Opinion
No. C00-2045
February 20, 2002
ORDER
This matter comes before the court pursuant to the defendant's motion for summary judgment (docket number 21). The parties have consented to the exercise of jurisdiction by a Magistrate Judge pursuant to 28 U.S.C. § 636(c). In this case, the plaintiff alleges that he was discharged from his employment at Snap-On Tools, Inc. based on his age. The defendant moves for summary judgment contending that the plaintiff is unable to satisfy the elements of a prima facie age discrimination case. In the alternative, the defendant moves for a dismissal of the case based on an arbitration clause in the contract. The court concludes that the defendant waived the right to compel arbitration by participating in this litigation and that the plaintiff has produced evidence sufficient to create a genuine issue of material fact for trial. The defendant's motions for summary judgment and dismissal are denied.
FACTS
The plaintiff, Dan Freiburger, worked for the defendant, Snap-On tools from August 1988 to June 1999 as a field manager in the Davenport sales region. A field manager is responsible for the training, motivation, recruitment, and supervision of individual dealers Prior to that he was an independent dealer for the defendant. The defendant underwent a nationwide Reduction in Force (RIF) announced in June 1998 called "Project Simplify" during which the Davenport region was to eliminate two of the field manager positions. Prior to the implementation of "Project Simplify", one of the field managers was released for reasons unrelated to the RIF. As a result, only one other field manager position needed to be eliminated. A field manager named Rick Parvin accepted a position as an independent dealer in December of 1998. The net result was two less field managers in the Davenport sales region, thus satisfying the RIF goal of "Project Simplify."
On July 27, 1998, the defendant hired Brad Buhmeyer as a field manager in the Davenport sales region. Mr. Buhmeyer is nine years younger than the plaintiff. He had been working for the defendant for ten months when another RIF was announced by the defendant in 1999. The Davenport region was required to eliminate another field manager position. It was during this RIF, that the plaintiff's position was eliminated.
The plaintiff was born on January 31, 1952. He was fired from his job on June 3, 1999. He was forty-seven years old at the time he was terminated. He was the oldest field manager in the Davenport branch.
During the two RIFs the branch manager of the Davenport branch was Brad Nelson. He was the person responsible for choosing which field manager would be fired and which managers would be retained. He testified that he decided to terminate the plaintiff's position because "the sales performance of his dealers was low and Freiburger had difficulty working with his dealers in developing team building concepts" and historically failed to complete QFTC (Quality Field Training Contact) reports. The plaintiff was identified as being the least capable when compared to his peers at the time of the reduction in June of 1999.
The plaintiff claims that he had the most improved dealers in his group for the years 1995, 1996, and 1998. He had the third lowest numbers in sales to forecast percentages in 1999. He was sixth out of eighth in purchase average in 1997. The plaintiff was third out of eight in something called RA average and was fourth in improvement of RA average in 1997.
ARBITRATION CLAUSE
The employment contract signed by the plaintiff contained the following arbitration clause:
any controversy or dispute which establishes a legal and equitable cause of action ("claim") between any two or more Persons Subject to Arbitration, including without limitation, any controversy or dispute, whether contractual, at common law or statutory, federal or state, arising out of, or relating to Employee's employment or this Agreement (whether concerning the entry into, performance under, non-renewal or termination of this agreement, Employee's employment with the Company or any other matter); shall be submitted to final and binding arbitration as the sole exclusive remedy for such controversy or dispute.
As a matter of federal law, any doubts concerning the scope of arbitrable issues, such as an allegation of waiver, should be resolved in favor of arbitration. See Barker v. Golf U.S.A., Inc., 154 F.3d 788, 793 (8th Cir. 1998), quoting Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 24-25 (1983). However, the Eighth Circuit Court of Appeals had held that a party waives its right to arbitrate where that party (1) knew of an existing right to arbitration; (2) acted inconsistently with that right; and (3) prejudiced the other party by these inconsistent acts. Barker, 154 F.3d at 793; see also Dumont v. Saskatchewan Government Insurance, 258 F.3d 880, 886 (8th Cir. 2001);Ritzel Communications, Inc. v. Mid-American Cellular Telephone Co., 989 F.2d 966, 969 (8th Cir. 1993).
In Ritzel, the court held that the defendant's waived their right to arbitration "by failing to make the simple effort of requesting a stay in this court and by proceeding to trial on the merits in the district court. Ritzel at 970. In S H Contractors v. A.J. Taft Coal Co., 906 F.2d 1507, 1514 (11th Cir. 1990), cert. denied 498 U.S. 1026 (1991), the Eleventh Circuit held that a party waived its arbitration rights by filing a motion to dismiss, opposing discovery, and taking the depositions of five of its opponent's employees. In St. Mary's Medical Center v. Disco Aluminum Products, 969 F.2d 585, 587 (7th Cir. 1992), the Seventh Circuit held that a ten month delay before asserting its arbitration rights and, in the interim, filed a motion to dismiss and an alternative motion for summary judgment, were inconsistent with a party's desire to arbitrate. In Microstrategy, Incorporated v. Lauricia, 268 F.3d 244, 249 (4th Cir. 2001), the Fourth Circuit held:
A party may waive its right to insist on arbitration if the party so substantially utilizes the litigation machinery that to subsequently permit arbitration would prejudice the party opposing the stay. But even in cases where the party seeking arbitration has invoked the litigation machinery to some degree, the dispositive question is whether the party objecting to arbitration has suffered actual prejudice.
Prejudice may result from lost evidence of duplication of efforts, or from use by parties seeking to compel arbitration of discovery methods unavailable in arbitration. See Prudential-Bache Securities, Inc. v. Stevenson, 706 F. Supp. 533 (S.D. Texas 1989). In Matter of Arbitration Between S R Co. of Kingston and Latona Trucking, Inc., 984 F. Supp. 95 (N.D.N.Y. 1997), the court held that the petitioners waived their contractual right to compel arbitration by unnecessarily delaying assertion of arbitration defense and deriving benefits from liberal discovery procedures of federal courts; petitioners failed to assert an arbitration defense for approximately fifteen months after the complaint was filed, and actively participated in pre-trial discovery. In Eagle Traffic Control, Inc. v. James Julian, Inc., 945 F. Supp. 834 (E.D.Pa. 1996), the court held that by actively litigating the action for seven months, the defendants waived their alleged contractual right to compel arbitration where the parties had engaged in extensive discovery, the defendants vigorously contested merits of the plaintiff's claims in their motion to dismiss, the defendants assented to the court's pretrial orders, and the defendant gave no notice prior to filing the motion to compel arbitration that it intended to seek arbitration.
In this case the defendant delayed 18 months from the filing of the complaint to submit the motion to dismiss based on the arbitration clause. Snap-On Tools, Inc. raised the arbitration issue as an affirmative defense in its July 5, 2000 answer to the plaintiff's amended and substituted complaint. The defendant removed the case from state to federal court, filed an answer to the plaintiff's complaint, and filed answers to the plaintiff's interrogatories. The defendant engaged in the taking of the plaintiff's deposition and were present during the taking of the defendant's employee, Brad Nelson's deposition. At no time prior to the filing of this motion, did the defendant file a motion for a stay of the proceedings to compel arbitration of the matter.
The defendant knew of its right to demand arbitration. The participation in discovery, depositions, and motion filing is inconsistent with the right to compel arbitration. These inconsistent acts prejudiced the plaintiff. This case is ready to be resolved. It was originally set for trial on February 19, 2002 and, upon filing the consent to United States Magistrate Judge, the parties asked that the trial be delayed until these motions could be resolved. It would prejudice the plaintiff to have to begin the arbitration proceedings more than a year after such proceedings could have been concluded. The delay in raising the right to arbitrate coupled with the defendant's extensive participation in pre-trial litigation activities constitutes a waiver of the right to compel arbitration of this dispute.
SUMMARY JUDGMENT
A motion for summary judgment may be granted only if, after examining all of the evidence in the light most favorable to the nonmoving party, the court finds that no genuine issues of material fact exist and that the moving party is entitled to judgment as a matter of law. Kegel v. Runnels, 793 F.2d 924, 926 (8th Cir. 1986). Once the movant has properly supported its motion, the nonmovant "may not rest upon the mere allegations or denials of [its] pleading, but . . . must set forth specific facts showing that there is a genuine issue for trial."Fed.R.Civ.P. 56(e). "To preclude the entry of summary judgment, the nonmovant must show that, on an element essential to [its] case and on which [it] will bear the burden of proof at trial, there are genuine issues of material fact." Noll v. Petrovsky, 828 F.2d 461, 462 (8th Cir. 1987) (citing Celotex Corp. v. Catrett, 477 U.S. 317 (1986)). Although "direct proof is not required to create a jury question, . . . to avoid summary judgment, `the facts and circumstances relied upon must attain the dignity of substantial evidence and must not be such as merely to create a suspicion.'" Metge v. Baehler, 762 F.2d 621, 625 (8th Cir. 1985) (quoting Impro Prod., Inc. v. Herrick, 715 F.2d 1267, 1272 (8th Cir. 1983)). In applying these standards, the court must give the nonmoving party the benefit of all reasonable inferences to be drawn from the evidence. Krause v. Perryman, 827 F.2d 346, 350 (8th Cir. 1987).
Summary judgment is appropriate only when the evidence indicates no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Sprenger v. Federal Home Loan Bank of Des Moines, 253 F.3d 1106, 1110 (8th Cir. 2001). The non-moving party is entitled to all reasonable inferences that can be drawn from the evidence without resort to speculation. Id. The mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff. Id. Although we have stated that summary judgment should seldom be granted in employment discrimination cases, summary judgment is proper when a plaintiff fails to establish a factual dispute on an essential element of her case. Helfter v. United Parcel Service, Inc., 115 F.3d 613, 615-16 (8th Cir. 1997). The standard for plaintiff to survive summary judgment required only that plaintiff adduce enough admissible evidence to raise genuine doubt as to the legitimacy of the defendant's motive, even if that evidence did not directly contradict or disprove defendant's articulated reasons for its actions. O'Bryan v. KTIV Television, 64 F.3d 1188, 1192 (8th Cir. 1995).
AGE DISCRIMINATION
Under the Age Discrimination in Employment Act of 1967 (ADEA) it "is unlawful for an employer . . . to fail or refuse to hire or to discharge any individual or otherwise discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's age." 29 U.S.C. § 623(a)(1). In order to have a successful claim the plaintiff's age must have "actually played a role [in the employer's decision making] process and had a determinative influence on the outcome." Reeves v. Sanderson Plumbing Products, Inc., 530 U.S. 133, 141 (2000). The plaintiff must satisfy all the elements to prove a prima facie case. Reeves, 530 U.S. at 142. The standard elements of a prima facie case of age discrimination in the termination context are: "(1) that the plaintiff is within the protected age group; (2) that [s]he met the applicable jobs qualifications; (3) that [s]he was discharged; and (4) that, after his discharge, the position remained open and the employer sought applicants with similar qualifications to fill the position." Hutson v. McDonnell Douglas Corporation, 63 F.3d 771, 776 (8th Cir. 1995). However, the traditional elements when applied to a reduction in force (RIF) context need to be modified. Id. In a RIF context the plaintiff need not establish the fourth element of the standard prima facie test, attempted replacement, but instead must provide some "additional showing" that age was a factor in the termination. Id.
When and if the plaintiff establishes a prima facie case of discrimination, the burden of production then shifts to the defendant to articulate a legitimate, non-discriminatory reason for the adverse employment action. Id. at 776-777. If the defendant fails to do so, the plaintiff is entitled to a finding of intentional discrimination. Id. If the defendant does provide such a reason, however, the burden shifts back to the plaintiff to demonstrate that the reason provided was a pretext for discrimination. Id. The defendant's burden is a burden of production not a burden of proof. Krenik v. County of Le Sueur, 47 F.3d 953, 958 (8th Cir. 1995).
As regards the pretext inquiry specifically to survive summary judgment, the plaintiff must adduce enough admissible evidence to raise genuine doubt as to the legitimacy of a defendant's motive, even if that evidence does not directly contradict or disprove a defendant's articulated reasons for its actions. Sprenger, 253 F.3d at 1110.
DISCRIMINATION AND TERMINATION
The plaintiff has established that he falls within the protected age group or within the protected class. He was over forty years old when his employment was terminated. He met the applicable job qualifications for his position. He was discharged from Snap-On Tools, Inc. Because Snap-On Tools, Inc. was engaged in a Reduction In Force, the plaintiff must provide some "additional showing" that age was a factor in the termination.
The plaintiff contends that the additional showing element has been satisfied by the fact that there was no real need to eliminate his position after one sales representative was fired prior to the RIF and another accepted a position as an independent dealer of the defendant's products. The plaintiff argues that because two positions were to be eliminated in the Davenport region during the first RIF, there was no reason to hire Brad Buhmeyer after the first RIF was announced. During the second RIF, the plaintiff contends that the new hire, Brad Buhmeyer should have been the field manager fired because he had the least amount of experience and he was unnecessarily hired between RIF's. The plaintiff also claims that his sales numbers were not the lowest in the comparison of the field managers. He claims that he consistently performed in the middle ranges of the sales percentages and had most improved dealers in his groups in 1995, 1996, and 1998.
The defendant justified the firing of the plaintiff by pointing to the low sales numbers and the inability to motivate and lead the dealers. The plaintiff contends that the numbers do not support the reasons for eliminating his position and he had demonstrated an ability to motivate and supervise dealers in his group. He alleges that the defendant's real motivation was to discharge the oldest field manager. Most importantly, plaintiff claims that Brad Buhmeyer was actually hired during the RIF when the defendant was trying to reduce the pool of field managers. The plaintiff argues that this evidence is enough to allow the trier of fact to infer that the reasons Snap-On Tools, Inc. has given for the termination were merely pretextual.
The defendant argues that the evidence produced by the plaintiff does not satisfy the additional showing requirement to establish a prima facie case of discrimination. The defendant points to the age neutral criteria used in the sales figures analysis that was applied to the field mangers positions during the restructuring. The defendant contends that the other field managers in the Davenport branch had better sales numbers and better sales percentages and stated that the plaintiff had the lowest sales numbers in 1999 and had finished near the bottom in the previous two years. The defendant contends that the low sales numbers and the branch managers determination that the plaintiff was the least capable field manager in terms of leading and motivating dealers were the only reasons considering when making the decision of which position should be eliminated. The defendant's justification for the elimination of the plaintiff's position shifts the burden back on to the plaintiff to prove that the proffered reasons for the termination were merely pretextual.
Brad Buhmeyer was hired by the defendant after the RIF had been announced. There is no explanation as to why the defendant was hiring anyone when it was poised to undergo a RIF. A RIF indicates that the number of employees will decrease, not increase. The unexplained hiring of a younger field manager during a RIF is the additional evidence necessary to survive a motion for summary judgment.
The plaintiff has satisfied the elements of a prima facie case of age discrimination. The defendant has offered reasonable justifications for the termination and the shifted burden back to the plaintiff to prove the proffered reasons were merely pretextual. The plaintiff has provided sufficient evidence to create genuine issues of material fact concerning the reasons for termination. The defendant's motion for summary judgment and motion to dismiss in the alternative are denied.
IT IS ORDERED that the defendant's motion for summary judgment and motion to dismiss are denied.
IT IS FURTHER ORDERED that a telephonic scheduling conference to secure a trial date is set for 10:30 a.m. on March 5, 2002. The call will originate from the undersigned's chambers, United States District Courthouse, Cedar Rapids, Iowa.