Diettrich v. Northwest Airlines, Inc.

• Decision Date: 16 February 1999
• Docket Number: No. 97-2831,97-2831
• Citation: 168 F.3d 961
• Parties: 79 Fair Empl.Prac.Cas. (BNA) 206, 75 Empl. Prac. Dec. P 45,758 Stefan DIETTRICH, Plaintiff-Appellee, v. NORTHWEST AIRLINES, INC., Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 961

168 F.3d 961

79 Fair Empl.Prac.Cas. (BNA) 206,

75 Empl. Prac. Dec. P 45,758

Stefan DIETTRICH, Plaintiff-Appellee, v. NORTHWEST AIRLINES, INC., Defendant-Appellant.

No. 97-2831.

United States Court of Appeals Seventh Circuit.

Argued Jan. 14, 1998.

Decided Feb. 16, 1999.

Lawrence G. Albrecht (argued), First, Blondis, Albrecht, Bangert & Novotnak, Milwaukee, WI; Curry First, First, Blondis, Albrecht, Bangert & Novotnak, Milwaukee, WI, for Plaintiff-Appellee.

Ely A. Leichtling (argued), Quarles & Brady, Milwaukee, WI, for Defendant-Appellant.

Before FLAUM, EASTERBROOK, and DIANE P. WOOD, Circuit Judges.

DIANE P. WOOD, Circuit Judge.

When Northwest Airlines reorganized its sales department in the summer of 1992, Stefan Diettrich, a 28-year veteran of the airline's sales force, lost his job. Northwest claimed that it terminated Diettrich because he failed to demonstrate the kind of aggressiveness and drive the company needed to survive in the increasingly competitive market for air travel. Diettrich maintained the real reason was his age (53) and brought this suit under the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. § 623 et seq. After a jury returned a verdict in Diettrich's favor and the district court entered an award for damages and attorneys' fees, Northwest moved for judgment as a matter of law or, in the alternative, a new trial. The motion was denied. For the reasons that follow, we reverse the judgment of the district court.

I

From 1967 until 1992, Diettrich worked as an account manager for Northwest Airlines (or its predecessors, North Central and Republic Airlines) in its Milwaukee office. In that capacity, he was responsible for convincing travel agencies and businesses to use Northwest. To that end, he made sales calls, talked with customers, and solved customers' problems. By all reports, he had been quite successful in his job. For example, he had been recognized by serving as the chair of the Milwaukee Airlines Managers Association, and he had well-developed relationships with key travel industry personnel throughout the area.

Unfortunately, as of the summer of 1992, Northwest (like many other airlines) was facing financial difficulties: fuel prices were skyrocketing, passenger travel was depressed because of the fallout from the Persian Gulf War, and a competing airline had just decided to establish a new pricing structure that dramatically cut the price of business travel. Business fares are the bread and butter of any major air carrier, and a decline in corporate business would have been catastrophic for Northwest. Northwest decided that it needed to reorganize its sales force to pursue corporate accounts more aggressively. Although the reorganization did not (at least at that time) involve a reduction in force, no salesperson was guaranteed a position. Instead, they all had to re-apply formally for their jobs.

In re-evaluating its employees for purposes of "rehiring," Northwest decided not to rely on past job evaluations, which the company believed were inflated. Instead, it opted to select its candidates for sales positions principally on the basis of one-on-one interviews. Russell Hinckley, a regional director of sales for Northwest, was given the responsibility for conducting those interviews for employees in the greater Chicago region, which included Diettrich's Milwaukee office. Although Northwest supplied Hinckley with a 14-page interview guide detailing techniques and questions designed to help him identify desirable candidates, it did not otherwise train him in interviewing techniques.

Taking the company at its word, Hinckley placed little weight on the cover letter and resume Northwest required each employee to furnish in connection with her job application, and he emphasized the interviews. Hinckley testified that he was looking for answers that demonstrated that the candidates were aggressive, results-oriented people who understood the critical situation the airline was in and the need to change the way the sales force was doing business.

Hinckley interviewed 12 Northwest employees, including Diettrich, who had re-applied for a position as an account manager. At the time, Hinckley did not know the ages of the candidates, who ranged from 28 to 53 years old. At 53, Diettrich was the oldest, though not by much--the next oldest were 52 and 51, respectively. Although Hinckley was not required to fill the account manager positions with current employees, there were enough positions available so that he could have re-hired each of the 12 applicants.

By chance, Hinckley interviewed Diettrich first. Perhaps because of that fortuity, Hinckley experimented on Diettrich with several questions that he abandoned in later interviews. As a result, Diettrich faced different questions from those posed to the other applicants, including the two other applicants who were over 50. Diettrich's interview, which lasted 30 minutes, was also ten minutes shorter than the interviews given to the others. Hinckley assigned a numerical rating to each interviewee and took notes on his subjective impressions. Of the 12 employees interviewed, Diettrich received the lowest score. The next oldest candidates, the 52-year-old and the 51-year-old, received the next lowest scores. After conducting the interviews, Hinckley re-hired everyone except Diettrich. He filled the remaining account manager positions with Northwest employees from different departments and with external candidates.

Convinced that age discrimination was at work, Diettrich filed this ADEA suit against Northwest. The parties agreed to sever the liability and damages portions of the case. The jury was to determine liability and, if it found liability, it was also to decide whether Northwest's actions were "willful" for purposes of liquidated damages. The parties agreed that the district court would decide all other issues pertaining to damages. After the district court denied Northwest's motion for summary judgment, the case went to trial. The jury found in favor of Diettrich on his claim of age discrimination, but it also found that Northwest's actions were not willful. The district court then awarded Diettrich $7,311.23 as back pay damages, commenting later in its decision and order on fees that this award "largely reject[ed] [Diettrich's] theory of damages." After denying Northwest's alternative post-trial motions for judgment as a matter of law or a new trial, the court awarded Diettrich $101,784.75 in attorneys' fees and costs.

II

Before we turn to the substance of Diettrich's ADEA claim, we must address a disturbing episode of attorney misconduct that marred the course of the proceedings before the district court. After the jury returned its verdict, the district court granted Northwest permission to interview jurors informally for its attorneys' education, as is within the court's power under Eastern District of Wisconsin Local Rule 8.07. Northwest's attorneys abused this grant of permission. The district court permitted them to interview jurors to learn which trial techniques worked and which did not, so that the attorneys could use the information for future trials. Instead, Northwest relied on its lawyers' post-verdict dialogue with the jury (during which, according to Northwest, jurors suggested that they found Hinckley to be a credible witness) to support its motions for overturning the jury verdict.

The conduct of Northwest's lawyers was clearly out of bounds. As the district court pointed out, Northwest inappropriately "invite[d] the court to open the black box that is the jury room." Northwest violated both Local Rule 8.07, by going far beyond the scope of the district court's permission, and Wisconsin Supreme Court Rule 3.5 (an exact copy of ABA Model Rule of Professional Conduct 3.5), which prohibits lawyers from communicating ex parte with jurors "except as permitted by law." Wisc. Sup.Ct. R. 20:3.5. The district court appropriately chastised Northwest for its highly improper behavior.

Diettrich argues that Northwest's misconduct was sufficiently grave that this court should punish Northwest by affirming the jury's verdict. We agree that this was a serious transgression. Nevertheless, as in all cases the punishment must fit the crime. It is true that the federal courts have the inherent power to "fashion ... appropriate sanction[s] for conduct which abuses the judicial process," Chambers v. NASCO, Inc., 501 U.S. 32, 44-45, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991), and that in appropriate cases this power would even permit a court to impose the ultimate sanction of a grant of judgment (or its equivalent, dismissal with prejudice). See Barnhill v. United States, 11 F.3d 1360, 1367 (7th Cir.1993); see also Chambers, 501 U.S. at 45, 111 S.Ct. 2123. Nevertheless, "[b]ecause of their very potency, inherent powers must be exercised with restraint and discretion." Chambers, 501 U.S. at 44, 111 S.Ct. 2123. This court has repeatedly recognized the need to be cautious when imposing the draconian remedy of terminating the underlying action in favor of one party. Kovilic Constr. Co., Inc. v. Missbrenner, 106 F.3d 768, 773 (7th Cir.1997); Barnhill, 11 F.3d at 1367.

A number of reasons persuade us that affirmance of the jury verdict would not be the appropriate sanction here. Most importantly, Diettrich was not prejudiced by Northwest's misconduct. In evaluating Northwest's post-trial motions, the district court expressly stated that it would disregard Northwest's impermissible materials. Based on permissible materials alone, the court found that Diettrich had submitted sufficient evidence to sustain the verdict. Thus, we are confident that Northwest's misconduct did not contaminate the district court's review.

We are equally certain that our own review is untainted by Northwest's improper reference to the jury deliberations. The key...