Fagan v. NYS Electrical & Gas Corp.

• Decision Date: 01 August 1998
• Docket Number: Docket No. 98-7266
• Citation: 186 F.3d 127
• Parties: (2nd Cir. 1999) RICHARD FAGAN, Plaintiff-Appellant, v. NEW YORK STATE ELECTRIC & GAS CORP., Defendant-Appellee
• Court: U.S. Court of Appeals — Second Circuit

Page 127

186 F.3d 127 (2nd Cir. 1999)

RICHARD FAGAN, Plaintiff-Appellant, v. NEW YORK STATE ELECTRIC & GAS CORP., Defendant-Appellee.

Docket No. 98-7266

August Term, 1998

UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

Argued: December 3, 1998

Decided: August 02, 1999

Appeal from the judgment of the United States District Court for the Northern District of New York (Frederick J. Scullin, Jr. Judge) entered January 27, 1998, granting defendant-appellee's motion for summary judgment.

Affirmed.

[Copyrighted Material Omitted] Anna K. Holmberg, Ithaca, NY (Dirk A. Galbraith, Holmberg, Galbraith, Holmberg & Orkin, Ithaca, NY, of counsel) for Plaintiff-Appellant.

James S. Gleason, Binghamton, NY (Leslie Prechtl Guy, Hinman, Howard & Kattell, Binghamton, NY, of counsel) for Defendant-Appellee.

Before: NEWMAN, LEVAL, and PARKER, Circuit Judges.

PARKER, Circuit Judge:

Plaintiff-appellant Richard Fagan appeals from the judgment of the United States District Court for the Northern District of New York (Frederick J. Scullin, Jr., Judge) entered January 27, 1998, granting the motion by defendant-appellee New York State Electric & Gas Corp. for summary judgment.

After appellee fired him at the age of 55, appellant sued under the Age Discrimination in Employment Act of 1967 (ADEA), 29 U.S.C. § 621 et seq. Judge Scullin ruled that appellant had failed to establish a prima facie case of age discrimination, and that, in the alternative, no genuine issue of material fact existed as to whether appellant was terminated as a result of intentional age discrimination.

I. BACKGROUND

A. Appellant's promotion to head MSBU

Appellee employed appellant from 1971 until the time it fired him in 1996 at the age of 55.

In 1990, appellee reorganized into three business units- Electric, Gas, and Management Services- and created the position of senior vice president to head each unit. Appellee's chairman and chief executive officer James Carrigg recommended to the board of directors that appellant become senior vice president of the Management Services Business Unit ("MSBU"), and the board promoted appellant to that position in 1990.

MSBU administered a variety of company functions including finances, auditing, human resources, security, information systems, and a portion of customer services. Appellant reported directly to Carrigg, and it was appellant's responsibility to inform Carrigg and the board of directors about "significant" developments within MSBU.

B. The FRS project

In 1992, MSBU, with the assistance of the accounting firm Coopers & Lybrand ("Coopers"), studied the possibility of upgrading appellee's internal accounting methods. On completion of the study, MSBU recommended the implementation of the Financial Reporting System ("FRS"), which envisioned the installation of a new computer system to revamp the company's accounting system. In January 1993, with Carrigg's endorsement, the board approved a $15 million expenditure to implement FRS. FRS was to be operational by January 1, 1995. Because appellee's fiscal year ran from January to December, any delay beyond January 1, 1995, would delay implementation until January 1, 1996. Soon after board-approval, Coopers was hired to consult on the project. Coopers began work in February of 1993 without a written contract.

FRS was an MSBU project and was included in the MSBU business plan prepared by appellant. Appellant considered FRS to be one of four "blue chip" projects within MSBU in 1993. Vice-President Everett Robinson, the "executive sponsor" of FRS, reported to appellant. A nine-member steering committee was formed to oversee FRS. Appellant was on the committee, as was Carrigg's executive assistant Ralph Tedesco. Tedesco had no supervisory authority over appellant.

Appellant went on medical leave in July 1993 and returned in October 1993. At steering committee meetings on October 19, 1993, and November 2, 1993, Coopers reported that installation of the "client/server aspect of the system" would probably be delayed, and that the cost of the project would increase to between $17.5 and $20 million. The delay to the server was not, at that time, expected to delay implementation of the whole system. Tedesco reported this information to Carrigg.

In early December 1993, appellant learned that Coopers was seeking an additional $1.5 million in fees. Additionally, appellant learned of a new problem regarding the integration of the old and new computer systems. Appellant spoke to Robinson and Frank Puzio, the Coopers partner in charge of appellee's audit, about the problem. They assured him that the problem would be solved.

On January 24, 1994, Carrigg called a meeting to finalize the signing of the contract with Coopers. Carrigg, appellant, Robinson, and Tedesco were present. By this time, appellant "had concerns" about cost overruns and was also "concerned" that the implementation date for FRS would have to be moved back because of problems with the server and the integration of the two systems. However, appellant did not tell Carrigg about these concerns. At the meeting, Robinson told Carrigg that FRS was on time and on budget, and appellant confirmed that this was true. Carrigg then executed the Coopers contract.

By March 8, 1994, appellant had a "very strong concern" about the problem of integrating the old and new computer systems, and believed that the failure to solve the integration problem "threaten[ed] the continuity" of FRS. Appellant called Puzio to discuss his concerns, but again did not inform Carrigg.

On March 11, 1994, Robinson and appellant attended a meeting of the board's audit committee. Robinson represented to the committee that FRS was on time and on budget. Although appellant believed there were "strong indications" that there would be delay and cost overruns, he did not say anything. Appellant believed that Robinson's representations were accurate "given the context." On the same day, the full board met. With appellant present, Robinson represented that there were cost overruns and that he would report back to the board in more detail. Appellant again remained silent.

On March 24, 1994, Robinson approached appellant and suggested suspending FRS. Robinson believed that technical solutions were unavailable given the cost and the deadline. The estimated cost for the project was now $26 million. On April 5, 1994, appellant had a pre-arranged meeting with Carrigg on topics unrelated to FRS. Appellant did not tell Carrigg that Robinson had suggested suspending FRS.

On April 6, 1994, Robinson went before a committee of appellee's vice presidents and proposed to suspend FRS. The committee voted in favor of suspending FRS. On April 11, 1994, at the office of the chairman meeting, Robinson made a presentation about FRS, and the program was formally suspended.

C. The investigation of Robinson

In July 1994, Carrigg commissioned an internal investigation to determine whether Robinson "had been forthright" concerning FRS. On October 17, 1994, before the investigation was complete, Carrigg told appellant that he intended to terminate Robinson. He did not, however, tell appellant that he believed that appellant had "committed any misconduct or that [Carrigg] intended to take any job action in respect to [appellant]." Nevertheless, appellant took notes about this meeting and wrote, "My assessment of [Carrigg's] issue with me is now his confidence level with me in view of his perception of lack of full disclosure of the FRS project status at the meeting of January 24, 1994."

The report on the Robinson investigation was completed November 3, 1994. Carrigg viewed the report as clear evidence that Robinson had repeatedly misrepresented the status of FRS. Carrigg also believed that the report indicated that appellant was aware as early as January 24, 1994, that the project was late and over budget. At this time, appellant became concerned "that Mr. Carrigg had taken action against Mr. Robinson he might take similar action against myself." On November 7, 1994, appellant met with Carrigg to discuss these concerns. Carrigg did not "indicate to [appellant] at that time that he had any complaint with [appellant's] performance." In December 1994, Robinson resigned.

D. Appellant's demotion and subsequent termination

On December 9, 1994, Carrigg proposed and the board approved a reorganization of appellee's senior management. On that same day, Carrigg informed appellant that Carrigg had lost confidence in him because he had not kept Carrigg advised regarding FRS. Carrigg said that he would not terminate appellant immediately. Instead, he would allow him to remain at his current pay, with reduced responsibilities, until he was eligible for appellee's early retirement plan on January 3, 1996. Carrigg told appellant that this decision was final. Because he was permitted to remain employed until he became eligible for early retirement, appellant received approximately $1 million more when he was terminated than he would have received if he had been terminated in December 1994.

Pending termination, appellant's duties were reassigned. The parties agree that appellant maintained a portion of his prior work, but dispute the manner of the reassignment of the bulk of his work. Appellee asserts that all of the reassigned duties were given either to Jack Roskoz- who was promoted to the new position of executive vice president from his old position as head of the Electric Business Unit- or to Carrigg himself. Both Roskoz and Carrigg are older than appellant.

Appellant does not dispute that some of his duties were reassigned to Roskoz and Carrigg. However, he asserts that his duties with regard to the information services department, the budget and forecast department, and the customer service department were transferred to three managers- Smith, Rude, and Putman- whose ages ranged from 41 to 46 years old. (Appellant was almost 54 at the time of the December 9, 1994,...