Labor & Employment Law Daily Wrap Up, DISCRIMINATION—AGE—10th Cir.: Employees terminated in Spirit AeroSystems RIF did not establish ageist pattern, practice, (Jan 8, 2025)

By Jason Albright, J.D.

Spirit “softened the role of tenure in an employee’s performance rating.”

Former employees of Spirit AeroSystems, Inc., terminated in a 2013 reduction in force that led to 271 firings, failed to prove that the company engaged in an unlawful pattern or practice under the Age Discrimination in Employment Act, the Tenth Circuit affirmed. Although they presented an array of lay testimony, documentary evidence, and expert opinions that, in combination, might reasonably support an inference that Spirit was concerned about its aging workforce, viewing that evidence individually or collectively, a factfinder could not reasonably infer that Spirit had a standard operating procedure to shed older employees, the court found (Raymond v. Spirit Aerosystems Holdings, Inc., No. 23-3126 (10th Cir. Jan. 7, 2025)).

Financial problems. By early 2011, according to the appeals court, Spirit was experiencing financial problems. Accordingly, in late 2011, executives changed the way the company assessed employee performance. The change resulted in lower performance ratings but no meaningful reduction in the workforce.

Cost-cutting options. Without a meaningful dent in labor costs, Spirit continued to experience financial problems, and its executives discussed other ways to cut costs, such as reviewing management overhead, increasing firings for poor performance, changing the requirements for hiring, optimizing shifts, and offering a voluntary severance package to long-time employees.

Restructuring of performance system. Through these discussions, Spirit decided in 2012 to restructure its system for evaluating employee performance. Under the new system, managers would rate employees so that 15 percent would exceed expectations, 70 percent would meet expectations, and 15 percent would not meet at least some of its expectations.

Its executives conducted training sessions to “educate” managers on the new system, and during the sessions, managers met with employees in the HR department to discuss the performance of various employees.

Resistance. The meetings spurred resistance. One manager complained of pressure from Spirit executives to downgrade older or less healthy workers even when they were performing well. Another employee complained that Spirit was unfairly putting some employees on performance improvement plans (PIPs) while exempting new employees.

New health plan. In addition, Spirit executives discussed funding of healthcare expenses for employees. In these discussions, a contractor told Spirit that its healthcare expenses would increase, largely because of the “aging factor.” Spirit accordingly decided to self-fund its health insurance.

2013 “retention exercise.” After tightening the system for evaluating employee performance, Spirit planned a reduction in force (RIF) that would trim its Wichita, Kansas plant’s workforce by 10 percent. To carry out this plan, it had to comply with a labor contract, under which Spirit could include unionized employees in a RIF only after conducting a “retention exercise.”

Spirit conducted its retention exercise in 2013, and it considered the following factors for each employee: 2012 performance rating, 2013 performance, versatility, and criticality. Spirit defined “versatility” based on an employee’s “critical thinking skills,” the employee’s “flexibility/resiliency/adaptability/attitude,” and other related factors. It assessed “criticality” based on whether the employee had the skills necessary to “best run the critical business functions” or to meet “future business requirements.”

Softened role of tenure. The company also “softened the role of tenure in an employee’s performance Rating,” according to the court. Until then, tenured employees would ordinarily enjoy an advantage. The labor contract generally allowed 20-year employees to advance one category in a retention exercise. Thus, an employee with a C rating and 20 years’ experience would automatically advance to a B rating.

However, the labor contract authorized Spirit to exempt employees and remove the advantage. Spirit exercised this authority under the contract and exempted every tenured employee from this advantage in the retention exercise. It further softened the role of tenure by exempting new employees in the retention exercise as well.

ADEA collective action and decision below. These actions spurred many former employees to bring a collective action under the Age Discrimination in Employment Act (ADEA) in federal district court. The district court granted summary judgment to Spirit based on the employees’ failure to prove an unlawful pattern or practice.

The employees appealed to the Tenth Circuit.

Pattern or practice. Affirming, the appeals court observed that the employees relied on six categories of lay testimony and documentary evidence of Spirit’s alleged unlawful pattern or practice: slides addressing tenure and health-care costs, planning documents, policies, statements by Spirit executives, statements by Spirit employees, and training materials. The issue was “whether Spirit had a standard operating procedure to get rid of older employees,” and considered individually or collectively, the evidence did not support an inference of an ageist operating procedure, according to the Tenth Circuit.

One manager, for instance, complained of ageist pressure, but she did not know who had created it. And some employees disagreed with Spirit’s exemption of new employees from the labor contract’s tenure requirements, but there was no evidence linking this exemption to a bias against older workers. Finally, though Spirit removed a benefit ordinarily afforded to senior workers here, the union contract entitled it to do so, and the move “put all employees on an equal playing field,” according to the appeals court.

Expert opinions. The Tenth Circuit was also unmoved by the expert evidence on which Spirit attempted to rely, most notably one expert witness’s opinions about statistical comparisons among Spirit’s workers. The expert found that older workers had been more likely to get a poor rating in the 2013 retention exercises than in a prior one in 2010 and concluded that Spirit decided between 2010 and 2013 to target older workers. The court was unpersuaded, finding that the expert “wasn’t comparing apples and apples.” In the 2010 retention exercise, it observed, Spirit generally upgraded employees with 20 or more years of experience from a C to a B on its rating scale, and then, in the 2013 retention exercise, Spirit removed that advantage for all employees with 20 or more years of experience. Here, the appeals court observed, “We’ve regarded the removal of similar advantages as age-neutral,” and given the expert’s failure to consider this age-neutral explanation, the court declined to rely on his statistical comparison to infer an ageist operating procedure from the change.

The expert also opined that in the RIF, older workers had been far more likely to lose their jobs than younger workers. To reach the opinion, he examined the firings, controlling for age, discipline, performance rating, and job code, but the district court found that he lacked evidentiary support. The appeals court agreed, finding that the former employees simply did not explain how the factors of “versatility” and “criticality”—which Spirit alleged it had also considered—could refer simply to the job code, as the expert had asserted, when Spirit sometimes compared employees within the same job code. The employees also presented no evidence that versatility or criticality were proxies for age or that the expert had controlled for 2013 performance in his analysis.

Refusal to rehire. Finally, the Tenth Circuit rejected the argument that Spirit’s failure to rehire older workers after the RIF constituted a standard operating procedure involving ageism. In part, the former employees argued that Spirit lulled them into believing that they were eligible for rehire, but they were indeed eligible for rehire, according to the court. And though a factfinder might reasonably agree that Spirit did not want to rehire them, that was hardly unexpected because it “had just fired these employees based on their poor performance, inferior versatility, and lack of criticality.”

The case is No. 23-3126.

Judge: Bachrach, R.

Attorneys: James Harvey Kaster (Nichols Kaster) for Donetta Raymond, Frederick Heston, and Jilun Sha. James M. Armstrong (Foulston Siefkin) for Spirit AeroSystems Holdings, Inc.

Companies: Spirit AeroSystems Holdings, Inc.

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