Opinion
Case No. 02-C-1184.
February 17, 2004
JUDGMENT IN A CIVIL CASE
Jury Verdict. This action came before the Court for a trial by jury. The issues have been tried and the jury has rendered its verdict.
[X] Decision by Court. This action came before the Court for consideration.
IT IS HEREBY ORDERED AND ADJUDGED that the defendants' motion for summary judgment is GRANTED and this case is DISMISSED.
DECISION AND ORDER
William Haasl, a sixty-three year-old engineer, asserts that when the Leach Company laid him off in the midst of a reduction in force (RIF) in 2001, it favored younger employees at his expense, in violation of the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq. He also asserts that misrepresentations were made to him about his benefits at the time he was hired by Leach in 1996. The defendants have moved for summary judgment, asserting that Haasl cannot make out an age discrimination case and that his benefits misrepresentation claims are preempted by ERISA. For the reasons stated herein, the motion for summary judgment will be granted.I. Background
The Leach Company, located in Oshkosh, manufactures truck-mounted refuse bodies, and specifically rear loaders, which are essentially the business end of commercial and residential garbage trucks. ( See www.leachusa.com/rearloaders.html. ) By the 1990s, Leach sold four different product lines: rear loaders, front loaders, Curbtender automated side loaders, and "VAC/ALL" trucks, which are street sweepers. (Def. Br. at 3.) During July 1996, Plaintiff William Haasl and Bruce Yakley, an engineering vice-president at Leach, began discussing the possibility of Haasl coming to work for Leach. On July 28, Yakley made a verbal offer of employment to Leach, which was followed up by a written offer a few days later. That offer, in a letter dated August 6, 1996, stated that "your benefits will take effect after 60 days of employment". (Dizard Aff., Ex 11.) Haasl states that he believed that phrase meant that his pension would become vested after 60 days, and that he relied on that fact in accepting employment. (Haasl Aff., ¶ 4.) At the time he was hired, he was fifty-six years old. His job title was "engineering manager" and he was responsible for the front loader and VAC/ALL product lines. In 1999 the engineering department was reorganized, and an engineer named Jim Lemmer was promoted to manage the front loader line, and Jim White was put in charge of the rear loader line. And, in 2000, Haasl was reassigned to deal with problems involved with the Curbtender design, at which time James Lemmer also assumed responsibility for the VAC/ALL line. (Dizard Aff., Ex. 5 at 34-35.) Thus, by the middle of 2000 Haasl was working on the Curbtender design, Lemmer was working on front loaders and the VAC/ALL lines, and White was in charge of rear loaders.
In the meantime, however, Leach's business did not boom. In 2000, Leach stopped selling the Curbtender side loader line due to reliability issues. Around the same time, Leach decided to sell off the VAC/ALL and front loader product lines to other companies. Thus, by 2001 only the rear loader product line remained, and Leach restructured its business accordingly. In early 2001, Leach also lost out on a potentially very lucrative contract with Waste Management, previously Leach's largest customer. (Dizard Aff., Ex. 1 at 37-40.) This ultimately led to the need to cut costs, which resulted in the implementation of a RIF, affecting four engineers (including Haasl) and over fifty hourly employees.
According to the defendants, Haasl was selected for termination because the product lines on which Haasl had experience-the VAC/ALL and front loader lines-had been sold off. Moreover, by early 2001 Leach had decided not to pursue a side loader system like the failed Curbtender, based on a tepid response to the idea from its distributors. (Dizard Aff., Ex. 4 at 60.) Thus, by the time of the RIF Haasl was an engineer without a product line and was therefore one of the engineers selected for termination. Other engineers who had experience with the rear loaders were not terminated.
Haasl claims he was singled-out because he was sixty at the time he was fired. As evidence of this, he notes that a report to management listing termination candidates showed their age and pension status. (McGinnis Aff., Ex. 23.) He also notes that an engineering position remained open during early 2001 and was not offered to Haasl. This position was titled "engineering manager of the rear loader product line" and, Haasl asserts, he would have been qualified for that job because he had "some experience" with the product. (PPFOF ¶ 30.) At his deposition, however, he admitted that his experience was limited to having an unknown number of discussions about rear loaders with other Leach employees. (McGinnis Aff., Ex. 32.) He also notes that he did not have product-specific experience when he was assigned to work on the Curbtender side loader, nor did Jim White (age 35), who was ultimately promoted to the rear loader management position.
II. Analysis
Summary judgment is proper if the pleadings, depositions, answers to interrogatories, and admissions on file, together with any affidavits, show that there is no genuine issue of material fact and 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, 322 (1986). The moving party has the initial burden of demonstrating that it is entitled to summary judgment. Id. at 323. Once this burden is met, the nonmoving party must designate specific facts to support or defend its case. Id. at 322-24. In analyzing whether a question of fact exists, the court construes the evidence in the light most favorable to the party opposing the motion. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). The mere existence of some factual dispute does not defeat a summary judgment motion, however; there must be a genuine issue of material fact for the case to survive. Id. at 247-48.
1. Age Discrimination
The plaintiff does not have direct evidence of age discrimination and must therefore rely, as most discrimination plaintiffs do, on indirect evidence. Under the burden-shifting method of proof, Haasl must establish a prima facie case of age discrimination by a preponderance of the evidence. See Zaccagnini v. Chas. Levy Circulating Co., 338 F.3d 672, 674-75 (7th Cir. 2003). If the plaintiff can establish a prima facie case, then the employer has the burden to make out a legitimate and nondiscriminatory reason for the termination. Id. at 676. And, if the employer meets this burden, the plaintiff must come back and demonstrate that the stated reason for termination is pretextual. See Schuster v. Lucent Technologies, Inc., 327 F.3d 569, 576 (7th Cir. 2003). To show pretext in a RIF case, an employee must establish that an improper motive "tipped the balance" in favor of discharge. Krchnavy v. Limagrain Genetics Corp., 294 F.3d 871, 876 (7th Cir. 2002) (citations omitted).
To establish a prima facie case, the plaintiff must show: (1) membership in a protected class (age 40 or over); (2) his job performance was adequate; (3) he was discharged; and, in the RIF context, (4) the employer treated substantially younger and similarly-situated employee(s) more favorably. Pitasi v. Gartner Group, Inc., 184 F.3d 709, 716 (7th Cir. 1999) (in RIF cases the fourth prong of the prima facie case analysis has been described as requiring a showing that "similarly situated, substantially younger employees were treated more favorably.") The defendants concede the first three elements and focus their efforts on contesting the fourth element. The question, then, is whether the plaintiff can show that any similarly situated and substantially younger employees were treated more favorably during the RIF.
Much of the plaintiff's prima facie case is devoted to demonstrating that he was qualified for the rear loader management position. For instance, Haasl notes that Leach's vice-president of manufacturing and engineering believed that he was "highly qualified" for the position. (Pltf. Br. at 13.) But this line of argument ignores the fact that in a reduction in force situation, management must make difficult decisions, often choosing among many highly qualified candidates. And, because the goal of an RIF is to save the company money, it might sometimes be the case that the most qualified candidate for the job is let go, merely because that individual is earning the highest salary. See Hazen Paper Co. v. Biggins, 507 U.S. 604 (1993), and Anderson v. Baxter Healthcare Corp. 13 F.3d 1120, 1125-26 (7th Cir. 1994). As long as the decision is not motivated by an impermissible discriminatory purpose, it is not the court's role to second-guess difficult management decisions.
That said, the plaintiff cites two younger employees who he believes were similarly situated and were treated more favorably. Haasl must show that these employees were similarly situated "with respect to performance, qualifications, and conduct, and that `the retained or transferred younger employees possessed analogous attributes, experience, education, and qualifications relevant to the positions sought'" Balderston v. Fairbanks Morse Engine Div. of Coltec Industries, 328 F.3d 309, 322 (7th Cir. 2003). First, the plaintiff points to Jim Lemmer, who was forty-years-old at the time of the RIF, and had assumed management of the VAC/ALL and front loader lines at the time Haasl was reassigned to work on the side loader line in 2000. At the time of the RIF, Lemmer was not terminated, but rather stayed on and "continued to facilitate the transition in sale of the VAC/ALL and front loader product lines for some time following the Plaintiff's termination." (Pltf. Br. at 8.) Then, apparently some time soon after the RIF, and after the sale of the VAC/ALL and front loader product lines, (Lemmer does not recall exactly), he was assigned to work on the rear loader line under Jim White. Lemmer had, in the 1990s, worked on the rear loader line. From 1995 to 1996 he had worked to develop a "mid-range rear loader refuse truck," after which he began working on special rear loader orders for another two years. (Dizard Aff., Ex. 5 at 31-32.) Scott Sloan, Leach's vice-president of manufacturing and engineering, testified that Lemmer was retained to work on the rear loader line because, "really the key thing was his knowledge of the rear-loader in the alpha product line. I mean, that was his baby." (Dizard Aff., Ex. 6 at 101.)
Haasl does not dispute Lemmer's experience with the rear loader product line. Instead, he relies on the oft-repeated fact that he himself had "some experience" with the rear loaders as well. Yet, as noted earlier, his experience was extremely limited, such that he had only had several conversations with other Leach employees about the product. At his deposition, he testified as follows:
Q: Well, did you do any work on the rear loader product line? Did you —
A: Part of my responsibilities were to discuss programs and — and design activities, and there were times that — that I was part of conversations, discussions, regarding rear loaders.
Q: In terms of the duties of product development and the coordinating of subordinates, the majority if not all of your work was done on the Vac/All, front loader and side loader product lines; correct?
A: That's correct.
(McGinnis Aff., Ex. 32 at 84.) This, in itself, is enough to distinguish Haasl from Lemmer. Given that the rear loader was the only remaining product, the difference in experience between the two employees on Leach's most important product line compels a finding that the two were not similarly situated.
Haasl also argues that he was similarly situated to Jim White, who was thirty-five at the time of the RIF. White had been in charge of the rear loader product line (as a senior product engineer) since October 1999, when the engineering departments had undergone a transformation. (That was also the time Jim Lemmer was promoted to manage the front loader line.) (Dizard Aff., Ex. 8 at 241-242.) Then, in the fall of 2001 White was promoted to manager of the rear loader line, though he had already been responsible for that line since October 1999. ( Id.) Haasl argues that White had no prior rear loader experience in 1999 when he was picked to lead that group and that Haasl was a better manager than White. (Pltf. Br. at 7.) But these arguments do not pertain to the state of affairs during the reduction in force in March 2001. Then, with only the rear loader line remaining, management was forced to choose between several capable individuals. By that point, White had been working on that line for a year and a half, whereas Haasl had still never worked at all on rear loaders. White and Haasl were not similarly situated.
Ultimately, one must be sympathetic to Haasl's predicament. He was a skilled engineer and manager who was subject to a reduction in force when other, much younger, engineers were not. But the picture Haasl paints is one more of happenstance and, frankly, bad luck, than of age discrimination. The inter-departmental shuffle had given others the opportunity to work on the one product line that remained following the divestiture of the lines with which Haasl was experienced. When the reduction in force was implemented, the music stopped and Haasl was left without a chair. But, as noted, the individuals Haasl focuses on were not, on account of their rear loader experience, similarly situated. Accordingly, he has not set forth a prima facie case of age discrimination.
Although my finding that Haasl has failed to set forth a prima facie case is enough to end the inquiry on his ADEA claim, it may be useful to address his argument that Leach's stated reason for retaining White and Lemmer instead of him is pretextual. Haasl argues that summary judgment should be denied because a jury may disbelieve Leach which would allow the jury to infer that the real reason for its action was the forbidden one of age discrimination. Perdomo v. Browner, 67 F.3d 140, 145 (7th Cir. 1995). But to avoid summary judgment, Haasl must do more than accuse the defendant of dishonesty. Schuster, 327 F.3d at 578. Nor is it sufficient to show that "the employer made a mistake or that the employer's reason was not good enough to support its decision." Balderston v. Fairbanks Moore Engine, 328 F.3d 309, 323 (7th Cir. 2003). "Plaintiffs must provide evidence tending to prove that the employer's reasons are factually baseless, were not the actual motivation for the discharge in question, or were insufficient to motivate the discharge, and that plaintiff would not have been let go but for his age." Id. (internal quotes and citations omitted).
Haasl has failed to provide such evidence. As noted above, it is undisputed that Haasl, unlike both White and Lemmer, had no direct experience with Leach's one remaining product line. White had been the managing that line since 1999, and Lemmer had worked on that product line between 1995 and 1998. By contrast, Haasl had never been assigned to work on that line; he could only recall an uncertain number of discussions regarding rear loaders. Thus, there is a strong factual basis for the employer's stated reason. Haasl points to his greater overall managerial experience and suggests that a jury could conclude that this was or should have been a more important factor in determining which employee to retain. But the question of whether general managerial experience should have been given greater weight than engineering experience with specific product line at issue is no more a question for the jury than the court. "[T]he issue of pretext does not address the correctness or desirability of reasons offered for employment decisions. Rather, it addresses the issue of whether the employer honestly believes in the reasons it offers." McCoy v. WGN Continental Broadcasting Co., 957 F.2d 368, 373 (7th Cir. 1992). Courts "do not sit as a super-personnel department that reexamines an entity's business decisions." Mechnig v. Sears, Roebuck Co., 864 F.2d 1359, 1365 (7th Cir. 1988). Haasl has offered no evidence that Leach did not actually value direct experience with its remaining product line more than general managerial experience. He has offered no evidence that his age played any role in the decision whatsoever.
The only mention of Haasl's age occurred in a report prepared by a financial consultant hired by Leach. The consultant listed the date of birth and age of the candidates for termination. There is no evidence, however, that this information played any role in the decision not to retain Haasl. Moreover, the record indicates that the relevant decision-makers all knew who Haasl, a top manager, was. Given this fact, it seems largely irrelevant whether they knew that he was exactly sixty, by virtue of the report, or whether they would have just guessed that he was approximately sixty, or at least a generation or more older than individuals like Jim Lemmer (40) or Jim White (35).
2. State Claims and ERISA
In addition to the ADEA claim, the plaintiff's amended complaint includes five other causes of action. The second claim alleges breach of contract and breach of duty of good faith due to the fact that the plaintiff did not receive the pension benefits that were allegedly promised to him. The third claim alleges fraud in the inducement; the fourth alleges misrepresentation; the fifth alleges promissory estoppel; and the sixth alleges negligent misrepresentation. All claims are based on the same nexus of facts described earlier.
The defendants' motion for summary judgment argues that all five of these state law claims are preempted by ERISA because they "relate to" an ERISA plan. The parties do not dispute that the pension plan in question is governed by ERISA; instead, they dispute the application of ERISA preemption law to the claims alleged in the complaint. ERISA preemption, as is widely recognized, is the rule rather than the exception. This "sweeping preemption provision" provides that ERISA shall "supersede any and all State laws insofar as they may now or hereafter relate to any employee benefit plan. . . ." See Tolle v. Carroll Touch, Inc., 977 F.2d 1129, 1136, (7th Cir. 1992) (citing 29 U.S.C. § 1144(a)). The Supreme Court has interpreted this broadly drafted preemption provision as "deliberately expansive." Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 46 (1987). In view of that expansive interpretation, the Court has concluded that this preemption provision displaces all state laws "within its sphere, even including state laws that are consistent with ERISA's substantive requirements." Metropolitan Life Ins. Co. v. Mass, 471 U.S. 724, 739 (1985).
Whether Haasl's state law claims are preempted depends on the facts underlying those claims, rather than on any legal titles he might ascribe to them. Haasl relies on the August 5, 1996 written offer of employment, which he accepted, as the basis of his breach of contract and other claims. In Haasl's view, the issue is quite simple. The written offer said that Leach agreed to provide pension benefits after Haasl worked there for 60 days. When Leach did not provide those benefits, their agreement was breached. Viewing the facts in this light, the plaintiff suggests that the breach of contract claim could be adjudicated without reference to any benefit plan. As Haasl puts it, "the Plaintiff can successfully prove his state law claims, and establish that he is entitled to recovery, without the plan." (Pltf. Br. at 18.) Haasl's theory of the case is in this way similar to the plaintiff's theory that was rejected by the court in Bartholet v. Reishauer A.G. (Zurich):
As Bartholet sees things, Reishauer vowed to create a pension plan with certain attributes and didn't; a court may decide whether Reishauer broke its promise without considering any of the technical requirements of ERISA or entering a judgment that would affect the pension plan's assets. His action therefore does not "relate to" a pension plan and falls outside § 514(a), Bartholet concludes.Bartholet v. Reishauer A.G. (Zurich), 953 F.2d 1073, 1076-1077 (7th Cir. 1992).
It is clear from a more thorough review of the facts that they do not fit so easily within the simplistic framework suggested by the plaintiff. The August 6 letter reads, in relevant part:
Benefits Programs
You will participate in all the normal benefits programs offered by Leach Company. They include a health plan, dental insurance, life insurance, disability insurance, pension and 401K. With the exception of the 401K program (which requires a one year waiting period from January 1, 1997) your benefits will take effect after 60 days of employment (booklets are enclosed). Please note that minor changes in the benefits have occurred since May 1, 1996. These are highlighted on a sheet titled "Leach Benefits". Please see the booklet "Facts About My Job" for description [sic] of other items relative to employment at Leach Company.
(Dizard Aff., Ex. 11.) Rather than being a stand-alone offer of pension benefits, the relevant sections of the letter are merely attempting to describe, by reference to other documents, the nature of Leach's pension plan. In directing Haasl to review the relevant benefits booklets, the letter plainly instructs him that he will be eligible to participate in "all the normal benefits programs offered by Leach Company". (italics added). The letter then proceeds to say that your benefits (including the Leach pension plan) will "take effect after 60 days". This is, at best, a promise or statement about the terms of the Leach pension plan, not about some other or independent pension plan, the terms of which are known only to Haasl and Yackley. Any court, in reviewing whether this promise was breached, cannot determine whether there was a breach without reference to what the plan actually said. Thus, I could not, as Haasl would have it, find for the plaintiff without referring to the Leach plan itself. This is partly why the Seventh Circuit has recognized that a "suit based on the difference between the pension promised by contract and the pension established by the plan `relates to' the pension plan." Bartholet v. Reishauer A.G. (Zurich), 953 F.2d at 1077. See also Griggs v. E.I. Dupont de Nemours Co., 237 F.3d 371, 378 (4th Cir. 2001) ("Generally speaking, ERISA preempts state common law claims of fraudulent or negligent misrepresentation when the false representations concern the existence or extent of benefits under an employee benefit plan.") Thus, to the extent that this letter would give rise to a breach of contract claim (it clearly fits more within the misrepresentation category), the claim would be preempted because it requires an interpretation of the plan. See Rice v. Panchal, 65 F.3d 637, 644 (7th Cir. 1995) (finding complete preemption of state law claims "is required where a state law claim cannot be resolved without an interpretation of the contract governed by federal law.")
I note at this stage that it would seem highly unusual for a pension plan to vest after 60 days. By their very nature, pension plans are paid out based on a formula involving years of service and annual salary. Thus, it is unclear what kind of vested pension benefit the plaintiff thought he would be entitled to after only 60 days of service. Accordingly, it seems that the phrase "your benefits will take effect" could not reasonably be read to mean that "your pension will be fully vested" after 60 days of employment.
The plaintiff's fraud in the inducement, misrepresentation and estoppel claims must fail for the same reason. The plaintiff's theories resemble arguments rejected by the Eleventh Circuit:
Hall's principal argument is that her fraudulent inducement claims are entirely independent of the existence of Blue Cross's plan because she can prove her case in state court without ever referencing the plan's terms and provisions. Hall claims that she can state a prima facie case of fraudulent inducement merely upon showing that Blue Cross's denial of coverage was inconsistent with its agents' representations, and she detrimentally relied on those misrepresentations. At no time, Hall argues, would she have to compare the agents' oral representations to Blue Cross's written policy.Hall v. Blue Cross/Blue Shield of Alabama, 134 F.3d 1063, 1065 (11th Cir. 1998). In rejecting Hall's argument, the court stated that
[u]ltimately, no court will be able to determine whether Hall has been fraudulently induced without resorting to the written policy and assessing the truth of the agents' representations. Because the terms of Blue Cross's ERISA-governed policy are critical to the resolution of Hall's fraudulent inducement claims, her cause of action is sufficiently related to an employee benefits plan to fall within ERISA's preemptive scope.Id.
The alleged fraud or misrepresentation here is that Yakley falsely said that the terms of the Leach plan were X, when actually they were Y. Just as was the case with the breach of contract claim, determining whether there was actually a misrepresentation will necessarily involve an interpretation of the actual terms of the Leach plan. At their heart, all of these claims must "relate to" an ERISA plan because they are based on misrepresentations about the terms of an ERISA plan. See Bartholet, 953 F.2d at 1077("A suit based on the difference between the pension promised by contract and the pension established by the plan "relates to" the pension plan."); Hampers v. W.R. Grace Co., Inc., 202 F.3d 44, 52 (1st Cir. 2000) (holding that "a cause of action `relates to' an ERISA plan when a court must evaluate or interpret the terms of the ERISA-regulated plan to determine liability under a state law cause of action.") Accordingly, I find that all of the plaintiff's state law claims are preempted by ERISA.
It does not necessarily follow from the fact that a plaintiff's state common-law claims are preempted by ERISA that he has no claim at all. In some cases, ERISA itself provides a basis for a claim. In Bartholet, the court reversed the district court's Rule 12(b)(6) dismissal of a state-law contract claim based on ERISA preemption because it was possible that the plaintiff had a remedy under ERISA 953 F.2d at 1077-78. However, this case is before me on a motion for summary judgment, not dismissal under Rule 12(b)(6), and Haasl has not requested leave to amend or even suggested that he may have a claim under ERISA. Under these circumstances, summary judgment will be granted and plaintiff's claims will be dismissed with prejudice. See Stewart v. U.S. Bancorp, 297 F.3d 953, 959 (9th Cir. 2002) ("Plaintiffs could have stated an ERISA claim in their initial complaint, or the complaint could have been amended to include an ERISA claim. There was no initial bar to the district court's considering an ERISA claim except Plaintiffs' failure to raise it.")
Given the disposition reached here, I need not address the issue, raised by the defendants, regarding Federal Signal Corporation's status as a proper party to this suit.
Therefore, for the reasons given herein, the defendants' motion for summary judgment is GRANTED and this case is DISMISSED.