Hughes v. Ortho Pharmaceutical Corp.

• Decision Date: 27 May 1999
• Docket Number: No. 98-2218,98-2218
• Citation: 177 F.3d 701
• Parties: 79 Fair Empl.Prac.Cas. (BNA) 1871 E. Dexter HUGHES and Sharmell W. Relerford, Appellants, v. ORTHO PHARMACEUTICAL CORPORATION and Johnson & Johnson, Inc., Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 701

177 F.3d 701

79 Fair Empl.Prac.Cas. (BNA) 1871

E. Dexter HUGHES and Sharmell W. Relerford, Appellants, v. ORTHO PHARMACEUTICAL CORPORATION and Johnson & Johnson Inc., Appellees.

No. 98-2218.

United States Court of Appeals, Eighth Circuit.

Submitted Jan. 15, 1999.

Filed May 27, 1999.

D. Eric Sowers, St. Louis, Missouri, argued, for Appellants.

David J. Waxse, Overland Park, Kansas, argued, for Appellees.

Before: RICHARD S. ARNOLD, WOLLMAN ¹, Circuit Judges, and TUNHEIM, ² District Judge.

TUNHEIM, District Judge.

E. Dexter Hughes and Sharmell W. Relerford (collectively "plaintiffs") appeal from the district court's ³ order granting defendants' motion for summary judgment on their race discrimination claims under the Civil Rights Act of 1866 ("Section 1981"), 42 U.S.C. § 1981. We affirm.

I.

Defendant Ortho Pharmaceutical Corporation ("Ortho"), a subsidiary of defendant Johnson & Johnson, Inc., hired Relerford and Hughes in 1983 and 1993, respectively. Relerford and Hughes are African American. During their employment with Ortho, they were the only African American sales representatives in the company's St. Louis, Missouri division. At all times relevant to their claims, Kathleen Brown Carlyon was their district manager and direct supervisor. Carlyon interviewed and hired Hughes, and she terminated both plaintiffs on December 7, 1994, as part of a company-wide reduction-in-force ("RIF").

During the first quarter of 1994, Hughes' sales were below the national average in every category. In July 1994, he received a letter stating that he was ineligible to participate in Johnson & Johnson's stock compensation plan because of his inadequate sales performance. Carlyon placed Hughes on formal probation in August, after determining that his sales were below the national average in all product categories.

Hughes points out that he was recognized at a district sales meeting for his strong sales of an Ortho product (Terazol) during the first part of 1994. He also contends that Carlyon's realignment of his sales territory in June and July 1994 took from him over eighty high potential physician customers. Defendants respond, however, that Hughes' sales territory was realigned so that he could concentrate his efforts on a smaller number of customers. Also, it appears undisputed that sales results were measured by market share based on the customers in a given territory and not by gross sales per representative.

At the end of the third quarter of 1994, Hughes ranked thirty-seventh out of 520 Ortho sales representatives in a company-wide contest known as the "Top Achievers Contest." The contest ranked sales representatives on a weighted computation of market share and market increase, rather than overall sales performance. Forty percent of the weight attributable to market share increase was for a single product. In November, Carlyon, who had no knowledge of the contest until after she terminated Hughes, extended Hughes' probation because he remained below the national average in all sales categories except one. He was still on probation when Carlyon terminated him on December 7.

Relerford received stock options at the end of 1993 for her sales performance with Ortho. After the first quarter of 1994, however, Ortho informed her that her market share was disappointing. Carlyon placed Relerford on formal warning status in August 1994, after two prior written warnings regarding market share performance and problems with selling skills. After the second quarter, Relerford ranked near the bottom of Ortho's sales representatives with regard to market share for oral contraceptives, a major product group. In October, Carlyon repeated the formal warning and told Relerford that if she failed to improve, she would be placed on probationary status. Relerford's sales figures with regard to oral contraceptives did show some improvement in the third quarter, but she remained on formal warning status until her termination on December 7.

Plaintiffs' terminations were part of a company-wide RIF that resulted in four terminations in the St. Louis division. The other two terminated representatives are Caucasian. All four had received formal warnings or were on probation at the time. Relerford testified that Carlyon told her at the time of her termination that she was being discharged due to overlapping sales territories. In response to Relerford's subsequent request for a service letter, Carlyon wrote "You were discharged from employment with [Ortho] due to a realignment and reduction of sales territories." Carlyon went on to state that the "decision regarding which sales representatives to separate from employment was based primarily upon performance. Due to your poor past performance, you were one of the individuals discharged in the process." In her deposition, Carlyon testified that Relerford was terminated because she was "either on probation or had received a written warning."

In January 1995, Carlyon hired an African American as a sales representative, who assumed at least part of Relerford's territory. Carlyon initially had recruited this new representative in August 1994. At that time, however, she had informed the recruit that there were no openings and that Ortho was interviewing to keep a pool of applicants available in case openings emerged. Carlyon testified that she did not become aware that Ortho was planning to downsize until December 1994.

Plaintiffs filed suit in district court alleging race discrimination in violation of Section 1981. In a detailed opinion, the district court granted defendants' motion for summary judgment, finding that Hughes and Relerford had failed to establish a prima facie case of discrimination and had failed to offer evidence that would support an inference that defendants' proffered reason for terminating them as part of a company-wide RIF was pretextual. Plaintiffs appealed, arguing that the district court's determination was erroneous.

II.

We review the district court's grant of defendants' motion for summary judgment de novo. See, e.g., Roxas v. Presentation College, 90 F.3d 310, 315 (8th Cir.1996). We will affirm a grant of a summary judgment motion if the evidence, viewed in the light most favorable to the nonmoving party, shows that no genuine issue of material fact exists and that the moving party is entitled to judgment as a matter of law. See, e.g., Bashara v. Black Hills Corp., 26 F.3d 820, 823 (8th Cir.1994).

The order and allocation of proof in cases in which there is no direct evidence of discrimination is governed by the three-step burden shifting analysis set forth in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802-04, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973), and St. Mary's Honor Center v. Hicks, 509 U.S. 502, 505-11, 113 S.Ct. 2742, 125 L.Ed.2d 407 (1993). This framework applies to claims brought under Section 1981. See Roxas, 90 F.3d at 315. A Section 1981 plaintiff has the initial burden of establishing a prima facie case of race discrimination. See id. Once the plaintiff has established a prima facie case, the burden of production shifts to the defendant employer, who must articulate a legitimate, non-discriminatory reason for the adverse employment action. See id. at 316....