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finding the court may consider a retaliation claim that arose in response to the plaintiff's EEOC charge
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Civil Action No. 3:99-CV-2077-L
August 20, 2001
MEMORANDUM OPINION AND ORDER
Before the court are Defendant's Motion for Summary Judgment, filed December 28, 2000; Plaintiffs' Motion to Strike Portions of Defendants' [sic] Summary Judgment Evidence, filed February 7, 2001; and Defendant's Motion to Strike Portions of Plaintiff's [sic] Summary Judgment Evidence, filed February 22, 2001. After careful consideration of the motions, responses, replies, briefs, evidence submitted, and applicable law, the court grants in part and denies in part Plaintiffs' Motion to Strike; denies Defendant's Motion to Strike; and grants in part and denies in part Defendant's Motion for Summary Judgment.
I. Factual and Procedural Background
The facts contained herein are either undisputed or, where they are disputed, presented in the light most favorable to Plaintiffs as the nonmovants.
This action arises from an employment relationship between Plaintiff W. Eugene Thompson ("Thompson") and Defendant Origin Technology in Business, Inc. ("Origin"). Thompson was hired by Origin effective July 20, 1998. Thompson's date of birth is April 2, 1935; at the time he was hired, he was 63 years old. He was originally employed as Vice President of Sales for the Managed Services Division. The sales force at Origin was separated into several different divisions, of which Managed Services was one. There were three substantially similar sales management positions at the time, all of which were occupied by individuals younger than Thompson: the SAP Implementation Division, headed by Hans Giesbers ("Giesbers"), date of birth September 6, 1960; the BAAN group, headed by Mike Newell ("Newell"), date of birth June 24, 1954; and the Professional Services group, headed by Bob Coughlin ("Coughlin"), date of birth April 10, 1948.
At the time Thompson was hired, by Tim Baker ("Baker"), he was told by Baker that Origin intended to combine its sales forces into a single, integrated sales force. Thompson was also told, by Baker and other Origin representatives, that he would be a prime candidate for selection as the sales manager over the anticipated integrated sales force. In December 1998, Origin's President, Steve Truitt ("Truitt"), combined the sales forces of the Managed Services Division and the SAP Implementation Division. Truitt considered only Giesbers and Newell for the position, and selected Giesbers. Thompson was offered, and accepted, a position as an account manager in the combined sales force for Managed Services and SAP Implementation, reporting to Giesbers. Thompson's previous duties were assumed by Giesbers and Mike Holder ("Holder"), who was 50 years old at the time. Newell and Coughlin retained their sales management positions, and those sales forces were not integrated into the group under Giesbers.
Thompson was terminated from his account manager position on April 23, 1999, in a meeting with Giesbers and Vicki Plack ("Plack"), Origin's Human Resources Manager. Another employee in Giesbers' group, Martin Kralik ("Kralik"), was terminated at the same time. Thompson and Kralik (57 years old at the time) were the oldest employees in Giesbers' group. The "separation data sheet" for both Thompson and Kralik indicated that they were terminated because of a "reduction in work force," not unsatisfactory performance per se. In his deposition, Thompson states that Giesbers explained the reason for the termination as that Thompson did not understand Origin's business well enough, and did not have a "pipeline" of prospective business. Thompson asserts that he did have approximately $10 million to $14 million of prospective business at the time he was terminated, which he expected to close within six months.
During the meeting with Giesbers and Plack, Thompson was given a proposed severance agreement. The proposed agreement specified certain separation benefits Thompson would receive, and contained a waiver by Thompson of all his claims against Origin, specifically including age discrimination claims. Thompson had not previously asserted any claims based on, or complained of, age discrimination. Thompson appears to believe that the inclusion of age discrimination claims in the proposed waiver is significant. The court disagrees; in such situations, employers routinely seek waivers of any conceivable claim regardless of whether they anticipate such claims.
Thompson also complains of certain post-termination events. Origin provides and administers an employee benefit plan. Thompson participated in the plan, for which he and his wife were beneficiaries. Subsequent to his termination, Thompson made numerous attempts to contact Origin concerning benefits issues. Origin failed to notify the Thompsons of their right to continue health insurance coverage, and did not respond timely to Thompson's inquiries. As a result, Thompson's health insurance was temporarily canceled. The insurance was later reinstated, but Thompson incurred temporary out-of-pocket expenditures for medical and prescription costs. He asserts that he also experienced worry, stress, anxiety, and frustration because of Origin's failure to respond. In connection with Thompson's efforts to secure other employment, a potential employer sent Origin a letter and form to verify Thompson's employment with Origin, on July 6, 1999. No response was received from Origin. Later in 1999, Giesbers was transferred out of his position. Thompson applied for Giesbers' position, by letter to Truitt, but was neither interviewed nor hired.
Thompson filed a charge of age discrimination with the EEOC and Texas Commission on Human Rights ("TCHR") on June 9, 1999. Thompson and his wife Linda Thompson (collectively "the Thompsons") filed this action against Origin on September 14, 1999. Thompson asserts causes of action under the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. § 621 et seq. and the Texas Commission on Human Rights Act ("TCHRA"), Tex. Labor Code Ann. § 21.001 et seq., for age discrimination, consisting of: 1) his demotion in December 1998; 2) his termination in April 1999; and 3) retaliation for filing his age discrimination claim with the EEOC and TCHR, by refusing to verify his employment to a potential employer and refusing to re-hire him in 1999 for Giesbers' position. Thompson also asserts common law claims of quantum meruit, for his services in developing a "pipeline" of business, and fraud, with respect to Origin's representations to him in connection with the demotion in December 1998. Finally, the Thompsons collectively assert a claim under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), 29 U.S.C. § 1161 et seq., for failure to notify them timely of their rights to elect continuation coverage for insurance under Origin's employee benefit plan following Thompson's termination in April 1999.
II. Motions to Strike Summary Judgment Evidence A. Plaintiffs' Motion to Strike
The Thompsons move to strike certain portions of an affidavit by Martin Heneck ("Heneck"), Origin's Vice President of Human Resources. The paragraphs in question concern asserted legitimate, nondiscriminatory reasons for Thompson's demotion and subsequent termination. The Thompsons argue that Heneck's deposition testimony demonstrates that the questioned statements in his affidavit were not based on his personal knowledge and therefore are inadmissible under the standard of Fed.R.Civ.P. 56(e).
The court, having reviewed the affidavit and deposition, concurs in part. The decision to demote Thompson was made by Truitt, and the decision to terminate Thompson was made by Giesbers. Based on his deposition testimony, Heneck clearly bases his "knowledge" about the reasons for the demotion and termination on his awareness of business conditions, what he thought the appropriate decision would have been, and his belief that Truitt and Giesbers would not make such decisions for discriminatory purposes. That is insufficient to conclude, as personal knowledge, that Thompson's age was not a motivating factor in the decisions by Truitt and Giesbers. Further, Heneck's knowledge as to allegedly performance deficiencies must have been based on information received from Truitt and Giesbers.
The challenged paragraphs do, however, contain some assertions that are not necessarily based on information received from others, as opposed to personal knowledge. The court therefore declines to strike the four challenged paragraphs in their entirety. Instead, the court concludes that the following statements should not, and will not, be considered in its evaluation of the motion for summary judgment:
* Paragraph 3: "This company reorganization was based entirely on business reasons, and was in no way based on Mr. Thompson's age, or any discriminatory reason. Instead, it was a legitimate, non-discriminatory business decision made by the company."
* Paragraph 5: "The decision to terminate Mr. Thompson on April 23, 1000 was due to declining revenues generated by the entire sales force, including Mr. Thompson." "Because Thompson's salary of $150,000 per year was more than most sales personnel within the integrated sales group, and he demonstrated poor sales performance and displayed production inadequacies — that is, he failed to close one sale since his hire in July 1998 — a decision was made to terminate his employment." Paragraphs 6 and 7: in their entirety
As discussed below, the court would come to the same conclusion with respect to Thompson's age discrimination claims even if it considered these portions of the Heneck affidavit.
B. Defendant's Motion to Strike
Origin moves to strike portions of deposition testimony by Plack in which she discusses an "inappropriate comment" about Thompson's age, made to her by Giesbers shortly after Thompson's termination. She gave conflicting answers regarding whether she considered the comment as a possible indication that the termination was based in part on Thompson's age, but admitted that she had held the belief that Thompson's age might have been a factor in the decision. Plack could remember no other details about the remark, other than that she called her superior, Heneck, to express her concern. Heneck also did not remember details of the remark, but stated that he discussed the remark with Truitt, Giesbers' superior, as well as the Chief Financial Officer and in-house counsel; disciplinary action was subsequently taken against Giesbers.
Plaintiffs' Appendix at 268, 277. She told Giesbers at the time that the comment was inappropriate. Id. at 268.
Id. at 269-72.
Id. at 278-79.
Id. at 195-99.
Origin concludes that those portions of Plack's deposition are inadmissible. Specifically, Origin relies upon EEOC v. Texas Instruments, Inc., 100 F.3d 1173 (5th Cir. 1996), in which the Fifth Circuit noted that age-based comments are "stray remarks" and not probative of discriminatory intent unless "direct and ambiguous." Id. at 1181. The court finds this argument unpersuasive. The "stray remarks" doctrine concerns the probative value of the evidence rather than its admissibility. EEOC v. Manville Sales Corp., 27 F.3d 1089, 1093 n. 2 (5th Cir. 1994), cert. denied, 513 U.S. 1190 (1995). Further, as discussed below, the reactions of Origin's management to the comment increase its probative value beyond that of the typical "stray remark." The court therefore concludes that the challenged evidence is relevant and admissible for purposes of summary judgment, and declines to strike it.
III. Summary Judgment Standard
Summary judgment shall be rendered when the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 323-25 (1986); Ragas v. Tennessee Gas Pipeline Co., 136 F.3d 455, 458 (5th Cir. 1998). A dispute regarding a material fact is "genuine" if the evidence is such that a reasonable jury could return a verdict in favor of the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). When ruling on a motion for summary judgment, the court is required to view all inferences drawn from the factual record in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 587 (1986); Ragas, 136 F.3d at 458.
Once the moving party has made an initial showing that there is no evidence to support the nonmoving party' s case, the party opposing the motion must come forward with competent summary judgment evidence of the existence of a genuine fact issue. Matsushita, 475 U.S. at 586. Mere conclusory allegations are not competent summary judgment evidence, and thus are insufficient to defeat a motion for summary judgment. Eason v. Thaler, 73 F.3d 1322, 1325 (5th Cir. 1996). Unsubstantiated assertions, improbable inferences, and unsupported speculation are not competent summary judgment evidence. See Forsyth v. Barr, 19 F.3d 1527, 1533 (5th Cir.), cert. denied, 513 U.S. 871 (1994). The party opposing summary judgment is required to identify specific evidence in the record and to articulate the precise manner in which that evidence supports his claim. Ragas, 136 F.3d at 458. Rule 56 does not impose a duty on the court to "sift through the record in search of evidence" to support the nonmovant's opposition to the motion for summary judgment. Id., see also Skotak v. Tenneco Resins, Inc., 953 F.2d 909, 915-16 n. 7 (5th Cir.), cert. denied, 506 U.S. 832 (1992). "Only disputes over facts that might affect the outcome of the suit under the governing laws will properly preclude the entry of summary judgment." Anderson, 477 U.S. at 248. Disputed fact issues which are "irrelevant and unnecessary" will not be considered by a court in ruling on a summary judgment motion. Id. If the nonmoving party fails to make a showing sufficient to establish the existence of an element essential to its case and on which it will bear the burden of proof at trial, summary judgment must be granted. Celotex, 477 U.S. at 322-23.
IV. Analysis A. Age Discrimination Claims — Demotion
Under the applicable burden-shifting paradigm for age discrimination claims, Thompson must establish a prima facie case of discrimination; Origin must then articulate a legitimate, nondiscriminatory reason for its action; and finally, if the parties satisfy their initial burdens, the case reaches the "pretext stage" and Thompson must adduce sufficient evidence to permit a reasonable trier of fact to find pretext or intentional discrimination. See McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802-04 (1973) (Title VII race discrimination claim); Price v. Marathon Cheese Corp., 119 F.3d 330, 336 (5th Cir. 1997) (applying McDonnell Douglas framework to ADEA claims); Quantum Chemical Corp. v. Toennies, 47 S.W.3d 473, 476-77 (Tex. 2001) (applying McDonnell Douglas framework to TCHRA claims; noting that, absent plain language in the state statute to the contrary, "analogous federal statutes and the cases interpreting them guide our reading of the TCHRA"). The typical prima facie case for an age discrimination claim involves a termination or demotion in which the plaintiff is replaced, and focuses on the identity of the replacement. See, e.g., Crawford v. Formosa Plastics Corp., Louisiana, 234 F.3d 899, 902 (5th Cir. 2000). In this case, however, it is clear that Thompson was not replaced. When he was demoted in December 1998, his former position was eliminated. The court therefore concludes that the appropriate requirements for Thompson' s prima face case are those associated with reductions in force. Thompson must show
The parties have not identified any respects, relevant to the motion for summary judgment, in which the provisions of the TCHRA should be interpreted differently than the provisions of the ADEA. The court therefore relies, for purposes of analyzing the age discrimination claims, on precedents addressing the ADEA and applies them to the TCHRA claims.
(1) that he is within the protected age group; (2) that he has been adversely affected by the employer's decision; (3) that he was qualified to assume another position at the time of the discharge; and (4) evidence, circumstantial or direct, from which a factfinder might reasonably conclude that the employer intended to discriminate in reaching the decision at issue.Nichols v. Loral Vought Systems Corp., 81 F.3d 38, 41 (5th Cir. 1996) (citation and internal quotation marks omitted). This requires only a minimal showing. Id.
There appears to be no serious dispute that Thompson has established a genuine issue of material fact as to the first three elements of the prima facie case for the demotion. Accordingly, the key issue as to the prima facie case is the fourth element, "evidence, circumstantial or direct, from which a factfinder might reasonably conclude that the employer intended to discriminate in reaching the decision at issue."
Thompson points out that at the time of the demotion he was significantly older than the other three people in comparable positions, none of whom was demoted. Origin argues that this is insufficient, citing Amburgey v. Corhart Refractories Corp., 936 F.2d 805 (5th Cir. 1991) and Thornbrough v. Columbus Greenville R.R., 760 F.2d 633 (5th Cir. 1985) for the proposition that a plaintiff must also allege that the younger employees are less qualified. The court concludes that this is an overly narrow reading of Amburgey and Thornbrough. Although the plaintiffs in those cases did in fact allege that the younger employees retained were less qualified, neither case clearly indicated that such allegations were necessary. The discussion in Thornbrough suggests a lower threshold. "In a reduction-in-force case, what creates the presumption of discrimination is not the discharge itself, but rather the discharge coupled with the retention of younger employees." Thornbrough, 760 F.2d at 644.
[W]hat is suspicious in reduction-in-force cases is that the employer fired a qualified, older employee but retained younger ones. If we focus not on why employees, in general, were discharged, as the district court did, but instead on why the plaintiff rather than another employee was discharged, the discharge of an older employee rather than a younger one is initially unexplained. Under these circumstances, requiring the employer to articulate reasons for his decision to fire the plaintiff is appropriate. It serves the primary function of the prima facie case doctrine: to sharpen the inquiry into the elusive factual question of intentional discrimination.Id. (citation and internal quotation marks omitted) (citing decisions from other courts applying a minimal threshold in such cases). The court concludes from Thornbrough that evidence that younger employees were treated more favorably, without any allegations that the younger employees were less qualified, is generally sufficient to shift the burden to the employer in the second stage of the McDonnell Douglas framework. The court therefore concludes that Thompson has met his initial burden of establishing a genuine issue of material fact as to the elements of the prima facie case.
Origin asserts that it had legitimate, nondiscriminatory reasons for the demotion. Its proffered evidence, however, was the Heneck affidavit, specifically the portions challenged by the Thompsons' motion to strike and excluded by the court. Origin submitted no affidavit or deposition by Truitt, the decisionmaker with respect to the demotion, but the Thompsons did submit excerpts from Truitt's deposition. In those excerpts, Truitt indicated that the decision to select Giesbers for the position, and therefore demote Thompson, was motivated by: 1) Giesbers' initiative in developing a plan for organization and operation of the combined group; and 2) Thompson's relative unfamiliarity with the portion of the business that was expected to become dominant. The rebuttal of the presumption created by the prima facie case requires only a minimal showing, as does the prima facie case itself. Amburgey, 936 F.2d at 813. The court concludes that Origin has at least established a genuine issue of material fact as to a legitimate, nondiscriminatory reason for the demotion.
The court notes that the Heneck affidavit would have been insufficient in any event. In it, Heneck asserts that there was a legitimate, nondiscriminatory reason for the reorganization. The relevant decision that is challenged by the Thompsons, however, was not the reorganization per se but the selection of Giesbers rather than Thompson for the single sales management position remaining in the combined groups as a result of the reorganization. "The question is why, given the employer's need to reduce his workforce, he chose to discharge the older rather than the younger employee. By shifting the burden of production to the employer, this is the question that we hope to answer." Thornbrough, 760 F.2d at 645.
Plaintiffs' Appendix at 415-16.
Id. at 406-07.
The Thompsons, however, have not identified sufficient evidence to permit a reasonable trier of fact to find pretext or intentional discrimination with respect to the demotion. In essence, they rely on Thompson's performance appraisal, in December 1998 shortly before the reorganization, in which he received the highest rating possible in all categories. The cases cited by the Thompsons, for the proposition that good appraisals and the absence of any complaints about performance establish a genuine issue of material fact as to pretext, are not persuasive for a number of reasons. Several of those cases involved a discharge for poor performance, rather than as a result of a reduction in force. Rivers-Frison v. Southeast Missouri Cmty. Treatment Ctr., 133 F.3d 616, 618 (8th Cir. 1998); Duchon v. Cajon Co., 791 F.2d 43, 45-46 (6th Cir. 1986); Sweat v. Miller Brewing Co., 708 F.2d 655, 656 (11th Cir. 1983). An employee's considerations in a reduction in force, however, are different than those involved in a discharge or demotion for poor performance.
Id. at 9-12.
Unlike in an ordinary discharge case, where the mere discharge creates a presumption of discrimination because we assume that an employer does not fire a qualified employee, in a reduction-in-force case, discharges are readily explicable in terms of the employer's economic problems. Consequently, the fact that qualified, older employees are laid off is not inherently suspicious. . . .Thornbrough, 760 F.2d at 644. Accordingly, the relevant issue is not whether Thompson was well qualified in his previous position, but his qualifications for the newly-created position taken by Giesbers and his performance relative to Giesbers. Id. at 646 n. 22. The absence of previous complaints about inadequate performance, as in Rivers-Frison, Duchon, and Sweat, is relevant to the former but not the latter. The court therefore concludes that, when a plaintiff's position is consolidated during a reduction in force with another position, sufficiently different from his previous position to weaken the predictive value of his previous performance, the plaintiff's good performance and absence of complaints in his previous position are insufficient by themselves to create a genuine issue of material fact as to pretext. The Thompsons have presented nothing further to show that the stated reasons for his demotion were pretext for discrimination. Accordingly, there is no genuine issue of material fact as to Thompson's age discrimination claims based on his demotion, and Origin is entitled to judgment as a matter of law as to those claims.
The court further notes that in the cases cited by the Thompsons there was more evidence, offered to rebut the articulated legitimate, nondiscriminatory reason for the discharge, than merely a positive performance appraisal and the absence of prior complaints. See Wilson v, AM General Corp., 167 F.3d 1114, 1117-18, 1121 (7th Cir. 1999); Rivers-Frison, 133 F.3d at 620; Duchon, 791 F.2d at 46-47; Sweat, 708 F.2d at 656-57.
B. Age Discrimination Claims — Termination
As to Thompson's termination, the court concludes that the appropriate requirements of his prima facie case are those associated with a discharge rather than a reduction in force. His separation data sheet indicated that the reason for termination was reduction in work force. The Thompsons also submitted an email from Giesbers to Truitt, however, which referenced an agreement to "use [Thompson's and Kralik's] slots" for two other individuals, Eric van der Velden ("van der Velden") and Ken Brown ("Brown"). Regardless of whether van der Velden and Brown were eventually hired, there was apparently the intent to retain the positions rather than eliminate them. Accordingly, the court concludes that Thompson's claim based on the termination, despite some ambiguity, should be analyzed as a typical discharge case rather than a reduction in force case.
Plaintiffs' Appendix at 13.
The prima facie case of age discrimination in the context of a discharge requires Thompson to show that "he is a member of a protected class, he was qualified for the position that he held, he was discharged," and "he was either i) replaced by someone outside the protected class, ii) replaced by someone younger, or iii) otherwise discharged because of his age." Brown v. Bunge Corp., 207 F.3d 776, 781 (5th Cir. 2000) (citation and internal quotation marks omitted). There appears to be no serious dispute that Thompson has established a genuine issue of material fact as to the first and third elements of the prima facie case for the termination. Thompson points out that he and the other employee discharged were the oldest members of the group, and van der Velden was substantially younger than Thompson. The court concludes that this is sufficient to at least establish a genuine issue of material fact as to the fourth element of the prima facie case.
Van der Velden was born on February 7, 1963; Brown was never hired by Origin, and his date of birth was not available. Plaintiffs' Supplemental Appendix.
Although Origin's briefs are not entirely clear on this point, Origin may be contending that Thompson was not "qualified for the position he held" when he was terminated. Thompson points out that the separation data sheet specified the reason for his termination as reduction in force rather than unsatisfactory performance. The sheet also indicates that Origin would not rehire Thompson, but Thompson states, through affidavit, that he had a substantial "pipeline" of business (greater than his sales quota) expected to close within six months and that he had not received any previous indications that his performance was unsatisfactory. The court does not weigh the evidence or evaluate whether it would be sufficient to prevail at trial, but concludes that Thompson has at least established a genuine issue of material fact as to this element, and therefore as to the prima facie case as a whole. Origin asserts that it had legitimate, nondiscriminatory reasons for the termination. As with the demotion, however, its proffered evidence was the Heneck affidavit, specifically the portions challenged by the Thompsons' motion to strike and excluded by the court. Origin submitted no affidavit or deposition excerpts from Giesbers, the actual decisionmaker with respect to the termination. Origin also submitted the EEOC Charge of Discrimination filed by Thompson, on which Thompson stated that the asserted reason for the termination was that he "didn't understand [the] business," as well as Thompson's deposition which contained similar statements. It is far from clear whether the EEOC charge and Thompson's deposition would suffice to establish a genuine issue of material fact as to the second stage of the McDonnell Douglas framework. Both in essence recount out-of-court statements by Giesbers, presumably offered for the truth of the matter asserted, which would normally be considered hearsay. Because Giesbers' statements are offered against Thompson, rather than against Origin, they would not qualify as non-hearsay admission by party-opponent under Fed.R.Evid. 802(d)(2).
Analysis as a reduction in force case would not change the conclusion. The distinction would simply result in slightly different elements for the prima facie case. For a reduction in force case, the plaintiff must show that he is qualified for another position, while in a discharge case, the plaintiff must show that he is qualified for the position he held. The court concludes that this distinction is trivial and would have no effect here. This leaves the fourth element: in a reduction in force case, "evidence, circumstantial or direct, from which a factfinder might reasonably conclude that the employer intended to discriminate in reaching the decision at issue," Nichols, 81 F.3d at 41; in a discharge case, that "he was either i) replaced by someone outside the protected class, ii) replaced by someone younger, or iii) otherwise discharged because of his age." Brown, 207 F.3d at 781 (citation and internal quotation marks omitted). For essentially the same reasons as noted in the discussion of Thompson's claims based on demotion, the court concludes that Thompson has also established a genuine issue of material fact as to the fourth element of the prima facie case for a reduction in force.
In any event, the court need not decide the issue. Even assuming arguendo that Origin has submitted competent summary judgment evidence as to a legitimate, nondiscriminatory reason, it is clear that Thompson has submitted evidence sufficient to create a genuine issue of material fact as to pretext concerning the termination. Specifically, Thompson offers Plack's deposition, in which she discusses an inappropriate age-based remark by Giesbers shortly after Thompson's termination. Further, the remark does not stand alone, but is supported by the reactions of Origin's Human Resources Manager (Plack), who evaluated it as a possible indication of discrimination. Plack discussed it with the Vice President of Human Resources (Heneck), and Heneck discussed it with Truitt, Origin's President, as well as the Chief Financial Officer and in-house counsel. Although certainly not conclusive evidence, along with other evidence of pretext it would be enough that a reasonable juror could "conclude without any inferences or presumptions that age was an impermissible factor in the decision to terminate the employee." Texas Instruments, 100 F.3d at 1181.
Origin argues that the remark is insufficient as evidence of pretext under the "stray remarks" doctrine. As Thompson notes, the Fifth Circuit has "questioned the continued vitality of the stray remarks doctrine," Auguster v. Vermilion Parish Sch. Bd., 249 F.3d 400, 404 (5th Cir. 2001), in light of the Supreme Court decision in Reeves v. Sanderson Plumbing Products, Inc., 530 U.S. 133 (2000). The Fifth Circuit, however, has "interpreted Reeves not to overrule our stray remarks jurisprudence, at least where the plaintiff has failed to produce substantial evidence of pretext." Id. at 405. Thus, stray remarks can be considered as evidence of pretext (as Thompson argues), but only when accompanied by sufficient indicia of relevance (as Origin argues) — essentially, the four-part test originated in Brown v. CSC Logic, Inc., 82 F.3d 651 (5th Cir. 1996) and still recognized by the Fifth Circuit post-Reeves:
For comments in the workplace to provide sufficient evidence of discrimination, they must be 1) related to the protected class of persons of which the plaintiff is a member; 2) proximate in time to the terminations; 3) made by an individual with authority over the employment decision at issue; and 4) related to the employment decision at issue.Auguster, 249 F.3d at 405 (citations, internal quotation marks, and internal brackets omitted). Age-based remarks may be considered "even if uttered by one other than the formal decisionmaker, provided that the individual is in a position to influence the decision." Russell v. McKinney Hosp. Venture, 235 F.3d 219, 229 (5th Cir. 2000). There is at least a genuine issue of material fact whether the age-based comment by Giesbers, as described above, meets these requirements. The court further notes that the comment is enforced by associated evidence as to how seriously Origin management took it. The stray remarks doctrine therefore cannot shield Origin in this instance.
Origin also argues in its reply brief that this is inadmissible hearsay. Defendant's Brief in Reply to Plaintiff's [sic] Response to Defendant's Motion for Summary Judgment ("Reply Brief") at 9 n. 11. The court disagrees. Here, Giesbers' out-of-court comment is offered against Origin, and therefore qualifies as non-hearsay admission by party-opponent under Fed.R.Evid. 802(d)(2).
For example, in her deposition Plack also stated that poorly performing employees were normally placed on a performance improvement plan and given 90 days to improve, but that Thompson was never put on such a plan. Plaintiffs' Appendix at 250-56.
Origin also argues that the "same actor" doctrine justifies summary judgment in its favor on the termination claim. Under that doctrine, when the same individual makes the decision to hire the plaintiff and later to fire the plaintiff, there is an "inference that age discrimination was not the motive behind [the] termination." Brown v. CSC Logic, Inc., 82 F.3d 651, 658 (5th Cir. 1996). The reason for the doctrine is that the decisionmaker's presumed animus against the protected class, as the motive for the termination, is inconsistent with the decision to hire the plaintiff in the first place. Id.
The court finds Origin's argument unpersuasive. Thompson asserts that he was initially hired by Baker, demoted by Truitt, and terminated by Giesbers. Origin argues that "Thompson did not become less desirable as an employee between the time he was hired at the age of sixty-three (63) years, and the time he turned sixty-four (64) years of age" or the time he was terminated, nine months after being hired. This argument places the focus on the objective desirability of Thompson as an employee, which is not the relevant issue. The rationale for the "same actor" doctrine relies on the decisionmaker's animus (or lack thereof) toward members of a protected class. Animus on the basis of age, in this context, is specific to an individual decisionmaker. The apparent absence of age bias by Baker creates no inference as to a similar lack of animus by Giesbers. Even if it did, the "same actor" doctrine creates only an inference, which can be overcome by sufficient evidence that the stated reason for the termination was pretext for age discrimination. Id, The court concludes that the Thompsons' evidence described above is clearly sufficient to create a genuine issue of material fact as to pretext, even if the "same actor" inference applied. Accordingly, there is a genuine issue of material fact as to Thompson's age discrimination claims based on his termination, and Origin is not entitled to judgment as a matter of law as to those claims.
Reply Brief at 7.
C. Age Discrimination Claims — Retaliation
Retaliation claims pursuant to the ADEA are analyzed using the same McDonnell Douglas burden-shifting framework. Sherrod v. American Airlines, Inc., 132 F.3d 1112, 1121 (5th Cir. 1998). "A plaintiff establishes a prima facie case of unlawful retaliation by proving (1) that she engaged in protected activity, (2) that an adverse employment action occurred, and (3) that a causal link existed between the protected activity and the adverse employment action." Id. at 1122 n. 8. Filing an EEOC charge is such a protected activity. Id. at 1122. Thompson asserts that Origin retaliated against him, for the EEOC charge he filed on June 9, 1999, by refusing in July 1999 to verify his employment to a potential employer and/or by refusing to rehire him in October 1999. Origin presents two arguments for summary judgment: 1) that Thompson did not administratively exhaust his retaliation claim by including it in a charge filed with the EEOC; and 2) that Thompson has not shown a causal connection between filing his EEOC charge and the actions that he claims constitute retaliation. The court finds neither argument persuasive.
A condition precedent to bringing suit on an employment discrimination claim is the timely filing of an EEOC charge. Young v. City of Houston, Tex., 906 F.2d 177, 179 (5th Cir. 1990). The scope of a lawsuit filed thereafter extends no further than the scope of the investigation that can reasonably be expected to grow out of the charge of discrimination. Id.; Fine v. GAF Chemical Corp., 995 F.2d 576, 577-78 (5th Cir. 1993); Chester v. American Tel Tel Co., 907 F. Supp. 982, 987 (N.D. Tex. 1994), aff'd, 68 F.3d 470 (5th Cir. 1995), cert. denied, 516 U.S. 1141 (1996). The lawsuit is not limited to the exact language of the EEOC charge, but neither does it extend beyond the investigation that would reasonably arise from that language. The determination involves competing policies — limiting the scope of the lawsuit to promote "an emphasis upon voluntary settlement of all issues without an action in the District Court," and expanding the scope of the lawsuit to recognize "the remedial and humanitarian underpinnings of [the ADEA]," Sanchez v. Standard Brands, Inc., 431 F.2d 455, 461, 467 (5th Cir. 1970) (internal quotation marks and citation omitted).
The Thompsons cite an exception to this general requirement of exhausting administrative remedies. In Gupta v. East Texas State Univ., 654 F.2d 411 (5th Cir. 1981), the Fifth Circuit held that plaintiffs need not exhaust administrative remedies for a retaliation claim related to an earlier charge. Id. at 413-14. That is, if a plaintiff files an EEOC charge and subsequently alleges retaliation specifically for filing that EEOC charge, the retaliation claim is ancillary to the claim of discrimination in the original charge; if the original claim of discrimination is properly before the court, the retaliation claim can also be heard by the court regardless of whether a second EEOC charge was filed for the retaliation. Id. Because Thompson's EEOC charge was based on his demotion and termination, he alleges retaliation specifically in response to the EEOC charge, and the termination claim is properly before the court, the court has ancillary jurisdiction over the retaliation claim.
Origin attempts, unsuccessfully, to distinguish Gupta, Origin appears to argue that in Gupta the original acts of discrimination and the retaliatory conduct were by the same entity, whereas here the alleged original acts of discrimination were by Giesbers and Truitt while the alleged retaliatory conduct was by unidentified Human Resources personnel. Gupta, however, is not based on such a "same actor" presumption. The rationales for the rule in Gupta are that: 1) requiring administrative exhaustion of a retaliation charge, which naturally arise after an EEOC charge is filed, would lead to "a double filing that would serve no purpose except to create additional procedural technicalities"; and 2) "[eliminating this needless procedural barrier will deter employers from attempting to discourage employees from exercising their rights under [the ADEA]." Id. at 414. Neither rationale requires limiting the rule to retaliatory conduct by the "same actor." Accordingly, the court concludes that Gupta controls and administrative exhaustion of the retaliation claim is not required in this situation.
For the third element of the prima facie case, the causal connection between the protected activity (filing the EEOC charge) and the alleged retaliatory conduct (refusal to verify employment and refusal to rehire), the Thompsons offer only the close proximity in time. This is, however, sufficient to establish a genuine issue of material fact as to the causal connection. "Close timing between an employee's protected activity and an adverse action against him may provide the `causal connection' required to make out a prima facie case of retaliation." Swanson v. General Servs. Admin., 110 F.3d 1180, 1188 (5th Cir.), cert. denied, 522 U.S. 948 (1997). Even retaliatory conduct four months after the protected activity can create an inference of a causal connection. Evans v. City of Houston, 246 F.3d 344, 354 (5th Cir. 2001). Origin fails to address this argument. The court concludes that the Thompsons have established a genuine issue of material fact concerning the causal connection between protected activity and retaliatory conduct. Accordingly, Origin is not entitled to judgment as a matter of law with respect to the retaliation claims.
Origin notes that Thompson has provided no summary judgment evidence that the position for which he applied was even open at the time. The court need not address this issue, because Thompson has provided summary judgment evidence as to the other alleged retaliatory conduct, the refusal to verify employment.
Conversely, a long delay between the protected activity and the alleged retaliatory conduct is not "legally conclusive proof against retaliation." Shirley v. Chrsyler First, Inc., 970 F.2d 39, 43 (5th Cir. 1992).
D. Quantum Meruit Claim
Thompson asserts a claim based on quantum meruit, for the value of his services in "building a strong pipeline of accounts for his sales team, which led to increased sales of Origin's services."
To recover quantum meruit damages, a claimant must prove that: 1) he rendered valuable services or furnished materials; 2) for the person sought to be charged; 3) such services and materials were accepted, used and enjoyed by the person sought to be charged; and 4) under such circumstances as reasonably notified the person sought to be charged that the plaintiff in performing such services was expecting to be paid by the person sought to be charged.McFarland v. Sanders, 932 S.W.2d 640, 643 (Tex.App.-Tyler 1996, no writ). Recovery under quantum meruit is based on the prospect of unjust enrichment to the defendant. Id. Origin alleges that there was no unjust enrichment, because Origin obtained no sales, executed contracts, or revenue from the prospects developed by Thompson.
Second Amended Complaint ("Complaint") ¶ 37.
Thompson responds that he "built a multi-million dollar pipeline of accounts that would have resulted in significant revenue to Origin had Origin not removed him from his Vice President position and his sales position." He cites Truly v. Austin, 744 S.W.2d 934 (Tex. 1988) for the proposition that "recovery in quantum meruit is allowed when a plaintiff has partially performed an express contract but, because of the defendant's breach, the plaintiff is prevented from completing the contract." Id. at 936. The court disagrees with Thompson's interpretation of Truly. The quoted passage was presented as an exception to the general principle that "a plaintiff who seeks to recover the reasonable value of services rendered or materials supplied will be permitted to recover in quantum meruit only when there is no express contract covering those services or materials." Id. It did not eliminate the other requirements for a quantum meruit claim, including that of unjust enrichment. In fact, Truly reiterated the unjust enrichment requirement.
Plaintiffs' Brief in Opposition to Defendant's Motion for Summary Judgment ("Response Brief") at 26-27 (emphasis added).
To justify a recovery in quantum meruit, the plaintiff must not only show that he has rendered a partial performance of value, but must also show that the defendant has been unjustly enriched and the plaintiff would be unjustly penalized if the defendant were permitted to retain the benefits of the partial performance without paying anything in return. 5AA. Corbin, Corbin on Contracts § 1122 (1964).Id. at 938 (emphasis added). If, as Origin asserts and Thompson apparently does not dispute, the prospects in question never resulted in actual sales and revenue for Origin, Origin has not been unjustly enriched. Accordingly, the court concludes that there is no genuine issue of material fact as to Thompson's quantum meruit claim, and Origin is entitled to judgment as a matter of law with respect to that claim.
Indeed, Origin arguably has been "punished" for its decisions to demote and later terminate Thompson.
E. Fraud Claim
Thompson's fraud claim is based on statements made to him by Giesbers and Baker in the December 1998 meeting in which they notified him of the reorganization and that Giesbers had been selected to lead the combined sales forces. Specifically, he alleges that Giesbers and Baker told him that the sales force had been fully integrated, whereas the reorganization only combined sales forces from the SAP Implementation and Managed Services divisions; that his position had been eliminated; and that he "would be compensated for the pipeline of accounts he had built while working as Vice President of Sales for the Managed Services Division." "The elements of fraud are a material misrepresentation, which was false, and which was either known to be false when made or was asserted without knowledge of the truth, which was intended to be acted upon, which was relied upon, and which caused injury." DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 688 (Tex. 1990). Origin asserts that Thompson has presented no evidence of materiality, reliance, injury, or Origin's intent that Thompson would rely on the alleged false representations.
The court finds this contention confusing. Thompson asserts that the "truth" was that "Giesbers would be assuming Mr. Thompson's duties." That is not inconsistent with a representation that Thompson's position, as it existed before, was being combined with Giesbers' former position. Employers commonly talk of "eliminating" positions in such circumstances, even though the duties are absorbed.
Complaint ¶ 41.
Thompson's argument as to materiality, reliance, and Origin's intent, as the court understands it, is that as a result of the statements in the December 1998 meeting, he accepted the demotion to an account manager position. His reliance on the representations in making a significant decision therefore implies that the representations were material. Burleson State Bank v. Plunkett, 27 S.W.3d 605, 613 (Tex.App. — Waco 2000, pet. denied) ("A representation is `material' if it is important to the party to whom it is made in making a decision regarding the particular transaction.") Origin cites to other statements in Thompson's deposition that appear to be inconsistent with his assertion that he would have acted differently if he had known the true state of affairs, but at most that affects the credibility of his later statement in the deposition that he would have acted differently. Finally, as the representations were made in a meeting in which, or resulting from which, Thompson was required to make a decision (whether to accept the account manager position), the jury could reasonably conclude that Origin anticipated that his decision would be influenced by, and intended that he rely on, the representations. Although the question of Origin's intent is close, the court concludes that Thompson has established a genuine issue of material fact as to these three challenged elements of his fraud claim.
Origin characterizes the statements thus: "During his deposition, however, Thompson admitted that notwithstanding any alleged representation, he would not have reacted any differently." Reply Brief at 13. That is a mischaracterization. The referenced statements were only to the effect that he did not know what, if anything, he would have done differently. Defendant's Appendix at 168-69.
Thompson's evidence as to resulting injury, however, is problematic. He contends that accepting the account manager position harmed him, although the alternative would have been no job and no salary, because it would have been easier to find another position by being able to say that his immediately previous position had been as vice president of sales and marketing for a $4 billion company. In other words, he contends that his short-lived position as an account manager harmed his future job prospects. This does not mean, however, that Thompson has sustained a cognizable injury.
Plaintiffs' Appendix at 395 A (Thompson deposition). Out of an abundance of caution, the court considers this evidence although Thompson did not point to it or even make the argument in his brief. In fact, the brief describes the injury as that "he was removed from a position in which he had received excellent performance ratings, was placed in a position but was not given sufficient time in that position to succeed, and lost significant earnings as a result." Response Brief at 28-29. This characterization of the injury is, of course, insufficient for Thompson's fraud claim. Origin, rather than Thompson, decided to demote him and allegedly decided to terminate him without giving him sufficient time to succeed in his new position. These injuries simply cannot have resulted from Thompson's reliance on any allegedly fraudulent representations, as the decisions were not within his control.
"In order to recover damages in a fraud cause of action, one must plead and prove a pecuniary loss that is `directly traceable to and which resulted from the false representation' relied upon. In addition, speculative losses and lost profits are not recoverable in an action for fraud." Sanchez v. Johnson Johnson Med., Inc., 860 S.W.2d 503, 514 (Tex.App.-El Paso 1993), aff'd in part, rev'd in part on other grounds, 924 S.W.2d 925 (Tex. 1996). "[W]hen there has been fraud in the employment relationship, damages in the form of lost [future] wages and benefits" may be appropriate. Id. There must still be some method of ascertaining damages, however. Hoechst Celanese Corp. v. Arthur Bros., 882 S.W.2d 917, 926 (Tex.App.-Corpus Christi 1994, writ denied) ("[Fraud] damages must be susceptible of ascertainment in some manner other than speculation and by reference to some fairly definite standard."). "[R]easonable, not absolute, certainty" is the appropriate standard, id., but Thompson presents nothing more than a conclusory allegation to even show that he was injured, let alone that the amount would be ascertainable. He presents no evidence that he sought other employment (other than one position for which Origin did not respond to the potential employer's request for verification of employment), that other suitable positions were available, what positions he was denied, or what impact his demotion had on the potential employers.
It is far from clear whether a plaintiff could ever recover for lost future wages and benefits unless he is able to demonstrate a high likelihood that he would have been offered a particular position, different from his position at the time, absent his reliance on the alleged fraud. Such reasonable certainty is rare for the type of positions Thompson presumably would have sought. Thompson's failure to even attempt such a showing is fatal. The court concludes that Thompson has not demonstrated the existence of a genuine issue of material fact with respect to the injury prong of his fraud claim. Accordingly, the fraud claim fails, and Origin is entitled to judgment as a matter of law as to that claim. F. COBRA Claim
His position at the time paid $150,00 per year.
COBRA provides that under certain circumstances employees who would otherwise lose coverage under a group health plan can elect to continue coverage at their own expense. 29 U.S.C. § 1161(a), 1162, 1164, 1165. Termination is a "qualifying event" 29 U.S.C. § 1163(2). The employer must notify the plan administrator of such qualifying events within 30 days, 29 U.S.C. § 1166(a)(2), and the administrator must then notify beneficiaries within 14 days of their right to elect continuation coverage, 29 U.S.C. § 1166(a)(4), (c). If the administrator does not provide the required notice, or fails to comply with a request for information within 30 days, the administrator "may in the court's discretion be personally liable to such participant or beneficiary in the amount of up to $100 a day from the date of such failure or refusal, and the court may in its discretion order such other relief as it deems proper." 29 U.S.C. § 1132(c)(1). The Thompsons, both of whom were beneficiaries under Origin's employee benefits plan, allege that Origin failed to notify them of their rights to elect continuation coverage and failed to respond timely to requests for information. Origin advances three arguments for dismissal of the Thompsons' COBRA claim: 1) that the Thompsons failed to exhaust internal appeals procedures; 2) that the Thompsons suffered no damages; and 3) that the court, in exercising its discretion, should decline to impose the statutory penalty in the absence of bad faith on Origin's part or prejudice to the Thompsons. The court finds none of these arguments sufficient as a basis for granting summary judgment.
COBRA is a component of the overall statutory framework of the Employee Retirement Income Security Act of 1974 ("ERISA") (codified as amended at 29 U.S.C. § 1001-1461 and in scattered sections of titles 5, 18, 26, 31 and 42 U.S.C.). Although ERISA does not by its literal terms require exhaustion of internal appeals procedures, the Fifth Circuit has judicially imposed such a requirement. Hall v. National Gypsum Co., 105 F.3d 225, 231 (5th Cir. 1997); Dentòn v. First Nat. Bank of Waco, Texas, 765 F.2d 1295, 1300-03 (5th Cir. 1985). The court is not persuaded, however, that the exhaustion requirement applies here. The Fifth Circuit relied on the rationale for the exhaustion requirement set forth in Amato v. Bernard, 618 F.2d 559 (9th Cir. 1980), which "required benefit claimants to exhaust their administrative remedies prior to seeking federal court review of a benefit denial" Denton, 765 F.2d at 1300 (emphasis added). The Fifth Circuit also relied, as did the Amato court, on statutory and regulatory provisions which "require benefit Plans to provide administrative remedies to persons whose benefits had been denied" Id. at 1301 (emphasis added).
Those statutory and regulatory provisions, however, refer to internal administrative review of benefit claims. "In accordance with regulations of the Secretary, every employee benefit plan shall . . . afford a reasonable opportunity to any participant whose claim for benefits has been denied for a full and fair review by the appropriate named fiduciary of the decision denying the claim." U.S.C. § 1133(2). "Every employee benefit plan shall establish and maintain reasonable procedures governing the filing of benefit claims, notification of benefit determinations, and appeal of adverse benefit determinations (hereinafter collectively referred to as claims procedures)." 29 C.F.R. § 2560.503-1. The claims process is quite different from the COBRA notification requirements. Internal appeal of a failure to notify, as opposed to a denial of benefits, serves no purpose; by the time the participant or beneficiary appealed, he or she would presumably know of the right to continuation coverage and there would be nothing further for the plan administrator to do.29 The Fifth Circuit has not explicitly addressed this question, but the court concludes that the requirement that a plaintiff exhaust internal appeals for ERISA causes of action does not apply to an action brought for failure to notify of the COBRA entitlement to enroll in continuation coverage.
If the administrator refused to enroll the participant/beneficiary in continuation coverage or refused to pay a claim pursuant to such coverage, that would be a different situation. It would then make sense to require the participant/beneficiary to pursue an internal appeal before bringing an action in federal court. That is not this case. The Thompsons' claim is for failure to notify, not refusal to enroll or pay a claim.
Alternatively, the court reaches the same result because, even if the exhaustion requirement applies, Origin has submitted no competent summary judgment evidence that it has established such internal appeal procedures, or even explained what procedures were not exhausted.
Origin's other two arguments, relating to the absence of prejudice or injury to the Thompsons and absence of bad faith on the part of Origin, are also insufficient. In the first place, the provision for statutory damages, 29 U.S.C. § 1132(c)(1), imposes no requirement that the participant or beneficiary demonstrate actual injury or prejudice flowing from the failure to notify. Godwin v. Sun Life Assurance Co. of Canada, 980 F.2d 323, 327 (5th Cir. 1992). This is, in fact, normal for statutes which provide for statutory, rather than actual, damages. In any event, the Thompsons assert that they were injured, in terms of "significant worry, stress, anxiety and frustration" as well as temporary out-of-pocket expenses before coverage was eventually provided. The statute also does not excuse administrators who act in good faith, and the statutory penalty can be imposed "even in the absence of a showing of . . . bad faith on the part of the administrator." Tait v. Barbknecht . Tait Profit Sharing Plan, 997 F. Supp. 763, (N.D. Tex. 1997). Lack of bad faith by Origin and absence of any injury to the Thompsons (ignoring arguendo the Thompsons' evidence as to such injury) clearly may be considered by the court when exercising its discretion in deciding what, if any, penalty to impose pursuant to 29 U.S.C. § 1132(c)(1). The court concludes, however, that absent extreme circumstances its discretion is properly exercised at the conclusion of trial rather than at the summary judgment stage.
Plaintiffs' Appendix at 464.
None of Origin's arguments is sufficient to show that there is no genuine issue as to any material fact with respect to the COBRA claim. Accordingly, Origin is not entitled to judgment as a matter of law as to that claim.
V. Conclusion
For the above-stated reasons, there is no genuine issue of material fact with respect to Thompson's claims for age discrimination (to the extent based on his demotion), quantum meruit, and fraud. Origin is entitled to judgment as a matter of law as to those claims. Origin has not, however, demonstrated the absence of a genuine issue of material fact with respect to Thompson's claims for age discrimination (to the extent based on his termination and the alleged retaliation) and violation of COBRA requirements. Origin is not entitled to judgment as a matter of law as to those claims. Origin's Motion for Summary Judgment is granted in part and denied in part. Thompson's ADEA and TCHRA claims, to the extent based on his demotion, and his quantum meruit and fraud claims are hereby dismissed with prejudice.
It is so ordered