Gaworski v. ITT Commercial Finance Corp.

• Decision Date: 02 March 1994
• Docket Number: 92-1840,Nos. 92-1753,s. 92-1753
• Citation: 17 F.3d 1104
• Parties: 64 Fair Empl.Prac.Cas. (BNA) 382, 63 Empl. Prac. Dec. P 42,886, 62 USLW 2461 Richard C. GAWORSKI, Plaintiff-Appellee, Equal Employment Opportunity Commission, Intervenor Plaintiff-Appellee, v. ITT COMMERCIAL FINANCE CORP., a Nevada corporation; ITT Financial Corporation, a Delaware corporation; ITT Corporation, a Delaware corporation, Defendants-Appellants, Richard C. GAWORSKI, Plaintiff, Equal Employment Opportunity Commission, Intervenor Plaintiff-Appellant, v. ITT COMMERCIAL FINANCE CORP., a Nevada corporation; ITT Financial Corporation, a Delaware corporation; ITT Corporation, a Delaware corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1104

17 F.3d 1104

64 Fair Empl.Prac.Cas. (BNA) 382,

63 Empl. Prac. Dec. P 42,886, 62 USLW 2461

Richard C. GAWORSKI, Plaintiff-Appellee, Equal Employment Opportunity Commission, Intervenor Plaintiff-Appellee, v. ITT COMMERCIAL FINANCE CORP., a Nevada corporation; ITT

Financial Corporation, a Delaware corporation;

ITT Corporation, a Delaware corporation,

Defendants-Appellants, Richard C. GAWORSKI, Plaintiff, Equal Employment Opportunity Commission, Intervenor Plaintiff-Appellant, v. ITT COMMERCIAL FINANCE CORP., a Nevada corporation; ITT

Financial Corporation, a Delaware corporation;

ITT Corporation, a Delaware corporation,

Defendants-Appellees.

Nos. 92-1753, 92-1840.

United States Court of Appeals Eighth Circuit.

Submitted May 13, 1993.

Decided March 2, 1994.

Rehearing and Suggestion for Rehearing

En Banc Denied in No. 92-1753

April 20, 1994. ^***

Counsel who presented argument on behalf of the appellant was Robert Reinhart of Minneapolis, MN. Susan Wiens appeared on the brief.

Counsel who presented argument on behalf of the appellee EEOC was Paul D. Ramshaw, of Washington, D.C. For appellee Gaworski was Steven Rau of St. Paul, MN.

Before RICHARD S. ARNOLD, Chief Judge, LAY, Senior Circuit Judge, and JOHN R. GIBSON ^*, Circuit Judge.

LAY, Senior Circuit Judge.

Richard Gaworski and intervenor E.E.O.C. ("plaintiffs") brought an action under the Age Discrimination in Employment Act, 29 U.S.C. Sec. 621 et seq. (1988) ("ADEA" or "Act"), ¹ against ITT Commercial Finance Corp., ITT Financial Corp., and ITT Corp. (collectively, "ITT"). Gaworski had been terminated from his position as Manager of Credit and Operations for ITT Commercial Finance Corporation's Capital Resources Group ("CRG"). At the time of his termination, he was fifty-five years old. Following a four-day trial, a jury returned a verdict finding that age had been a determining factor in ITT's discharge of Gaworski. The district court ² then entered judgment and awarded Gaworski backpay in the amount of $265,892.27. The court denied ITT's post-trial motion for judgment notwithstanding the verdict or a new trial. On appeal, ITT urges that there exists insufficient evidence to support the jury's verdict and that certain additional offsets should have been taken from the backpay award. The E.E.O.C. cross-appeals, challenging the district court's deduction from the backpay award of unemployment compensation that Gaworski received following his termination. We affirm the judgment on the verdict finding that age was a determining factor in Gaworski's discharge, but reverse in part and remand as to the backpay award.

I. AGE DISCRIMINATION

A. Background

Gaworski came to ITT in 1976 as Comptroller of ITT Industrial Credit. As Comptroller, he was responsible for the company's accounting, budgeting, financial analysis and electronic data processing. He moved to CRG after Industrial Credit merged with Commercial Finance in 1984. Two years later, ITT terminated his employment. At the time of his termination, Gaworski was the oldest and highest paid CRG employee, and he was the only CRG employee eligible to receive a pension. Defendants claim that Gaworski was terminated as part of a "reduction in force" ("RIF") initiated by Michael Guimbarda, the director of the CRG division, and that Gaworski's position was eliminated. Gaworski disputes the employer's reasons for his discharge; he urges that age was the motivating factor in his termination.

At the time of Gaworski's discharge, the number of employees at CRG dropped from seventeen to thirteen. Gaworski argues, however, that the purported RIF was not objectively carried out and that he was included among the employees to be laid off because of his age. To support his claims, Gaworski presented evidence at trial that despite Guimbarda's contention that the RIF was needed, CRG's business was increasing at the time of the layoffs. In addition, Gaworski adduced evidence that in conducting the alleged RIF, Guimbarda failed to comply with a company policy explicitly requiring "advance written notification to both the senior levels of operating management and the director of personnel" before any layoff could occur.

Gaworski also presented evidence that his position was not eliminated, as Guimbarda claimed, but that instead, he was replaced by a younger man. The day after Gaworski's employment was terminated and his position of "Manager of Credit and Operations" was supposedly eliminated, Guimbarda promoted John Olker, a 46-year-old senior investment manager whom Gaworski had supervised, to the "new" position of "Manager of Credit and Administration." Olker received an $8,000 raise, moved into Gaworski's office, and assumed substantially all of Gaworski's former duties. Gaworski claims that this promotion, too, was conducted in violation of company policy. The policy required a performance review before an employee could be promoted, and Olker had not been given such a review. At the time of Olker's previous performance review, seven months earlier, his performance was evaluated as "standard" (average), while Gaworski had generally been rated as "above standard," and it was recommended that Olker not be reassigned or promoted during the ensuing twelve-month period.

Guimbarda testified that he retained Olker over Gaworski because, although they were both good performers, Olker had greater knowledge of the computer system than Gaworski and had more experience performing actual credit analyses. In response, Gaworski elicited testimony from Olker that it had been necessary for Gaworski to understand credit analysis in order to supervise and direct Olker's and others' performance in this area. Gaworski also argued that he gained a thorough understanding of credit analysis while serving as Comptroller of Industrial Credit. Olker, by contrast, had little, if any, experience supervising credit analysts and had performed his first "solo" credit analysis only four months before the alleged RIF and his promotion. As for the purported need for computer skills, Gaworski presented evidence that the personnel director had never been informed of this need and that computer skills were not listed on Olker's job description. Moreover, Olker testified that his use of the computer had actually decreased by 50% after his promotion. Gaworski claims that Guimbarda's purported reasons are not credible and are mere pretext for discrimination on the basis of age.

ITT contends that Gaworski has nowhere demonstrated a link between his age and his termination. Gaworski responds, and the district court agreed, that there is substantial evidence to support the jury's verdict. Moreover, the district court specifically rejected ITT's claim in its motion for j.n.o.v. that Gaworski was terminated as part of a RIF, holding that "sufficient evidence was before the jury that Gaworski was replaced by a younger and less compensated employee." The court thus refused to overturn the jury's verdict, leading to this appeal.

B. Discussion

On appeal our task is limited. We must: (1) consider the evidence in the light most favorable to Gaworski; (2) assume that all conflicts in the evidence were resolved by the jury in Gaworski's favor; (3) assume Gaworski proved all the facts his evidence tends to prove; (4) give Gaworski the benefit of all favorable inferences that may reasonably be drawn from the facts proved; and (5) affirm the denial of the motion for judgment as a matter of law if reasonable persons could differ as to the conclusions to be drawn from the evidence. Doyne v. Union Elec. Co., 953 F.2d 447 (8th Cir.1992). Applying this highly deferential standard, we affirm Judge Magnuson's denial of the motion for judgment as a matter of law.

It is axiomatic that employment discrimination need not be proved by direct evidence, and indeed, that doing so is often impossible, because as the Supreme Court has said, "[t]here will seldom be 'eyewitness' testimony as to the employer's mental processes." United States Postal Serv. Bd. of Governors v. Aikens, 460 U.S. 711, 716, 103 S.Ct. 1478, 1482, 75 L.Ed.2d 403 (1983). In disparate treatment cases based on circumstantial evidence, courts apply the analytical framework of shifting burdens developed in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973), and its progeny. ³ Under this framework, the plaintiff has the burden of establishing a prima facie case of discrimination. Texas Dep't. of Community Affairs v. Burdine, 450 U.S. 248, 252-53, 101 S.Ct. 1089, 1093-94, 67 L.Ed.2d 207 (1981). Once established, the prima facie case raises a legal presumption of discrimination in the plaintiff's favor, requiring the defendant to produce legitimate, nondiscriminatory reasons for its actions. Id. If such reasons are put forth, the plaintiff, who at all times retains the burden of proving discrimination, may attempt to demonstrate that the proffered reasons are pretextual. Id. This framework is designed as a "sensible, orderly way to evaluate the evidence in light of common experience as it bears on the critical question of discrimination." Furnco Constr. Corp. v. Waters, 438 U.S. 567, 577, 98 S.Ct. 2943, 2949, 57 L.Ed.2d 957 (1978). On appeal, our focus is on the "critical question," not on the sufficiency of a party's showing at any particular stage of the McDonnell Douglas analysis. Morgan v. Arkansas Gazette, 897 F.2d 945, 948 (8th Cir.1990). We are guided, however, by the Supreme Court's most recent refinement of the McDonnell Douglas test in St. Mary's Honor Center v. Hicks, --- U.S. ----, 113 S.Ct. 2742, 125 L.Ed.2d 407 (1993), which clarifies when the question of discrimination is to be left to the finder of fact and when it may be decided as a matter of law.

In Hicks, the Supreme Court held that a panel of this Court had erred in concluding that a finding that the employer's proffered nondiscriminatory reasons for its actions were pretextual compelled a judgment as...