Graefenhain v. Pabst Brewing Co.

Decision Date26 June 1987
Docket NumberNos. 85-3094,85-3095,s. 85-3094
Citation827 F.2d 13
Parties44 Fair Empl.Prac.Cas. 180, 43 Empl. Prac. Dec. P 37,213, 23 Fed. R. Evid. Serv. 320 Gunther GRAEFENHAIN and Philip Miller, Plaintiffs-Appellants, v. PABST BREWING COMPANY, Defendant-Appellee.
CourtU.S. Court of Appeals — Seventh Circuit

Frank J. Schiro, Law of Frank J. Schiro, Ltd., Chicago, Ill., Jeffrey C. Bannon, E.E.O.C., Washington, D.C., Leonard N. Flamm, Hockert & Flamm, New York City, for plaintiffs-appellants.

John R. Saap, Michael Best & Friedrich, Milwaukee, Wis., for defendant-appellee.

Appeals from the United States District Court for the Eastern District of Wisconsin.

Before FLAUM and EASTERBROOK, Circuit Judges, and WILL, Senior District Judge. *

WILL, Senior District Judge.

This is an appeal from a judgment n.o.v. in a suit brought under the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. Sec. 621 et seq. The plaintiffs, Gunther Graefenhain and Philip Miller, sued Pabst Brewing Co. ("Pabst") for age discrimination. 1 1] The jury found that Pabst had willfully discriminated against both Graefenhain and Miller by terminating them on the basis of age. Following a separate trial for damages, the district court found the jury verdict unsupportable and granted Pabst's motion for a judgment n.o.v. The questions presented on this appeal are (1) whether the district court applied proper legal precepts in refusing to consider evidence of plaintiffs' superior performance as proof of pretext; (2) whether the district court misapplied the judgment n.o.v. standard by failing to view plaintiffs' evidence in its totality; and (3) whether substantial evidence supports the jury's verdict. After carefully examining the entire record in this case, we conclude that the exacting standards for granting a losing party's motion to overcome a jury verdict were not satisfied here. We therefore reverse and remand for reinstatement of the jury verdict and for reconsideration of plaintiffs' previously pending motion to amend the original judgment to award "front pay damages."


A district court's decision to enter a judgment n.o.v. must be reviewed de novo. Kunzelman v. Thompson, 799 F.2d 1172 (7th Cir.1986). A judgment n.o.v. is properly granted where the evidence presented, combined with all reasonable inferences that may be drawn from it, is insufficient to support a jury verdict when viewed in the light most favorable to the non-moving party. Syvock v. Milwaukee Boiler Mfg. Co., 665 F.2d 149 (7th Cir.1981); Christie v. Foremost Insurance Co., 785 F.2d 584, 585 (7th Cir.1986). In reviewing a district court's decision to enter a judgment n.o.v. we do not, of course, judge the credibility of witnesses, see Freeman v. Franzen, 695 F.2d 485, 489 (7th Cir.1982), cert. denied, 463 U.S. 1214, 103 S.Ct. 3553, 77 L.Ed.2d 1400 (1983), and we do not reweigh the evidence as would a jury to find a preponderance on one side or the other. LaMontagne v. American Convenience Products, 750 F.2d 1405, 1410 (7th Cir.1984). "We do however, weigh the evidence to the extent of determining whether the evidence is substantial; a mere scintilla of evidence will not suffice." Id. (emphasis in the original).

Viewed in accordance with these principles, and emphasizing this court's obligation to interpret events in a light most favorable to Graefenhain and Miller, the record discloses the following facts.

Pabst is a brewery engaged in the production and nationwide marketing of beer. Gunther Graefenhain and Philip Miller were employed by Pabst as Division Sales Managers for the Rocky Mountain and Atlantic Divisions, respectively.

Graefenhain had been employed by Pabst for fifteen years. He consistently received positive performance evaluations, annual merit pay increases, and bonuses, which continued up until 1981, the year of his discharge. As of December 1981, beer sales were up 7% for Graefenhain's division, thus ranking his division the second highest nationwide out of a total of 13 divisions. Graefenhain had received commendation letters from a number of Pabst officials over the years from 1968 through 1981. Graefenhain received his last commendation in April 1981 from the then Vice President of Pabst, Paul Roller, along with a $1,000 bonus. This was approximately six months before Pabst fired him.

Like Graefenhain, Philip Miller was a long-time employee of Pabst. At the time Miller was fired, he had been employed by Pabst for 32 years, and like Graefenhain, he had consistently received positive evaluations, letters of commendation, and bonus payments. Because of Miller's long tenure at Pabst, he was a member of what was regularly described as the "Old Guard." At the time he was fired, his supervisor's most recent evaluation ranked him second out of five division managers in the Atlantic region.

In December 1981, Pabst, faced with declining beer sales, implemented a nationwide sales force reduction, which resulted in the firing of Graefenhain and Miller. Graefenhain received notice of his termination on December 1, 1981. He was 47 years old. 2 His immediate supervisor, George Spencer, told him at that time that as a result of economic cutbacks, Pabst was closing his office. 3 Pabst never closed the Rocky Mountain office, however. Approximately two months after firing Graefenhain, Pabst installed Dave Kelly, age 29 and an employee of Pabst for the previous 4 1/2 years, as the Rocky Mountain Division Manager. Kelly assumed the same title, the same office, the same secretary, and the same vehicle as Graefenhain.

Although at the time of discharge the only reason Spencer gave for Graefenhain's termination was economic cutbacks, Spencer later testified that Graefenhain was fired because Spencer had long been dissatisfied with Graefenhain's lack of cooperation and performance. In October 1981, Spencer had ranked Graefenhain fourth out of his four division managers, and at trial he referred to this low evaluation as the basis which led to Graefenhain's firing.

Spencer testified that his criticisms of Graefenhain included: (1) concerns about the timeliness and completeness of Graefenhain's pricing materials; (2) Graefenhain's request for approval of promotions after the promotions period had started; (3) the fact that Graefenhain's division was $6,000 over budget; and (4) sales decreases and pricing errors.

Pabst also terminated Miller in December 1981, giving economic cutbacks as the only reason. Miller was 62 at the time. Two months earlier, Miller's supervisor, Michael Matchey, ranked Miller second out of five district managers. After Miller's departure, his Atlantic Division territory was split up and taken over by two other division managers in the Eastern region. Both men were younger than Miller and had less seniority. Matchey testified at trial that Miller was a better employee than either of the two other division managers. A year and a half later, after Pabst merged with Olympia Beer, Pabst reestablished Miller's old position and filled it with a younger, less experienced person.

At trial Robert Lyons, a former Pabst Vice President, testified for Pabst that it was he who had decided to fire Miller owing to his dissatisfaction with Miller's performance. Lyons cited Matchey's relatively poor evaluations of Miller in March 1980 and February 1981 in which Matchey ranked Miller third and fifth, respectively, out of the five eastern division managers. He denied that Miller had improved sufficiently to warrant Matchey's November 1981 evaluation in which Matchey had ranked Miller second out of five. Lyons also cited inadequate cooperation by Miller with the national accounts department, particularly with regard to Pabst's ill-fated venture into Yankee Stadium. 4 Lyons further testified that he recommended that Miller be fired because he did not believe that Miller could work effectively with him as part of the company's sales team. Although Lyons placed most of the blame on Miller for the Yankee Stadium account, Matchey testified that Miller was not responsible for the failure of that effort, and that there was nothing Miller could have done to resolve the problem.

In addition to evidence relating to their performance at Pabst, Graefenhain and Miller presented evidence that was designed to show that Pabst's reduction-in-force explanation was merely a pretext for terminating older, higher salaried employees. In other words, Graefenhain and Miller attempted to show that their termination was part of a plan to cut costs by replacing older, higher salaried employees with inexperienced, younger employees who could be paid less. In response, Pabst argued that there was an economic disincentive in selecting older employees for termination because of their eligibility for greater severance packages.

In support of their position, Graefenhain and Miller largely relied on the testimony of Lyons, who was ultimately responsible for the reduction of the company's sales force. Lyons testified that in October 1981, the President of Pabst gave Lyons and another management employee the task of reducing the sales force by 30%. The men had approximately five weeks to make the cuts. Lyons acknowledged at trial that the purpose of the reduction-in-sales-force policy was to save money through the elimination of the salaries and benefits of the terminated employees. His testimony was that approximately 30% of the sales force was in fact fired in December 1981. Graefenhain and Miller, however, attempted to counter the evidence of the 30% reduction by offering evidence to show that with the number of replacements for the fired employees, there was, in fact, no overall net reduction.

Finally, Graefenhain and Miller also attempted to show that Spencer, Graefenhain's supervisor, had an animus towards older workers. Eric Gagel, a former Pabst official, testified that Spencer had seemed interested in a particular candidate for hire until he found out how...

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