Opinion
1:01cv87-T
June 12, 2002
MEMORANDUM AND RECOMMENDATION
THIS MATTER is before the court upon defendant's Motion for Summary Judgment. After careful consideration of that motion and review of the pleadings, the undersigned enters the following findings, conclusions, and recommendation.
FINDINGS AND CONCLUSIONS
I. Background
A. Cause of Action
This action arises under the Age Discrimination in Employment Act ("ADEA") United States Code, Sections 621, et seq. Plaintiff is within the class protected by the Act and, at the time of the alleged wrongful conduct, was employed by a corporation subject to the requirements of the Act. Defendant is engaged in the business of owning, managing, and marketing timeshare properties and, at the relevant time, promoted its resort properties through telemarketing. Plaintiff was a manager of a telemarketing team at the time of his termination. He contends his employment was terminated by defendant because of his age and that defendant's given reason for his termination — poor performance of the team — was pretextual.
B. Facts
Defendant Peppertree Resorts LTD. ("Peppertree") is a subsidiary of Equivest Finance, Inc., which, during the pendency of this litigation, was acquired by Cendant Corporation. Peppertree owns, markets, and manages timeshare resort properties.
Plaintiff was twice employed by Peppertree: from 1995 to 1996 and from 1997 to 2000. Plaintiff's charge of age discrimination does not involve his first period of employment, only the last four months of his second period of employment in 2000.
During his first employment with Peppertree, plaintiff was 51 years old, and his job was that of a telemarketer. He called prospective purchasers and arranged for them to receive a tour at one of the Peppertree properties. Plaintiff testified at his deposition that he left that job voluntarily due to restructuring of the compensation package.
By chance, plaintiff was driving by defendant's telemarketing office in 1997 when his former supervisor, Earl Wallace, flagged him down and asked him to come back to work in the capacity of a floor manager. It is undisputed that during that second period of employment, plaintiff (then at management level) received raises, including a bonus increase on July 28, 1999; a bonus increase on June 1, 1998; a doubling of his base pay from $300 to $600 per week on February 1, 1999; and an additional base pay increase to $700 per week on August 2, 1999. Plaintiff was also promoted on June 1, 1998, from floor manager to assistant telemarketing manager. Viewed in a light most favorable to plaintiff, that promotion was a "paper promotion" because he testified that his duties as assistant telemarketing manager were the same as they had been as floor manager.
In November 1999, Peppertree was acquired by Equivest Finance, Inc., ("Equivest") and all Peppertree employees retained their jobs with Equivest. Soon after Equivest acquired Peppertree, its performance fell in 1999 and 2000, including the performance of the telemarketing operations, which were managed by plaintiff.
According to testimony submitted by defendant on the issue of business deterioration in the year 2000, the problem in telemarketing was that the costs of the tours generated by the two telemarketing offices operated by Peppertree were not covered by the sales generated by those tours. There was a precipitous drop in the number of tours generated by the telemarketing offices in 2000, and plaintiff testified at his deposition that his office was losing money for the company.
Beginning in January 2000, Peppertree cut costs at its two telemarketing offices. Included in those cuts were pay decreases for management at plaintiff's office. Earl Wallace, who had rehired plaintiff, received a 20 percent cut in pay; Chuck March, plaintiff's direct supervisor, received a pay cut of approximately 10 percent; and the three assistant managers, including plaintiff, had their base pay cut to $650 per week. In addition, Peppertree tied bonuses to sales attributable to the tours booked by the office, not the number of tours. Plaintiff's base pay remained at that level through August 31, 2000, when his employment was terminated.
The evidence presented by defendant indicates that its cost-cutting measures were ineffectual at making the telemarketing venture profitable. Instead, it got worse. Beginning in February 2000, Peppertree began terminating employees or accepting resignations, which included plaintiff's direct supervisor, Mr. March, and the head of the office (who had rehired plaintiff), Mr. Wallace. Plaintiff testified that "a lot" of performance problems existed at his office when Mr. Wallace left, resulting in the subcontracting of some of the telemarketing work. Further, plaintiff stated that with the departure of the higher-level managers, he and the two other assistant managers, along with the staff, were confused as to who was in charge.
At that point, plaintiff's direct supervisor was Don Clayton, Peppertree's senior vice president of sales and marketing. Plaintiff conveyed to Mr. Clayton the confusion experienced at the office and expressed an interest in taking over control of the office. Mr. Clayton placed plaintiff in charge of the office as of May 1, 2000, and gave him 60 days to increase tour production and decrease costs.
A meeting was conducted on May 14, 2000, at which Mr. Clayton introduced Lee Farthing as the new telemarketing director. Mr. Clayton told plaintiff at that meeting that he had not seen enough improvement and could not give him any more time, even though plaintiff contended that he had improved performance within that short period. Mr. Farthing had been at Peppertree since December 1999 as the director of marketing for the entire company and was given the telemarketing duties in addition to his existing duties. He did not receive any additional compensation for performing the additional duties; instead, his compensation was reduced as of May 26, 2000. Thereafter, on June 5, 2000, Mr. Clayton resigned from Peppertree, and George Usery, who had been working for Equivest, was transferred to Peppertree to replace Clayton.
Plaintiff admitted during his deposition that at the time he was in charge, his office was not operating profitably. He testified that Mr. Farthing told him when he took over that he would continue to be the senior manager in charge. Soon thereafter, plaintiff went to Mr. Farthing and complained that some of the employees were not following his instructions, some of them were circumventing him by going directly to Mr. Farthing, and that he was still being paid the same as the other assistant telemarketing managers.
Plaintiff also questioned changes Mr. Farthing had made, including the "scripts" used by the telemarketers and the promotions used to encourage prospective purchasers to tour the resort. Plaintiff further testified that on June 28, 2000, he asked Mr. Farthing if he could discuss the changes and other problems with Mr. Usery, who was Mr. Farthing's superior, and was told he would be fired if he did.
The following day, June 29, 2000, at 1:44 p.m., plaintiff sent an e-mail to Ellen Steele in Peppertree's human resources department about problems he perceived in his office. It is undisputed that his own age was not mentioned or discussed in the e-mail, and plaintiff admits that he never raised any concern about age discrimination on or before that date.
Plaintiff's e-mail received no response. Upset with the lack of a response even by close of business on the following day, plaintiff decided to travel to Charlotte the following morning and file a charge of age discrimination with the Equal Employment Opportunity Commission. On June 30, 2000, plaintiff filed a charge of discrimination against Peppertree, alleging that he was "being discriminated against because of [his] age (57)." As a basis for the charge, plaintiff noted that Mr. Farthing took over the office and that he was in his "mid to late 30's." In reality, Mr. Farthing was 42 years old at the relevant time. Soon after the charge was filed, Mr. Farthing took a new position as regional marketing director for the South, which caused him to leave the office at which plaintiff worked. With Farthing's transfer, Peppertree rehired Chuck March, plaintiff's previous supervisor, in the position he had left as telemarketing manager.
Thus, plaintiff was back performing the duties of an assistant manager in July 2000. The telemarketing offices remained unprofitable. Two fundamental problems existed: there were too few telemarketers, and the ones that were employed were not producing enough tours to cover the costs of their positions. Mr. Usery closed the other telemarketing office in August 2000. As to plaintiff's telemarketing office, Mr. Usery decided to fire the entire management team. Apparently, the office had the capacity for 120 telemarketers, but, on average, less that 20 worked during the month of August 2000. Plaintiff, Mr. Farthing, Mr. March, and Mr. Patterson were all terminated, allowed to resign, or resigned. Ms. Hayes, a fellow assistant manager, was demoted and offered a position in another department, which she refused.
After being terminated, plaintiff filed a second charge of discrimination on September 5, 2000, alleging age discrimination and retaliation for filing the first charge. In this claim, plaintiff charged that Mr. March was 40 years old when he took over as telemarketing manager, when, in reality, he was 49 years old. Plaintiff admitted at his deposition that when he was rehired, Mr. March had more experience than he had as a telemarketing manager and that he did not believe that Mr. March's age had anything to do with Peppertree's decision to rehire him as telemarketing manager.
By November 2000, the entire office was closed, resulting in the termination of more than 100 employees. Peppertree has not reopened its in-house telemarketing venture, but, instead, has contracted that work to third parties.
II. Summary-Judgment Standard
On a motion for summary judgment, the moving party has the burden of production to show that there are no genuine issues for trial. Upon the moving party's meeting that burden, the nonmoving party has the burden of persuasion to establish that there is a genuine issue for trial.
When the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts. In the language of the Rule, the nonmoving party must come forward with "specific facts showing that there is a genuine issue for trial." Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving [sic] party, there is no "genuine issue for trial."
Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986) (citations omitted; emphasis in the original) (quoting Fed.R.Civ.P. 56). There must be more than just a factual dispute; the fact in question must be material and readily identifiable by the substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986). When resolution of issues of fact depends upon a determination of credibility, summary judgment is improper. Davis v. Zahradnick, 600 F.2d 458 (4th Cir. 1979). For the limited purpose of making a recommendation as to the pending motion, the undersigned has resolved all factual disputes in a light most favorable to the nonmoving party (plaintiff).
III. Plaintiff's First Cause of Action: Age Discrimination In Employment
A. Introduction
A plaintiff may prove a claim of age discrimination by direct evidence of intentional discrimination or may prove discriminatory intent through circumstantial evidence by using the indirect method of proof established in McDonnel Douglas Corp. v. Green, 411 U.S. 792 (1973), and adapted to ADEA cases. In the present case, plaintiff has offered no direct evidence of age discrimination. Plaintiff, therefore, must establish his claim with circumstantial evidence, using the "3-stage scheme of proof originally formulated for Title VII cases." Herold v. Hajoca Corp., 864 F.2d 317, 319 (4th Cir. 1988). The three-stage scheme includes the following:
The only "direct evidence" that was initially offered by plaintiff in his complaint was refuted by plaintiff in his deposition. Plaintiff alleged that Mr. Wallace "made statements that Plaintiff must be getting too old for his job." Plaintiff testified under oath that Mr. Wallace only said, "I think your [sic] getting just a little too spacey." Complaint, at 31; c.f. Bishop Depo., p. 124.
(1) plaintiff must make out a prima facie case of age discrimination;
(2) if plaintiff satisfies his burden, the burden of production shifts to defendant to articulate a legitimate, nondiscriminatory reason for its actions; and
(3) if defendant satisfies its burden, plaintiff must show by a preponderance of the evidence that defendant's legitimate, nondiscriminatory reason was a pretext for discrimination.
B. Prima Facie Case
Plaintiff has presented his argument in the context of a termination of employment rather than a reduction in force. Plaintiff must prove four elements to establish a prima facie case of age discrimination:
(1) he is within the protected class;
(2) he was performing the duties of his job at a level meeting the legitimate expectations of his employer;
(3) he was fired; and
(4) a younger person outside the protected age group was selected for the job in question.
See Lovelace v. Sherwin-Williams Co., 681 F.2d 230, 239 (4th Cir. 1982). There is no dispute that plaintiff was within the protected class and that his employment was terminated. The only issues are whether plaintiff was performing his duties at a level meeting legitimate expectations of his employer and whether he was replaced by a person outside the protected age group, i.e., a person or persons who were "substantially younger." Thus, it is plaintiff's burden to prove both the second and fourth elements of a prima facie case.
1. Second Element: Plaintiff's Job Performance
Review of the evidentiary materials reveals that there is no dispute as to the following facts: (1) the defendant's telemarketing venture was failing, in that it did not generate revenues sufficient to cover its costs; (2) plaintiff was a manager of that venture; and (3) plaintiff was terminated, along with the entire management team.
Where a plaintiff relies on the indirect method of proof, it is his burden to produce evidence that he was performing his job at a level that met his employer's legitimate expectations at the time he was discharged. Indeed, plaintiff admits that the telemarketers he was supervising were underperforming and that there were complaints that they were misleading consumers. While defendant admits that plaintiff was by no means solely responsible for the performance problems and losses at the annex (see Usery affidavit), he did bear some of the responsibility. Id. Without doubt, it is both legitimate and reasonable for an employer to expect a manager to run a venture in a manner that returns a profit to the employer and to supervise his employees' conduct in the furtherance of the business. Defendant has shown that neither plaintiff nor his fellow managers was performing at a level which met defendant's legitimate expectations. Plaintiff, therefore, cannot satisfy the second element of a prima facie case.
2. Fourth Element: Hiring a Substantially Younger Person to Replace Plaintiff
Even if plaintiff could satisfy the second element, he would also have to show that a younger person outside the protected class was hired in his stead. Resolving all facts in a light most favorable to plaintiff, which would include drawing reasonable inferences in his favor, plaintiff has shown that persons who were younger than he may have taken his job duties; however, such persons were not "substantially" younger or, for that matter, outside the protected class, inasmuch as Mr. Farthing was 42 and Mr. March was 49. Even if age were set aside, the record is undisputed that Mr. Farthing had superior qualifications and experience in marketing and Mr. March had more experience managing telemarketers. Plaintiff has admitted as much in his deposition.
The undersigned can only surmise that plaintiff's claim here is as it was before the EEOC — he has a hunch that his termination was based on age discrimination. If defendant's aim was to rid itself of older employees, the undisputed facts indicate that defendant went about it in a counterintuitive manner. For starters, the evidence reveals that one of defendant's managers, who obviously knew plaintiff was an older worker, flagged him down from a highway and asked him to come back to work for Peppertree management. Upon his return, defendant gave him a number of raises and bonuses and promoted him, at least on paper. When defendant finally decided to fire him (presumably for his age), it also dismissed all other members of the venture's management team.
As to this element, speculation will not suffice. A few years' difference in age is not "substantially younger" for purposes of establishing the prima facie case. O'Connor v. Consolidated Coin Caterers Corp., 517 U.S. 308, 313 (1996) (an inference of age discrimination cannot be drawn from the replacement of one worker with another worker who is insignificantly younger); Cramer v. Intelidata Technologies Corp., No. 97-2775, 1998 U.S. App. LEXIS 32676, at *7 (4th Cir. Dec. 31, 1998) (plaintiff failed to establish prima facie case where replacement was only five years younger than plaintiff, and not, therefore, "substantially younger").
Even if Mr. Farthing, at age 42, were to be considered substantially younger than plaintiff, there is no evidence that he, or anyone else, replaced plaintiff after plaintiff was terminated at the end of August 2000. Instead, the only evidence is that Mr. Farthing took on the duty of directing telemarketing, in addition to his company-wide duty of marketing, and that he not only did not receive a pay increase, his pay was reduced. Thus, plaintiff cannot satisfy the fourth element.
C. Nondiscriminatory Reason for Defendant's Actions
Had plaintiff set forth a prima facie case, it would have been defendant's duty to come forward with a legitimate business reason for terminating plaintiff's employment. Defendant has articulated a legitimate, nondiscriminatory reason for its termination of plaintiff — namely, that plaintiff was discharged (as was the rest of the management team) for lack of performance. It is undisputed that defendant's in-house telemarketing operations were losing money for the company — a fact which plaintiff has admitted. It is also undisputed that defendant attempted to resolve the problem in 2000 through pay cuts, followed by reorganization and consolidation of operations and managers; then a wholesale termination of what defendant perceived to be an ineffectual management team; and finally, a complete closure of in-house telemarketing. Defendant has, without doubt, provided a legitimate, nondiscriminatory reason for its termination of plaintiff (along with the rest of the management team) in August 2000.
D. Pretext
Defendant having articulated a legitimate, nondiscriminatory reason for discharging plaintiff, the onus of proof shifts back to plaintiff to prove that he was a victim of intentional age discrimination. That burden can be satisfied by his showing that the reason defendant has put forward is a mere pretext for discrimination and that the plaintiff's age is the more likely reason for the termination. Herold v. Hajoca Corp., 864 F.2d 317, 319 (4th Cir. 1988), cert denied, 490 U.S. 1107 (1989).
The question is not whether [defendant] exercised prudent business judgment, . . . but whether [plaintiff] has come forward to refute the articulated, legitimate reasons for his discharge. In this regard, [plaintiff] must do more than challenge the judgment of his superiors through his own self-interested assertions.
Dale v. Chicago Tribune Co., 797 F.2d 458, 464 (7th Cir. 1986) (citations omitted), cert. denied, 479 U.S. 1066 (1987). Consistent with the Court of Appeals for the Seventh Circuit, the Fourth Circuit reasoned that what is relevant is not a plaintiff's belief that he was fired because of age, but "the perception of the decision-maker." Smith v. Flax, 618 F.2d 1062, 1067 (4th Cir. 1980). See Elliott v. Group Medical Surgical Service, 714 F.2d 556 (5th Cir. 1983). Plaintiff must prove not only that defendant's reasons for his discharge are false, but that the real reason for his discharge was age discrimination. Vaughn v. MetraHealth Cos., 145 F.3d 197, 202 (4th Cir. 1998).
Plaintiff argues that he can show pretext beginning in May 2000, when he was "demoted" from managing the telemarketing team to "senior" assistant manager. It is his contention that he was not given enough time to revitalize the operation and that the real reason for such alleged demotion was his age. He claims that any production figures defendant used to justify his replacement were pretextual because tours scheduled during the first two weeks of May 2000 would not show up as sales for some time. Plaintiff also argues that he was told he would have 60 days to turn around the department, but was cut short when Mr. Farthing took over some 14 days later. During his deposition, however, plaintiff admitted that at the time he was in charge of telemarketing, his office was not operating profitably.
Plaintiff has also taken issue with Mr. Farthing's use of the word "senior," which plaintiff argues was used derisively to refer to his age, rather than an indicator of seniority. Plaintiff testified that when Mr. Farthing took over, he approached the subject of management structure and told plaintiff that he would continue to be the senior manager in charge. Plaintiff has also argued in his response to defendant's Motion for Summary Judgment, as follows:
On March 23, 2000 Earl Wallace stated "you are spacey and must be getting too old to do the job." Statements of members of management that plaintiff was getting too old to do the job, made in close proximity to the adverse employment action of is strong evidence that Mr Bishop's age was a motivating factor in the adverse employment action.
Plaintiff's Response, at 13 (errors in original). That argument, however, is not supported by the record, inasmuch as plaintiff has specifically testified that no such statement was ever made by Mr. Wallace and that Mr. Wallace had simply referred to plaintiff as being "spacey."
E. Conclusion As to Age-Discrimination Claim
Review of the testimony and arguments reveals that plaintiff firmly believes his employment was terminated because of his age. It further appears that he believes that because of his age, his supervisors gave little or no credence to his suggestions of how to turn around the company's efforts at in-house telemarketing. Indeed, plaintiff's frustration peaked when an e-mail concerning his ideas went unanswered.
While the wisdom of age is valuable, it receives no protection under the ADEA. Employers are free to disregard the opinion of any employee, regardless of the employee's age, and they do so not at any legal peril, only financial. In this case, plaintiff has not established a prima facie case of age discrimination because he cannot show that he was performing his work as an assistant manager in a manner that met the legitimate expectations of his employer. It is reasonable for an employer to expect managers to run the business at a profit. In addition, plaintiff has not presented evidence of the fourth element of a prima facie case, which is that he was replaced by a substantially younger individual. His argument concerning his "promotion" in May is unavailing, inasmuch as there was apparently no pay increase or decrease, and the individual was well into his 40's, already an employee of defendant, and simply took on additional duties. There is absolutely no evidence that anyone, much less a substantially younger individual, replaced plaintiff when he was fired in August 2000. Finally, plaintiff's arguments as to why the failure of the telemarketing operation was a pretext for age discrimination are, at best, speculative and are not supported by the record or by logic. The undersigned, therefore, will recommend that summary judgment be granted for defendant on plaintiff's first cause of action for age discrimination.
IV. Retaliation
In his second cause of action, plaintiff alleges that he was terminated in retaliation for filing charges of age discrimination with the EEOC. On defendant's Motion for Summary Judgment, the burden falls on plaintiff to present evidence establishing a prima facie case of retaliation. To meet that burden, plaintiff must show the following:
(1) engagement in protected activity;
(2) adverse employment action taken against him; and
(3) a causal connection between the protected activity and the adverse employment action.
Ross v. Communications Satellite Corp., 759 F.2d 355, 385 (4th Cir. 1985). If the plaintiff meets that burden, the defendant then must articulate a legitimate, non-retaliatory reason for the adverse action taken. Thereafter, the burden shifts back to the plaintiff to show that the employer's articulated reason was pretext for retaliation.
Plaintiff has shown that he engaged in protected activity and that defendant, thereafter, took action adverse to his employment. The first two elements, therefore, are satisfied. Inasmuch as the Court of Appeals for the Fourth Circuit has held that mere knowledge of protected activity, coupled with adverse employment action, establishes a causal connection, Williams v. Cerberonics, Inc., 871 F.2d 452 (4th Cir. 1989), plaintiff, by merely satisfying his burden on the first two elements, has satisfied the third factor and established a prima facie case of retaliation.
Once a prima facie case has been made by plaintiff, the burden shifts to defendant to articulate a legitimate, non-retaliatory reason for firing plaintiff. The court incorporates the above discussion of the legitimate reasons given by defendant for its termination of plaintiff.
Defendant having articulated a legitimate, non-retaliatory reason for taking the adverse action, the burden shifts back to plaintiff to show that the articulated reason was pretextual. The court incorporates the above discussion concerning pretext.
Plainly, mere knowledge on the part of an employer that an employee . . . has filed a discrimination charge is not sufficient evidence of retaliation to counter substantial evidence of legitimate reasons for discharging that employee.
Williams v. Cerberonics, Inc., supra, at 457. Plaintiff has presented no evidence that he would not have been terminated "but for" filing a charge with the EEOC or that the protected activity was the "motivating" factor behind defendant's adverse action. See McNair v. Sullivan, 929 F.2d 974 (4th Cir. 1991); Dwyer v. Smith, 867 F.2d 184 (4th Cir. 1989). The undersigned, therefore, must recommend that defendant's Motion for Summary Judgment on plaintiff's claims of retaliatory discharge be granted.
V. Pendant State-Law Claim
Finally, defendant has moved for summary judgment on plaintiff's third claim for relief, which is a state-law claim for unfair and deceptive trade practices, brought pursuant to this court's supplemental jurisdiction. N.C. Gen. Stat. § 75-1.1. Plaintiff's claim is based upon allegations that (1) defendant has used "assumed names without compliance with North Carolina's Assumed Name Statute," (2) improper practices relating to plaintiff's compensation, and (3) other alleged wrongful acts arising out of plaintiff's employment with defendant. See Complaint, at paras. 67-71).
The essential elements of a claim for unfair trade practices are, as follows:
(1) an unfair or deceptive act,
(2) in or affecting commerce,
(3) which proximately caused actual injury to the claimant.
Durling v. King, 146 N.C. App. 483, 487 (2001). It is undisputed that all of plaintiff's claims arise from his employment with defendant, which is simply not covered by the statute:
The primary purpose of G.S. § 75-1.1 is to provide a "private cause of action for consumers." Although commerce is defined broadly under G.S. § 75-1.1(b) as "all business activities, however denominated," "the fundamental purpose of G.S. § 75-1.1 is to protect the consuming public."
Id. at 488 (citations omitted). The Act is simply "not applicable to employment disputes," id., and plaintiff has not shown that any of the limited exceptions to such rule apply to his claims. Sara Lee Corp. v. Carter, 351 N.C. 27 (1999) (self-dealing by an employee in transactions with his employer).
RECOMMENDATION
IT IS, THEREFORE, RESPECTFULLY RECOMMENDED that defendant's Motion for Summary Judgment (#39) be ALLOWED.