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August 9, 2000


The opinion of the court was delivered by: Marrero, District Judge.


Plaintiffs John Hogan and Stuart Rosen ("Hogan and Rosen") bring this action under the Age Discrimination in Employment Act of 1967 ("ADEA"), 29 U.S.C. § 621; the New York Executive Law §§ 290 et seq. ("State HRL"); the New York City Administrative Code §§ 8-107(1)(a) and (c), and 8-107(17) ("City HRL"); and § 502(a) of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1132(a). Defendants Metromail, Experian Marketing Solutions, and Metromail Corporation Special Severance Plan ("the Plan") (collectively "Metromail") have moved under Fed.R.Civ.P. 12(b)(6) to dismiss the complaint for failure to state a claim on which relief can be granted. Hogan and Rosen, invoking the ADEA and State and City HRL, allege that Metromail engaged in age-based discrimination against them and later in retaliation for their filing of age-discrimination claims. Additionally, Hogan and Rosen allege that Metromail, in violation of ERISA, denied them severance benefits under the Plan.

For the reasons stated below, Metromail's motion to dismiss is granted with regard to the ERISA claim, as well as the ADEA and HRL age-discrimination claims of disparate impact, disparate treatment, constructive discharge and retaliation based on denial of severance pay. Hogan and Rosen are granted leave to replead the ERISA claim, the constructive discharge claim, the retaliation claim based on denial of severance pay and the disparate impact and treatment claims that relate to Metromail's employment actions during 1998-1999. The Court finds the alleged 1997 demotions are time-barred. Metromail's motion to dismiss is denied insofar as it relates to the ADEA and HRL retaliation claims alleging improper denial of ancillary benefits.


Plaintiffs John Hogan and Stuart Rosen, 66 and 64 years old respectively at the time this action commenced, worked for defendant Metromail for almost 30 years. Within three years of their employment by Metromail as salesmen, each was promoted to Regional Director. Compl. ¶¶ 15-16. As Regional Directors, they received commissions on sales and renewals of sales on existing accounts in assigned, exclusive territories. Rosen also supervised other sales people and received overrides, which are commissions based on sales by subordinates. Id. ¶ 18.

In January 1997, Metromail adopted a benefits plan ("the Plan"), which provided severance benefits to employees under certain conditions, including "the termination of an Employee's employment with the employer within two years following a Change in Control (i) by the Employer other than for Cause . . . or (ii) by the Employee for Good Reason." Compl. ¶¶ 31, 35-36; Sandak Aff., Ex. D at 5-6. "Good reason" specifically included the "reduction by the employer in the employee's salary or a change in the employee's duties or responsibilities in the nature of a demotion." Id. Under the Plan, responsibility for discretionary decisions regarding Plan benefits eligibility was assigned to the Human Resources Committee of Metromail's Board of Directors ("the Board").

Following Experian's adoption of the 1998 compensation system, Hogan and Rosen submitted claims for severance payments under the Plan, asserting that they were entitled to such benefits by virtue of the change in control from Metromail to Experian and the ensuing reduction of their salaries, duties and responsibilities. The Plan denied the requests. Id. ¶¶ 37-40. Although it is not set forth in their complaint, Hogan and Rosen argue, in papers submitted in opposition to Metromail's motion to dismiss, that the severance pay rejection was communicated through letters sent on Experian letterhead, bearing the signatures of Experian officials, and copied to the Board.

In December 1998, Hogan and Rosen retained counsel to raise charges of age discrimination, which were filed with the United States Equal Employment Opportunity Commission ("EEOC") in March 1999. Id. ¶¶ 11, 27. The Plan administrators, in August 1999, denied Hogan and Rosen's appeal of the severance benefits denial. Id. ¶ 13. Hogan and Rosen claim this denial of severance was made in retaliation for their asserting discrimination claims. Id. ¶ 28. They also allege retaliation in Metromail's denial of ancillary employment benefits such as invitations to national sales functions. Id. ¶ 29. In August 1999, plaintiffs received "Right to Sue" letters from the EEOC.

Hogan asserts in the factual background paragraphs of the complaint that he was constructively discharged on August 31, 1999. Id. ¶ 6. As this allegedly occurred after the EEOC proceeding, it was not included in the EEOC charges. While the allegation is mentioned as a factual matter, the complaint does not set forth constructive discharge as a separate cause of action for relief.


A 12(b)(6) motion hinges on a claim's "legal sufficiency." Goldman v. Belden, 754 F.2d 1059, 1067 (2d Cir. 1985). For purposes of the motion, plaintiff's factual allegations are deemed true and all reasonable inferences are drawn in plaintiffs' favor. See Gant v. Wallingford Bd. of Educ., 69 F.3d 669, 673 (2d Cir. 1995); Grandon v. Merrill Lynch & Co., 147 F.3d 184, 188 (2d Cir. 1998). Dismissal is warranted only if it appears beyond doubt that no set of facts offered by plaintiffs could entitle them to relief. See Conley v. Gibson, 355 U.S. 41, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). Given insufficient pleadings, full dismissal can be precluded by granting leave to replead. See Stern v. General Elec. Co., 924 F.2d 472, 477 (2d Cir. 1991).

A. ADEA Age Discrimination Claim

The ADEA protects employees over forty against age-based discrimination relating to "compensation, terms, conditions, or privileges of employment." 29 U.S.C. § 623(a)(1). The ADEA is derived from Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq. To establish discrimination under either Title VII or the ADEA, plaintiffs must show that defendants' policies or practices caused "disparate impact" or "disparate treatment" affecting conditions of plaintiffs' employment based on their membership in the protected class. See Criley v. Delta Air Lines, Inc., 119 F.3d 102 (2d Cir. 1997); District Council 37 v. New York City Dept. of Parks & Rec., 113 F.3d 347 (2d Cir. 1997); Lowe v. Commack Union Free Sch. Dist., 886 F.2d 1364 (2d Cir. 1989); Abdu-Brisson v. Delta Air Lines, No. 94 Civ. 8494, 1999 WL 944505 (S.D.N.Y. Oct.19, 1999). Disparate impact involves a facially-neutral employment practice that has an adverse effect of "fall[ing] more harshly" on a protected class than on one unprotected, while disparate treatment is purposeful, and requires an age-based discriminatory motive. Hazen Paper Co. v. Biggins, 507 U.S. 604, 609, 113 S.Ct. 1701, 123 L.Ed.2d 338 (1993). ADEA recovery for constructive discharge is also allowed if an employer created "conditions so intolerable as to force involuntary resignation." Kirsch v. Fleet St., 148 F.3d 149, 161-162 (2d Cir. 1998).

1. Timeliness

Defendants move for dismissal of claims based on the 1997 demotions on the grounds that those actions are time barred. The ADEA has a 300 day statute of limitations. 29 U.S.C. § 626(d) and 633(b); see also Oscar Mayer & Co. v. Evans, 441 U.S. 750, 762-63, 99 S.Ct. 2066, 60 L.Ed.2d 609 (1979). Hogan and Rosen concede that the alleged demotion they claim occurred in 1997 is barred by the 300-day limitation. While events occurring prior to the 300-day limitation period thus may not be considered as the basis for Hogan and Rosen's claims, the Court may, consistent with Blesedell v. Mobil Oil Co., 708 F. Supp. 1408 (S.D.N Y 1989), consider them as background material relating to the 1998-1999 claims.

2. Disparate Impact

Hogan and Rosen allege that Metromail maintained a pattern and practice of discriminating "against older long-term employees." Compl. ¶ 14. This policy is allegedly evidenced by Metromail's restructuring of its sales force and salary and commission structure. Under these alterations all sales and regional directors "who were the longer-term employees" were demoted, denied commissions on renewals of orders built over the years, and had their territories taken away, while also being paid the same base salary and commission rate and assigned higher sales quotas for earning bonuses. Although not specifically articulated the complaint, Hogan and Rosen's theory appears to be that Metromail's older long-term employees were impacted by these employment practices disproportionately in relation to Metromail's younger workers. Metromail contends that this allegation fails to establish the elements of a disparate impact claim in that the discrimination alleged by Hogan and Rosen was based on seniority and experience rather than age. The issue for the Court is whether Hogan and Rosen's allegations as pleaded are sufficient to state a claim for disparate impact discrimination.

As a starting point, the Court notes that on their face the Metromail employment practices at issue did not reflect classification by age. As stated in the complaint, Metromail's various employment actions applied to all sales employees, not just those over forty. Nonetheless, a facially neutral policy or classification may have a disparate impact upon the protected class as compared to the unprotected class, and thus may serve as the basis for an impermissible discriminatory action, when the detrimental effect on the protected class is "sufficiently substantial [as to] raise . . . an inference of causation." See Watson v. Fort Worth Bank & Trust, 487 U.S. 977, 108 S.Ct. 2777, 101 L.Ed.2d 827 (1988) (holding that statistical evidence can establish disparate impact for subjective or discretionary employment practices under Title VII); Lowe, 886 F.2d at 1370 (applying Watson but finding no adequate evidence of disparate impact). A basis for classification may be closely intertwined with age, but that interrelation does not by itself render the classification discriminatory. Courts have distinguished classification by seniority and years of service from that of age, recognizing that longevity of experience may separate older employees from younger ones into groups independently of age. See Criley, 119 F.3d at 105 (years of service); Hazen, 507 U.S. at 613, 113 S.Ct. 1701 (pension status and years of service). For example, in Abdu-Brisson, the court found no disparate impact because seniority was preserved in each group of employees during a merger of two airlines even though there was some difference in treatment across airlines. Since all employees affected by the merger, "whether age 27 or 57 — encountered a loss of seniority . . ., any `negative' impact here was felt by both younger and older [employees]." Abdu-Brisson, 1999 WL 944505, at *4. Thus, the court concluded that the distinction at issue was based not on age, but on the permissible factor of employees' airline of origin. Id.

The Supreme Court has declined to decide whether a remedy for age discrimination under a disparate impact theory is available under the ADEA. See Hazen, 507 U.S. at 604, 113 S.Ct. 1701 (finding the disparate treatment doctrine applicable to ADEA claims, but withholding consideration of whether a disparate impact claim is allowed). The Second Circuit, however, recognizes such claims under particular circumstances. See Criley, 119 F.3d 102, 105 ("Although the Supreme Court has never decided whether a disparate impact theory of liability is available under the ADEA[,] in our circuit[,] we have recognized such an action"); District Council 37, 113 F.3d 347 (relying on pre-Hazen precedent to conclude that disparate impact claims are still cognizable under the ADEA); Lowe, 886 F.2d 1364 (allowing the claim only if the disparate impact falls on the entire protected group of employees rather than a subsection, and not if discrimination is only against a group of employees "within" the protected class: those over fifty rather than forty).*fn1

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