Keller v. Orix Credit Alliance, Inc.

• Decision Date: 24 November 1997
• Docket Number: No. 95-5289,95-5289
• Citation: 130 F.3d 1101,1997 WL 752158
• Parties: 75 Fair Empl.Prac.Cas. (BNA) 716, 72 Empl. Prac. Dec. P 45,062 Frederick F. KELLER, Appellant, v. ORIX CREDIT ALLIANCE, INC. . Originally
• Court: U.S. Court of Appeals — Third Circuit

Page 1101

130 F.3d 1101

75 Fair Empl.Prac.Cas. (BNA) 716,

72 Empl. Prac. Dec. P 45,062

Frederick F. KELLER, Appellant, v. ORIX CREDIT ALLIANCE, INC.

No. 95-5289.

United States Court of Appeals, Third Circuit.

Originally Argued March 6, 1996.

Reargued In Banc April 16, 1997.

Decided Nov. 24, 1997.

Edwin M. Baum (argued), James Robert Pigott, Jr., Solomon, Zauderer, Ellenhorn, Frischer & Sharp, New York City. Steven L. Lapidus, Robinson, Lapidus & Liveli, Newark, NJ, for Appellee.

Debra L. Raskin (argued), Anne L. Clark, Vladeck, Waldman, Elias & Engelhard, P.C., New York City, for Appellant.

Before MANSMANN, ALITO and LEWIS, Circuit Judges.

Before: SLOVITER, Chief Judge, and BECKER, STAPLETON, MANSMANN, GREENBERG, SCIRICA, COWEN, NYGAARD, ALITO, ROTH, LEWIS, and McKEE, Circuit Judges.

OPINION OF THE COURT

ALITO, Circuit Judge:

Frederick F. Keller sued his former employer, ORIX Credit Alliance, Inc., in federal district court, asserting claims under the federal Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. § 621 et seq., and the

New Jersey Law Against Discrimination ("NJLAD"), N.J.S.A. § 10:5-1 et seq. Keller, who had served as executive vice president and a member of the board of directors, claimed that ORIX Credit Alliance had discriminated against him based on his age when it failed to promote him to the position of chief operating officer and later terminated his employment. The district court granted summary judgment for ORIX Credit Alliance. A panel of this court issued a decision reversing the district court, but ORIX Credit Alliance's petition for rehearing en banc was granted, and we now affirm.

I.

A.

Background of the Parties and the Dispute. ORIX Credit Alliance is a subsidiary of companies that are in turn subsidiaries of ORIX Corporation, a Japanese company. App. 385-86, 616. ORIX Credit Alliance is a commercial finance company that is engaged primarily in the business of financing the acquisition or leasing of equipment. Id. at 310. ORIX Credit Alliance generally must borrow the funds needed to support the financing it provides for its customers. Id. In simple terms, the company makes a profit by borrowing funds at one rate and then lending to its customers a higher rate. Id. at 80.

Frederick Keller was born on January 31, 1942. App. 610. After college, he was hired by Franklin National Bank and eventually handled its relationship with Credit Alliance Corporation, ORIX Credit Alliance's predecessor. Id. at 611. In 1976, Credit Alliance Corporation hired Keller as a vice president, and in that capacity he shared the primary responsibility for raising funds for the company. Id. at 612, 1121. Keller obtained funding from banks, helped to supervise "the commercial paper program," and worked on "other sources of funding." Id. at 1120-21. The then-chairman of the company has described Keller's work as "excellent," and after several years, Keller was promoted to senior vice president of finance. Id. at 614.

In December 1984, First Interstate Bancorp acquired Credit Alliance Corporation's parent company, and Credit Alliance Corporation continued to do business as First Interstate Credit Alliance Corp. App. 613. After this acquisition, First Interstate Bancorp provided most of the funding used by First Interstate Credit Alliance Corp. for its lending activities, and therefore it was no longer necessary for Keller to raise money. Id. at 614. Keller acquired the titles of executive vice president, chief financial officer, and chief credit officer, and he served as a member of the company's board of directors. Id. at 70-71, 1121. In 1988, the chairman of the board of First Interstate Credit Alliance Corp. told Keller that he had been considered for the presidency of the company but that Daniel Ryan had been selected. Id. at 1121.

In September 1989, ORIX subsidiaries acquired First Interstate Credit Alliance Corp., which continued to do business under the name of ORIX Credit Alliance. App. at 616. Prior to the acquisition, Keller and six other key executives were requested to sign employment contracts with the new company, and Keller signed a three-year contract for employment at a substantial annual salary. Id. at 616, 644.

After this acquisition, Keller was given the responsibility for raising funding for ORIX Credit Alliance. App. 78. At that time, according to Keller's affidavit, "Credit Alliance had approximately 1.6 billion in debt outstanding to First Interstate Bancorp, 1.3 billion of which was to continue to be provided on a temporary basis. Because it was the goal of Credit Alliance to obtain funding independent of First Interstate Bancorp and of ORIX Corp. or ORIX USA [an ORIX subsidiary] [Keller] determined that it would ultimately be necessary for Credit Alliance to have available credit facilities totaling approximately 1.5 billion dollars." Id. at 616-17 (emphasis added). Keller stated that he communicated this goal to the board of directors at "[m]ore than one meeting." Id. at 15.

Keller's Failure to Meet the $1.5 Billion Goal and His Explanations. This goal, however, was never met or even approached. Keller himself stated in his deposition that "Credit Alliance never achieved the goal for funding that [he] had communicated to the board of directors." App. 16. Indeed, he acknowledged that, at all times from September While Keller does not dispute that he failed to meet or approach the financing goal, he claims that this was due to factors beyond his control. See Appellant's Br. at 8-11, 35-36; App. 617-32 (Keller Affidavit). For example, Keller explained that ORIX Credit Alliance was unable to launch a "commercial paper program," as he had projected, because "there were many obstacles to obtaining a sufficiently high credit rating to permit Credit Alliance to issue and sell commercial paper on favorable terms." App. 618. Among these, he stated, "were the absence of any guarantee by ORIX Corp., and the growing weakness of the Japanese economy which would affect Credit Alliance's parent." Id. Keller summarized these problems in memos that he sent to Ryan. Id.

                1989 (the time of the ORIX acquisition) to April 1, 1993 (the time of his termination), funding provided by First Interstate Bancorp and ORIX affiliates constituted more than 50% of ORIX Credit Alliance's funding.  Id. at 81-82.   In December 1991, $785 million in credit facilities was available to ORIX Credit Alliance.  App. 13.  By September 1992--approximately when the initial decision to terminate Keller was made--the total available bank lines had dropped to $695 million.  Id. at 48.   After September 1992, Keller did not secure any increase in bank lines.  Id. at 24-25
                

Keller likewise provides a plethora of reasons for his failure to secure bank lines of credit. He cites the company's credit rating, "the perceived 'downturn in the equipment financing industry' ... [,] Credit Alliance's statistics for 'past dues' or untimely payments from its customers and other aspects of its portfolio ... [,] bank 'environment[s] ... not conducive to risk of any sort' ... [,] and bank limitations on lending to financing companies ... or to companies outside a particular geographical area," "the negative impact of the recession in the United States and Japan during the late 1980's and early 1990's and the resulting reluctance of American banks to 'book loans,' " and "banks' reluctance to lend to a company having a Japanese parent, given the negative economic situation in Japan at the time." App. 620-21.

During this same period, when Keller was allegedly unable to raise funds by means of a commercial paper program or bank lines of credit, Keller repeatedly expressed opposition to raising funds by "asset-backed securitization," a process that involves the sale of accounts receivable or loan paper to a specially created trust that in turn sells interests or securities in that trust. See App. 90, 626. Ryan mentioned the possibility of raising funds in this way to Keller before or shortly after the ORIX acquisition (id. at 90), but Keller repeatedly advised Ryan that in his opinion asset-backed securitization was "not for us." Id. at 28-29, 627.

Finally, Keller states that he explored the possibility of private placements of ORIX Credit Alliance debt with insurance companies and other institutional investors. App. 628. But Keller states that it was not until July 1992 (one or two months prior to the decision to terminate him) that he proposed to Ryan that ORIX Credit Alliance Corp. take "[t]he first step" in this direction, i.e., the selection of a bank to act as the company's agent. Id. at 627-28.

ORIX Credit Alliance's Assessment of Keller's Performance. ORIX Credit Alliance points to evidence that paints a picture of growing dissatisfaction within the company about Keller's failure to reach or approach the funding goal. Keller and Ryan both testified that Ryan repeatedly questioned Keller about the funding situation. App. 40, 44, 98-99. Ryan also stated that he asked Keller why ORIX Credit Alliance's competitors were able to obtain forms of financing that his company either did not pursue or allegedly could not obtain. Id. at 90, 92, 98. See also id. at 627 (Keller Affidavit). One of ORIX Credit Alliance's outside directors, David E. Mundell, who had served for nearly 20 years as the president of another leading commercial lending company, stated that at most, if not all, of the board meetings from March 1991 until April 1993 he questioned Keller and "expressed dissatisfaction with the lack of progress in raising funding." Id. at 388. At one meeting, Mundell added, he "expressed the view that, based on [his] knowledge of the equipment finance industry and [his] experience in managing the liability side of finance companies' balance sheets, [he] believed that Credit Alliance was not Another outside director, Yoshiaki Ishida, who was also the president and chief executive officer of an ORIX parent corporation, stated...