Bryant v. Farmers Ins. Exchange

• Decision Date: 20 December 2005
• Docket Number: No. 03-3234.,03-3234.
• Citation: 432 F.3d 1114
• Parties: Judith A. BRYANT, Plaintiff-Appellant, v. FARMERS INSURANCE EXCHANGE, Defendant-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1114

432 F.3d 1114

Judith A. BRYANT, Plaintiff-Appellant, v. FARMERS INSURANCE EXCHANGE, Defendant-Appellee.

No. 03-3234.

United States Court of Appeals, Tenth Circuit.

December 20, 2005.

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Michael J. Gallagher, Gallagher & Kaiser, LLP, Kansas City, MO, for Plaintiff-Appellant.

James R. Holland II, (Shelley Schiebel Patterson with him on the briefs), Bioff Finucane Coffey Holland & Hosler, LLP, Kansas City, MO, for Defendant-Appellee.

Before EBEL, BRISCOE and TYMKOVICH, Circuit Judges.

EBEL, Circuit Judge.

This case involves various age and gender discrimination claims brought by Plaintiff-Appellant Judith A. Bryant ("Bryant") against her former employer, Defendant-Appellee Farmers Insurance Exchange ("Farmers"). The district court granted summary judgment in favor of Farmers. On appeal, Bryant raises two issues: (1) whether the district court abused its discretion in excluding portions of her summary judgment affidavit as inadmissable; and (2) whether there existed a genuine dispute of material fact regarding the pretextual nature of Farmers' proffered nondiscriminatory reasons for terminating Bryant. As to Bryant's affidavit, we hold, inter alia, that so long as the other prerequisites of Fed.R.Civ.P. 56(e) are met, it is permissible to submit simple statistical calculations such as averages without first being designated as an expert witness. Regarding pretext, we conclude that Bryant's evidence calling into question the veracity of Farmers' nondiscriminatory reasons for firing her are sufficient to establish pretext for summary judgment purposes. Thus, taking jurisdiction under 28 U.S.C. § 1291, we REVERSE.

BACKGROUND

I. The Parties

Bryant is a sixty-one-year-old white female who worked for Farmers in various capacities from March 1992 until her termination in March 2000.¹ Farmers is a large, national insurance exchange based in California that sells a variety of policies, including coverage for recreational products, the division in which Bryant worked when she was terminated.

II. Facts

At the time of her termination, Bryant was a claims director within the Specialty Claims unit of the Western division of Farmers. Specifically, Specialty Claims handled claims from five types of insurance products: (1) Recreational Products Insurance ("RPI"); (2) Marine Insurance; (3) Loss Reporting; (4) Antique Auto; and (5) National Recovery. Each insurance product had its own individual director of claims.

RPI dealt primarily with recreational vehicles and motorcycles. Within RPI, there existed two groups of claims adjusters: Liability and Adjusted Property of Physical Damage ("APD"). The liability section handled third-party claims where Farmers' insureds were accused of causing injury to others. APD, on the other hand, handled first-party claims for property damage to vehicles covered by RPI policies.

In March 1992, Bryant began working for Farmers as a Regional Marketing Manager in Denver, Colorado. Over the next few years, Bryant earned a number of promotions and moved throughout the company. By 1996, Bryant was director of claims for RPI.

Along with the directors of claims for the other four insurance products in Specialty Claims, Bryant answered to Jack Honore, the division claims manager since 1998. One of Bryant's subordinate managers was Steve Nagle, who headed the Liability section of RPI. Nagle, a 35-year-old male, eventually replaced Bryant after Honore terminated her in March 2000.

A. Farmers' internal auditing procedure

On January 1, 1998, Farmers instituted a new quality control program that included the "Balanced Scorecard," an attempt objectively to measure an office's performance in four categories: (1) customer satisfaction; (2) financial perspective; (3) internal perspective; and (4) organizational learning/innovation.

As part of the Balanced Scorecard evaluation, executives conducted a "Quality Assurance Review," which was basically an audit of claims for each individual insurance product. Under the company procedure, auditors would review a statistical sample of claims files and measure two factors: "compliance" and "leakage."

The "compliance" score measured the thoroughness of the files reviewed. In other words, the auditors would make sure that each file had the necessary documentation, claimant contacts, and paperwork. After reviewing the files for completeness, the auditors assigned a percentage score based on how much of the required information was missing or improperly recorded.

The "leakage" score measured the percentage of overpayments. There were two components to this score: hard leakage and soft leakage. Hard leakage referred to objective overpayment. These were amounts that absolutely should not have been paid because, for example, the policy did not cover the injury or because the claim exceeded the policy limit. Soft leakage was a more subjective determination. It was the amount of overpayment on a claim based on the auditor's evaluation of the claim's worth. Thus, if the adjuster paid out $5,000 on a claim that the auditor felt was worth only $4,500, this would represent $500 in soft leakage. The hard and soft leakage amounts were totaled up and measured against the total payments of all files reviewed in order to determine the overall percentage of leakage for the reviewed files.

B. Events leading up to Bryant's termination

From the time Farmers implemented the Quality Assurance Review in 1998 to the time Honore terminated Bryant in 2000, RPI was audited five times—three times by the home office and twice by Honore.² Three of these audits took place in the twelve months preceding Bryant's termination.³

1. January 1998 Audit

RPI's first audit was intended to serve as a baseline reading for the department's compliance with new protocols and standards implemented by the company. RPI's compliance score was 85.16%; it had no hard leakage, but soft leakage came in at 97.9%. For this audit, RPI's goal was 91% compliance and 7.5% total leakage.

2. September 1998 Audit

Farmers once again audited RPI after it had been given a few months to get oriented to the new quality control standards. RPI scored 84.88% compliance and 5.18% in overall leakage. As before, RPI's goal was 91% compliance and 7.5% total leakage. One month after this Audit, Farmers hired Jack Honore to supervise Bryant. In her declaration before the district court, Bryant claims that Honore was immediately hostile to her, and that he suggested Bryant move to another position or quit her job.

At about the same time, a director from the Farmers home office ordered Bryant to hire 35-year-old Steve Nagle to run the Liability department of RPI. According to other employees in RPI, however, the understanding was that Nagle was brought in to replace Bryant. Nagle allegedly admitted to another employee that he had been picked to come to Kansas City to replace Bryant. In fact, Nagle eventually replaced Bryant as director of claims for RPI after Bryant's termination.

Honore gave Bryant a negative performance evaluation for 1998, citing her failure to meet required Balanced Scorecard standards.

3. June 1999 Audit

Despite Bryant's negative performance evaluation, RPI's numbers did not increase significantly. During the June 1999 Audit, RPI scored 88.46% for compliance and 7.88% in total leakage. Both parties agree that the "target" for compliance under the June 1999 audit was 90 percent. However, the record is not clear as to what the target leakage score was. Thus, we cannot say for certain whether RPI "failed" the June 1999 audit, but what is certain is that it did not meet the compliance goals for the audit.

After the audit, Honore informed Bryant in a formal written warning that if her department's numbers did not improve, he would take corrective action (including the possibility of termination). Honore also told Bryant that he would personally conduct an audit of RPI's files over the next 90 days.

4. September 1999 Audit

Honore's September 1999 Audit was really a combination of two "mini-audits." RPI achieved a compliance score of 87.36% and an overall leakage score of 8.01%. Honore also broke down the score in terms of the two component departments of RPI: Liability and APD. APD had a 92.59% compliance score and a 1.53% leakage score. Liability, on the other hand, had a 76.90% compliance score and a 15.4% leakage score. For this audit, RPI's "target" appears to be a 90% compliance score, a 2% APD leakage, and a 2.5% liability leakage.

These numbers indicate that RPI's APD division was performing up to standards but that its Liability division, headed by Steve Nagle (Bryant's eventual replacement), was causing RPI to fail the audits. In January 2000, Honore again gave Bryant a negative performance evaluation, stating:

[Bryant] has not demonstrated imagination in identifying problems or developing solutions to solve the problems. The lack of leadership and her apparent management style of complete delegation have led to morale problems particularly with other members of the management team. [Bryant] is reactive rather than proactive. It was very apparent after the September 1998 audit that much had not been done to improve the results since the Jan. 98 audit. Again in June of 1999 most of the same problems were still there. While there has been some improvement since June 1999, the results are still unacceptable.

Honore placed Bryant on probation and stated that he would return to the office in thirty days to conduct a final audit. He warned Bryant that if RPI's results were not up to standards, she would be terminated.

5. March 2000 Audit

As promised, Honore conducted another audit in March 2000. RPI scored 87.71% in overall compliance and 4.92% in overall leakage. As for the specific divisions, APD scored 88.78% compliance and 3.96% leakage. Liability scored 85.41% compliance and 5.79% leakage. Like the September 1999 Audit, RPI needed...