The opinion of the court was delivered by: TELESCA
Plaintiffs, all former employees of Xerox Corporation ("Xerox") in the Information Management function of its United States Customer Operations and Corporate Strategic Services groups, bring these actions pursuant to Title VII of the Civil Rights Act, 42 U.S.C. § 2000e-2, et seq., the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. § 621, et seq., and the New York State Human Rights Law, alleging that they were redeployed and dismissed from their positions on the basis of their ages and gender.
On February 1, 1996, defendant filed summary judgment motions seeking dismissal of plaintiffs' disparate impact and disparate treatment discrimination claims. Thereafter, plaintiffs voluntarily dismissed their disparate treatment claims and instead decided to proceed solely on the theory of disparate impact. The parties agreed to defer further briefing and decision on the summary judgment motions and certified the following question to this Court for decision as the fact-finder:
Did Xerox' redeployment and involuntary reduction-in-force policy as applied in the United States Customer Operations Group in March 1992 and in the Corporate Strategic Services Group in June 1992 disparately impact males employed in the Information Management subgroup of USCO and employees 40 years of age or older employed in the Information Management subgroup of USCO and CSS?
Pursuant to Federal Rule of Civil Procedure 52(c), the following constitutes this Court's findings of fact and conclusions of law.
I. Xerox' Redeployment and Dismissal Policy
A. United States Customer Operations Group
In the early 1990s, faced with a sluggish economy and a changing technological environment which demanded enhanced computer use and expertise, Xerox decided to reduce its workforce and upgrade the technical skills of its remaining employees in order to remain competitive during the recessionary economy. A primary target of this corporate reorganization was the United States Marketing Group ("USMG"), which is currently known as the United States Customer Operations ("USCO") group.
A voluntary reduction in force was implemented in late 1991 during which 385 USCO employees opted to leave Xerox. However, USCO still faced an employee surplus and a skills mix imbalance in some of its subgroups, including the Information Management ("IM") subgroup. Affidavit of Patricia Wallington, P 3 ("Wallington Aff.").
Due to the rapidly changing computer technology, Xerox managers perceived that skill deficiencies had developed in USCO/IM to the point where it was necessary to upgrade the skills base in order to meet the changing needs of that division.
Management's perceptions were confirmed through a skills assessment conducted by the consulting firm of Nolan, Norton and Company, which found, among other things, that the skills of USCO/IM employees were severely lacking in several critical areas important to the organization's future. Id. P 4. Xerox claims that in order to address these concerns, it attempted to upgrade the skills of the USCO/IM workforce through training and by selectively hiring employees with critical skills, such as software engineering. However, in early 1992, the need to upgrade employees' skills and to meet budgetary constraints became acute and Xerox determined that 49 exempt employees in USCO/IM would be redeployed. Wallington Aff. P 5. A skills and performance assessment was implemented separately for both managerial employees and exempt non-managers, referred to as individual contributors, to determine which of the USCO/IM employees would be selected for redeployment.
The managerial assessments were based on their last four Performance Appraisals (50%) and Role Model Manager Attributes (50%). The role model portion of the assessment was derived from an evaluation form filled out by the employee's immediate manager which assessed 19 managerial attributes. This assessment was then reviewed by a second level manager to ensure accuracy and fairness. The points accumulated from the Role Model Attributes assessment were then added to the Performance assessment and all managers were slotted on a matrix based upon the overall assessment point total and tenure. Selection for redeployment was made in a pre-specified cell order beginning with the lowest cell. According to Xerox, the longer an employee's tenure, the higher the employee measured on the matrix and the less vulnerable that employee was to being designated for redeployment.
Of those employees assessed, 49 exempt employees in USCO/IM were placed on a redeployment list effective March 2, 1992, including ten managers out of the 67 assessed and 39 individual contributors out of the more than 300 assessed. Those employees chosen for redeployment were given 60 days within which to locate new positions within Xerox or face involuntary termination. At the conclusion of the 60-day period, 17 of the 49 employees selected for redeployment had located new positions within Xerox and the remainder of the redeployed employees were dismissed. Of the 17 plaintiffs in this action, 16 were selected for redeployment in USCO and were dismissed after failing to find alternative employment at Xerox.
B. Corporate Strategic Services
Xerox' determined that the Corporate Strategic Services ("CSS") group also had the same technical deficiencies as USCO in its IM workforce. In 1992, CSS/IM provided computer support for Xerox' engineering, manufacturing and logistics operations. Affidavit of Patricia Cusick P 3.
However, due to changing information management technologies, CSS management determined that the skills base in its IM subgroup was outdated and inadequate to meet CSS' future goals and resource demands. Management's perception of IM's skills deficiencies were confirmed by an independent skills assessment conducted by Nolan, Norton and Company, a 1990 and 1991 corporate audit and various other internal assessments. Id.
As with USCO, CSS first attempted to upgrade the skills of its existing IM employees. However, it ultimately determined that it would have to redeploy 57 of its exempt workforce and embarked on a selection process. CSS' selection process differed slightly from USCO's and in June 1992, 57 CSS/IM employees were selected for redeployment out of 250 total employees assessed. Of the 17 plaintiffs in this action, only one plaintiff, Edna Trumble, was selected for redeployment in CSS. The remainder of plaintiffs were redeployed through USCO's selection process. Ms. Trumble was a Computer Operator who provided support for a mainframe computer system which was being phased out by CSS and is no longer in use at Xerox.
The CSS employees selected for redeployment were given 60 days within which to find alternative employment at Xerox. At the conclusion of that 60-day period, 36 of the 57 redeployed IM employees had obtained another position at Xerox. The remaining 21 employees, including plaintiff Trumble, were dismissed after failing to find alternative employment at Xerox.
In support of their claim that Xerox' redeployment and reduction-in-force policy disparately impacted male employees in USCO and employees 40 years of age or older in USCO and CSS, plaintiffs offered the testimony of labor economist Dr. Marjorie Honig, Chair of the Department of Economics at Hunter College, City University of New York. Dr. Honig was tendered and received as an expert in the field of labor economics without objection.
Dr. Honig identified the relevant pool of workers for statistical purposes as all employees employed in the USCO and CSS groups prior to the redeployments in March and June 1992. With respect to plaintiffs' claim that Xerox' policy of selecting employees for redeployment disparately impacted USCO/IM and CSS/IM employees 40 years of age and older, Dr. Honig compared the number of workers employed by USCO and CSS to the number of employees over the age of 40 in both of those groups who were selected for redeployment. She then statistically analyzed this ratio to determine whether a difference in redeployment rates existed for employees over 40 years of age and those under 40 years of age and whether that difference was statistically significant. She employed the same analysis with respect to plaintiffs' claims that: (1) Xerox' dismissal of redeployed employees in USCO and CSS had a disparate impact upon employees 40 years and older; (2) Xerox' selection of redeployed employees in USCO/IM disparately impacted males; and (3) Xerox' dismissal of redeployed employees in USCO/IM disparately impacted males.
After conducting statistical analyses with respect to each of these claims, Dr. Honig concluded the following:
(1) the observed difference in the redeployment rates between employees 40 years of age and older and employees under 40 years of age in USCO/IM and CSS/IM would have occurred by chance less than one time in 100 in the absence of age discrimination;
(2) the observed differences in dismissal rates between employees 40 years of age and older and those under 40 years of age in USCO/IM and CSS/IM would have occurred by chance less than one time in 100 in the absence of age discrimination;
(3) the observed differences in redeployment rates between male and female employees at USCO/IM would have occurred by chance less than one time in 100 in the absence of gender discrimination; and
(4) the observed differences in dismissal rates between male and female employees at USCO/IM would have occurred by chance less than five times in 100 in the absence of gender discrimination.
In arriving at her conclusions, Dr. Honig relied on the results of two statistical tests, the "t-ratio" test and the "likelihood ratio" test. Both tests were applied separately to the same data set to statistically test two null hypotheses: (1) that there was no age-based disparity in the selection of USCO/IM and CSS/IM employees for redeployment and dismissal; and (2) there was no gender-based disparity in the selection of USCO/IM employees for redeployment and dismissal.
Dr. Honig conceded that her conclusions were based solely on the results of the "t-ratio" and "likelihood ratio" tests and that she did not perform a regression analysis to account for non-discriminatory factors which could have been responsible for the observed disparities, i.e., the results of the employees' skills assessments and their performance histories. She testified that it would have been improper to perform a regression analysis in this case because the skills assessment and performance history data were subjective opinions made by Xerox managers which were, therefore, inherently unreliable. She also doubted that performance histories were available for all redeployed employees, thus rendering that data set incomplete.
Dr. Honig also disputed the validity of Dr. Bloom's conclusions that Xerox' redeployment and dismissal policies had no disparate impact on age or gender groups since the results of his "t-ratio" and "likelihood ratio" tests were consistent with her findings that the disparities observed could not have occurred by chance but for considerations of age or gender. In those cases where Dr. Bloom could not determine the statistical significance of disparities in dismissal rates, Dr. Honig attributed his failure to report results to his selection of the inappropriate labor pool. Dr. Honig also disagreed with Dr. Bloom's separate analysis for managers and individual contributors. She testified that the usual division of labor for statistical purposes is based upon the Federal Labor Standard Act's designation ...