Brownlow v. Edgecomb Metals Co.

• Decision Date: 13 March 1989
• Docket Number: No. 87-4142,87-4142
• Citation: 867 F.2d 960
• Parties: 49 Fair Empl.Prac.Cas. 346, 49 Empl. Prac. Dec. P 38,683 Benjamin W. BROWNLOW, Plaintiff-Appellee, v. EDGECOMB METALS COMPANY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 960

867 F.2d 960

49 Fair Empl.Prac.Cas. 346,

49 Empl. Prac. Dec. P 38,683

Benjamin W. BROWNLOW, Plaintiff-Appellee, v. EDGECOMB METALS COMPANY, Defendant-Appellant.

No. 87-4142.

United States Court of Appeals, Sixth Circuit.

Argued Dec. 2, 1988.

Decided Feb. 13, 1989.

Rehearing Denied March 13, 1989.

Michael T. McMenamin (argued), Nancy A. Noall, Walter, Haverfield, Buescher & Chockley, Michael P. Harvey, Cleveland, Ohio, for defendant-appellant.

Malcolm C. Douglas (argued), Cleveland, Ohio, for plaintiff-appellee.

Before KENNEDY, GUY and RYAN, Circuit Judges.

RYAN, Circuit Judge.

Defendant appeals a non-jury verdict in favor of plaintiff for violation of his rights under the Age Discrimination in Employment Act ("ADEA") 29 U.S.C.A. Sec. 621 et seq. (1985 and Supp.1988). Because we conclude the district court's central findings of fact are clearly erroneous, we reverse.

I.

A.

Plaintiff Benjamin Brownlow was employed by defendant Edgecomb Metals Company as the department manager for inside sales of stainless steel and aluminum products at defendant's Cleveland Service Center from November 20, 1978 to February 10, 1982. On February 10, 1982, Ray Larsen, the general manager of Edgecomb's Cleveland facility, discharged plaintiff from his position with Edgecomb. Brownlow was fifty-five years of age at the time. Larsen told Brownlow his termination was the result of economic necessity, and was unrelated to plaintiff's job performance.

At the time of plaintiff's termination, the Cleveland Service Center had been incurring major economic losses. They had lost $907,000.00 in 1980 and $534,000.00 in 1981. Ray Larsen became general manager of the Cleveland facility at the beginning of 1982. At that time, Harold Beasley was the sales manager, and the inside sales staff included four department managers: (1) Bill Minnick, general line products, age 29; (2) Tom Baltakis, carbon flatroll products, age 34; (3) plaintiff, stainless steel and aluminum products, age 55; and (4) R.E. Wood, hot-roll plate products and work orders, age 34. Of the four, plaintiff was the most senior in years of service and the oldest.

Prior to terminating plaintiff, Ray Larsen had several conversations with Harold Beasley, the sales manager. Larsen informed Beasley that he planned to terminate plaintiff, and Beasley objected strenuously. However, Larsen never discussed his plans with the controller of the Cleveland facility, Jerome Jarzynka. Moreover, Larsen never indicated to Beasley or Jarzynka that his termination of Brownlow was part of an overall reorganization or reduction in force plan. The only other employee discharged at the same time as Brownlow was Sherry Motil, a personnel representative who was responsible for the Cleveland Service Center's compliance with EEOC guidelines.

The responsibilities of the department managers included the supervision of inside sales representatives in their product line areas, controlling and administering inventory in their product line areas, and functioning as the senior inside sales person in their area. Subsequent to plaintiff's termination, the functions which he had previously performed were initially assigned to Larsen, who undertook the inventory and supervisory functions, and to Susan Weinke and Dale DeWalt, who took over plaintiff's outside sales accounts. In May 1982, Larsen hired Michael Prokop, age 36, as inside sales manager. Prokop was given the supervisory duties previously performed by plaintiff.

Bill Minnick resigned as department manager for general line products in April 1982. Tom Baltakis resigned as department manager for carbon flatroll products on May 28, 1982. There was some evidence in the record indicating that Minnick and Baltakis resigned because they feared that Larsen would terminate them. R.E. Wood, department manager for hot-roll plate products, was discharged for unsatisfactory work performance in November 1982. In September 1982, Edgecomb closed down operations in Detroit and Pittsburgh and consolidated them with the Cleveland Service Center. At least partially because of this consolidation, seven new sales positions were established within the Cleveland operation after Brownlow's termination.

In the middle of 1983, Edgecomb created the position of Product Specialist for each of the four departments within the inside sales area of the Cleveland Service Center. The Products Specialists for each department were given the sales and inventory functions of the department manager position which plaintiff had held, but not the supervisory functions. In 1984, the Products Specialists resumed the title of Department Manager.

At trial, Ray Larsen testified that he terminated Brownlow pursuant to a reorganization or reduction in force plan which he had developed. This plan called for the elimination of the four department managers as a means of reducing cost at the Cleveland Service Center. Larsen stated that the plan was not written, nor did it have any set timetable. Larsen offered three reasons for his decision to terminate plaintiff first: (1) he (Larsen) was more comfortable with aluminum and stainless steel than with the other product line areas because most of his experience had been in aluminum and stainless steel; (2) plaintiff was responsible for supervising only two other employees, and Larsen did not believe such a small number of employees needed supervising; and (3) he did not believe that Edgecomb had a bright future in aluminum in Cleveland.

B.

After a three-day bench trial, the district court issued an opinion granting judgment to plaintiff. The district court held that the plaintiff had succeeded in presenting a prima facie case under ADEA by demonstrating that he was in the protected age group, that he was discharged, that he was qualified for his position, and that he was replaced by a younger person. The court held that the fourth element, a showing that plaintiff was replaced by a younger person, was satisfied because plaintiff's position was not eliminated. The district court further held that the fourth element "is excused where employees are allegedly terminated pursuant to a reduction in force...." In such cases, the district court held the plaintiff must come forward with additional direct, circumstantial, or statistical evidence demonstrating that age was a factor in his termination. The court found that even if plaintiff had not demonstrated the fourth element, he nevertheless established a prima facie case by presenting "additional evidence" showing that the alleged reduction in force was a sham. Having found that the plaintiff had established a prima facie case, the court shifted the burden of production to defendant to articulate a legitimate reason for plaintiff's discharge. The court held that defendant met its burden by alleging that plaintiff's termination was part of a reduction in force plan designed to eliminate cost and end the operating losses which were then prevalent at the Cleveland facility.

The court then shifted the burden back to plaintiff to prove that defendant's proffered reasons were pretextual. The court listed six reasons in support of its conclusion that plaintiff had met this burden. "First, plaintiff showed that only he and one minor clerical employee were terminated pursuant to the alleged reduction in force. Any savings from the two discharges was absorbed by the expense of the subsequent hires." "Second, the proferred [sic] reduction in force was never put in writing at any step in its implementation." Third, the district court found that aluminum sales had increased exponentially during plaintiff's tenure as department manager. The court found that this mitigated against defendant's argument that the decrease in stainless steel sales and a "dim" future in the aluminum market led to the decision to discharge plaintiff instead of any of the other department managers. Fourth, the district court discounted defendant's assertion that plaintiff, rather than the other department managers, should be terminated first under Larsen's plan because Larsen had comparable experience in aluminum and stainless steel:

However, new employees were hired to take over plaintiff's duties, inevitably resulting in the reestablishment of plaintiff's duties in the single position of product specialist and the title later reverted to Department Manager. Plaintiff was replaced: his position was not eliminated. Similarly, defendant argued that plaintiff was discharged because he supervised only two persons. However, defendant continued to employ a Department Manager who suprevised only one part-time employee and the other remaining Department Managers supervised only three and four employees respectively.

Fifth, "defendant's failure to transfer plaintiff to another position or rehire him is evidence of pretext in light of the different treatment of Mr. Woods [sic] and evidence that no meaningful reduction in force occurred." "Sixth, in discharging plaintiff and advertising for new hires, defendant did not follow any of the versions of its equal employment opportunity compliance policy proffered at trial. The failure to conform to its own policies is evidence of pretext."

After determining that Edgecomb was liable under ADEA, the district court held that an award of front pay was appropriate in this case because plaintiff was fifty-five years old at the time of his discharge. The court rejected defendant's argument that plaintiff's unemployment compensation benefits and his workmen's compensation benefits should be deducted from his backpay award because the "collateral source" rule provides that defendant may not benefit from payments to the plaintiff from third parties. Finally, the district court rejected defendant's argument that plaintiff should not be awarded fringe benefits, such as insurance premiums, where plaintiff had not purchased alternative coverage or otherwise incurred reimbursable expenses. The court awarde...