Balderston v. Fairbanks Morse Engine

• Decision Date: 17 April 2003
• Docket Number: No. 01-1166.,01-1166.
• Citation: 328 F.3d 309
• Parties: John BALDERSTON and John Gabriel, Plaintiffs-Appellants, v. FAIRBANKS MORSE ENGINE DIVISION OF COLTEC INDUSTRIES,<SMALL><SUP>1</SUP></SMALL> Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

328 F.3d 309

John BALDERSTON and John Gabriel, Plaintiffs-Appellants, v. FAIRBANKS MORSE ENGINE DIVISION

OF COLTEC INDUSTRIES,¹ Defendant-Appellee.

No. 01-1166.

United States Court of Appeals, Seventh Circuit.

Argued November 13, 2001.

Decided April 17, 2003.

Rehearing and Rehearing En Banc Denied May 29, 2003.

COPYRIGHT MATERIAL OMITTED

Charles Barnhill, Jr. (Argued), Miner, Barnhill & Galland, Madison, WI, for Plaintiffs-Appellants.

Lisa M. Bergersen (Argued), Lindner & Marsack, Milwaukee, WI, for Defendant-Appellee.

Before WOOD, JR., EASTERBROOK, and KANNE, Circuit Judges.

HARLINGTON WOOD, JR., Circuit Judge.

Plaintiffs John Balderston ("Balderston") and John Gabriel ("Gabriel") brought this action under the Age Discrimination in Employment Act of 1967, as amended, 29 U.S.C. § 626 ("ADEA"), against Fairbanks Morse Engine Division of Coltec Industries ("Fairbanks"), challenging Fairbanks' actions in terminating plaintiffs. Fairbanks maintains that plaintiffs lost their jobs as a result of a company reorganization and reduction-in-force ("RIF"). The district court granted summary judgment in favor of Fairbanks, finding that even if plaintiffs had established a prima facie case of age discrimination, they had not offered sufficient evidence to support a finding that Fairbanks' stated reasons for termination were pretextual. Plaintiffs appeal. We agree with the district court's order and affirm.

I. BACKGROUND

A. Balderston

At the time in question, Fairbanks evidently was a division of Coltec Industries, which is a wholly-owned subsidiary of Goodrich Corporation. Fairbanks manufactures large engines that are sold to private and public sector customers for uses such as powering naval vessels and generating electricity for businesses and utilities. Balderston, born on June 25, 1939, began his career at Fairbanks in 1971 as an engineer and eventually became vice president and general manager of product installation and service. At the time of his termination on October 8, 1998, at age 59, Balderston was responsible for sales and profits associated with product and customer service, new engine installations, aftermarket parts sales, and remanufactured products sales, in addition to overseeing Fairbanks' customer service centers in Houston, Texas; Norfolk, Virginia; Seattle, Washington; Beloit, Wisconsin; and Calgary, Canada.

Warren Martin, born on March 29, 1956, had been with Fairbanks since 1989 and rose from director of parts sales to vice president and general manager of parts sales. Balderston stated that at a company meeting in 1996, Martin, then Fairbanks' youngest vice president at age 42, remarked that he favored eliminating all managers over 55. Balderston, who had previously been told he might be considered as a candidate for president of the company, was already over 55. At the meeting, the executives that were present discussed the feasibility and economics of offering an early retirement package to employees over age 55. It was decided that it would not be economical to do so and could lead to the loss of key employees whose skills and experience the company wished to retain. Martin left Fairbanks in 1997 to serve as president of another division of Coltec but returned in June 1998, at age 44, as president.

Anticipating the reorganization, Martin had not considered promoting Balderston because Martin had a negative opinion of Balderston's conduct and performance as a result of his experience working with Balderston from 1989 to 1997. Martin believed that Balderston had engaged in unnecessary travel, had failed to plan trips to take advantage of low airfares, arrived for work late and left early, could not always be found during the work day, failed to treat others in an appropriate manner, failed to organize work and administrative matters, did not train field service personnel properly, and did not promote the sale of full service engine maintenance contracts adequately. Part of Martin's impressions were also based on his discussion with Balderston's former secretary, who stated that Balderston had verbally mistreated her on several occasions, causing her to resign. Affidavits of former Fairbanks' employees supported the beliefs of Martin that Balderston arrived late for work, left early, and treated others inappropriately.

On June 5, 1998, Martin wrote a memorandum to Balderston in order to establish:

a specific set of rules, guidelines, and expectations for your work habits, work ethic, treatment of personnel, travel and business focus going forward. The need for this meeting is brought about by my own personal experience working with you, previous input from Dick Dashnaw [former president of Fairbanks] and John Bottorff [vice president of human resources], and observations of others. I want to begin our business relationship with you knowing very clearly the types of expectations I have of you in these areas.

Martin met with Balderston that same day to discuss his requirements for Balderston: (1) to work full days and spend his time in a productive manner; (2) to pay attention to details and follow-up on the completion of projects and assignments; (3) to devote the majority of his efforts to the sale of full service engine maintenance contracts; (4) to develop the remanufactured engine program at the Houston facility; and (5) to develop and execute a comprehensive training program for all field service personnel. Balderston was told his performance would be unsatisfactory if he failed to meet the expectations outlined in the memo. On June 8, 1998, in a memo placed in Balderston's personnel file, Bottorff noted that he had spoken with Balderston about the possible outcomes of the reorganization, including demotion or replacement, and indicated that Balderston was going to try and meet Martin's expectations.

Prior to Martin's departure in 1997, Fairbanks' sales and marketing department was organized into three areas with a vice president for each division: (1) engine sales and related marketing under Barry Cockerham, born on September 30, 1953; (2) parts sales and marketing under Barry Hall, born on September 11, 1953; and (3) service and product installation under Balderston. Upon his return, Martin wanted to consolidate the three separate areas of sales and marketing under one corporate executive, in order to create a more effective and efficient department which he felt would benefit the company as a whole.

On June 26, 1998, Martin named Cockerham, age 45, who had been vice president of engine sales since June 1997, as senior vice president of sales and marketing, overseeing all three departments. Cockerham had more than twenty years of successful sales and marketing experience at the managerial and executive levels and had experience with negotiating legal claims filed by Fairbanks' customers.

During the three-month period from July to September 1998 when Cockerham was developing the reorganization plan, a number of incidents led Cockerham to believe Balderston was not suited for a working-level management position. For example, Cockerham was unhappy with Balderston's work on a settlement agreement concerning a billing dispute with one of Fairbanks' customers. Balderston negotiated a financial settlement but had not secured a formal agreement or a release of claims signed by the customer.

Fairbanks had been trying to break into the government market and was interested in obtaining more work with the Military Sealift Command ("MSC"), which operated a fleet of vessels and was considered one of Fairbanks' important government customers. In a monthly report to Cockerham in late August 1998, Balderston stated that he was negotiating a contract with the MSC to monitor and maintain the fleet's operating condition, which he valued at $304,000 a year. However, the contract Balderston eventually secured was for $6,000 a year for engine maintenance.

Cockerham was also not satisfied with a two-day meeting/presentation in July 1998 with the MSC. Balderston was in charge and assigned the task of organizing and running the meeting to Gabriel. Cockerham attended approximately two hours of the meeting and informed Balderston that all of the presentations should have been done in PowerPoint,² instead of some PowerPoint and some overhead projections, that Gabriel should not have worn blue jeans, and that Balderston should have prepared written follow-up. Cockerham later found out that the MSC had agreed to prepare a written follow-up.

Balderston was also responsible for the Amocar project in 1998, which involved remanufacturing two state-of-the-art, fuel efficient, low emission EnviroDesign® engines. The project was bid on a low profit margin in order to make the sale yet stay within the customer's budget. Several problems caused cost overruns because Houston operations, which worked on the project, had no previous experience with remanufacturing an EnviroDesign® engine. As vice president of product installation and services, Balderston was responsible for controlling service cost installations. Cockerham believed that Balderston had not been sufficiently involved in overseeing the project and held him accountable for the level of cost overruns.

In August 1998, Balderston traveled to Russia because a Fairbanks' engine that had been shipped to a customer in Russia had been damaged during unloading and the customer wanted someone from Fairbanks to evaluate the condition of the engine. The customer's shipping agent stated that they would reimburse Fairbanks for Balderston's travel expenses. However, the shipping agent eventually refused to pay, leaving Fairbanks responsible for $5,000 in travel expenses. Although Balderston had not requested a purchase order or letter of credit for his travel expenses, something which he had never been required to obtain for any of his previous travel, Cockerham felt it was irresponsible of Balderston to have relied on the shipping agent's letter of...