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eLABORate: 11th Circuit Opens ADEA Disparate Impact Claim to Job Applicants, Modifies Burden for Tolling of Statute of Limitations

December 03, 2015

In Villarreal v. R.J. Reynolds Tobacco Company, (11th Cir. Nov. 30, 2015), the Eleventh Circuit, in a 2-1 decision, allowed a rejected applicant to proceed with a claim of disparate impact employment discrimination under the Age Discrimination in Employment Act (“ADEA”), 29 USC §623(a)(2). The court also modified the threshold for equitable tolling to revive the timeliness of the plaintiff’s claim despite a two-and-a-half year delay in filing the charge of discrimination. The decision on both issues marks a departure from previous case law and puts the Eleventh Circuit in conflict with several other Circuits.

Villarreal, who was 49 at the time, submitted an online application for employment with R.J. Reynolds in November 2007. The company never responded. For over two years, Villarreal did nothing. He later learned that R.J. Reynolds had an employment policy whereby it instructed hiring managers to target candidates who are “2-3 years out of college” and to “stay away from candidates” with “8-10 years” of prior sales experience. On May 17, 2010, Villarreal filed a charge of discrimination with the Equal Employment Opportunity Commission (“EEOC”) alleging the company discriminated against him on the basis of his age. The EEOC declined to take further action and issued Villarreal a right-to-sue notice. Villarreal then filed a lawsuit on behalf of himself and those similarly situated.

R.J. Reynolds moved to dismiss the suit. First, R.J. Reynolds argued the ADEA’s disparate impact provision does not apply to applicants for employment. The provision makes it unlawful for an employer to “limit, segregate, or classify his employees in any way which would deprive or tend to deprive any individual of employment opportunities.” R.J. Reynolds argued that because the provision explicitly prohibits an employer from, “limit[ing], segregate[ing], or classify[ing] his employees,” [emphasis added] the disparate impact cause of action is reserved for employees and not applicants for employment. The district court agreed with this interpretation and granted R.J. Reynolds’ motion to dismiss.

However, on appeal, the Eleventh Circuit gave an expansive reading to the phrase “deprive any individual of employment opportunities.” The Court found that the language could reasonably be interpreted to provide a cause of action for any individual affected by an employer’s decision to “limit, segregate, or classify his employees.” In light of the perceived ambiguity, the Court deferred to EEOC regulations that expand the disparate impact cause of action to applicants in other areas of employment discrimination. The Eleventh Circuit reversed the decision of the district court and allowed Villarreal to proceed with the claim.

R.J. Reynolds also argued that the suit should be dismissed as untimely because of Villarreal’s over two-year delay in filing a charge, which was well beyond the statutory charge-filing deadline (EEOC allows 180 or 300 days, depending on the state). The Eleventh Circuit rejected this argument, holding that the claim was subject to the remedy of equitable tolling because Villarreal was not aware of the discriminatory hiring guidelines within the charge filing deadline.

Traditionally, equitable tolling is reserved as an exceptional remedy. It is only available when the party asserting it establishes that he was prevented from taking action sooner because of events beyond his control and unavoidable even with due diligence. R.J. Reynolds argued that Villarreal failed to demonstrate that he acted with the requisite due diligence because he did not make any effort to investigate why he was not selected for the position or otherwise contact the company about its hiring practices. Further, Villarreal failed to demonstrate that R.J. Reynolds prevented him from discovering facts relevant to the cause of action by misrepresentation or deceit.

The Eleventh Circuit, however, found that misrepresentation by an employer is not required for the remedy of equitable tolling, and the statute of limitations is not triggered when a person merely has a suspicion of age discrimination. The period only begins to accrue when a plaintiff has enough information to support his cause of action. Lastly, the court found that because secret preferences in hiring are unlikely to be readily apparent to the individual discriminated against, a plaintiff need not undertake an investigation into hidden discriminatory practices in the name of due diligence.

The Eleventh Circuit’s decision stands in contrast to decisions rendered in other Circuits, including the Fifth, Seventh, Eighth, and Tenth. As such, litigation on this issue will likely be ongoing. Employers within the Eleventh Circuit, however, now face an expanded ADEA claims regime and a new analysis of equitable tolling issues.