Carnegie Center Associates, In re, 96-5566

Citation129 F.3d 290
Decision Date31 October 1997
Docket NumberNo. 96-5566,96-5566
Parties75 Fair Empl.Prac.Cas. (BNA) 331, 72 Empl. Prac. Dec. P 45,074 In Re: CARNEGIE CENTER ASSOCIATES, Debtor. Deborah RHETT, Appellant, v. CARNEGIE CENTER ASSOCIATES.
CourtUnited States Courts of Appeals. United States Court of Appeals (3rd Circuit)

Elaine R. Jones, Director-Counsel, Charles Stephen Ralston, Norman J. Chachkin, Catherine B. Powell, (argued), NAACP Legal Defense & Educational Fund, New York City, Lanier E. Williams, Christopher Morkides, Philadelphia, PA, Attorneys for Appellant.

James E. Stahl, (argued), Remy M. Quinones, Borrus, Goldin, Foley, Vignuolo, Hyman & Stahl, North Brunswick, NJ, Attorneys for Appellee.

BEFORE: GREENBERG, McKEE, and WELLFORD, * Circuit Judges.

GREENBERG, Circuit Judge.

OPINION OF THE COURT

This case comes on before this court on appeal from the district court's order affirming a bankruptcy court order expunging the claim of the appellant Deborah Rhett, a black female, which arose out of the termination of her employment when her employer, appellee Carnegie Center Associates (Carnegie), abolished her position. The bankruptcy court had subject matter jurisdiction under 28 U.S.C. § 157(b)(2)(B), (O) and 28 U.S.C. § 1334(b). The district court had appellate jurisdiction over the bankruptcy court's order pursuant to 28 U.S.C. § 158. We have jurisdiction under 28 U.S.C. § 1291, 28 U.S.C. § 158(d), and 42 U.S.C. § 2000e-5(j).

A. FACTUAL AND PROCEDURAL HISTORY

The facts in the case were developed at the trial of the adversary proceeding in the bankruptcy court. Rhett began working for Carnegie, a real estate company Allan Landis owned and controlled, as a temporary secretary in April 1989. She became a full-time permanent secretary in Carnegie's Accounting/Finance Department on July 17, 1989, and received a salary increase of $1,500 in January 1990 based on her satisfactory performance.

In June 1990, Rhett informed her supervisors and coworkers that she was pregnant. When she told Keith Gormisky, the controller, and Gary Turndorf, the chief financial officer and counsel, of her pregnancy both asked if she was going to get married. Turndorf commented that being a single parent was difficult, and Rhett claimed that Gormisky said that getting married was: "in society's eyes ... the right thing to do." Nevertheless, Turndorf testified that the fact that Rhett was unmarried played no role in Carnegie's later decision to abolish her position. Rhett also claimed that Gormisky became irate with her just before she left on maternity leave and stated that she was on "thin ice." The bankruptcy court, apparently attributing this comment to Turndorf, found it related to his view of the quality of Rhett's work.

Rhett circulated a memo to the managerial officers (including Landis, Turndorf and Gormisky) on December 18, 1990, stating that she planned to be on maternity leave from December 21, 1990, until about April 15, 1991. Carnegie hired a temporary secretary to fill in while she was gone. Carnegie did not have a formal maternity leave policy, but Turndorf testified that its practice was to "try and hold it open for them if we could" so that "[w]hen they wanted to come back, if they contacted us and there was something open that was suitable, we would offer it to them." See bankruptcy court opinion at 5-6 (discussing two employees who left on maternity leave and subsequently returned to the same or similar positions).

Carnegie had experienced financial difficulties prior to Rhett's departure that worsened while she was gone, forcing it to make staff cutbacks to decrease costs. Consequently, just before Rhett originally had planned to return, Carnegie eliminated several positions, including Rhett's secretarial position, and terminated several employees, including her supervisor, Geoff Hammond. On March 26, 1991, Gormisky wrote Rhett to tell her that her position had been eliminated. 1 Turndorf testified that Carnegie did not make a performance-based evaluation as to which secretary's employment it should terminate because it did not consider Rhett an employee at that time and it was easy to abolish her former position by not hiring any more temps, thus reducing the number of secretaries from four to three. At that time Rhett was still away from work because she was under medical care (counseling) for post-partum depression, which she continued until June of 1991. When Rhett called Gormisky after receiving the letter, he reiterated that her position had been abolished. She asked about two other positions with Carnegie and was told they were not available to her. In fact, Carnegie did not interview Rhett, or consider hiring her, for any other position.

Rhett filed a suit in the district court under Title VII and the New Jersey Law Against Discrimination against Carnegie on November 26, 1993, alleging discrimination on the basis of her race, gender, and marital status. 2 The district court action was automatically stayed because Carnegie was undergoing bankruptcy reorganization. Thus, Rhett pursued the matter by filing a proof of claim with the bankruptcy court on February 19, 1994. Thereafter the district court terminated the district court action without prejudice and the case continued as an adversary proceeding in the bankruptcy court. The bankruptcy court found in Carnegie's favor after a three-day bench trial. It held that Carnegie had to reduce costs because of financial difficulties and that it eliminated staff at both the management and support levels. The court held that Carnegie abolished Rhett's position for the legitimate nondiscriminatory reason that she was away from work, and not because of discrimination on the basis of race, gender or pregnancy. The court further held that she was not qualified for any of the other positions for which she asserted Carnegie should have interviewed her. The district court affirmed in an opinion and order entered August 6, 1996, holding that the bankruptcy court's factual findings were not clearly erroneous and these findings "compelled the conclusion that the secretarial position held by appellant was abolished for legitimate, non-discriminatory reasons." Rhett then appealed to this court.

The main issue on this appeal is whether an employee's absence on maternity leave can be a legitimate nondiscriminatory reason for her termination. Inasmuch as the district court sat as an appellate court, we exercise plenary review of its decision. Universal Minerals, Inc. v. C.A. Hughes & Co., 669 F.2d 98, 101-102 (3d Cir.1981). Findings of fact by the bankruptcy judge, however, are only reversible if clearly erroneous. Bankruptcy Rule 8013.

B. PREGNANCY, RACIAL AND GENDER DISCRIMINATION

On this appeal Rhett claims that Carnegie terminated her employment because of her pregnancy and on account of her race and gender in violation of Title VII and the New Jersey Law Against Discrimination. We confine our discussion to Title VII because her state law claims are analyzed in the same way as her Title VII claims. See Marzano v. Computer Science Corp., 91 F.3d 497, 502 (3d Cir.1996). Indeed, Rhett apparently recognizes this point because she does not cite a single New Jersey state court opinion in either of her briefs on this appeal.

Title VII prohibits employment discrimination based on an individual employee's sex. 42 U.S.C. § 2000e-2(a). The Pregnancy Discrimination Act ("PDA"), a 1978 amendment to Title VII, states:

The terms 'because of sex' or 'on the basis of sex' include, but are not limited to, because of or on the basis of pregnancy, childbirth, or related medical conditions; and women affected by pregnancy, childbirth, or related medical conditions shall be treated the same for all employment-related purposes ... as other persons not so affected but similar in their ability or inability to work....

42 U.S.C. § 2000e(k). There is employment discrimination whenever an employee's pregnancy is a motivating factor for the employer's adverse employment decision. 42 U.S.C. § 2000e-2(m).

The bankruptcy and district courts analyzed Rhett's claim as being based on circumstantial evidence implicating the burden shifting framework of McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973). In a Title VII case such as this one involving a reduction in force, in order to make out a prima facie case the plaintiff must show that (1) she belonged to a protected class, (2) she was qualified for the position from which she was terminated, (3) she was terminated and (4) persons outside of the protected class were retained. See Armbruster v. Unisys Corp., 32 F.3d 768, 777 (3d Cir.1994). While neither court made specific reference to the applicability of the modified McDonnell Douglas framework in reduction in force situations, the record clearly establishes that Carnegie did reduce its force, so we will apply the appropriate framework. Once the plaintiff establishes a prima facie case, the burden shifts to the defendant to articulate a legitimate non-discriminatory reason for the plaintiff's termination. Texas Dep't of Community Affairs v. Burdine, 450 U.S. 248, 252-53, 101 S.Ct. 1089, 1093, 67 L.Ed.2d 207 (1981). If the defendant articulates such a reason, the plaintiff then must prove that the facially legitimate reason was a pretext for a discriminatory motive. Id. 3

The bankruptcy and district courts held that Rhett did not establish a prima facie case. We disagree with this conclusion but are satisfied that the courts' error is harmless because the bankruptcy court considered the issues relevant to a reduction in force analysis at a trial and made the requisite findings for such an analysis. Thus, insofar as this case involves a reduction in force, we focus on Carnegie's reason for terminating Rhett's employment.

This case largely boils down to a dispute over one issue: whether terminating an employee because she is absent on maternity leave is a violation of the PDA. The...

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