Imwalle v. Reliance Medical Products, Inc.
| Decision Date | 08 February 2008 |
| Docket Number | No. 06-4619.,06-4619. |
| Citation | 515 F.3d 531 |
| Parties | Dennis IMWALLE, Plaintiff-Appellee, v. RELIANCE MEDICAL PRODUCTS, INC. et al., Defendants-Appellants. |
| Court | U.S. Court of Appeals — Sixth Circuit |
ARGUED: Mark J. Stepaniak, Taft, Stettinius & Hollister, Cincinnati, Ohio, for Appellants. George M. Reul, Jr., Freking & Betz, Cincinnati, Ohio, for Appellee. ON BRIEF: Mark J. Stepaniak, Doreen Canton, Rachel S. Zahniser, Taft, Stettinius & Hollister, Cincinnati, Ohio, for Appellants. George M. Reul, Jr., Randolph H. Freking, Freking & Betz, Cincinnati, Ohio, for Appellee.
Before: DAUGHTREY and GILMAN, Circuit Judges; EDMUNDS, District Judge.*
Dennis Imwalle became President of Reliance Medical Products, Inc. in 1990. He was fired in January of 2004, three months after he filed a charge with the Equal Employment Opportunity Commission (EEOC) that alleged both age and national-origin discrimination. He was 62 years old at the time his employment ended. Imwalle's suit in the district court resulted in a $185,000 jury verdict for compensatory damages based on his claim that he was fired in retaliation for filing his discrimination claims. The court subsequently awarded him approximately $250,000 more in attorney fees, costs, and prejudgment interest.
Reliance and its affiliated companies have appealed, challenging both the district court's denial of their motion for judgment as a matter of law and the amount of the award for attorney fees and costs. For the reasons set forth below, we AFFIRM the judgment of the district court.
Haag-Streit Holding AG (HSH AG) is a holding company based in Bern, Switzerland that has 18 subsidiaries located in the United States and throughout Europe. The Haag-Streit companies are providers of medical instruments and equipment for ophthalmologists, optometrists, and opticians. HSH AG acquired Reliance, a company based in Mason, Ohio, in 1988. Ten years later, HSH AG consolidated all of its U.S. operations, including Reliance, under Haag-Streit Holding US, Inc. (HSH US). HSH AG's U.S.-based distribution companies—including Moeller Microsurgical, Inc. (Moeller), Haag-Streit Service, Inc., Clement Clarke, Inc., and Interzeag, Inc.—were consolidated at that time to form Haag-Streit USA, Inc. (HS USA), a subsidiary of HSH U.S. that is also located in Mason. Reliance was not included in that consolidation. As a result, Reliance and HS USA are each a direct subsidiary of HSH US. All of the defendants are hereafter collectively referred to as "Haag-Streit."
Imwalle, a U.S. citizen who was born on August 7, 1941, was hired as President of Reliance in May of 1990. His employment agreement automatically renewed each year in the absence of any proper notice to the contrary. In July of 1999, Imwalle also became President of HSH US, Reliance's parent company, and, a month later, was named Vice President (VP) and Chief Operating Officer (COO) of HS USA. Prior to 1999, Imwalle had no role in any of the Haag-Street companies other than Reliance. He continued to serve as President of Reliance at all times relevant to this lawsuit.
Throughout his employment, Imwalle reported to Walter Inabnit, a Swiss national who was chairman of HSH AG, HSH US, HS USA, and Reliance, and who also served as President of HS USA. Rene Ott, also a Swiss national, became COO of HSH AG in April of 2000. In that capacity, Ott was responsible for the operations of all of HSH AG's subsidiaries and was Imwalle's immediate boss. Dominick Beck, a 38-year-old Swiss national, replaced Inabnit as President of HS USA in January of 2003. Thereafter, Imwalle no longer served as VP of HS USA, but he continued to hold the positions of President of Reliance, President of HSH US, and COO of HS USA.
Imwalle testified that when he became President of Reliance in 1990, the company's facilities were "a dump," "production flow was terrible," and the company was "nothing" and a "nobody." Following Imwalle's arrival, the company built a 10,000 square-foot facility and obtained independent certification attesting to the company's compliance with international quality-management standards. Imwalle, Ott, Haag-Streit's independent auditor Richard Batterberry, and Haag-Streit's human resources director Roy Grandstaff all testified that Reliance operated on budget, doubled its sales, and saw profits increase while Imwalle was President.
Batterberry and Grandstaff also acknowledged that Reliance was "always profitable," "a very successful part of the business," and "very well controlled" while Imwalle was President. Grandstaff testified that 2003—Imwalle's last full year with Reliance—was the "highest volume sales year in the 100 plus year history of the company." Inabnit and Ott both said that they were satisfied with Imwalle's performance as President of Reliance.
Haag-Streit does not dispute the foregoing, but highlights the fact that Reliance saw its sales decline by 14% in the early months of 2001. Imwalle attributed the sales slump to a wider economic recession. Ott was dissatisfied with that explanation, and blamed Imwalle for failing to the recession and minimize its effects on the company. But Ott acknowledged at trial that there was an "official recession in the United States" in March of 2001. He also testified that the decline in sales lasted until May of 2001, after which Reliance's sales and profits rebounded.
Haag-Streit argues that Inabnit and Ott had a legitimate, nondiscriminatory reason for Imwalle's termination: poor performance by Imwalle, citing accounting and inventory problems at Moeller. Imwalle does not dispute Haag-Streit's contention that such problems plagued Moeller. Instead, he argues that this explanation was simply a pretext designed to mask retaliation for his complaints of discrimination. In support of his case, Imwalle introduced evidence to show that he was not responsible for Moeller's problems and that he in fact tried to fix them.
Moeller, a microscope-distribution company, was originally formed in New Jersey in 1992 as a distribution company for Moeller-Wedel, a German company. HS USA acquired the company in 1998 and made it a division. Moeller was in financial distress at the time of the acquisition and was "virtually bankrupt" within two years. In July of 1999, Inabnit and Imwalle met with the managing director of a HSH AG subsidiary in Germany to discuss a "major inventory/accounting problem" involving Moeller. According to HSH AG's independent auditor Batterberry, Moeller had "an enormous amount of obsolete inventory onsite that require[d] write offs of approximately $1.4 million." This problem was exacerbated by the fact that Moeller did not employ an accountant, had not established any inventory controls, and had no system to track inventory. Batterberry detailed Moeller's problems in a letter dated January 28, 2004 (just one day after Imwalle was terminated) as follows:
The magnitude of the poor operating results of this division . . . is staggering for a business of its size. This continuing pattern of substantial losses is something that we very rarely see with our other audit clients. This history was certainly compounded by the magnitude of the adjustments needed in the past several years to adjust for prior years' inventory deficiencies . . . . While there were a number of issues, the major business problem always seemed to be the low volume of sales which never allowed the Moller [sic] division to break even on a financial basis . . . . As your auditors, we found it curious that so many difficult issues plagued the Moller Microscope division that were not found in other parts of the U.S. operation. Except for the Moller Microscope division, we have found that [sic] internal controls to be generally effective, accounting systems to be functioning in a very acceptable manner, and personnel to be helpful to us as auditors and conscientious in performing their responsibilities.
The letter went on to explain that, in addition to the $1.4 million write-off, the continuing problems at Moeller could be traced to the way in which Moeller employees managed sales, purchasing, inventory tracking, and financial controls on a day-to-day basis.
Following the July 1999 meeting, Inabnit asked Imwalle to "dig in and review procedures" at Moeller. Batterberry confirmed that Imwalle and Dave Edenfield, the Chief Financial Officer (CFO) of HS USA, "were able to implement procedures and controls at the Moller [sic] division that were in effect at the other [Haag-Streit] U.S. divisions The Moeller problems persisted, however, and, in the spring of 2002, Inabnit told Imwalle that "he was very disappointed with the continuation of the Moeller inventory issues."
Inabnit and Ott repeatedly told Imwalle that he was responsible for the inventory problems at Moeller and they expressed frustration that the problems continued to plague the company. Although Inabnit and Ott repeatedly blamed Imwalle for the Moeller problems, Ott later testified that a prior VP of Sales was responsible for the "inventory mess." Batterberry, in his January 2004 letter, blamed the then-current VP of Sales, Ed Rae, and Moeller personnel generally, for careless management, while emphasizing Imwalle's and Edenfield's role in trying to solve the problems.
In June of 2002, Imwalle attended management meetings in Bern, Switzerland and recommended, along with others, that the Moeller division be closed. He testified that when he left the meeting, he thought that a consensus had been reached to close operations, only to learn later that Inabnit had overruled the decision. Thereafter, Imwalle says that he was excluded from meetings related to Moeller. Ott testified that Moeller was in fact eventually closed at the...
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