint was also deemed unreasonable, as was a 2-year-and-2-month delay in another case.
The court noted that the EEOC’s counsel conceded that the 8-year delay in filing the action against Baltimore County “troubled him.” Moreover, the agency offered no convincing explanation for its unreasonable delay. Consequently, the court denied its request for retroactive and prospective monetary relief.
Bottom line
This is a significant decision for a number of reasons. First, it should come as refreshing news for any Maryland employer that has had an EEOC matter pending for an unreasonably long time. While many claims are resolved by the agency in a reasonable amount of time, others seem to fall behind a file cabinet and remain dormant for months, if not years. As this case highlights, an unreasonable delay by the EEOC creates significant harm for an unsuspecting employer because the potential back-pay liability accrues each month the file remains hidden behind the file cabinet.
This case provides hope for employers that find themselves facing a lawsuit years after discrimination charges were filed with the EEOC. It’s important to keep in mind, however, that the court’s ruling in this case was based primarily on the agency’s lack of effort in moving the case along. If an employer contributes to such a delay by withholding evidence or otherwise dragging out the process, it is unlikely to obtain the same result.
Kevin C. McCormick, an editor of Maryland Employment Law Letter, can be reached at kmccormick@wtplaw.com or 410-347-8779.