Guest Article

(From the July 25, 2005 issue of Deloitte's Washington Bulletin, a periodic update of legal and regulatory developments relating to Employee Benefits.)

Parties File Briefs with District Court (Again) in AARP v. EEOC

Less than four months after U.S. District Court Judge Anita Brody permanently enjoined the Equal Employment Opportunity Commission (EEOC) from issuing a final Age Discrimination in Employment Act (ADEA) exemption for retiree medical plans that coordinate with Medicare, the case is back in her court. Judge Brody invited the EEOC to file a Motion for Relief from Judgment after an unrelated Supreme Court decision provided additional guidance on when courts should defer to an agency's interpretation of a statute. The EEOC and the AARP each filed briefs on the Motion for Relief on July 14, 2005.

Background

The district court issued the permanent injunction on March 30, 2005 after Judge Brody concluded the EEOC does not have the authority to issue the exemption. The ADEA specifically states EEOC can issue "reasonable exemptions to and from any or all provisions of" the ADEA that are "necessary and proper in the public interest." ADEA § 9. But Judge Brody decided the EEOC can exercise this authority only with respect to explicit or implicit gaps Congress left in the statute to be filled by regulation. And there is no gap to be filled in this case because, according to Judge Brody, "The Third Circuit held that Congress did not allow for ambiguity with regard to the applicability of the ADEA to retiree health benefits."

The EEOC filed a notice of appeal with the Third Circuit Court of Appeals on May 31. Then, on June 27, the Supreme Court ruled, "Only a judicial precedent holding that the statute unambiguously forecloses the agency's interpretation, and therefore contains no gap for the agency to fill, displaces a conflicting agency construction." National Cable & Telecommunications Association et al. &. Brand X Internet Services et al., 545 U.S. ____ (2005). Judge Brody convened a conference call with the EEOC and AARP on June 28 to discuss the impact of Brand X on her March 30 order, and the EEOC filed its Motion for Relief from Judgment on June 30. The Third Circuit Court of Appeals on July 13 remanded the case to the district court to consider the EEOC's motion.

Outlook

Predictably, the briefs filed by the EEOC in support of the Motion for Relief, and by the AARP in opposition, offer very different views of the issue at hand. The key question is whether the district court should analyze the EEOC's proposed exemption as an interpretation of its authority to issue exemptions under ADEA § 9, or of the substantive age discrimination prohibitions codified at ADEA § 4(a). The difference is critical because Third Circuit Court of Appeals' Erie County decision was based on ADEA § 4, and it did not address (or even mention) the EEOC's exemption authority under ADEA § 9.

The AARP won the first round in this case by convincing the district court that the EEOC's proposed exemption conflicted with the Third Circuit's interpretation of ADEA § 4(a). It is now up to Judge Brody to decide whether the Supreme Court's Brand X decision compels a different conclusion. Watch Washington Bulletin for updates.

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