No. 10-36

IN THESUPREME COURT OF THE UNITED STATES

KAPL, INC., LOCKHEED MARTIN CORPOI~TION,and JOHN J. FREEH, both individually and as anemployee of KAPL and Lockheed Martin,

Conch’tional Cross-Petitioners,

V.

CLIFFORD B. MEACHAM, THEDRICK L. EIGHMIE,ALLEN G. SWEET, JAMES R. QUINN, DEBORAH L.BUSH, RAYMOND E. ADAMS, WALLACE ARNOLD,WILLIAM F. CHABOT, ALLEN E. CROMER, BELINDAGUNDERSON, CLIFFORD J. LEVENDUSKY, BRUCEE. PALMATIER, NEIL R. PAREENE, MARGARETREYNHEER, JOHN K. STANNARD, DAVID W.TOWNSEND, and CARL T. WOODMAN,

Con&’tional Cross-Respondents.

ON CONDITIONAL CROSS-PETITION FOR WRIT OF

CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

KNOLLS’ REPLY BRIEF

MARGARET A. CLEMENS JOHN E. HIGGINS

LITTLER MENDELSON, P.C. NIXON PEABODY LLP400 Linden Oaks, Suite 110 677 Broadway, 10th FloorRochester, NY 14625 Albany, NY 12207mclemens@littler.com jehiggins@nixonpeabody.com(585) 203-3400 (518) 427"2650

Counsel for Conditional Cross’Petitioners

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TABLE OF CONTENTS

Page_

TABLE OF CONTENTS .............................................i

TABLE OF CITED AUTHORITIES ..........................ii

INTRODUCTION .......................................................1

ARGUMENT ..............................................................2

1. Plaintiffs’ RFOA Waiver Arguments WereConsidered, and Properly RejectedPreviously and Should Be Rejected Again .... 2

2. This Court’s Mandate and the InstructiveOpinion in Meacham May Not Be Ignored ....4

3. Granting Judgment for Knolls on theRFOA Defense is Consistent with the Law ofthis Case and Other Supreme CourtDecisions ............................................................... 8

CONCLUSION .........................................................14

ii

TABLE OF CITED AUTHORITIES

Page(s)CASES

Ba~imore &Carolina L~Inc. ~ Redman,295 U.S. 654(1935) ........................................................13

BlondemTongueLabs, In~ v. Uni~ofIllino~Found,402 U.S. 313 (1971) ........................................................3

Meacham v. KAPL, lnc.,554 U.S. 84 (2008) ("Meacham") ...................................passim

Onta~o ~Quon,130 S. Ct. 2916(June17,2010) ......................................10,11

Reeves v. Sanderson Plumbing,

530 U.S. 133 (2000) ........................................................10,11

Smi~ Ci~ofJackson,544 U.S. 228 (2005) ........................................................4,5,10,11

OTHER AUTHORITIES

Fed. R. Civ. P. 50 ..................................................................passim

U.S. Constitution, Seventh Amendment ...............................11

INTRODUCTION

This reply brief is submitted by conditionalCross-Petitioners (hereinafter, "Knolls") in responseto the Brief in Opposition ("Opp. Br.") filed byPetitioners, the plaintiffs below (hereinafter,"plaintiffs"), in this important disparate impact agediscrimination case.

For the reasons set forth here and in Knolls’conditional cross-petition, if the Court grants theunderlying petition, it should also grant Knolls’cross’petition and end this 14-year old litigation onthe merits by issuing an order (1) reversing theSummary Order issued by the Court of Appeals tothe extent that it ordered a new trial "on the liabilityissues only," and (2) ordering that judgment beentered in favor of Knolls pursuant to Fed. R. Civ. P.50(b), based on the existing trial evidence (whichwas not evenly or closely balanced) on the onlysubstantive question left open after this Court’sOpinion in Meacl~am v. KAPL, Izw., 554 U.S. 84, 128S.Ct. 2395 (2008) ("Meacham")).

This is because the existing trial record makesit clear, and no reasonable jury could find otherwise,that Knolls satisfied its burden of persuasion inresponse to plaintiffs’ disparate impact claims byproving that the layoff factors it used to selectplaintiffs for layoff (including "criticality" of skillsand the "flexibility" to perform more than one job)were reasonable factors other than age ("RFOA").

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ARGUMENT

Plaintiffs’ RFOA Waiver Arguments WereConsidered and Properly Rejected Previouslyand Should Be Rejected Again

In opposing Knolls’ cross-petition, plaintiffsrepeat and reargue the very same "waiver" and"abandonment" arguments which they previouslymade to this Court in Meacl~am (compare P1. Opp.Br., seriatim, with Plaintiffs’ Initial Supreme CourtBrief in MeacI~am, 2008 U.S.S. Ct. Briefs LEXIS299, at "11"12 (March 4, 2008), and Plaintiffs’ ReplyBrief, 2008 U.S.S. Ct. Briefs LEXIS 397, at *23(April 14, 2008)). This fact was correctly observed bythe Court of Appeals in support of its conclusion thatthis Court’s Opinion in MeacI~azn should be "read...as impliedly but necessarily rejecting plaintiffs’waiver argument." (Order, p. 4).

These same waiver arguments were alsoexpressly and properly rejected by the Court ofAppeals in "MeacI~am II," 461 F.3d 134, 146 n.9 (2dCir. 2006) (where the court correctly held, ingranting judgment as a matter of law to Knolls on itsRFOA defense under both State and federal law,that "defendants [never] waived the argument~ thattheir business justification was ’reasonable.’").Plaintiffs’ attempts to raise these very samearguments again before this Court in response toKnolls’ cross’petition should be rejected outright.

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As the Second Circuit correctly noted in itsSummary Order, this Court in Meacham "wassquarely presented with plaintiffs’ waiver argument,and a natural reading [of Meacham] suggests that itwas rejected." (Summary Order, p. 4). Further, it isundisputed that Knolls included an RFOA defense inits answer, specifically asserting, inter alia, that"It]he employment of plaintiffs.., was terminated..¯ for reasonable factors other than their ages withinthe meaning of the ADEA" (Joint App, p. 124). Thus,despite their protestations to the contrary, plaintiffswere given clear "notice of the [defense] and a chanceto argue, if [they could], why the [defense] would beinappropriate," but they never did. Blonder-TongueLabs, Inc. v. Univ. of Illinois Found, 402 U.S. 313,350 (1971).

Moreover, as demonstrated by the voluminousrecord already before this Court in Meacham, Knollsproduced overwhelming and unchallenged RFOAevidence at trial. This evidence was plainlysufficient to put plaintiffs on notice that Knolls’defense was at all times based on proof thatplaintiffs were selected for layoff based on job"related, legitimate, and reasonable non-age factors,including specifically their job performance,company service, criticality to the mission of theLaboratory, and flexibility.

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2. This Court’s Mandate and the InstructiveOpinion in Meachaza May Not Be Ignored

Like the Court of Appeals did below inrefusing to grant judgment as a matter of law toKnolls, plaintiffs have improperly ignored the clearmandate and Opinion of this Court in Meacham.Similarly, plaintiffs and the court below haveimproperly ignored the plain language of the RFOAprovision added to the ADEA by Congress, asinterpreted by this Court in both Meacham andSmith v. City o£Jackson, 544 U.S. 228 (2005).

For example, the Court in Meacharn held inno uncertain terms that "[t]he focus of the [RFOA]defense is that the factor relied upon was a’reasonable’ one for the employer to be using."Meacham, 128 S.Ct. at 2403. The Meacham Courtalso explained clearly, in an Opinion written for theCourt by Justice Souter, that "a reasonable factormay lean more heavily on older workers, as againstyounger ones" (id. at 2403), but "that the choice of apractice relying on a ’reasonable’ non-age factor isgood enough to avoid liability" under the RFOAexception of the ADEA. Id. at 2405 (emphasisadded again).

Likewise wholly ignored by plaintiffs and inthe Second Circuit’s Summary Order are this Court’sadmonitions in MeacJ~am to the effect that (1)"Congress took account of the distinctive nature ofage discrimination, and the need to preserve a fair

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degree of leeway for employment decisions witheffects that correlate with age, when it put theRFOA clause in the ADEA, ’significantly narrow[ing]its coverage"’ (id. at 2406 (quoting Citjz o£Jackson,544 U.S. at 233)); (2) the more plainly reasonable theemployer’s ’factor other than age’ is, the shorter thestep for that employer from producing evidenceraising the defense, to persuading the factfinder thatthe defense is meritorious" (id. at 2406); and (3) the"burden of persuasion answers ’which party loses ifthe evidence is closely balanced’" and ’" [i]n truth,however, very few cases will be in evidentiaryequipoise." Id. (quoting Schaffer v. Weast, 546 U.S.49, 56 and 58 (2005). Here, a review of the recordbefore this Court in Meacham and before the courtsbelow on remand show that the RFOA evidence inthis case was neither closely balanced nor inevidentiary equipoise.

In sending this case back to the Court ofAppeals for further consideration in light of theOpinion in Meacham, this Court did not, as plaintiffshave suggested, merely issue an "open-endedmandate" devoid of any guidance. (P1. Opp. Br., p.5). Instead, this Court clarified the nature and focusof the RFOA defense and reaffirmed the RFOAteachings handed down by the Court three yearsearlier in City of Jackson. It was of course in thatcase that this Court first held that disparate impactclaims of age discrimination under the ADEA, whilecognizable generally, "are strictly circumscribed bythe RFOA exemption" (id. at 267 (O’Connor, J.,

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concurring) (emphasis added)). And it was in City ofJackson where this Court first made it clear that (1)"the scope of disparate’impact liability under theADEA is narrower than under Title VII" (Id. at240); and (2) that the "business necessity" test andburden’shifting analysis previously applied in theSecond Circuit at the time of the trial in the presentaction do not apply in disparate’impact agediscrimination cases under the ADEA.

Undeniably, the Supreme Court’s RFOAteachings in both Meacham and City o£Jackson onthe "focus" and Congressional purposes behind theRFOA defense - and, perhaps more importantly, onwhat it means to say, as this Court held inMeaeham, that employers bear the burden ofpersuasion on this statutory defense - must beconsidered in deciding whether or not Knollssatisfied its RFOA burden of persuasion. But theSummary Order ignored all of this Court’s teachingsand liability-limiting instructions (in both Meachamand City of Jackson) in deciding that Knolls is notentitled to judgment as a matter of law because"uncertainty and multiple changes in the governinglaw have complicated the issues in this case." (Order,p. 4). In this respect, the Summary Order fails tocarry out and is inconsistent with the mandate andOpinion in Moacham, is clearly erroneous, and mustbe reversed.

In fact, the only question remanded to theCourt of Appeals by this Court in Moacham was

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whether the outcome in Meacham II, where thisCourt correctly observed that the Court of Appeals"showed no hesitation in finding that Knollsprevailed on the RFOA defense" (Meacham, 128 S.Ct. at 2406), "should be any different when theburden is properly placed on the employer." Thatthe Court of Appeals failed to carry out and/ormisconstrued the mandate and Opinion in Meachamseems clear.

Indeed, even the plaintiffs admit in theiropposition brief that "the court of appeals did notdecide whether defendants had established an RFOAdefense on the pre-existing trial record." (Opp. Br.,p. 5). Plaintiffs similarly admit, as they must, thatthe Second Circuit on remand following this Court’sOpinion in Meacham "refus[ed] to examine thecurrent trial record" (id. at 6 n.4), and that "neitherthe court of appeals nor the district court reachedthe merits of defendants’ RFOA defense." (Id., at11). Plaintiffs further concede in their oppositionbrief "that any misconstruction of the mandate [inMeacham by the Second Circuit] would warrantcorrection" by this Court. (P1. Opp. Br., p. 5). That isthe case here.

Accordingly, for all of these reasons, and thoseset forth in Knolls’ cross’petition, this Court shouldreverse the Second Circuit’s new trial order, findthat the uncontested and overwhelming recordevidence of reasonableness proved at trial by Knollssatisfied its burdens both of production and

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persuasion on the RFOA defense, and enterjudgment as a matter of law in Knolls’ favor onplaintiffs’ disparate impact claims, as if on summaryjudgment, just as the Court did in City

o Granting Judgment for Knolls on the RFOADefense is Consistent with the Law of thisCase and Other Supreme Court Decisions

In opposing Knolls’ cross’petition, plaintiffswould have this Court completely ignore not only thefull Opinion in Meschsm, but also certain priorfindings made by the Court of Appeals in MeschamI/. These still’valid findings, all of which are fullysupported by the existing record evidence and whichthis Court never disagreed with in Meacham, arestill the law of this case.

For example, the Second Circuit in Mescham//granted Knolls’ motion for judgment as a matter oflaw based on its finding that although "[t]here mayhave been other reasonable ways for [Knolls] toachieve its goals ., the one selected was notunreasonable." Of course, this is just as it was inCity o£Ja ckson.

The Court of Appeals in Mescham //alsofound that the proof of reasonableness put on byKnolls at trial established without question orchallenge (1) "that the specific features of the IRIFchallenged by plaintiffs were routinely’usedcomponents of personnel decision-making systems in

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general, and were appropriate to the circumstancesthat provoked KAPL’s IRIF." 461 F.3d at 144. Insimilar fashion, in Meact~am II, the court also found(based in large part on the unchallenged testimonyof Knolls’ expert, Frank Landy) that "the criteria’criticality’ ad ’flexibility’ were ubiquitouscomponents of ’systems for making personneldecisions,’ and that the subjective components of theIRIF were appropriate because the managersconducting the evaluations were knowledgeableabout the requisite criteria and familiar with thecapabilities of the employees subject to evaluation."Id.

As the Second Circuit correctly held inMeacI~am II, this and other evidence ofreasonableness introduced at trial by Knollsdemonstrated beyond dispute that "KAPL setstandards for managers constructing matrices andselecting employees for layoff, and [Knolls] didmonitor the implementation of the IRIF," thereby"restrict[ing] arbitrary decision’making byindividual mangers." Id. at 145. In fact, as theSecond Circuit correctly found in MeacI~am II,"KAPL’s staffing manager testified to the importanceof criticality and flexibility to ensuring that [it] couldcarry on operations with a shrinking workforce." Id.at 144. "This evidence," it was also correctly held,"unquestionably discharged [Knolls’] burden ofproduction" on the RFOA defense. Id.

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Nothing in this Court’s decision in Meachamindicates in any way that these findings andholdings by the Second Circuit in Meacham Hare nolonger good law. Accordingly, because these still-valid findings are fully supported by the recordevidence, and are consistent with this Court’sdecisions in Meacham and City of Jackson, theSecond Circuit erred in not granting Knolls’ repeatedrequests for judgment as a matter of law in its favoron the RFOA defense, pursuant to Rule 50(b). SeeReeves v. Sanderson Plumbing, 530 U.S. 133, 148-49(2000), City of Jackson, supra, and Ontario v. Quon,130 S. Ct. 2619 (June 17, 2010).

Furthermore, even if there was no law of thiscase, plaintiffs do not genuinely dispute many of thefacts set forth in Knolls’ cross-petition in support ofthis continued motion. In fact, plaintiffs have failedto dispute in any material way any of the facts setforth by Knolls with respect to the RFOA evidenceintroduced at trial (see Cross-Pet., pp. 6" 11), the juryinstructions given by the District Court to the jury(id. at 11"15), regarding Knolls’ arguments to thejury in summation (id. at 1517), regarding Knolls’Rule 50 motions and the assigned MagistrateJudge’s denial of Knolls’ Rule 50(b) motion onplaintiffs’ disparate impact claims (id. at 18-21).This is for the simple reason that these facts arefully supported by the record before this Court inMeacham, and before the lower courts on remand.

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Notably, plaintiffs have also failed to disputein any way Knolls’ position on the exceptionalnational importance of this case and of the questionsimplicated by the Second Circuit’s Summary Orderto both employers and employees alike. (See id. atpp. 28-40). Likewise notable is the plaintiffs’ failureto oppose or respond in any material way to thearguments made by Knolls at pages 40-43 of theircross-petition. This includes plaintiffs’ failure toaddress or respond to Knolls’ arguments in supportof their continued motion for judgment as a matterof law based on this Court’s decisions in Reeves v.Sanderson Plumbing, 530 U.S. 148"49, City ofJackson, supra, and Ontario v. Quon, supra.

Like the facts in Knolls’ cross-petition, each ofthese cases supports Knolls’ position that it shouldbe awarded judgment as a matter of law dismissingplaintiffs’ disparate impact claims, as this Court didin City of Jackson, based both on plaintiffs’ failure toidentify a specific facially neutral practice thatcaused a disparity (contrary to plaintiffs’misrepresentations that they did so), and onindisputable and overwhelming record evidenceproving that the layoff factors relied upon by Knolls(including but not limited to criticality and flexibilityof skills) were not obscure factors, but werereasonable factors to use in the circumstances of thiscase, as a matter of law.

The cases cited by plaintiffs in their oppositionbrief do not compel or warrant a different conclusion.

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In fact, a number of these cases discussed below fullysupport Knolls’ position that this Court may grantKnolls’ motion for judgment as a matter of law,pursuant to Rule 50(b), rather than countenancingthe need for a new trial.

Contrary to plaintiffs’ argument to the effectthat the Seventh Amendment prohibits this Courtfrom "deciding the sufficiency of the evidence" onappeal in this case (P1. Opp. Br., p. 12), this Courtclearly has the power to enter judgment as a matterof law in favor of Knolls instead of allowing for a newtrial as the Second Circuit has now ordered. Indeed,the cases relied upon by plaintiffs for a contraryargument are not only cited out of context, but, whenread in their entirety, actually support Knolls’position and request for relief.

Thus, for example, the sole issue in Cone v. W.Va. Pulp & Paper Co., was whether, in the absenceof a Rule 50(b) motion for judgment notwithstanding the verdict, "an appellate court [hasthe] power to direct the District Court to enterjudgment contrary to the one it had permitted tostand." 330 U.S. 212, 217-18 (1947). In declining topermit entry of judgment, this Court limited itsruling in Cone to circumstances in which the movingparty failed to timely file a Rule 50(b) motion withthe trial court. Id. at 218. That is plainly not thecase here.

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In fact, the record in this case makes it clearthat, following the entry of the jury’s disparateimpact verdict in favor of plaintiffs, Knolls (unlikethe defendant in Cone) made timely motions underRule 50(a) and then renewed their motion forjudgment as a matter of law under Rule 50(b). Eachtime, Knolls challenged the sufficiency of plaintiffs’disparate impact evidence, arguing that theplaintiffs failed to establish a prima /~ciecase ofdisparate impact discrimination and that theplaintiffs’ layoffs in the reduction in force werejustified.

Plaintiffs’ reliance on Baltimore & CarolinaLine, Inc. v. Redman, 295 U.S. 654 (1935), is alsomisplaced. In Redman, this Court modified thejudgment of the Second Circuit, which had held thatthe trial evidence was insufficient to support theplaintiffs verdict and thus ordered a new trial. Indoing so, this Court modified the Court of Appeals’judgment by "substituting a direction for judgmentof dismissal on the merits in place of the direction fora new trial." Id. at 661.

Simply put, as the Supreme Court made clearin Redman, where the sufficiency of the evidence isproperly challenged at the trial level, as it wasrepeatedly here (see Meacham II, 461 F.3d at 146(noting "[d]efendants repeatedly sought judgment asa matter of law with respect to both the ADEA andHRL claims")), this Court has the power to orderjudgment as a matter of law, instead of a new trial.

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CONCLUSION

If the Court grants plaintiffs’ underlyingpetition, Knolls’ cross-petition should also begranted, and the Court should grant judgment infavor of Knolls and dismiss plaintiffs’ disparateimpact claims in their entirety, as a matter of law.

Dated: September 28, 2010

Respectfully submitted,

MARGARET A. CLEMENSCounsel of Record

LITTLER MENDELSON, P.C.400 Linden Oaks, Suite 110Rochester, NY 14625(585) 203-3400

JOHN E. HIGGINSOn the Petition

NIXON PEABODY LLP677 Broadway, 10th FloorAlbany, NY 12207(518) 427-2650

Attorneys for ConditionalCross" Petitioners