Dorsch v. L.B. Foster Co.

• Decision Date: 05 February 1986
• Docket Number: No. 84-3157,84-3157
• Citation: 782 F.2d 1421
• Parties: 40 Fair Empl.Prac.Cas. 201, 39 Empl. Prac. Dec. P 35,887, 54 USLW 2434 Adam H. DORSCH, Plaintiff-Appellant, v. L.B. FOSTER COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1421

782 F.2d 1421

40 Fair Empl.Prac.Cas. 201,

39 Empl. Prac. Dec. P 35,887, 54 USLW 2434

Adam H. DORSCH, Plaintiff-Appellant, v. L.B. FOSTER COMPANY, Defendant-Appellee.

No. 84-3157.

United States Court of Appeals, Seventh Circuit.

Argued June 10, 1985.

Decided Feb. 5, 1986.

Robert E. Arroyo, Keck, Mahin & Cate, Chicago, Ill., for plaintiff-appellant.

Stephen S. Mayer, Grotta, Glassman & Hoffman, Roseland, N.J., for defendant-appellee.

Before COFFEY, EASTERBROOK, Circuit Judges and GRANT, Senior District Judge. ^*

COFFEY, Circuit Judge.

The plaintiff, Adam Dorsch, appeals the district court's grant of summary judgment in favor of the defendant, L.B. Foster Company, and finding that the plaintiff's involuntary early retirement and the defendant's early retirement plan were not in violation of the Age Discrimination in Employment Act. We affirm.

I.

The plaintiff, Adam Dorsch, was employed as a pipe salesman in the Chicago regional office of the L.B. Foster Company ("Foster"), a national manufacturer and distributor of pipe, rail and other steel products. During his initial term of employment with Foster, Dorsch worked as an "inside" and "outside" salesman. ¹ After leaving Foster for a period of time to assist in the formation of another company, Dorsch returned to Foster in 1972 as a pipe salesman handling both outside and inside sales. Beginning in January of 1983, Dorsch, at the direction of his supervisor, Doug Paschal, devoted 50 percent of his time to administrative duties including purchasing and inventory control for the Mid-West Region of the company, providing pricing assistance to district salesmen, and inspecting inventory at the Region's warehouse. No other salesman was assigned to these administrative functions.

In 1983, Foster, suffering the effects of the general economic downturn, reorganized its operations. As part of the reorganization the Chicago regional office became a district office and its administrative functions were moved to the Atlanta office. Stan Hasselbusch, an employee who had previously worked in the Chicago office, returned from his New York assignment to the Chicago office and was elevated to the position of district manager. After accepting the appointment as Chicago district manager, Hasselbusch discussed the Chicago office with his superior, Dean Frenz, and learned that the company had determined that the company's average gross profit per salesman in the Chicago district had to be $250,000 per sales person. Because the sales in the Chicago office were roughly $900,000, Hasselbusch decided that he would have to discharge several sales department employees. In order that he might have a clear picture of the Chicago operation and to assist in his determination of which salesmen to discharge, Hasselbusch decided to interview the salesmen in the Chicago office and sent all of the salesmen, including Dorsch, the following teletype: "Please arrange your schedules to be in the Chicago District Office on Tuesday, July 5. Dean Frenz and I will be in Chicago and would like to meet with each of you. If you have any conflicts, please advise me." The record fails to reveal when, if ever, Dorsch, who was on vacation at the time, received the teletype. Dorsch, among others, did not attend the meeting and Hasselbusch did not re-notify any of the salesmen that failed to appear. Hasselbusch, however, did interview Doug Paschal, Dorsch's supervisor, and Richard Brabec, Dorsch's former supervisor. From these interviews, Hasselbusch learned that 50 percent of Dorsch's time was devoted to administrative functions, and, as to sales, that Dorsch primarily maintained existing accounts--i.e., he solicited and received orders from established customers. Brabec commented to Hasselbusch that Dorsch "preferred" inside work and in response to the question of what people from the department he would let go, Brabec stated that he would discharge Dorsch and a Joseph Shaffer. Brabec noted that Steve Lochen and Lee Croger opened more new accounts than Dorsch.

In addition to conducting the interviews, Hasselbusch and Frenz examined net sales and gross profit sales data for the Chicago office salesmen for the years 1981, 1982, and 1983. The reports revealed that Dorsch, who devoted 50 percent of his time to administrative duties in 1983, had experienced a 50 percent decline in his 1983 sales in comparison to his 1982 sales and that the sales of two other pipe salesmen, Steve Lochen and Lee Croger, exceeded Dorsch's sales in 1983.

At the conclusion of his review, Hasselbusch determined that because of the dramatic decline in the sales of the Chicago office, the office was in need of salesmen who could and would develop new customers and markets. Hasselbusch placed Dorsch on involuntary early retirement after the elimination of his administrative duties since he had failed to demonstrate that he had the ability to develop new customers. Dorsch was age 60 at the time of his involuntary retirement. In addition to Dorsch, Hasselbusch terminated Carl Pambianco (age 35), Doug Paschal (age 39) and Joseph Shaffer (age 28). Hasselbusch retained three salesmen, including Lochen (age 38) and Croger (age 31). Brabec voluntarily took an early retirement.

After notifying Dorsch of his termination, Hasselbusch informed Dorsch that he was eligible for early retirement under the company's "Rule of 75" program. The Rule of 75 plan provided $600 per month until age 62 to an employee whose age plus total years of service with Foster was equal to or greater than 75 years. Dorsch rejected the offer and received a lump sum severance payment of $16,500.

Dorsch filed suit in the United States District Court for the Northern District of Illinois alleging that his involuntary retirement violated the ADEA. ² The defendant moved for summary judgment and the district court found in the defendant's favor holding that Dorsch could not establish a prima facie case because he failed to demonstrate that he was as qualified as the salesmen who were retained. In the alternative, the district court determined that even if Dorsch were able to establish a prima facie case, Foster's reason for placing him on early retirement was not a pretext for discrimination. Dorsch filed a motion to reconsider and also sought leave to amend his complaint to add a count alleging that Foster's early retirement plan violated the ADEA because younger workers received a larger total payment of early retirement benefits than older workers. The district court denied the motion to reconsider, but granted leave to amend the complaint and "construe[d] plaintiff's opposition to the motion for leave to file as an extension and renewal of its previous summary judgment motion," and granted summary judgment in Foster's favor. The district court judge reasoned that the Rule of 75, which provided each employee with the same $600 per month benefit, did not violate the ADEA because:

"The total sum received by the time one reaches age 62 differs depending on age of retirement but this is due to the inherent discrepancies in amount of years less than 62--a fact of the passage of time, rather than a fact of discrimination. It is obvious, of course, that one retiring at age 60 has received more compensation in salary or wages than one being retired at age 50."

II.

A. The Reduction in Force

Dorsch contends that the district court erred in granting summary judgment to the defendant on his forced early retirement because he was in fact qualified for another position with Foster as a pipe salesman and, further, that Foster's reason for placing Dorsch on early retirement was pretextual. The ADEA promotes "employment of older persons [ages 40 to 70] based on their ability rather than their age...." 29 U.S.C. Sec. 621. To establish a violation of the ADEA, a plaintiff must prove that an adverse employment decision, such as discharge, was made because of his age. LaMontagne v. American Convenience Products, Inc., 750 F.2d 1405, 1409 (7th Cir.1984). "To accomplish this, he must prove not that age was the sole factor motivating the employer to discharge him but that age was a 'determining factor,' in the sense that he would not have been discharged 'but for' his employer's motive to discriminate against him because of his age." Id. The plaintiff may prove his case with direct or circumstantial evidence. Id. When the plaintiff presents indirect evidence, the court adopts the analysis set forth in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973) to evaluate the evidence. Tice v. Lampert Yards, Inc., 761 F.2d 1210, 1212 (7th Cir.1985). Initially, the plaintiff must prove a prima facie case of age discrimination. Id. A plaintiff in a reduction in force case, ³ establishes a prima facie case by:

"(1) ... showing that he is within the protected age group and that he has been adversely affected--discharged or ⁴ demoted--by defendant's employment decision;

(2) Showing that he was qualified to assume another position at the time of discharge or demotion; and

(3) Producing evidence, circumstantial or direct, from which a fact finder might reasonably conclude that the employer intended to discriminate in reaching the decision at issue."

Williams v. General Motors Corp., 656 F.2d 120, 129 (5th Cir.1981); Matthews v. Allis-Chalmers, 769 F.2d 1215, 1221 (7th Cir.1985); Tice, 761 F.2d at 1215 n. 5. Successfully establishing a prima facie case gives rise to a rebuttable presumption of discrimination. Klein v. Trustees of Indiana University, 766 F.2d 275, 280 (7th Cir.1985). ⁵ "If the plaintiff demonstrates a prima facie case, the employer has the burden of offering a justifiable nondiscriminatory reason for the termination." Tice, 761 F.2d at 1212-13.

"The defendant's burden in presenting a legitimate, non-discriminatory reason for his action is only a burden of production; the burden of persuasion rests at all times on the plaintiff. Thus, '[i]t...