Frazier v. Heritage Federal Bank for Sav.

• Decision Date: 13 May 1997
• Citation: 955 S.W.2d 633
• Court: Tennessee Court of Appeals
• Parties: Betty S. FRAZIER, Plaintiff/Appellee, v. HERITAGE FEDERAL BANK FOR SAVINGS and Federal Bank Shares, Inc., and now, pursuant to a plan of merger, First American Corporation and First American National Bank, Defendants/Appellants.

Page 633

955 S.W.2d 633

Betty S. FRAZIER, Plaintiff/Appellee, v. HERITAGE FEDERAL BANK FOR SAVINGS and Federal Bank Shares Inc., and now, pursuant to a plan of merger, First American Corporation and First American National Bank, Defendants/Appellants.

Court of Appeals of Tennessee Eastern Section.

May 13, 1997.

Permission to Appeal Denied by

Supreme Court Nov. 3, 1997.

Cecil W. Laws, Kingsport, for Plaintiff-Appellee.

John B. Phillips, Jeffrey S. Norwood and Raymond H. Hixson, Jr., Miller & Martin, Chattanooga, John S. Bryant and Karen L.C. Ellis, Bass, Berry & Sims, P.L.C., Nashville, and William T. Gamble, Wilson, Worley, Gamble & Ward, P.C., Kingsport, for Defendants-Appellants.

OPINION

FRANKS, Judge.

In this action for damages, the Chancellor determined that plaintiff's employer had discriminated against plaintiff on the basis of age and sex, and awarded damages pursuant to the Tennessee Human Rights Act, (THRA) T.C.A. § 4-21-101 et seq. Defendants have appealed.

Plaintiff was born September 7, 1937, and began working at Heritage Federal Bank as a teller in 1959. She rose through the ranks over time, becoming a Senior Vice President in 1984. Her work encompassed many branches of the bank and primarily centered around customer service and teller supervision.

The nature of her work changed in June 1991, when an organizational restructuring of the bank took place. William Kreis replaced Wendall Kirk as President of the Bank. Plaintiff retained her Senior Vice President title but was moved from the Customer Service Department to Customer Relations. A younger man, Don Osborne, took over Customer Service. She testified that she understood her reassignment to be a "lateral" move. Her annual performance evaluation that July contained some negative remarks but she received a salary increase.

In the spring of 1992, the bank was converted into a publicly held company. Unlike other senior management, plaintiff was not offered any of the benefits of the stock option plan or listed by name on the company's prospectus. That prospectus also showed that other executive officers were receiving salaries significantly higher than hers.

Between June and September of that year, she completed several special projects, but was not given any new assignments. She testified that she was excluded from meetings and could not get secretarial support. Her annual performance evaluation that September was more negative than in the past and stated that she had trouble working with people. She received no raise that year and her title was downgraded to Vice President. She no longer reported directly to the President of the bank.

In April of 1993, her office was moved from the executive suite to a downtown office and her portfolio of duties was narrowed. In March 1994, plaintiff's position as head of the Customer Relations Department was taken over by a 35 year-old woman, Della Walker. Plaintiff was put in charge of a newly created department supervising one employee and her office was moved to the basement floor.

Plaintiff filed suit on June 29, 1994, alleging violations of the Tennessee Human Rights Act (THRA) and the federal Equal Pay Act. In the trial before the Chancellor, the defendant was found to have violated the THRA by discriminating against the plaintiff on the basis of her age and gender. The Chancellor determined the discrimination had begun with the 1991 reorganization and continued until the lawsuit was filed. He assessed damages from May 22, 1992 and awarded $2,242,450.28 to the plaintiff.

Defendants insist the Chancellor erred in finding that plaintiff was discriminated against on the basis of age and sex. Under the THRA, it is unlawful for an employer "to discriminate against an individual with respect to compensation, terms, conditions, or privileges of employment because of such individual's race, creed, color, religion, sex, age or national origin." T.C.A. § 4-21-401(a)(1).

A prima facie case requires that the plaintiff demonstrate that he/she was a member of the protected class, was subject to an adverse employment action, was qualified for the position, and was replaced by a younger person. McDonnell Douglas Corp. v. Green ¹, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973); Brenner v. Textron Aerostructures, 874 S.W.2d 579 (Tenn.App.1993). Once a prima facie case is shown, the burden shifts to defendant to articulate a legitimate nondiscriminatory reason for its employment decision. Brenner at 583. The burden then again goes back to plaintiff to establish that the employer's reason is a pretext or "not worthy of belief." Id.

The evidence does not preponderate against the Chancellor's finding that the plaintiff was the object of age and sex discrimination. T.R.A.P. Rule 13(d). Defendant's argument that plaintiff's demotions did not constitute "adverse employment decisions" as required for a prima facie case, because her salary was not reduced, is without merit. The constant reduction in her duties and prestige at the bank were "materially adverse changes" in her terms and conditions of employment sufficient to qualify as discriminatory actions. See Kauffman v. Kent State Univ., 815 F.Supp. 1077, 1084 (N.D.Ohio 1993). The argument that Plaintiff was not qualified for the job that was taken away from her is not supported by the evidence of her years of experience in this position and the Chancellor rejected this out of hand, finding the evidence not to be credible.

The reasons offered by defendant for her demotions were her alleged difficulty working with people, which resulted in substantial employee turnover. The Chancellor found that these impressions of plaintiff were due to the policies put in place by Bank President Kirk, specifically the policy of hiring "full-time part-time" tellers who worked fulltime but were not offered benefits. The Chancellor found that the plaintiff was not responsible for these problems and that the proffered reasons were pretexts. These findings are supported by the testimony of board members that plaintiff was not really considered part of the senior management and by the bank president Kreis that he felt she had risen as far as she was going to at the bank. The findings of the trial court that defendants violated THRA are supported by the evidence. T.R.A.P. Rule 13(d). See Held v. Gulf Oil Co., 684 F.2d 427, 429 (1982).

Next, defendants insist that the Chancellor erred in applying the "continuing violation" theory to extend relief to plaintiff, which would otherwise be barred by the statute of limitations.

The concept of the "continuing violation" has been adopted by Tennessee from federal case law, as a means for dealing with discrimination which may not be immediately apparent to the victim. Spicer v. Beaman Bottling Co., 937 S.W.2d 884, 889 (Tenn.1996). The doctrine of continuing violations provides that a plaintiff may be granted relief for a time-barred act by linking a series of related acts, one or more of which falls within the limitations period. Spicer at 886; Selan v. Kiley, 969 F.2d 560, 564 (7th Cir.1992). The Tennessee Supreme Court explained the reasons which courts have given for adopting this doctrine:

First, they emphasize that Title VII is a remedial statute designed to eliminate discrimination and make parties whole. Second, they stress that employees are generally lay people and are unaware that they must act quickly or risk losing their cause of action. Often employees fear reprisal or turn to others for help, and in so doing, delay action on their cause until the statute has expired. Finally, and perhaps most importantly, those courts recognize that many discriminatory acts cannot be viewed as discrete incidents, and often unfold rather than occur, making it difficult to precisely pinpoint the time when they take place.

Spicer [937 S.W.2d] at 889.

The crucial issue is whether the nature of the discriminatory acts were "not apparent when they were committed but became so when viewed in the light of the later acts." Moskowitz v. Trustees of Purdue University, 5 F.3d 279, 282 (7th Cir.1993).

The limitations period for filing suit when plaintiff instituted this action was contained in T.C.A. § 4-21-311(d), which required that suit be filed "within one (1) year after the alleged discriminatory practice ceases." ² Plaintiff's action was filed on June 29, 1994, and to establish that her suit was timely filed, she had to prove that a discriminatory act occurred on or after June 29, 1993. She has met this requirement, in the form of the March 1994 demotion from the head of Customer Relations Department to work that can be described as clerical.

The question thus becomes whether the earlier violations can be "linked" ³ to this 1994 demotion. The inquiry is whether the earlier acts were "related closely enough to constitute a continuing violation" or were "merely discrete, isolated, and completed acts which must be regarded as individual violations." Berry v. Board of Supervisors of L.S.U., 715 F.2d 971, 981 (5th Cir.1983). To make this distinction, Spicer cited approvingly of the factors put forth in Berry:

The first is subject matter. Do the alleged acts involve the same type of discrimination, tending to connect them in a continuing violation? The second is frequency. Are the alleged acts recurring (e.g., a bi-weekly paycheck) or more in the nature of an isolated work assignment or employment decision? The third factor, perhaps of most importance, is degree of permanence. Does the act have the degree of permanence which should trigger an employee's awareness of and duty to assert his or her rights, or which should indicate to the employee that the continued existence of the adverse consequences of the act is to be expected without being dependent on a continuing intent to discriminate?

Berry at 981.

The importance of the third factor has been stressed, as a court examines:

What justifies treating a series of separate violations as a...