Finch v. Hercules Inc.
| Decision Date | 30 September 1996 |
| Docket Number | Civil Action No. 92-251 MMS. |
| Citation | 941 F.Supp. 1395 |
| Parties | David G. FINCH, Plaintiff, v. HERCULES INCORPORATED, Defendant. |
| Court | U.S. District Court — District of Delaware |
Richard G. Elliott, Jr., and Helen M. Richards, of Richards, Layton & Finger, Wilmington, DE, for plaintiff.
Sheldon N. Sandler, and Teresa C. Fariss, of Young, Conaway, Stargatt & Taylor, Wilmington, DE, for defendant.
Plaintiff David G. Finch ("Finch") has filed suit against his former employer, defendant Hercules, Incorporated ("Hercules"), alleging he was discriminated against based on his age in violation of the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. §§ 621-34. Hercules terminated Finch at age 58 in February 1991, and after exhausting his administrative remedies, Finch brought this action on May 5, 1992. Docket Item ("D.I.") 1. After almost four years of indefatigable sparring over discovery, summary judgment, an aborted interlocutory appeal, and prodigious motions in limine, the parties at last were ready for trial. Commencing January 10, 1996, in a jury trial spanning nearly three weeks, Finch sought over $2 million in damages encompassing back pay, front pay, and stock losses. He also sought to double this figure by winning liquidated damages. The jury returned a verdict in Finch's favor on the issue of liability but awarded Finch only $200,000 in back pay. D.I. 295.
Before the Court are various post-trial motions: defendant's motion for judgment as a matter of law, D.I. 306, plaintiff's motion for a new trial on damages, D.I. 308, and plaintiff's motions for costs and attorneys' fees, D.I. 333, 357. To date, this litigation has provided the raison d'etre for no less than six opinions; the bulk of the parties' briefs and appendices on record thus far command an entire section in the Clerk of the Court's file room. Although the Court has persevered to convince counsel it would be in their respective clients' best interests to bring this case to closure, i.e., reach settlement, both parties have made it abundantly clear that an appeal is imminent regardless of the results of the decisions rendered today. If history is a reliable indicator, it is not unrealistic to expect this case to languish further in the federal court system.
For the reasons set forth in this opinion, the Court will deny plaintiff's motion for a new trial on damages and will deny defendant's motion for judgment as a matter of law. Because plaintiff has prevailed in this case, he will be granted attorneys' fees and costs, albeit reduced from the amount he has sought.
At trial, the following evidence was adduced, as viewed in the light most favorable to Finch. Finch began his employment at Hercules in 1962 as a Systems Analyst. Tr. F-81. Over time, Finch enjoyed a series of promotions and transfers that culminated in the senior executive level position of General Auditor in charge of Hercules' Audit Department, a title he held for 11 years preceding his termination. Tr. F-83. As head of the Audit Department, Finch reported to work at Hercules' corporate headquarters in Wilmington, Delaware.
During the mid-1980s, Hercules, a major defense contractor, began downsizing and selling off its business units as a response to post Cold-War government defense reduction. Tr. C-21, E-88. Although Hercules divested itself of a number of businesses, it did not commensurately reduce the size of its central corporate staff in Wilmington, which comprised approximately 1600 personnel. Tr. A-113; Plaintiff's Exhibit ("PX") 1. Consequently, the company's overhead costs were proportionately greater than that of its peer corporations. Tr. A-114.
In 1988, Hercules appointed James Beach, its Vice President of Productivity and Management and Operating Services, to address this imbalance between the corporate headquarters' staff and the company's various divisions. Tr. A-112, 133-34. Beach hired Coopers & Lybrand, an outside auditing firm, to prepare a report, known as the Indirect Productivity Improvement ("IPI") study, and to recommend areas of possible elimination and consolidation. Tr. B-52-51. In late 1989, Beach hired consultant Thomas Litras with the goal of implementing the IPI recommendation of reducing Hercules' corporate workforce. Tr. B-53. Hercules terminated approximately 90 employees as part of an initial, albeit feeble, headquarters downsizing in January, 1990. Tr. A-136, Joint Trial Exhibit ("JX") 19, p. 7.
In September, 1990, Beach retained Litras again to design and execute a second, larger reduction in force ("RIF"). Tr. B-53, H-72. In that vein, Litras designated approximately 400 corporate positions that could be eliminated. Tr. B-103, H-78.
On December 31, 1990, at a special meeting of the Board of Directors' Executive Committee, the proposed reduction in force was approved. JX 21. By January 9, 1991, Litras initiated training of Hercules executives, including Finch, on how to force rank employees with the goal of culling employees for the RIF. Tr. B-28, JX 27, JX 28. Litras' method of forced ranking required Hercules managers to rate their employees from best to worst with regard to a particular factor or factors. Hercules agreed to this forced ranking system because Litras had convinced management that Hercules' current performance evaluation mechanism was practically worthless. Tr. B-56-57, H-58-59. Employees were to be ranked based on comparison with other employees in positions of similar skill or status levels. Tr. B-30. The ranking of managers together with their subordinates was generally to be avoided. Tr. B-31. The final step in the RIF procedure involved Hercules' Compliance Committee. Tr. C-110. This committee functioned to monitor compliance with employment discrimination laws and assure uniformity in the RIF process. Tr. C-135, C-142.
As Audit Department head, it was incumbent on Finch to force rank his employees and assist in implementing elimination of positions from that department consistent with Litras' guidelines. Tr. F-92. After he attended the forced ranking indoctrination session, Finch's completed ranking sheets were due to Human Resources the following week. Tr. B-27. As far as Finch knew, the position of General Auditor was not targeted for elimination; the retention of Finch's position was consistent with Litras' report and recommendation. Tr. H-84, JX 35, p. 27. However, it was not within Finch's purview as department head to recommend elimination of his own job. Tr. H-74.
Under Hercules' management hierarchy, Finch reported directly to the Audit Committee of the Board of Directors. Tr. C-62, F-80. In addition, Finch reported administratively to Arden Engebretsen, Tr. F-9, Hercules' Vice Chairman of the Board of Directors and Chief Financial Officer ("CFO"). Tr. F-4, C-23-25. Finch and Engebretsen knew each other for over twenty years. Tr. F-44. Aside from their mutual employment at Hercules, they were both active members of the same church congregation and saw one another at church functions. Tr. F-59. In his capacity as lay clergy, Finch had counseled Engebretsen's sons when they were teenagers; Finch and Engebretsen had also served together on the regional governing board of the church. Tr. F-138-39.
Also reporting to Engebretsen was George MacKenzie, Hercules' corporate Controller. Tr. G-46. At trial, MacKenzie testified that he had complained of Finch's participation in a car pool which prevented Finch's availability for conferences after five or six o'clock. Tr. F-68, G-63. Finch, however, testified that although he was in a car pool, it was only during the early 1980s, and that if there were meetings late in the day, he would stay late and have his wife pick him up. Tr. F-87. MacKenzie had also sharply criticized, in Engebretsen's presence, both the Audit Group and Finch as lacking in leadership of that group. Tr. G-70. In addition, MacKenzie also remarked to Engebretsen that Hercules, a Fortune 150 company, required a General Auditor who was a true professional, i.e., one credentialed as a Certified Public Accountant ("CPA"). Id., Tr. G-58. Finch was not so credentialed. Tr. F-134.
According to MacKenzie, Engebretsen tolerated little criticism of Finch's performance as General Auditor. MacKenzie recalled that in response to MacKenzie's critical comments about Finch, Engebretsen reacted by "ranting and raving." Id. MacKenzie recounted a later incident during which Engebretsen responded in like manner. Tr. G-71. After these episodes, fearing reprisal by Engebretsen, MacKenzie refrained from disparaging Finch in Engebretsen's presence. Tr. G-70.
MacKenzie was not the only executive who perceived Engebretsen as protective of Finch. Thomas McCarthy, Hercules' Vice President of Human Resources from 1985 to 1992, viewed Engebretsen as a greedy, self-serving individual who valued loyalty in his subordinates over competency. Tr. H-94-95. McCarthy thought little of Finch's capabilities and agreed with MacKenzie's assessment that Finch was underperforming. Tr. H-92. Others complained to McCarthy about Finch's lack of performance. Tr. H-97.
Francis VanKirk of Coopers & Lybrand, the outside auditors, rated Finch's department at a level of "C minus" and Finch himself as rating a "D." Tr. J-38. The external auditors criticized Finch for lack of initiative, lack of cooperation, and lack of overall quality of performance. Tr. G-80, I-43, J-34-36. VanKirk testified that, more often than not, his firm had to redo or at least supplement the Audit Department's work product for it to meet professional quality standards. Tr. I-38.
Joan Spero, a recent Chairperson of Hercules' Audit Committee to which Finch directly reported, also did not have a high...
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