Duggan v. Orthopaedic Institute of Ohio, Inc.

• Decision Date: 18 April 2005
• Docket Number: No. 3:03CV7651.,3:03CV7651.
• Parties: John DUGGAN, M.D., Plaintiffs v. ORTHOPAEDIC INSTITUTE OF OHIO, INC., et al., Defendants.
• Court: U.S. District Court — Northern District of Ohio

365 F.Supp.2d 853

John DUGGAN, M.D., Plaintiffs v. ORTHOPAEDIC INSTITUTE OF OHIO, INC., et al., Defendants.

No. 3:03CV7651.

United States District Court, N.D. Ohio, Western Division.

April 18, 2005.

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Kimberly A. Donovan, Kerger & Kerger, Richard M. Kerger, Kerger & Kerger, Stephen D. Hartman, Kerger & Kerger, Toledo, OH, for John Duggan, M.D., Plaintiff.

Gregory P. Rogers, Taft Stettinius & Hollister, Rachel S. Zahniser, Taft, Stettinius & Hollister, Cincinnati, OH, for Orthopaedic Institute of Ohio, Inc., James Bagenstose, M.D., Lloyd Briggs, M.D., David Davis, M.D., Mark McDonald, M.D., James Nieman, M.D., James O'Neill, M.D., Roger Terry, M.D., Daniel Travis, M.D., Michael Wieser, M.D., Paul T. Clark, M.D., Defendants.

ORDER

CARR, Chief Judge.

Plaintiff, John Duggan, M.D., brings this suit against his former employer, Orthopaedic Institute of Ohio, Inc. (OIO), his former colleagues, and OIO's administrative director, Paul Clark. Plaintiff's claims are: 1) OIO and the individual defendants violated the Age Discrimination in Employment Act (ADEA), 29 U.S.C. § 621 et seq.; 2) the individual defendants breached fiduciary obligations owed by them to the plaintiff; and 3) OIO is obligated to indemnify the plaintiff for certain losses and expenses.¹

Pending is defendant's motion for summary judgment. For the reasons that follow, defendants motion shall be granted.

Background

Plaintiff and several other orthopedic surgeons in the Lima, Ohio, area combined their practices in September, 1997, and formed the Orthopaedic Institute of Ohio, Inc., a C Corporation with the physicians as the sole shareholders. In February, 1998, the physician-shareholders opened the Surgery Center of West Central Ohio, which subsequently was converted to an orthopedic hospital, the Institute for Orthopedic Surgery (IOS).

In addition to the practice and the hospital, the physicians formed two organizations to hold land, equipment, and other assets — the West Central Ohio Land Development Group LLC I and II.

Plaintiff served as president of OIO and IOS, director of OIO's laboratory and osteoporosis clinic, and head of the two land development groups. He had an employment agreement which he had drafted for his position as president of OIO and IOS. The agreement was effective January 1, 2001, had a duration of twelve months, and included two twelve-month renewal periods extending the agreement through December 31, 2003. Plaintiff received $75,000 annual compensation for his added responsibilities in addition to his salary for his services as a physician.

In October, 2002, despite some reservations, a majority of the physician-shareholders agreed to renew plaintiff's employment agreement for its final year. A decision regarding renewal had to be made by November 15th of each year because the agreement automatically renewed on that date if the board did not give notice to the contrary.

During the week of February 10, 2003, plaintiff traveled to his second home in Arizona and later to a medical conference in Los Angeles. On February 12, 2003, plaintiff participated in a telephone conversation with Clark and the clinic manager, Noralu Kahle. During this conversation, plaintiff became aware of three problems at OIO relating to: 1) handling of Worker's Compensation files which plaintiff believed Clark had previously resolved; 2) concerns on the part of Ford Motor Company, one of the largest sources of patients for OIO, regarding the manner in which OIO handled its patients; and 3) a change, which contravened a policy adopted by OIO's Board of Directors and also affected plaintiff's surgical practice, by Dr. James O'Neill in his procedures for accepting new patients.

Plaintiff became very upset on learning of these problems. He swore at Clark and made statements indicating that plaintiff intended to terminate Clark once he returned to Ohio.

Clark then prepared a letter to the physician-shareholders complaining about how he had been treated during his conversation with plaintiff and reciting plaintiff's vulgar statements. Clark distributed copies of the letter to the physician-shareholders' offices on February 16, 2003.

After reviewing the letter, a meeting was called for the evening of February 17, 2003. Plaintiff received a copy of the letter that day, his first day back from his trip. Plaintiff also became aware of the meeting to be held that evening.

In the past when complaints had been made about the conduct of a shareholder, the physician-shareholders conducted investigations and consulted an attorney before responding. As to Clark's complaint, the physician-shareholders neither conducted a formal investigation nor gave any consideration to consulting an attorney.

Dr. David Davis served as chair of the meeting. The physician-shareholders discussed Clark's letter and plaintiff's abusive behavior toward him and other employees. They expressed concern over the abuse and the possibility that his treatment may lead to employee lawsuits against OIO.² Others believed that plaintiff, as president of OIO and IOS, director of OIO's laboratory and osteoporosis clinic, and head of the two land development groups, had too much responsibility.

The meeting concluded with a vote to terminate plaintiff as president. The physician-shareholders also decided to split the duties of running all the entities — with OIO having one president and IOS another. The physician-shareholders elected Dr. Michael Wieser president of OIO and plaintiff president of IOS.

Plaintiff initially accepted the presidency of IOS. On February 18, 2003, however, the day after the meeting, plaintiff resigned as president of IOS.

By the end of February plaintiff was looking for a position in Arizona. OIO began at some point to receive requests for licensing and credentialing information from Arizona. On May 12, 2003, plaintiff signed an employment agreement with a professional practice group in that state. On May 30, 2003, plaintiff submitted a letter informing Dr. Wieser of his withdrawal from OIO effective June 28, 2003.

Discussion

1. ADEA Claim

Defendants seek summary judgment on plaintiff's ADEA claim on numerous grounds. First, defendants contend that plaintiff's claim fails against the physician-shareholders because individual defendants cannot be held individually liable under the ADEA.

Defendants also argue that plaintiff's ADEA claim fails because he: 1) has no direct evidence of age discrimination; and 2) cannot establish a prima facie case of age discrimination based on circumstantial evidence because he was not replaced by a significantly younger person, was not treated differently than similarly situated younger employees, was not constructively discharged, and cannot establish pretext.

Defendants further argue that plaintiff's claim for compensatory and punitive damages under the ADEA fails because compensatory and punitive damages are not recoverable under the ADEA.

In a supplemental motion for summary judgment, defendants also seek summary judgment on the basis that plaintiff was not an "employee" under the ADEA.

Defendants' arguments as to plaintiff's ADEA claim are persuasive.

a. Merits of Plaintiff's Claim — Disparate Treatment Theory

The ADEA makes it unlawful for an employer "to discharge any individual or otherwise discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's age." 29 U.S.C. § 623(a)(1).

A plaintiff may establish a claim under the ADEA by offering either direct evidence or circumstantial evidence of discrimination. Mitchell v. Vanderbilt Univ., 389 F.3d 177, 181 (6th Cir.2004). Under the first option, "[d]irect evidence of discrimination is that `evidence, which, if believed, requires the conclusion that unlawful discrimination was at least a motivating factor in the employer's actions.'" Wexler v. White's Fine Furniture, Inc., 317 F.3d 564, 570 (6th Cir.2003) (quoting Jacklyn v. Schering-Plough Healthcare Prods. Sales Corp., 176 F.3d 921, 926 (6th Cir.1999)).

If a plaintiff cannot provide direct evidence of improper motive, he may offer indirect and circumstantial evidence of such a motive under the burden-shifting approach established in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973). Mitchell, 389 F.3d at 181.

i. Direct Evidence

Plaintiff contends that statements made by Dr. James Nieman to plaintiff's wife in which he referred to plaintiff as an "old fart" are direct evidence of discriminatory motive.³ Defendants contend that these statements — made in a social setting to plaintiff's wife — are insufficient in demonstrating discriminatory motive.

I agree with defendants. While "an employer's comments referring directly to a plaintiffs age may support an inference of discriminatory animus," Phelps v. Yale Sec., Inc., 986 F.2d 1020, 1025 (6th Cir.1993), the Sixth Circuit has consistently held that age related statements are inadmissible if they "are too abstract, in addition to being irrelevant and prejudicial, to support a finding of age discrimination." Chappell v. GTE Prods. Corp., 803 F.2d 261, 268 n. 2 (6th Cir.1986) (statements regarding young people taking over in management and indicating a negative view of "old-timers" held irrelevant and unduly prejudicial); see also Gagne v. Northwestern Nat'l Ins. Co., 881 F.2d 309, 314 (6th Cir.1989) (isolated remark by supervisor that he "needed younger blood" was irrelevant, prejudicial, and insufficient to prove age discrimination), overruled on other grounds by St. Mary's Honor Ctr. v. Hicks, 509 U.S. 502, 113 S.Ct. 2742, 125 L.Ed.2d 407 (1993); Schrand v. Fed. Pac. Electric Co., 851 F.2d 152, 155-56 (6th Cir.1988) (comments that employees were "too old" held irrelevant and unduly prejudicial); McLaurin v. Fischer, 768 F.2d 98, 104 (1985) (isolated statement regarding the "young men whom w...