Guthrie v. J.C. Penney Co., Inc.

Citation803 F.2d 202
Decision Date27 October 1986
Docket NumberNo. 85-4871,85-4871
Parties42 Fair Empl.Prac.Cas. 185, 42 Empl. Prac. Dec. P 36,763 William J. GUTHRIE, Plaintiff-Appellee/Cross-Appellant, v. J.C. PENNEY COMPANY, INC., Defendant-Appellant/Cross-Appellee. Summary Calendar.
CourtU.S. Court of Appeals — Fifth Circuit

Peyton S. Irby, Jr., Christopher E. Hoyme, Jackson, Miss., Nelle M. Funderburk, James Allan Smith and Paul R. Beshears, Atlanta, Ga., for defendant-appellant/cross-appellee.

Williams, Glover, Walton & McAlilly, Stephen L. McAlilly, David Williams, Meridian, Miss., for plaintiff-appellee/cross-appellant.

Appeals from the United States District Court for the Southern District of Mississippi.

Before REAVLEY, JOHNSON and DAVIS, Circuit Judges.

JOHNSON, Circuit Judge:

Defendant J.C. Penney Company appeals from a jury trial awarding back pay, liquidated damages, reinstatement, attorney's fees, and costs to one of its employees under the Age Discrimination in Employment Act (ADEA). 29 U.S.C. Secs. 621-634. The employee, William J. Guthrie, appeals the dismissal of his pendant state claims for the intentional infliction of mental distress and breach of a fiduciary duty. The issues raised by both appeals are: (1) whether the jury had sufficient evidence to find that J.C. Penney violated the ADEA; (2) whether the trial judge erred in refusing to order a new trial after the admission of allegedly prejudicial evidence; (3) whether the award of liquidated damages was justified and whether damages should have been reduced by the retirement benefits that Guthrie received; (4) whether the trial court properly dismissed the intentional infliction of mental distress claim; and (5) whether the court properly dismissed the breach of fiduciary duty claim. For the following reasons, we affirm the judgment of the district court as to all claims, but remand for a recalculation of damages.


Guthrie began working for J.C. Penney ("Penney") in 1964, after more than seventeen years at another department store chain. He took over management of the Meridian, Mississippi, store, in Penney's Southeastern Region, in 1973.

Penney had a written policy that all store managers retire at age sixty. In 1978, the Company sent out a letter announcing that it had changed this policy to conform with changes in the ADEA, so that all employees could work to age seventy. Guthrie testified that he was relieved because, with five children, the youngest in junior high school, he feared that he could not support his family on retirement pay and hoped to work as long as he could.

Guthrie contends that Penney's unwritten policy remained one of forcing all managers out at age sixty. The jury heard evidence that, beginning just before Guthrie's sixtieth birthday in the spring of 1979, the Company repeatedly inquired into his retirement plans. Penney listed Guthrie as retired on its records, and took ten months to correct the error. Guthrie's date of birth was circled on his appraisal forms, and a supervisor handwrote "When?" next to the parts of the forms covering retirement. District Manager Stiglets sent Guthrie a humorous poem on the sexual problems of old age with the notation, "I think it just fits you!" Guthrie testified that the Regional Personnel Manager, Woodruff, announced that the Company preferred its managers to retire at age sixty, and threatened to make his job difficult if he did not do so. Woodruff testified that he did not remember making those statements.

Penney had a manager rating scale from one to five. One was the highest rating three corresponded to average or satisfactory performance; four represented "improvement needed to meet requirements" and often meant the first step toward termination. In 1977, Guthrie received a two rating; until the end of 1981, he received three ratings. In each of those years, he received merit pay increases. Under Guthrie's management, the Meridian store stayed at the top or near the top in sales and profits, compared with other stores in the district. It won several sales contests. A professional shoppers group hired by Penney gave it the highest rating. In 1982, Guthrie was the only store manager over sixty in his district, and one of only twenty-one managers over sixty in Penney's 1,700 stores nationwide.

In February 1982, a reorganization placed Guthrie under a new District Manager, James M. Moore. Soon after, Moore made a visit to Guthrie's store and reprimanded him in front of his subordinates for not setting up sale displays the night before a sale. Guthrie responded that setting up the displays in the evening would force him to sell merchandise at sale prices to evening customers, and that ample time to set up remained between 7:00 a.m., when employees arrived, and 10:00 a.m., when the store opened. In criticizing Guthrie before his employees, Moore disregarded recommendations of Penney's District Manager's Manual.

In June 1982, Moore made his first formal visit to the store. Witnesses disagreed on whether Guthrie was notified of this visit in advance, as required by the Company manual. During the visit, Moore continued to criticize Guthrie in front of his staff. Moore made decisions normally reserved for the store manager, such as rearranging staff duties and changing employee ratings. He examined merchandise records and concluded that the store was out of stock in too many items. Guthrie and other employees testified that the store was converting from a manual to a computerized stock control system and that the items were actually in stock. Moore, however, refused to take the switchover into account. Moore made several other criticisms that Guthrie's witnesses characterized as minor problems found at most stores.

As a result of this visit, Moore lowered Guthrie's rating to a four and set new performance goals. Several of his subordinates testified that morale was low in the store because of Moore's visits, and one testified that she resigned because of them. Guthrie believed that he would be fired if he did not meet Moore's goals, and that the goals were impossible to meet, during remodeling and inventory-system changeover. In August 1982, he resigned, effective October 1. He spent several months looking for a job, finally obtaining one in Idaho for a substantially lower salary.

Guthrie's replacement, Lawrence Mason, was forty-seven years old. Although sales and profit figures fell after he took over the store, he received a three rating and was allowed to run the store without interference.

Guthrie sued under the ADEA and added pendant state claims for breach of fiduciary duty and intentional infliction of emotional distress. Eleven days before trial, Penney moved to amend its answer to include a statute of limitations defense to the claim for emotional distress. The jury heard testimony on the state claims, but, at the close of the evidence, the judge granted a directed verdict for the defendant on both. On his ADEA claim, Guthrie was awarded back pay, liquidated damages, attorney's fees, costs and reinstatement.


When a plaintiff in an ADEA case cannot present direct evidence of discrimination, the courts have developed a three-part test modeled on the one used by Title VII plaintiffs. McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802, 93 S.Ct. 1817, 1824, 36 L.Ed.2d 668 (1973). First, the plaintiff must make a prima facie case by proving that he was in the age group protected by the Act (forty to seventy years old), he was qualified for the position, he was discharged and he was replaced by a younger employee. In the second stage, the burden shifts to the employer to produce evidence that dismissal was due to a business reason other than age. At the third stage, the plaintiff can prevail by showing that the articulated reason was a pretext. Sherrod v. Sears, Roebuck & Co., 785 F.2d 1312, 1314-16 (5th Cir.1986); Elliott v. Group Medical & Surgical Service, 714 F.2d 556, 565-66 (5th Cir.1983), cert. denied, 467 U.S. 1215, 104 S.Ct. 2658, 81 L.Ed.2d 364 (1984); Reeves v. General Foods Corp., 682 F.2d 515, 520-24 (5th Cir.1982). Penney attacks the sufficiency of the evidence supporting the jury's verdict for Guthrie at two points: constructive discharge and the pretextual nature of Penney's business reasons.

Factual findings in employment discrimination cases are reviewed on the same standard as in other cases. United States Postal Service Board of Governors v. Aikens, 460 U.S. 711, 716, 103 S.Ct. 1478, 1482, 75 L.Ed.2d 403 (1983); Sherrod, 785 F.2d at 1314. Consequently, the Court will not overturn the jury verdict unless it is not supported by substantial evidence. Reeves, 682 F.2d at 518-19; Boeing Co. v. Shipman, 411 F.2d 365, 374-75 (5th Cir.1969) (en banc). An employee can prove constructive discharge by showing that his employer created conditions so intolerable that "a reasonable person in the employee's shoes would have felt compelled to resign." Bourque v. Powell Electrical Manufacturing Co., 617 F.2d 61, 65 (5th Cir.1980), quoting Alicea Rosado v. Garcia Santiago, 562 F.2d 114, 119 (1st Cir.1977). See also Kelleher v. Flawn, 761 F.2d 1079, 1086 (5th Cir.1985); Shawgo v. Spradlin, 701 F.2d 470, 481 (5th Cir.), cert. denied, 464 U.S. 965, 104 S.Ct. 404, 78 L.Ed.2d 345 (1983); Junior v. Texaco, Inc., 688 F.2d 377 (5th Cir.1982).

The inquiry focuses on the employee's state of mind, and the employer's intent in creating the allegedly intolerable conditions is irrelevant at this stage. See, e.g., Kelleher, 761 F.2d at 1086; Shawgo, 701 F.2d at 481 n. 12; Junior, 688 F.2d at 379. However, the test remains objective, because it turns, not on the plaintiff's actual reaction, but on the reaction of a "reasonable employee" in his position. Id.

In the instant case, the jury did hear substantial evidence supporting constructive discharge. All of the witnesses to District Manager Moore's two visits...

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